Justia Arbitration & Mediation Opinion Summaries

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

Custodians employed by a school district were represented by a union and worked under a collective bargaining agreement (CBA) that provided for extra pay—specifically, one and a half times their salary in addition to their regular pay—when schools were closed due to emergencies. During the COVID-19 pandemic, after a state of emergency was declared and schools were closed to students, the Board initially paid custodians 250% of their regular salary for in-person work. However, following an amendment to N.J.S.A. 18A:7F-9(e)(1), the Board adjusted compensation, ceasing the additional 150% pay and instead paid custodians as if schools were “open,” in line with the statute’s direction.The unions filed grievances alleging violations of the CBA regarding the cessation of extra pay. An arbitrator found in favor of the custodians, concluding the schools were “closed” within the meaning of the CBA and that the extra compensation should continue. The Chancery Division confirmed the arbitration award, determining the arbitrator’s decision was “reasonably debatable.” The Appellate Division reversed, finding the statutory language clear and holding the custodians should be compensated as if schools were “open,” not “closed,” thus vacating the arbitration award for custodial employees.The Supreme Court of New Jersey reviewed the case. It held that the arbitrator’s decision was directly contrary to the plain and express mandate of N.J.S.A. 18A:7F-9(e)(1), which requires compensation under the CBA “as if the school facilities remained open for any purpose.” The Court found the arbitrator’s award was not “reasonably debatable” and affirmed the Appellate Division’s decision to vacate the arbitration award for custodial employees. The case was remanded for proceedings consistent with this opinion. View "East Orange Educational Support Professionals' Association v. East Orange Board of Education" on Justia Law

This case involves a dispute among business partners regarding the calculation and distribution of administrative fees earned from the sale of shares in a jointly managed investment fund. Prospect Capital Management L.P. (“Prospect”) acted as the fund administrator, while Stratera Holdings, LLC (“Stratera”) and Destra Capital Managers LLC (“Destra”) were entitled to share in fees depending on how fund shares were issued, including through a dividend reinvestment program (“DRIP”). After a change in sub-wholesaler, ambiguity arose in the contract language about whether certain DRIP shares—specifically, those issued by Stratera’s predecessor, Provasi—should be included in fee calculations. Prospect excluded these shares, reducing the amount paid to Stratera and Destra.Stratera and Destra initiated arbitration under the contract’s dispute resolution clause. The arbitration panel’s initial “Interim Award” found that Prospect had breached the contract by excluding DRIP shares for which Destra served as sub-wholesaler, but the award’s language left unclear whether this ruling applied to DRIP shares issued earlier by Provasi. When the parties could not agree on the scope of the award, the panel issued a revised interim award clarifying that fees were owed for DRIP shares issued by both Provasi and Destra. Prospect then petitioned the United States District Court for the District of Delaware to vacate the revised award, arguing that the arbitrators had unlawfully revisited a final decision in violation of the functus officio doctrine. The District Court rejected this claim, finding that the ambiguity exception to functus officio permitted the arbitrators’ clarification.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court’s order. The court held that the ambiguity exception to the functus officio doctrine applied because the interim award was susceptible to more than one reasonable interpretation. Therefore, the panel acted within its authority in clarifying its award. View "Prospect Capital Management LP v. Stratera Holdings LLC" on Justia Law

Sylvia Morales was employed by San Diego Gas & Electric Company (SDG&E) for nearly two decades before being terminated. She filed a lawsuit alleging wrongful termination, asserting violations of the Fair Employment and Housing Act (FEHA) and the California Family Rights Act (CFRA), including claims of disability discrimination, failure to accommodate, failure to engage in an interactive process, and retaliation. Morales’s claims relied on statutory protections and a common law Tameny claim for wrongful termination in violation of public policy, not on any alleged breach of her employment agreement.After Morales filed her complaint, SDG&E moved to compel arbitration based on provisions in documents Morales had signed at hiring. The Superior Court of San Diego County granted the motion, concluding that the employment agreement’s arbitration clause covered all claims arising from Morales’s employment. The court reasoned that because the agreement described the employment as at-will, any claim based on exceptions to at-will employment constituted a dispute regarding an aspect of the agreement and thus was subject to arbitration.The California Court of Appeal, Fourth Appellate District, Division One reviewed the case. Applying principles of contract interpretation, the court focused on the language of the arbitration provision in the September 12, 2005 agreement, which limited arbitration to disputes regarding any aspect of the agreement or any act violating the agreement. The court held that Morales’s statutory and public policy claims did not arise from the employment agreement nor did they allege violation of its terms; thus, the arbitration provision did not apply. The court issued a writ of mandate directing the trial court to vacate its order compelling arbitration and to deny SDG&E’s motion. The main holding is that the agreement’s arbitration provision does not compel arbitration of Morales’s FEHA, CFRA, or Tameny claims. View "Morales v. Super. Ct." on Justia Law

