Justia Arbitration & Mediation Opinion Summaries

A real estate investment firm based in China and another firm based in Singapore entered into a joint venture in 2021 to develop and operate a property near Auburn University. The Chinese firm held an 80% interest, while the Singaporean firm held a 20% interest and managed the venture, with full access to the joint venture’s bank accounts. The Chinese firm alleged that the manager firm made unauthorized transfers from the joint venture’s accounts, ultimately taking over $1 million. Despite partial repayment and assurances, a significant amount remained outstanding.The Chinese firm filed suit in the Lee Circuit Court, Alabama, asserting claims including declaratory judgment, fraudulent misrepresentation, conversion, and fraudulent suppression. The Singaporean firm failed to timely respond to the complaint, leading to requests for default judgment. After some delay, the manager filed an answer and engaged in discovery, but disputes arose over depositions and compliance with court orders. The trial court repeatedly addressed motions for default judgment and issues of discovery noncompliance, particularly regarding the failure of the manager’s CEO to appear for deposition. The manager later moved to compel arbitration, citing joint venture agreements containing arbitration clauses; however, the trial court ultimately entered a default judgment on liability for the Chinese firm, reserving damages, and deemed the motion to compel arbitration moot.On appeal, the Supreme Court of Alabama considered whether it had jurisdiction, given that the lower court’s judgment did not resolve damages. The Supreme Court of Alabama held that the order was interlocutory and not appealable because it did not determine damages. The court concluded that the default judgment’s interlocutory nature was not altered by the ruling on the arbitration motion, and accordingly, dismissed the appeal for lack of a final judgment. View "Ivy Fund Manager, LLC v. CDH Real Estate Investment Management Company, Ltd." on Justia Law

Four former employees brought claims against their previous employer, a lithium extraction technology company, and several of its managers, alleging wrongful termination, discrimination, exposure to harmful chemicals, and sexual harassment. Each employee had signed an agreement to arbitrate disputes arising out of employment. Despite this, after the lawsuit was filed, the defendants engaged in extensive litigation activity: they filed answers and cross-complaints asserting arbitration rights, initiated and responded to significant discovery, and made multiple procedural motions. Notably, they did not immediately move to compel arbitration, instead doing so only after the plaintiffs filed an anti-SLAPP motion.The Superior Court of California, County of Alameda, denied the defendants’ motion to compel arbitration, finding that the defendants had waived their right to arbitrate by substantially invoking the litigation process and taking steps inconsistent with an intent to arbitrate. The court relied on factors from prior California appellate decisions, focusing on the defendants’ conduct in court and their use of discovery tools not typically available in arbitration. The court did not find it necessary to decide whether the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) applied, as its waiver finding was dispositive.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Four, affirmed the trial court’s order. The appellate court held that the trial court’s waiver analysis was consistent with the California Supreme Court’s decision in Quach v. California Commerce Club, Inc., which clarified that waiver of the right to arbitrate focuses solely on the party’s conduct and intent, not on prejudice to the opposing party. The appellate court found substantial evidence that the defendants intentionally relinquished their arbitration rights by actively litigating in court prior to seeking arbitration, and thus affirmed the denial of the motion to compel arbitration. View "Mitchell v. Lilac Solutions, Inc." on Justia Law

