Justia Arbitration & Mediation Opinion Summaries

A consumer purchased a used vehicle from a dealership, with the transaction documented in two contracts: a purchase order and a retail installment sale contract (RISC). The purchase order included an arbitration provision for disputes arising from the purchase or financing of the vehicle, while the RISC detailed the financing terms but did not include an arbitration clause. The RISC contained an assignment clause by which the dealership assigned its interest in "this contract" (the RISC) to a third-party lender, and defined the agreement between the buyer and the assignee as consisting "only" of the RISC and any addenda. The consumer later filed a class action against the lender, alleging improper fees under Maryland law.The Circuit Court for Baltimore City found for the lender, ruling that the purchase order and RISC should be read together as one contract for the purposes of the transaction, and that the arbitration agreement was enforceable against the consumer. The court granted the lender’s motion to compel arbitration. On appeal, the Appellate Court of Maryland affirmed, holding that the consumer was bound by the arbitration provision and that the assignee lender could enforce it, even though the consumer did not receive or sign a separate arbitration agreement.The Supreme Court of Maryland reviewed the case, focusing on contract interpretation and the scope of the assignment. The court held that, even if the purchase order’s arbitration provision was binding between the consumer and the dealer, it was not within the scope of the assignment to the lender. The RISC’s assignment language made clear that only the RISC and its addenda, not the purchase order or its arbitration clause, were assigned to the lender. As a result, the Supreme Court of Maryland reversed the judgment of the Appellate Court and remanded the case for further proceedings. View "Lyles v. Santander Consumer USA" on Justia Law

An employee at a nuclear power plant operated by a subsidiary corporation left active work due to a medical condition but remained employed while on short-term disability. After the employee transitioned to long-term disability, the employer terminated his employment. The union, representing the plant’s workers, filed a grievance on the employee’s behalf, arguing that the collective bargaining agreement (CBA) required continued employment and benefits. The union initiated arbitration against the employer but mistakenly named the employer’s parent company as the respondent. Despite the error, counsel for the correct employer participated in the arbitration, and all parties consistently identified the subsidiary as the actual employer during the proceedings.After the arbitrator issued an award in favor of the union—ordering reinstatement and benefits for the employee—the employer did not comply. Instead, the parent and subsidiary together filed suit in the United States District Court for the Western District of Michigan, seeking to vacate the award due to the mistaken caption. The union counterclaimed for confirmation of the award. The district court ruled for the union, finding extensive evidence that the subsidiary had engaged in and intended to be bound by the arbitration, and that the erroneous caption was merely a procedural defect to which the employer had waived any objection by participating fully and not raising a timely challenge.The United States Court of Appeals for the Sixth Circuit affirmed the district court’s judgment. The Sixth Circuit held that when an arbitration demand and award misname the party against whom the award is meant to be entered, but there is no ambiguity about the real party, a federal court may enforce the award. The court further held that any objection to the misnomer was waived by the employer’s participation and failure to object, and that the error was a curable misnomer not warranting vacatur or modification of the award. View "Holtec International Corp. v. Michigan State Utility Workers Council" on Justia Law

A 2018 data breach at Barracuda Networks exposed protected health information of patients of Zoll Services LLC, a subsidiary of Zoll Medical Corporation. Zoll had contracted with Fusion LLC for data security services, and Fusion in turn relied on Barracuda’s technology. The agreements between these companies included certain liability and indemnification provisions, as well as a right for Barracuda to audit Fusion’s customer contracts. After the breach, Zoll settled a class action brought by its customers whose data was compromised.Following these events, Zoll initiated arbitration against Fusion and filed suit against Barracuda in the U.S. District Court for the District of Massachusetts. Fusion intervened and asserted additional claims against Barracuda. The district court dismissed most claims but allowed Zoll’s equitable indemnification claim and Fusion’s breach of contract and breach of the covenant of good faith and fair dealing claims to proceed. After arbitration and settlements, Axis Insurance Company, as assignee and subrogee of Zoll and Fusion, was substituted as plaintiff. Barracuda moved for summary judgment on the remaining claims, which the district court granted.On appeal, the United States Court of Appeals for the First Circuit reviewed the district court’s summary judgment rulings de novo. The appellate court held that Axis failed to present evidence of a relationship between Zoll and Barracuda that would support derivative or vicarious liability necessary for equitable indemnification under Massachusetts law. The court found that Fusion did not meet a condition precedent in its contract with Barracuda, and Barracuda had not waived or was estopped from asserting that condition. Further, Axis could not show that Barracuda breached the covenant of good faith and fair dealing, as no relevant contractual right existed. The First Circuit affirmed the district court’s grant of summary judgment in favor of Barracuda on all claims. View "Axis Insurance Company v. Barracuda Networks, Inc." on Justia Law