In 2017, an investment entity loaned approximately 160 million Chinese yuan to an individual, who failed to repay the loan. The lender obtained an arbitral award against the borrower from the Beijing Arbitration Commission for around 150 million yuan. A Singaporean court later ordered the borrower to pay the award, but he still did not comply. The lender, knowing the borrower had been living in California for about two years, sought to enforce the foreign arbitral award in the United States under the Federal Arbitration Act by filing a petition in the U.S. District Court for the Southern District of California. Attempts to serve process directly on the borrower at his California residence were unsuccessful. Eventually, the petition was left with another adult at the residence, mailed, and emailed to the borrower, who later acknowledged receiving notice.The borrower moved to dismiss the case in the U.S. District Court for the Southern District of California, arguing under Federal Rule of Civil Procedure 12(b)(2) that the court lacked personal jurisdiction because his domicile was China and the underlying dispute had no connection to California. He did not raise a defense under Rule 12(b)(5) for insufficient service of process. The district court found that it had general personal jurisdiction over the borrower based on his physical presence in California and confirmed the arbitral award.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the Due Process Clause of the Fourteenth Amendment does not require that presence-based personal jurisdiction be conditioned on service of process on the defendant’s person; other means of service are sufficient if the defendant is physically present in the forum state. The court declined to address the sufficiency of service of process because the borrower had waived this argument by not raising it in district court. The Ninth Circuit affirmed the judgment. View "SHENZHEN ZEHUIJIN INVESTMENT CENTER V. YINGKUI" on Justia Law

A Nebraska auction company and its former independent sales representative (ISR) entered into a written agreement containing restrictive covenants, including a noncompete clause, and an arbitration provision governed by the Federal Arbitration Act. The ISR terminated the relationship and began working for a competitor, allegedly violating the noncompete clause. The auction company sued for breach of contract, injunctive relief, and tortious interference, seeking a temporary injunction to prevent the ISR’s competitive activities.The District Court for Hall County compelled arbitration for the breach of contract and tortious interference claims but retained jurisdiction to decide the request for injunctive relief, ultimately granting a temporary injunction against the ISR. While the arbitration was pending, the ISR sought to dissolve the injunction and later moved for damages, costs, and attorney fees under Nebraska’s injunction undertaking statute after the arbitrator ruled the restrictive covenants unenforceable and awarded certain damages to the ISR. The arbitrator also found that additional damages based on the invalidation of the restrictive covenants were speculative and not recoverable. The District Court confirmed the arbitral award and denied the ISR’s subsequent motion for additional damages, reasoning that the arbitral award was preclusive as to all damages except attorney fees and expenses.The Nebraska Supreme Court reviewed the case and held that, due to the scope of the arbitration and the confirmation of the arbitrator’s award, the ISR could not recover further damages for the wrongful injunction that overlapped with claims already addressed in arbitration. However, the Court held that attorney fees and expenses related to resisting the issuance and seeking dissolution of the wrongful injunction were not foreclosed by the arbitration and should be awarded. The Supreme Court modified the lower court’s judgment to include $11,000 in such fees and otherwise affirmed the judgment. View "Big Iron Auction Co. v. Harder Capital" on Justia Law