A group of small merchants, including a store in Rhode Island, entered into arbitration agreements with a credit card company, which required arbitration of disputes before the American Arbitration Association (AAA). In August 2023, these merchants initiated thousands of arbitration proceedings against the company, challenging certain “swipe-fee” policies that they argued harmed small businesses. A dispute arose over the filing fees that the credit card company owed to the AAA. The AAA administrator determined the applicable fees and repeatedly warned both parties that the arbitrations would be administratively closed if the fees were not paid. The merchants paid their share of the fees, but the credit card company refused to pay, contesting the fee amount. As a result, in late February 2024, the AAA administratively closed the arbitrations.Subsequently, the merchants filed a class action in the United States District Court for the District of Rhode Island, arguing that the company’s refusal to pay arbitration fees constituted a default and waiver of its right to compel arbitration under the Federal Arbitration Act (FAA). The credit card company moved to stay the litigation and compel arbitration. The District Court denied the motion, finding that the company had defaulted and waived its arbitration rights by failing to pay the required fees, and rejected the company’s argument that the merchants had acted with unclean hands.The United States Court of Appeals for the First Circuit reviewed the case. The court held that the district court had the authority to decide whether the company’s conduct amounted to waiver or default under the FAA, and that the company’s deliberate refusal to pay arbitration fees, despite repeated warnings, constituted waiver and default. The First Circuit also found no error in the district court’s rejection of the unclean hands defense. The appellate court affirmed the district court’s denial of the motion to stay and compel arbitration. View "5-Star General Store v. American Express Company" on Justia Law

A former Chief Financial Officer of a clinical drug development company was terminated shortly after experiencing a domestic violence incident and requesting limited accommodations at work. She alleged that her supervisor sidelined her, assigned her diminished responsibilities, and ultimately terminated her for reasons related to her gender and experience as a domestic violence victim. After her termination, she initially filed an arbitration demand asserting discrimination and harassment based on national origin and her status as a domestic violence victim. During discovery in the arbitration process, she uncovered evidence suggesting her mistreatment was motivated by sex. She then withdrew from arbitration and filed suit in state court, asserting sex discrimination and hostile work environment claims.The employer removed the case to the United States District Court for the Northern District of California and moved to compel arbitration, arguing that the Federal Arbitration Act and related federal law preempted any state procedural rules allowing withdrawal from arbitration. The district court ruled that, although state procedural rules were preempted, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) gave the plaintiff the right to invalidate the arbitration agreement and proceed in court based on plausible allegations of sexual harassment. The district court found that the plaintiff did not know of her sexual harassment claim when she initiated arbitration and had not waived her rights under the EFAA.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s order denying the motion to compel arbitration. The court held that the EFAA allows plaintiffs to elect to proceed in court once they discover a sexual harassment claim, even if they initially pursued other claims in arbitration, so long as they did not intentionally relinquish a known right. The court further found the plaintiff plausibly alleged a sex-based hostile work environment claim under California law and thus under the EFAA. View "DING V. STRUCTURE THERAPEUTICS, INC." on Justia Law

The Village of Schaumburg owns a hotel and convention center that it alleges has defective exterior walls. In February 2022, it initiated a lawsuit in the United States District Court for the Northern District of Illinois, Eastern Division, against several parties for fraud, breach of warranty, and products liability. In November 2022, the Village added Permasteelisa North America, a subcontractor, as a defendant. About eight months later, the Village sought to compel arbitration of its dispute with Permasteelisa, even though it had not previously requested arbitration in its complaint or before filing suit, and the arbitration clause was contained in a contract between Permasteelisa and the general contractor, not the Village directly.The District Court concluded that by filing a lawsuit and then delaying its request for arbitration, the Village presumptively waived any right to arbitrate it might have had. The Village argued that the lawsuit was filed to avoid the statute of limitations expiring, but the District Court responded that the Village should have requested arbitration at the outset or, at the latest, soon after Permasteelisa’s motion to dismiss was filed. The court found that the combination of filing suit and substantial delay amounted to waiver of any right to arbitrate and denied the Village’s motion to compel arbitration.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the District Court’s decision for abuse of discretion. The appellate court held that the District Court did not err in concluding that the Village waived any right to arbitrate by acting inconsistently with that right through both initiating litigation and delaying the arbitration request. The Seventh Circuit also rejected the argument that a contractual anti-waiver clause could override federal procedural rules governing litigation conduct. The judgment of the District Court was affirmed. View "Village of Schaumburg v Permasteelisa North America" on Justia Law

