Justia Arbitration & Mediation Opinion Summaries

A company that manufactures emergency-use auto-injectors terminated a senior technician after she certified that a probationary employee completed five on-the-job training (OJT) tasks in a single day. The company alleged that this certification was fraudulent and did not comply with its training policies, as the forms lacked supporting documentation and the employee did not demonstrate proficiency. The technician, a qualified trainer, filed a grievance through her union, arguing that it was common practice on her shift to conduct and certify multiple OJTs in one day and that supervisors were aware of these practices.An arbitrator reviewed the grievance under the collective bargaining agreement (CBA) between the company and the union. The arbitrator found that the company failed to prove by a preponderance of the evidence that the technician’s actions were intentionally fraudulent or falsified. The arbitrator also noted that the company’s staffing shortages and established practices contributed to the situation and drew an adverse inference against the company for not calling key supervisors as witnesses. The arbitrator ordered the technician’s reinstatement with back pay and benefits. The United States District Court for the Eastern District of Missouri granted summary judgment to the union, affirming the arbitrator’s award.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s decision de novo for legal conclusions and for clear error on factual findings. The Eighth Circuit held that the arbitrator acted within his authority in interpreting ambiguous terms in the CBA, such as “dishonesty,” and in considering past practices. The court also found that the arbitrator’s adverse inference and allocation of the burden of proof were permissible. Finally, the court concluded that reinstating the technician did not violate any well-defined and dominant public policy. The judgment affirming the arbitrator’s award was affirmed. View "Meridian Medical Technologies, Inc. v. International Brotherhood of Teamsters, Local 688" on Justia Law

A medical-malpractice insurance company based in California issued a policy to a healthcare provider headquartered in Ohio. After a patient sued the provider in Connecticut, the provider submitted the claim to its insurer, which accepted coverage and managed the defense. Disagreements arose between the provider and insurer regarding settlement strategy, leading the provider to self-fund a settlement to avoid the risk of a verdict exceeding policy limits. Subsequently, the provider sued the insurer in Ohio, alleging bad-faith insurance-claim handling and seeking reimbursement for the settlement and related costs.The insurer moved to stay proceedings and compel arbitration under the policy’s arbitration clause, which had been amended to require arbitration of “any dispute…relating to this Policy (including any disputes regarding [the insurer’s] contractual obligations).” The Stark County Court of Common Pleas granted the motion to compel arbitration. On appeal, the Fifth District Court of Appeals reversed, relying on the Ohio Supreme Court’s decision in Scott Fetzer Co. v. American Home Assurance Co., Inc., and held that the bad-faith claim was a tort arising by operation of law and thus not subject to arbitration under the policy’s endorsement.The Supreme Court of Ohio reviewed the case and held that the arbitration agreement in the insurance policy is a broad clause, creating a presumption of arbitrability. The Court found that the presumption was not overcome, as the bad-faith claim could not be maintained without reference to the policy or the insurer-insured relationship, and there was no express exclusion of such claims from arbitration. The Supreme Court of Ohio reversed the Fifth District’s judgment and reinstated the trial court’s order compelling arbitration. View "U.S. Acute Care Solutions, L.L.C. v. Doctors Co. Risk Retention Group Ins. Co." on Justia Law