The plaintiff, a remote engineer working for a California-based software company, was living and working in Utah when he was arrested in Florida during a vacation. After his release from detention, the employer terminated his employment, allegedly based on information about the arrest, which did not lead to a conviction. The plaintiff claimed that this termination violated California’s Fair Employment and Housing Act (FEHA) and Labor Code section 432.7, both of which prohibit employment decisions based on arrests not resulting in conviction.The case was initially filed in San Mateo County Superior Court but was stayed for binding arbitration due to provisions in the plaintiff’s employment documents. During arbitration, the parties disputed whether California law applied to the plaintiff’s claims, since he worked outside California and the termination decision was made in Illinois. The arbitrator concluded that California law could not apply extraterritorially to the plaintiff, as his principal place of work was Utah and the relevant employment actions occurred outside California. The parties stipulated that no other state’s law provided a cause of action for unlawful termination based on an arrest without conviction, and the arbitrator issued an award for the employer.The plaintiff petitioned the Superior Court to vacate the arbitration award, arguing that the arbitrator’s analysis was not properly tailored to the statutes at issue and that connections to California were sufficient. The court denied the petition, finding that the arbitrator correctly applied California’s standards for extraterritoriality. On appeal, the California Court of Appeal, First Appellate District, affirmed the denial. The court held that neither FEHA section 12952 nor Labor Code section 432.7 applied extraterritorially under these facts, as the plaintiff and his arrest had no connection to California and the termination decision was made outside the state. View "Saberin v. Alation, Inc." on Justia Law

A former employee brought suit against her previous employer and associated fiduciaries, alleging that they mismanaged the employer's retirement savings plan, which is a defined contribution plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). She claimed that the fiduciaries retained underperforming investment options in the plan’s menu to generate transaction fees, in violation of their duties of prudence and loyalty, and sought plan-wide monetary and equitable relief on behalf of the plan.Previously, the United States District Court for the Central District of California reviewed the case. The defendants moved to compel arbitration, relying on provisions in the plan requiring arbitration of disputes and waiving participants’ rights to bring claims on a “class, collective, or representative basis.” The plaintiff argued that this waiver impermissibly precluded her from enforcing statutory rights under ERISA, which allow participants to sue on behalf of the plan for plan-wide relief. The district court denied the motion to compel arbitration, finding the waiver unenforceable under the effective-vindication doctrine and holding that the waiver provision was expressly non-severable, thus requiring the claims to proceed in court.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s denial of the motion to compel arbitration. The Ninth Circuit held that the plan’s waiver provision was unenforceable because it prevented the plaintiff from asserting her right under ERISA to bring representative claims for plan-wide relief—a right that ERISA expressly provides. The court further held that, under the plan’s own terms, once the waiver was found unenforceable, any representative claim must be adjudicated in court, not arbitration. Thus, the plaintiff’s breach-of-fiduciary-duty claims would proceed before the district court. View "POVER V. THE CAPITAL GROUP COMPANIES, INC." on Justia Law

Neils Point, LLC owns a farm property in Harpswell, Maine, which it leased to Joseph and Laura Grady for agricultural use. The Gradys resided on the property and operated the farm under successive lease agreements, culminating in a 2017 extension titled “Commercial Agricultural Lease Agreement.” This lease specified that it was not a residential rental, set rent as a percentage of the farm’s net proceeds, and required arbitration for disputes. Neils Point alleged that the Gradys breached the lease by miscalculating rent, failing to pay on time, and not using the land as productive cropland.After Neils Point initiated arbitration in 2024, the Gradys responded by admitting the dispute was subject to arbitration and made their own arbitration demand under the lease. The arbitration hearing was held in July 2025, with both parties participating fully and without objection to either the process or the arbitrability of the dispute. The arbitrator found in favor of Neils Point, concluding that the Gradys breached the lease by improperly deducting expenses, failing to pay rent, and not maintaining the farm’s productivity. Damages were awarded, and the Gradys were ordered to vacate the property.The Cumberland County Superior Court confirmed the arbitration award and denied the Gradys’ subsequent motion to vacate, in which they argued for the first time that the arbitration provision was void because the lease was residential and the arbitrator exceeded his authority. The Maine Supreme Judicial Court affirmed the judgment, holding that the Gradys’ participation in arbitration without objection waived their right to challenge the validity of the arbitration clause or the arbitrator’s authority. The Court further held that the arbitrator’s construction of the lease was rational, and thus confirmation of the award was proper. View "Neils Point, LLC v. Grady" on Justia Law