Mark Stanford, an incapacitated resident of a Mississippi nursing facility, suffered severe burns after starting a fire in his room. The Mississippi State Department of Health determined that the nursing center failed to adequately supervise Stanford and maintain a safe environment, citing the facility for violating federal regulations regarding the safety and supervision of residents. Stanford, through his conservator, brought a lawsuit alleging negligence and medical malpractice against the nursing facility and related entities.Brandon Nursing and Rehabilitation Center moved to compel arbitration based on an agreement signed in 2017 by Stanford’s brother, Russell Phillips, who acted as Stanford’s health surrogate during his admission. Stanford opposed arbitration, arguing that the agreement was invalid because Phillips lacked authority under Mississippi’s Uniform Health-Care Decisions Act to bind Stanford, since Stanford’s adult son—a higher-priority family member under the statute—was reasonably available and willing to serve as surrogate. The United States District Court for the Southern District of Mississippi held that Phillips was not a proper surrogate under the statute and denied the motion to compel arbitration.Reviewing the case, the United States Court of Appeals for the Fifth Circuit applied de novo review to both the denial of arbitration and interpretation of state law. The Fifth Circuit determined that the key issue was whether, under Mississippi’s Uniform Health-Care Decisions Act, a health care provider must ensure that no higher-priority family member is “reasonably available” before accepting decisions from a lower-priority family member acting as surrogate. Noting the statutory ambiguity and lack of controlling Mississippi precedents, the Fifth Circuit did not resolve the merits but instead certified this question of state law to the Mississippi Supreme Court for authoritative interpretation. View "Stanford v. Brandon Nursing" on Justia Law

A provider of air ambulance services transported a patient insured by a health maintenance organization, but the provider was not part of the insurer’s network. After the transport, the provider and insurer could not agree on the payment amount. The dispute was submitted to the Independent Dispute Resolution (IDR) process established by the federal No Surprises Act, which requires each party to submit a payment offer and supporting rationale to an arbitrator. The arbitrator, a certified IDR entity, selected the insurer’s lower payment offer. The provider alleged that the insurer had misrepresented its “Qualifying Payment Amount” (QPA) by submitting a lower QPA to the arbitrator than it had previously provided to the provider, and claimed this constituted fraud.The United States District Court for the Middle District of Florida dismissed the provider’s complaint, finding that judicial review of IDR awards is limited to the grounds set forth in the Federal Arbitration Act (FAA), and that the provider’s allegations did not meet the heightened pleading requirements for fraud. The court also dismissed the arbitrator from the case with prejudice, holding that the No Surprises Act does not create a cause of action against IDR entities.On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s dismissal. The Eleventh Circuit held that the No Surprises Act incorporates the FAA’s limited grounds for vacating arbitration awards and that the provider failed to adequately plead fraud or undue means under those standards. The court also found that the arbitrator did not exceed its authority and that it was not necessary to name the arbitrator as a defendant to challenge the award. The judgment of the district court was affirmed in full. View "REACH Air Medical Services LLC v. Kaiser Foundation Health Plan Inc." on Justia Law

A company operating stevedoring services at the Port of Mobile, Alabama, entered into a collective bargaining agreement with a union representing longshore workers. The agreement included a no-strike provision and outlined procedures for resolving disputes, including arbitration. After an alleged strike by union members, the company filed a lawsuit in state court seeking a temporary restraining order and later damages for breach of the no-strike provision. The state court issued a restraining order, ending the strike within days. The union subsequently removed the case to federal court, where the company amended its complaint to seek damages, asserting that all conditions precedent for judicial action had been met.In the United States District Court for the Southern District of Alabama, the union moved to compel arbitration, arguing that the dispute should be resolved through the arbitration process outlined in the collective bargaining agreement. The district court denied the motion, concluding that the agreement permitted the company to seek monetary damages in court for violations of the no-strike provision. The union then filed an interlocutory appeal of the order denying arbitration, while the underlying damages action remained pending.The United States Court of Appeals for the Eleventh Circuit reviewed whether it had jurisdiction to hear the interlocutory appeal. The court held that it lacked appellate jurisdiction because the Federal Arbitration Act’s provision for interlocutory appeals does not apply to collective bargaining agreements covering workers engaged in interstate commerce, such as longshoremen. The court also found no basis for jurisdiction under the Labor Management Relations Act or the collateral-order doctrine. Accordingly, the Eleventh Circuit dismissed the appeal for lack of jurisdiction, leaving the district court’s order in place and expressing no opinion on the merits of the underlying dispute. View "APM Terminals Mobile, LLC v. International Longshoremen's Association" on Justia Law

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