The plaintiff received two pre-recorded telemarketing calls from a vacation property company, which he alleged were made without his consent in violation of the Telephone Consumer Protection Act. The company had used third-party vendors to conduct a large-scale telemarketing campaign, targeting individuals whose phone numbers had been obtained from opt-in websites. The plaintiff, on behalf of himself and a proposed class, filed suit against the company in April 2019, asserting that these calls violated federal law.In the United States District Court for the Northern District of Illinois, the defendant engaged in extensive litigation over the course of four years. It filed answers with affirmative defenses, participated in class-related discovery, and litigated several motions, including opposing class certification and filing for summary judgment. Notably, the defendant did not assert arbitration as a defense until after the class was certified and significant litigation had occurred. When it finally raised arbitration—claiming that many class members had agreed to arbitrate through opt-in websites—the district court refused to allow the late amendment to add this defense, finding that it was too late and that the right to arbitrate had been waived. The district court later denied the defendant’s motion to compel arbitration, granted summary judgment to the plaintiff and the class, and ordered further settlement negotiations.Upon appeal, the United States Court of Appeals for the Seventh Circuit clarified the appropriate standard of review for orders denying motions to compel arbitration, holding that legal rulings with precedential effect are reviewed de novo, while the ultimate waiver determination is reviewed for clear error. The court further held that a defendant’s conduct prior to class certification is relevant in assessing waiver of the right to arbitrate. Finding no clear error in the district court’s conclusion that the defendant waived its arbitration rights by failing to timely assert them, the Seventh Circuit affirmed the judgment. View "Moore v Club Exploria, LLC" on Justia Law

Devas Multimedia Private Limited, an Indian corporation, along with several related entities, sought to confirm a $562.5 million international arbitral award against Antrix Corporation Limited, a company wholly owned by India. The award stemmed from a 2005 agreement between Devas and Antrix, under which Antrix was to provide satellite capacity to Devas in exchange for fees. In 2011, Antrix terminated the agreement following a policy decision by the Indian government. Devas initiated arbitration before the International Chamber of Commerce, which resulted in an award in Devas’s favor. Devas then petitioned to confirm the award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) in the United States District Court for the Western District of Washington.The district court confirmed the award, finding it had subject matter jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”) arbitration exception and the New York Convention, and personal jurisdiction under the FSIA. The court also rejected Antrix’s argument that the case should be dismissed under the doctrine of forum non conveniens. Antrix appealed, and the Ninth Circuit initially ruled in Antrix’s favor on personal jurisdiction grounds. However, the Supreme Court in CC/Devas (Mauritius) Ltd. v. Antrix Corp., 605 U.S. 223 (2025), reversed, holding that the FSIA does not require a minimum contacts analysis beyond its statutory provisions, and remanded for consideration of alternative arguments.On remand, the United States Court of Appeals for the Ninth Circuit held that the FSIA’s arbitration exception supplied subject matter jurisdiction, the exercise of personal jurisdiction over Antrix was reasonable and comported with the Fifth Amendment, and that forum non conveniens does not apply to actions to confirm foreign arbitral awards under the New York Convention. The Ninth Circuit affirmed the district court’s judgment in part, and reversed and vacated in part on issues related to the standing of certain intervenors, remanding for further proceedings. View "DEVAS MULTIMEDIA PRIVATE LTD. V. ANTRIX CORP. LTD." on Justia Law

