Filed 6/23/26 Cookies Retail v. Cookies Creative Consulting & Promotions CA1/5
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
COOKIES RETAIL, LLC,
Plaintiff and Appellant, A174519
v. (City & County of San Francisco
COOKIES CREATIVE Super. Ct. No. CGC-24-620457)
CONSULTING & PROMOTIONS,
INC.,
Defendant and Respondent.
Plaintiff Cookies Retail, LLC (CRE) appeals from the judgment entered
after the trial court denied its motion to vacate an arbitration award and
granted defendant Cookies Creative Consulting & Promotions, Inc.’s
(Cookies) petition to confirm the award. CRE contends that under Code of
Civil Procedure section 1286.2:1 (1) the arbitrator exceeded his authority by
making an alter ego finding; (2) Cookies engaged in witness tampering that
resulted in an arbitration award procured by fraud or corruption; and (3) the
arbitrator’s refusal to postpone the arbitration hearing and his evidentiary
rulings caused substantial prejudice to CRE. Given the limits on judicial
review of arbitration awards and finding no error, we affirm.
1 All statutory references are to the Code of Civil Procedure.
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I. BACKGROUND2
Cookies is the owner and/or exclusive licensor of the cannabis-related
brand “Cookies” and other related intellectual property. Cookies licenses
that intellectual property “in exchange for monetary consideration and other
terms.”
CRE is a joint venture formed to identify and pursue opportunities for
new Cookies-branded retail stores that would be operated by third parties
subject to a written retail licensing agreement. Cookies is a minority owner
of CRE. Brandon Johnson, Ryan Johnson, and Daniel Firtel are the majority
owners.
Beginning September 16, 2019, Cookies and CRE entered into a joint
venture through multiple agreements. One of the agreements, titled “Master
Rollup Agreement” (Rollup Agreement), included an arbitration clause. That
clause provided that any dispute between Cookies and CRE “arising out of or
in any way related to” the Rollup Agreement would be subject to final and
binding arbitration administered by JAMS (Judicial Arbitration and
Mediation Services) pursuant to the JAMS Streamlined Arbitration Rules
and Procedures. The clause further stated that “[a]ny arbitration must be on
an individual basis and the parties and the arbitrator will have no authority
or power to proceed with any claim as a class action or otherwise to join or
consolidate any claim with any other claim or any other proceeding involving
third parties.” (Italics added.)
Under another written agreement, titled “License Agreement,” Cookies
allowed CRE to use Cookies’ intellectual property but “solely in connection
2 Because the parties do not dispute most, if not all, of the factual
findings of the arbitrator, we rely on those undisputed findings in reciting the
facts here.
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with the advertising, publicity or promotion of the Licensee Business in
furtherance of the Licensor Retail Strategy.” “Licensee Business” referred to
the identification of opportunities for retail stores referenced in the Rollup
Agreement, and “Licensor Retail Strategy” referred to the joint venture’s
business strategy of granting licenses to third party operators of those stores
pursuant to a written agreement. The License Agreement also contains an
arbitration clause with language virtually identical to the language of the
arbitration clause in the Rollup Agreement.
Under the joint venture agreements, Cookies expected to “share in the
appreciation in value of their joint venture entity.” But this changed in late
2021 when the Johnsons and Firtel created TRP Partners, LLC (TRP).
According to Cookies, CRE and TRP raised money from investors solely for
TRP and its affiliates using Cookies’ intellectual property, to the detriment of
Cookies.
Over the course of the parties’ business relationship, disputes arose.
After the parties were unable to resolve their disputes themselves, Cookies
filed a demand for arbitration in January 2024. Cookies alleged express and
implied contractual claims based on CRE’s failure to pay license fees owed
under the joint venture agreements, CRE’s unauthorized uses of Cookies’
intellectual property to aid TRP’s fundraising, and CRE’s false claims that
Cookies breached one of the parties’ agreements or made unreasonable
demands “in an effort to, among other things, seek and obtain unfounded
concessions . . . .”
That same month, CRE filed a complaint in Orange County Superior
Court, which was transferred to San Francisco County Superior Court and
ultimately added to the arbitration over CRE’s objections. CRE thereafter
responded to Cookies’ claims and submitted counterclaims in the arbitration.