Neil Maune and Marcus Raichle formed a general partnership known as the Maune Raichle Law Firm, which later took out life insurance policies for each partner, naming the partnership as beneficiary. In 2011, Maune, Raichle, and three others established a new law firm, MRHFM, governed by an operating agreement containing an arbitration clause and a delegation provision referencing the American Arbitration Association rules. MRHFM took over premium payments for the life insurance policies, but only Raichle’s policy was amended to name MRHFM as beneficiary. After Maune’s death, the death benefit from his policy was paid to the original partnership, not MRHFM. The Estate of Neil Maune sued Raichle and the partnership, alleging wrongful retention of the insurance proceeds, tortious interference, unjust enrichment, and breach of fiduciary duty.The Circuit Court of St. Louis County denied the defendants’ motion to compel arbitration, reasoning that the partnership was not a party to the operating agreement and thus could not enforce its arbitration provision. The Estate argued that Maune and Raichle signed the agreement only as members and managers of MRHFM, not as partners of the original partnership, and that the claims did not fall within the scope of the arbitration agreement.The Supreme Court of Missouri reviewed the case de novo and held that, under Missouri’s aggregate theory of partnerships, the partnership has no legal existence separate from its partners. Because Maune and Raichle were the only partners and signed the operating agreement in their individual capacities, they bound themselves and the partnership to the arbitration agreement. The Court further held that, due to the delegation provision, questions about the scope of the arbitration agreement must be decided by the arbitrator. The Supreme Court of Missouri vacated the circuit court’s order and remanded with instructions to compel arbitration. View "Maune vs. Raichle" on Justia Law

An attorney with over two decades of experience brought suit against an insurance company and its agent after his life insurance policy lapsed due to a missed payment. He claimed to have cured the lapse by paying the overdue premium and submitting required information, and alleged that the insurer confirmed reinstatement before later refunding his payment and rescinding the reinstatement. The insurer denied ever reinstating the policy and asserted it had expired by its own terms. The attorney filed suit in state court, alleging breach of contract and other claims. After removal to federal court, the parties mediated and signed a settlement memorandum outlining five essential terms, including a $10,000 payment to the plaintiff and mutual releases. The memorandum stated that final settlement language would use standard contractual terms.After mediation, the plaintiff refused to sign the draft settlement agreement, objecting to a non-reliance clause he claimed was not discussed during mediation. He also began raising new questions about the status of his insurance policy. He moved to vacate the settlement and sought further discovery, while the defendants moved to enforce the settlement. The United States District Court for the Western District of Missouri held an evidentiary hearing, which the plaintiff missed, and then granted the defendants’ motion to enforce the settlement and denied the plaintiff’s motions. The plaintiff’s motion for rehearing was also denied.On appeal, the United States Court of Appeals for the Eighth Circuit held that the settlement memorandum contained all essential terms and that the non-reliance clause in the draft agreement was standard language, not a material new term. The court found no clear error in the district court’s factual findings and no abuse of discretion in denying a new hearing. The Eighth Circuit affirmed the district court’s judgment enforcing the settlement. View "Schlecht v. Goldman" on Justia Law

Haamid Khan created an account with Coinbase, Inc., an online platform for buying, selling, and storing digital currencies. Khan alleged that Coinbase charged customers a hidden “Spread Fee” during transactions, which was not clearly disclosed to users. He claimed that the fee was only revealed if a customer clicked a tooltip icon and that the platform’s design misled less sophisticated users by imposing the fee only on those using the default trading option. Khan sought an injunction under California’s unfair competition and false advertising laws to prohibit Coinbase from continuing these practices.Coinbase responded by filing a petition in the City & County of San Francisco Superior Court to compel arbitration, citing a user agreement that included an arbitration clause and a waiver of class and public injunctive relief. The trial court denied Coinbase’s petition, finding that Khan’s claims sought public injunctive relief, which could not be waived or compelled to arbitration under California law, specifically referencing McGill v. Citibank, N.A. The court determined that the relief sought would benefit the public at large, not just Khan or a defined group of users.The California Court of Appeal, First Appellate District, Division Three, reviewed the case de novo. The appellate court affirmed the trial court’s order, holding that Khan’s complaint seeks public injunctive relief under the standards set forth in McGill. The court found that the arbitration agreement’s waiver of public injunctive relief was invalid and unenforceable. It concluded that Khan’s requested injunction would primarily benefit the general public by prohibiting ongoing deceptive practices, and thus, his claims could proceed in court rather than arbitration. The order denying Coinbase’s petition to compel arbitration was affirmed. View "Kahn v. Coinbase, Inc." on Justia Law