A software company operated an online payment portal used by residents, including the plaintiff, to pay rent for Maryland apartments. Each time the plaintiff paid rent through the portal, she was charged a convenience fee. To complete a transaction, users were required to check a box agreeing to the portal’s hyperlinked terms and conditions, which included an arbitration provision, a clause allowing unilateral changes to the agreement, and a notice provision stating that notices would be posted on the portal. The plaintiff, on behalf of herself and similarly situated individuals, filed a class action, alleging that the company unlawfully acted as an unlicensed collection agency by collecting these fees.After the action was removed to the U.S. District Court for the District of Maryland, the company moved to compel arbitration based on the terms and conditions. The plaintiff opposed, arguing that the arbitration agreement was unenforceable under Maryland law because the company’s ability to unilaterally change the terms without advance notice rendered its promise to arbitrate illusory. The district court agreed, finding that the contract was a browsewrap agreement and that the modification and notice clauses allowed the company to change terms at will without meaningful notice or an opportunity for users to opt out before changes became binding.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Fourth Circuit held that, under Maryland law, the arbitration agreement was unenforceable for lack of consideration because the company’s promise to arbitrate was illusory. The court reasoned that the change-in-terms clause gave the company unfettered discretion to modify the agreement at any time, without advance notice, thus failing to bind the company meaningfully. The court affirmed the district court’s judgment. View "Trimble v. Entrata, Inc." on Justia Law

A national flooring retailer contracted with a Louisiana-based construction management company for the construction of a retail store in Metairie, Louisiana. The relationship soured after the retailer terminated the agreement, allegedly due to delays. Shortly after termination, the construction company disputed that it had breached the contract and demanded payment for work performed. The retailer did not respond to the payment demand.The construction company filed suit in the United States District Court for the Middle District of Louisiana under the Louisiana Private Works Act, seeking recovery for the work performed. The retailer moved to compel arbitration based on the agreement’s dispute resolution provision and also sought to transfer the case. The district court granted the transfer to the United States District Court for the Eastern District of Louisiana and denied the motion to compel arbitration without prejudice. When the motion to compel arbitration was renewed in the new court, the district court denied it again, concluding the retailer had not followed the prerequisite steps outlined in the contract’s dispute resolution process.On appeal, the United States Court of Appeals for the Fifth Circuit conducted de novo review. The appellate court determined that the arbitration clause in the contract, which gave the retailer sole discretion to elect arbitration, was a contract of adhesion under Louisiana law. Applying state contract principles and relevant Louisiana Supreme Court precedent, the court found that the lack of mutuality and the imbalance in bargaining power rendered the clause unenforceable. The court held that the arbitration provision was adhesionary and thus invalid, and affirmed the district court’s denial of the motion to compel arbitration. View "MAPP v. Floor and Decor" on Justia Law

The dispute involved four law firms that jointly represented Wye Oak Technology, Inc. in litigation against the Republic of Iraq. After a federal district court awarded Wye Oak over $120 million, Wye Oak’s board approved paying a forty-six percent contingency fee to the law firms, with the specific allocation among them to be determined later. The firms executed an Agreement Concerning Attorneys’ Fees (ACAF), which included an arbitration clause. Quinn, Racusin & Gazzola Chartered (QRG) later claimed that it was excluded from a prior side agreement between two other firms and alleged it was pressured into accepting the arbitration provision under duress.Following disputes over fee allocation and related tort claims, Pavich Law Group and Whiteford, Taylor & Preston initiated arbitration. The arbitrator awarded QRG zero percent of the contingency fee, while the other firms received varying portions. QRG challenged the award in the Superior Court of the District of Columbia, arguing that the ACAF was invalid due to fraudulent inducement and duress, and that the arbitrator had exceeded his authority by ruling on issues outside the scope of the arbitration clause. The Superior Court rejected QRG’s arguments, determined that the arbitration clause was broad enough to cover the disputes, and confirmed the arbitrator’s award.On appeal, the District of Columbia Court of Appeals affirmed the Superior Court’s judgment. The Court held that QRG failed to demonstrate fraudulent inducement or duress regarding the agreement to arbitrate. It also found that the arbitrator acted within the scope of the ACAF’s arbitration clause, which covered both fee allocation and related tort claims. The Court further concluded that the vacatur of the underlying federal judgment did not void the ACAF, as some monetization of the judgment had occurred. The judgment confirming the arbitration award was affirmed. View "Quinn, Racusin & Gazzola Chartered v. Pavich Law Group, P.C." on Justia Law