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In its counterclaims, CRE asserted: (1) claims that Cookies unlawfully
operated and sold a franchise and that CRE was a franchisee; (2) fraud
claims based on Cookies’ misrepresentations and concealment of its status as
a licensor; (3) a claim for violation of the Unfair Competition Law (Bus. &
Prof. Code, § 17200 et seq.); and (4) claims for breach of express and implied
contract based on Cookies’ opening of a store in New York City’s Herald
Square and its agreement with another company to operate a “Cookies-
branded marijuana dispensary at the Herald Square Store.” CRE also sought
to enjoin Cookies’ business activities in New York under the Cookies brand
and declaratory relief regarding the parties’ rights in the New York market
under the joint venture agreements.
For damages, Cookies sought: (1) $8 million in unpaid license fees;
(2) $20.4 million for licensing fees lost due to CRE’s squatting in markets to
which CRE had exclusive rights; (3) $90 to $100 million for CRE’s unlicensed
use of Cookies’ intellectual property to raise funds for TRP, a CRE-affiliate;
and (4) $12.6 million for the resulting impairment of Cookies’ ability to raise
capital itself. In the alternative, Cookies sought a finding that TRP is CRE’s
alter ego and that alter ego liability for TRP’s conduct attaches to CRE.
Finally, Cookies asked for an order requiring that CRE and its counsel return
all records obtained from Freddy Cameron, Cookies’ former Senior Director of
Retail Operations.
Meanwhile, CRE asked the arbitrator to find that: (1) an inadvertent
franchise was created, entitling CRE to rescind its joint venture with Cookies
and recover damages; (2) CRE owed no licensing fees to Cookies or, if CRE
was required to pay those fees, it was entitled to a refund; (3) TRP properly
used Cookies’ intellectual property to raise money from investors because
TRP is CRE’s affiliate; and (4) Cookies fraudulently induced CRE to enter
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into the joint venture. CRE sought damages in the amount of $173,824,254,
as well as punitive damages.
On July 18, 2024, the arbitrator held a scheduling conference and
applied the JAMS Streamlined Arbitration Rules and Procedures pursuant to
the arbitration clause. Following another conference in September, the
arbitrator denied CRE’s request to continue the arbitration hearing. He also
issued a number of subpoenas requested by CRE, including one to Cameron.
When Cameron left Cookies and unbeknownst to Cookies, he allegedly took
“voluminous data.” In the final arbitration award, the arbitrator found:
“CRE’s counsel telephoned Freddy Cameron within minutes of his posting on
LinkedIn that he had left Cookies. CRE’s counsel had Freddy Cameron
accept what ostensibly was a statutory ‘records subpoena’ for his data trove
that (according to the documentation) was supposed to go to Array in Irvine,
but which CRE’s counsel redirected to Intrepid in San Diego. That data was
never treated as being subject to a ‘records subpoena.’ ”
The arbitration hearing began on September 26, 2024, and ended on
October 16. Before the hearing, the arbitrator ordered Cookies to produce all
non-privileged records taken by Cameron (Cameron documents), subject to an
order of return after the hearing. In producing those documents, Cookies
labeled them as “STOLEN.” “[T]here was no ruling precluding” the use of the
Cameron documents during the arbitration hearing, and CRE did, in fact, use
some of those documents at the hearing.
On June 2, 2025, the arbitrator issued a detailed, 75-page final award.
As relevant here, the arbitrator made a number of findings.
First, the arbitrator found that CRE owed Cookies unpaid license fees
under the joint venture agreements.
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Second, the arbitrator found that CRE misused Cookies’ intellectual
property. According to the arbitrator, neither CRE nor TRP had the right to
use that intellectual property for fundraising under any agreement. In the
alternative, the arbitrator found that TRP was CRE’s alter ego and that CRE
was therefore liable for TRP’s conduct. The arbitrator noted: “While CRE
asserts that TRP did not agree to be bound by an arbitration clause, that
argument fundamentally fails to understand that the Arbitrator is neither
suggesting nor ruling that TRP is bound by this award. . . . By contrast, CRE
is a party to this arbitration.” The arbitrator thereafter awarded Cookies $10
million dollars “for the improper use of the Cookies’ marks in CRE/TRP’s
fundraising.”