A law firm sought to recover over $1.7 million in fees and costs for representing the Los Angeles County Sheriff, Alex Villanueva, and the Sheriff’s Department in litigation initiated by the County of Los Angeles. Due to a conflict of interest, the County’s Board of Supervisors offered Villanueva independent counsel, allowing him to select his attorney but reserving discretion over compensation. Villanueva chose the law firm, which entered into an engagement agreement with him. The County, however, sent its own retainer agreement to the firm, which the firm refused to sign. The firm continued its representation but was never paid. After the firm demanded arbitration under its engagement agreement, the County and related plaintiffs filed suit seeking a declaration that no valid agreement to arbitrate existed and an injunction against the arbitration.The Superior Court of Los Angeles County granted a preliminary injunction, then summary judgment for the County plaintiffs, finding the Sheriff lacked authority to enter into the engagement agreement. The court denied the law firm’s post-judgment motion for leave to file a cross-complaint, citing both untimeliness and bad faith. The firm then filed a separate lawsuit against the County and related defendants, asserting breach of contract and related claims. The trial court sustained the County’s demurrer, dismissing the complaint with prejudice on grounds that the claims were compulsory cross-claims in the earlier action and for failure to allege compliance with the Government Claims Act.The California Court of Appeal, Second Appellate District, Division Eight, affirmed both the judgment in the County’s action and the dismissal of the law firm’s separate lawsuit. The court held that the Sheriff did not have authority to retain counsel on his own; only the Board of Supervisors could contract for legal services. The law firm’s claims were barred as compulsory cross-claims and for failure to comply with the Government Claims Act. View "County of Los Angeles v. Quinn Emanuel Urquhart & Sullivan, LLP" on Justia Law

Puerto Rico Telephone Company (PRTC) sought to confirm an arbitration award against WorldNet Telecommunications in federal court under section 9 of the Federal Arbitration Act (FAA). PRTC relied on then-existing First Circuit precedent, which allowed federal courts to exercise subject-matter jurisdiction over such applications if the underlying dispute involved a federal question. After the district court dismissed PRTC’s action for lack of Article III standing, PRTC appealed.The United States District Court for the District of Puerto Rico dismissed the case, finding that PRTC had not shown the necessary injury-in-fact to establish standing under Article III of the Constitution. PRTC then appealed to the United States Court of Appeals for the First Circuit. While the appeal was pending, the United States Supreme Court decided Badgerow v. Walters, which held that federal courts lack subject-matter jurisdiction over applications to confirm or vacate arbitration awards under sections 9 and 10 of the FAA, except in circumstances not present in this case. PRTC requested that the First Circuit vacate the district court’s judgment and direct dismissal without prejudice for lack of subject-matter jurisdiction, so that PRTC could pursue relief in the Commonwealth courts. WorldNet argued that the First Circuit should instead affirm the district court’s dismissal on standing grounds.The United States Court of Appeals for the First Circuit held that, in light of Badgerow v. Walters, federal courts do not have subject-matter jurisdiction over PRTC’s application to confirm the arbitration award under section 9 of the FAA. The First Circuit vacated the district court’s judgment and remanded with instructions to dismiss the case without prejudice for lack of subject-matter jurisdiction. The court did not address the standing issue. View "Puerto Rico Telephone Co. v. Worldnet Telecommunications, LLC" on Justia Law