Third, the arbitrator found against CRE as to all of its counterclaims.
Finally, the arbitrator ordered CRE to return the Cameron documents
to Cookies because “[a]llowing a litigant to retain stolen documents would
serve to encourage, rather than discourage, the conduct of wrongdoers.” In
total, the arbitrator awarded Cookies $17,893,394 in damages and
$4,864,329.60 in fees, costs, and disbursements.
CRE moved to vacate the arbitration award and Cookies petitioned to
confirm the award. The trial court denied CRE’s motion and granted
Cookies’ petition.
Citing the “extremely narrow” grounds for vacating an arbitration
award, the trial court held that the arbitrator did not exceed his authority
because TRP was not a party to the arbitration or bound by the award. It
also held that CRE was not prejudiced because the alter ego ruling was an
alternative basis for liability.
The trial court further reasoned that the arbitrator’s finding of no
witness tampering was supported by the record as “it was Mr. Cameron’s own
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conduct in taking Cookies’ documents that exposed him to criminal sanctions.
[Citation.] The arbitrator allowed Cameron to testify, but he failed to
appear.”
The trial court also rejected CRE’s arguments challenging the
arbitrator’s refusal to continue the hearing because CRE did “not cogently
explain how the scheduling and Cookies’ document production substantially
prejudiced it or how the outcome would have been different.”
Finally, as to CRE’s evidentiary challenges, the trial court held that
“[t]o the extent CRE raises a cognizable claim to vacate and is not merely
challenging the arbitrator’s factual findings contrary to Moncharsh [v. Heily
& Blase (1992) 3 Cal.4th 1 (Moncharsh)], the argument fails. Each party had
an opportunity to present its case and as noted, CRE’s resistance to
participation exacerbated any scheduling difficulties. CRE was even able to
use documents stolen from Cookies.”
After entering its orders on the competing motions, the trial court
entered judgment and CRE timely appealed.
II. DISCUSSION
A. Standard of Review
Although we review an order confirming an arbitration award de novo
(Bacall v. Shumway (2021) 61 Cal.App.5th 950, 957), we are also bound by
the well-established limits on judicial review of an arbitration award. “Public
policy supports minimal judicial participation in arbitration proceedings.”
(Evans v. Centerstone Development Co. (2005) 134 Cal.App.4th 151, 157
(Evans).) This is because “arbitral finality is a core component of the parties’
agreement to submit to arbitration.” (Moncharsh, supra, 3 Cal.4th at p. 10.)
As a result, we, as a general rule, “may not review an arbitrator’s
decision for errors of fact or law” and must accept the arbitrator’s findings as
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correct. (Cotchett, Pitre & McCarthy v. Universal Paragon Corp. (2010) 187
Cal.App.4th 1405, 1416.) Indeed, we must “draw[ ] all reasonable inferences
to support the [arbitrator’s] decision and ‘display[ ] substantial deference
towards the arbitrator’s determination of his or her contractual authority.’ ”
(Evans, supra, 134 Cal.App.4th at p. 157, quoting Jones v. Humanscale Corp.
(2005) 130 Cal.App.4th 401, 408.) “[B]y voluntarily submitting to arbitration,
the parties have agreed to bear [the] risk [an arbitrator will err] in return for
a quick, inexpensive, and conclusive resolution to their dispute.”
(Moncharsh, supra, 3 Cal.4th at p. 11.) Consistent with these overarching
principles, section 1286.2 sets forth the “exclusive grounds” on which we may
vacate an arbitration award. (Soni v. SimpleLayers, Inc. (2019) 42
Cal.App.5th 1071, 1085.)
B. Challenge Under Section 1286.2, Subdivision (a)(4)
Under section 1286.2, subdivision (a)(4), we may vacate an arbitration
award if the arbitrator exceeds his or her powers “and the award cannot be
corrected without affecting the merits of the decision upon the controversy
submitted.” CRE argues that the arbitrator in this case exceeded his powers
by finding that TRP was CRE’s alter ego even though the arbitration clause
prohibited TRP from participating in the arbitration. CRE further argues
that the arbitrator exceeded his authority by using his alter ego finding to
award an additional $10 million against CRE. We are not persuaded.
As an initial matter, it appears that CRE forfeited any challenge to the
arbitrator’s authority to make the alter ego finding. “In order to challenge an
award in court, a litigant must have raised the point before the arbitrator.”
(Comerica Bank v. Howsam (2012) 208 Cal.App.4th 790, 829 (Comerica).) In
its post-arbitration brief, Cookies asked the arbitrator to find that TRP was
CRE’s alter ego. But aside from addressing the merits of Cookies’ argument,
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CRE only challenged the arbitrator’s authority to enter a judgment against
TRP. It did not question the arbitrator’s authority to make an alter ego
finding as a basis for finding CRE liable.
In any event, even if CRE did not forfeit the issue, we would find that
the arbitrator did not exceed his authority.
First, CRE apparently misstates the language of the arbitration clause.
In both its opening brief and reply, CRE appears to quote from that clause
when it states that “the parties expressly agreed that . . . ‘the arbitrator will
have no authority or power to proceed with any other claim or any other
proceeding involving third parties.’ ” But the clause actually states in
relevant part that “the arbitrator will have no authority or power . . . to join
or consolidate any claim with any other claim or any other proceeding
involving third parties.” (Italics added.) Here, the arbitrator did not join or
consolidate Cookies’ arbitrable claims against CRE with any other claim or
proceeding involving TRP. Indeed, the arbitrator made it expressly clear that
his award was not “an award against TRP” or any other “non-party to the
arbitration.” Thus, the arbitrator did not exceed his authority by finding that
CRE, a party to the arbitration, could be held liable for the actions of TRP
because TRP was CRE’s alter ago. And to the extent that the language of the
arbitration clause is ambiguous, we must defer to the arbitrator’s
determination of his authority under that clause.3 (See Evans, supra, 134
Cal.App.4th at p. 157.)
Benaroya v. Willis (2018) 23 Cal.App.5th 462 does not compel a
contrary conclusion. In Benaroya, the arbitrator granted a motion for leave
3 CRE also does not explain how the inability of TRP to participate as a
party in the arbitration precluded CRE from defending itself from any
liability based on the actions of TRP.
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to amend the arbitration demand to add a nonsignatory to the arbitration
agreement as a party. (Id. at pp. 465–466.) The arbitrator ultimately found
that nonsignatory liable in the arbitration award. (Id. at pp. 466–467.) By
contrast, TRP was never a party to the arbitration and the arbitrator never
imposed any liability on TRP.
As to CRE’s contention that the arbitrator used the alter ego finding to
“award an additional $10 million against CRE,” we reject it based on the
actual language of the final award. That award explains that the “very
conservative” $10 million dollar award was based on CRE’s conduct,
including its “funneling [of] Cookies Branded Retail Store financial results
data to TRP with full knowledge that Cookies IP was being used to build that
separate business.” We therefore see no basis for holding that the arbitrator
exceeded his powers.
C. Challenge Under Section 1286.2, Subdivision (a)(1)
Under section 1286.2, subdivision (a)(1), we may vacate the arbitration
award if it “was procured by corruption, fraud or other undue means.” CRE
argues that the award was obtained by fraud and corruption because Cookies
tampered with a potential witness, Cameron, who consequently refused to
appear at the arbitration hearing. But CRE had ample opportunity “to
discover and reveal” this alleged fraud and corruption “at the arbitration
hearing.” (Pour Le Bebe, Inc. v. Guess? Inc. (2003) 112 Cal.App.4th 810, 833
[considering the appellants’ claim that award was procured by undue means
even though arbitrators had rejected that claim solely because the appellants
“ ‘never had an opportunity to prosecute a full-blown claim for breach of duty
of loyalty’ ”].) Indeed, CRE does not argue that it was prevented from
presenting any evidence of witness tampering at the arbitration hearing.
Instead, it simply disagrees with the arbitrator’s conclusion that no
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tampering occurred based on the evidence it did present. On a petition to
vacate an arbitration award, CRE cannot relitigate an issue that has been
fully litigated at the arbitration hearing. (See Starr v. Mayhew (2022) 83
Cal.App.5th 842, 857 [declining to vacate award under section 1286.2,
subdivision (a)(1) because the appellant “fully addressed” the issue at the
arbitration hearing].)