A company that provides employee management services hired an employee in California in September 2021. At the start of her employment, she completed onboarding documents that did not mention arbitration. About five months later, she was asked to sign additional documents, including an arbitration agreement, a voluntary dispute resolution policy, and a confidentiality and non-disclosure agreement (CND). The arbitration agreement required most employment-related disputes to be resolved through binding arbitration, with certain exceptions for claims related to confidential information. The CND allowed the company to bring certain claims in court and permitted the company to seek injunctive relief without posting a bond or proving actual damages. The employee later filed a lawsuit alleging various employment law violations.The Solano County Superior Court reviewed the company’s motion to compel arbitration. The company argued that the arbitration agreement was enforceable and, if any provision was found unenforceable, it should be severed. The employee opposed, arguing the agreement was unconscionable due to the manner in which it was presented and its one-sided terms. The trial court found the arbitration agreement to be both procedurally and substantively unconscionable, particularly because it forced the employee’s claims into arbitration while allowing the company’s likely claims to proceed in court, and because of a confidentiality provision that restricted informal discovery. The court denied the motion to compel arbitration and declined to sever the offending provisions, finding the agreement permeated by unconscionability.The California Court of Appeal, First Appellate District, Division Three, affirmed the trial court’s order. The appellate court held that the arbitration agreement and the CND, read together, were unconscionable due to lack of mutuality and an overly broad confidentiality provision. The court also found no abuse of discretion in the trial court’s refusal to sever the unconscionable terms and concluded that any error in denying a statement of decision was harmless. View "Gurganus v. IGS Solutions LLC" on Justia Law

An 84-year-old man with a history of dementia was admitted to a hospital after several falls and subsequently transferred to a nursing home for rehabilitation. His wife, acting as his “Authorized Representative,” signed an optional arbitration agreement as part of his admission paperwork. During his stay, the man developed a pressure wound that became septic, leading to his removal from the facility and subsequent death. The wife, as personal representative of his estate, filed a wrongful death lawsuit against the nursing home and its administrator, alleging medical negligence and asserting that the man was incompetent and unable to make decisions for himself at the time of admission.The Mobile Circuit Court reviewed the defendants’ motion to compel arbitration, which was based on the signed agreement. The wife opposed the motion, arguing she lacked authority to bind her husband to arbitration because he was permanently incapacitated due to dementia. She provided medical records and her own affidavit to support her claim of his incapacity. The defendants countered with evidence suggesting the man had periods of lucidity and was not permanently incapacitated. The trial court denied the motion to compel arbitration and later denied a postjudgment motion by the defendants that included additional medical records.The Supreme Court of Alabama reviewed the case de novo. It held that the wife did not meet her burden to prove the man was permanently incapacitated or temporarily incapacitated at the time the arbitration agreement was executed. The Court found that the evidence showed the man had lucid intervals and was at times alert and able to communicate, and that no contemporaneous evidence established incapacity at the time of signing. The Supreme Court of Alabama reversed the trial court’s order and remanded the case, holding that the arbitration agreement was enforceable. View "Mobile Nursing and Rehabilitation Center, LLC v. Sliman" on Justia Law

A nursing home resident’s legal representative, acting under a durable power of attorney, sued a nursing home for alleged medical negligence during the resident’s stay. Upon admission, the representative signed several documents, including an agreement to arbitrate any disputes arising from the resident’s care. The representative later claimed not to recall signing the documents but did not dispute her signature. The nursing home moved to compel arbitration based on the signed agreement, which expressly stated it was governed by the Federal Arbitration Act (FAA).The District Court of McCurtain County, Oklahoma, held a hearing on the motion to compel arbitration. The court found that a valid arbitration agreement existed, signed by both an authorized agent of the nursing home and the legal representative. The court determined that the FAA applied due to the involvement of interstate commerce and that the Oklahoma Nursing Home Care Act’s (NHCA) prohibition of arbitration agreements was preempted by federal law. The court granted the nursing home’s motion to compel arbitration and stayed the judicial proceedings.The Supreme Court of the State of Oklahoma reviewed the case de novo. It affirmed the district court’s decision, holding that the FAA preempts the NHCA’s categorical prohibition of arbitration agreements in the nursing home context when interstate commerce is involved and the agreement expressly invokes the FAA. The court found the arbitration agreement was validly executed and not unconscionable, distinguishing this case from prior Oklahoma precedent and aligning with the United States Supreme Court’s decision in Marmet Health Care Center, Inc. v. Brown. The Supreme Court of Oklahoma affirmed the district court’s order compelling arbitration. View "Thompsonl v. Heartway Corp." on Justia Law