Finally, even if CRE was entitled to a second bite of the apple on its
claim of witness tampering, we would reject it because CRE failed to show
that it was “prejudiced.” (Comerica, supra, 208 Cal.App.4th at p. 826.)
Although CRE claims that Cameron’s testimony would have supported its
position, his declaration in the arbitration was conclusory and is not
sufficient to establish prejudice. Indeed, CRE concedes that Cameron’s
“declarations were almost entirely limited to describing acts of intimidation
and witness tampering.” Accordingly, we find no grounds for vacating the
arbitration award under section 1286.2, subdivision (a)(1).
D. Challenges Under Section 1286.2, Subdivision (a)(5)
Under section 1286.2, subdivision (a)(5), we may vacate an arbitration
award if “[t]he rights of the party were substantially prejudiced by the refusal
of the arbitrators to postpone the hearing upon sufficient cause being shown
therefor or by the refusal of the arbitrators to hear evidence material to the
controversy or by other conduct of the arbitrators contrary to the provisions
of this title.” In seeking to vacate the award under this subdivision, CRE
points to the arbitrator’s refusal to postpone the arbitration hearing and his
refusal to consider CRE’s evidence while at the same time considering
Cookies’ “improper evidence.” Neither refusal, however, supports vacating
the award.
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1. Refusal to Postpone the Arbitration Hearing
In reviewing a challenge to the arbitrator’s refusal to postpone the
arbitration hearing, courts engage in a two-step analysis. “First, the trial
court must determine whether the arbitrator abused his or her discretion by
refusing to postpone the hearing upon sufficient cause being shown. Second,
if there was an abuse of discretion, the trial court must determine whether
the moving party suffered substantial prejudice as a result.” (SWAB
Financial, LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181,
1198.)
CRE argues it was prejudiced because the arbitration hearing began
only 71 days after the initial scheduling conference. According to CRE,
Cookies used the “compressed schedule as a weapon, preventing CRE from
having an adequate opportunity to obtain, review, and present evidence in
support of its claims and defenses.” We are not persuaded. As the trial court
observed, “the parties’ arbitration contract specified JAMS arbitration under
its Streamlined Arbitration Rules and Procedures.” And CRE does not
contend that the arbitrator violated those rules and procedures. We therefore
agree with the court that CRE is, in effect, asking us to find that the
arbitrator abused his direction by applying the rules under which CRE
agreed to arbitrate.
Even if the arbitrator should have continued the arbitration hearing,
we would still reject CRE’s claim for lack of prejudice. CRE contends it was
prejudiced because: (1) Cookies objected to and prevented third parties from
producing documents to CRE; (2) Cookies produced 40,000 documents only 27
days before the arbitration hearing; (3) Cookies produced “only a handful of
documents” related to one Cookies-branded retail store at issue in the
arbitration; and (4) 13 days before the arbitration hearing, Cookies
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threatened Cameron and his employer with criminal prosecution if he
participated in the arbitration hearing. In the final award, the arbitrator
expressly rejected all of these claims of prejudice. For example, the arbitrator
stated that he “has not perceived that [CRE] has been limited in any way in
their development of their presentation of their case, or in their ability to
participate fully in these proceedings.” With respect to Cameron, the
arbitrator considered and rejected CRE’s claim of witness tampering.
Moreover, the arbitrator did not find Cameron’s declarations “helpful to the
assessment of the merits of the case.” Because we must defer to these
findings (Evans, supra, 134 Cal.App.4th at p. 157), we find no prejudice.
2. Evidentiary Rulings
In its final challenge to the award, CRE contends that “the arbitrator
simultaneously refused to allow CRE to obtain material evidence while
allowing Cookies to use impermissible evidence.” Specifically, CRE
challenges various evidentiary rulings the arbitrator made. But “challenges
to the arbitrator’s rulings on discovery, admission of evidence, reasoning, and
conduct of the proceedings do not lie.” (Evans, supra, 134 Cal.App.4th at p.
167.) As the trial court correctly found, “[e]ach party had an opportunity to
present its case . . . .” We therefore find no error.
III. DISPOSITION
The trial court’s judgment is affirmed. Cookies is entitled to recover its
costs on appeal.
CHOU, J.
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WE CONCUR.
SIMONS, Acting P. J.
BURNS, J.
A174519/ Cookies Retail v. Cookies Creative
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