Justia Arbitration & Mediation Opinion Summaries

Angelo Brock, an independent distributor for Flowers Baking Co. of Denver, LLC, filed a class-action lawsuit alleging wage and hour violations under the Fair Labor Standards Act and Colorado labor law. Brock claimed that Flowers misclassified its delivery drivers as independent contractors to avoid paying proper wages. Flowers moved to compel arbitration based on an Arbitration Agreement within the Distributor Agreement between Brock and Flowers. The district court denied the motion, leading to this appeal.The United States District Court for the District of Colorado found that Brock fell within the "transportation workers exemption" under § 1 of the Federal Arbitration Act (FAA), which exempts certain transportation workers from arbitration. The court concluded that Brock's class of workers, who deliver Flowers goods intrastate, are engaged in interstate commerce because they play a direct and necessary role in the flow of goods across state lines. The court also determined that the Arbitration Agreement did not allow for arbitration under Colorado law, as it was inconsistent with the FAA.The United States Court of Appeals for the Tenth Circuit affirmed the district court's decision. The Tenth Circuit agreed that Brock's class of workers is engaged in interstate commerce, as their intrastate deliveries are part of a continuous interstate journey of goods. The court found that Flowers retains significant control over Brock's operations, indicating that the goods' delivery to retail stores is the final leg of an interstate route. The court declined to review Flowers's argument that the Distributor Agreement is not a contract of employment, as it was not raised in the lower court. Additionally, the court determined it lacked jurisdiction to review the district court's denial of arbitration under Colorado law. View "Brock v. Flowers Foods" on Justia Law

Julian Rodriguez, a former employee of Lawrence Equipment, Inc., filed a lawsuit alleging various wage-and-hour violations under the California Labor Code. Rodriguez claimed that Lawrence failed to pay for all hours worked, including overtime, did not provide adequate meal and rest breaks, issued inaccurate wage statements, and did not pay all due wages upon termination. He also sought civil penalties under the Private Attorneys General Act (PAGA). Rodriguez had signed an arbitration agreement with Lawrence, which led to the arbitration of his non-PAGA claims.The Superior Court of Los Angeles County ordered arbitration for Rodriguez’s wage-and-hour claims and stayed the PAGA claim. The arbitrator ruled in favor of Lawrence, finding that Rodriguez failed to prove any of the alleged Labor Code violations. The trial court confirmed the arbitration award and entered judgment for Lawrence. Subsequently, Lawrence moved for judgment on the pleadings, arguing that the arbitration award precluded Rodriguez from pursuing his PAGA claim due to lack of standing as an aggrieved employee. The trial court granted this motion and dismissed the PAGA claim.The California Court of Appeal, Second Appellate District, reviewed the case. The court held that the arbitration award, which found no Labor Code violations, precluded Rodriguez from establishing standing under PAGA. The court applied the doctrine of issue preclusion, determining that the issues litigated in arbitration were identical to those required to establish PAGA standing. Since Rodriguez could not prove any Labor Code violations, he lacked standing to pursue the PAGA claim. The court affirmed the trial court’s judgment of dismissal. View "Rodriguez v. Lawrence Equipment, Inc." on Justia Law

In 2017, CNU of Alabama, LLC, and Shakeena Cox entered into a loan agreement allowing Cox to take cash advances. Cox took three advances totaling $1,250 but later defaulted. CNU assigned its rights to UHG I LLC, which then sued Cox in Mobile District Court. Cox argued the agreement, including an arbitration provision, was void under the Alabama Small Loan Act. The district court agreed and ruled in Cox's favor.UHG appealed to the Mobile Circuit Court, where Cox filed a counterclaim on behalf of herself and a class, adding CNU as a party and seeking injunctive relief and damages. Both companies moved to compel arbitration based on the agreement's arbitration provision. The circuit court denied the motions, holding that the agreement and arbitration provision were void under the Small Loan Act, the arbitration provision was unconscionable, and UHG had waived its right to arbitrate by appealing the district court's decision. UHG and CNU appealed.The Supreme Court of Alabama reversed the circuit court's decision denying the motions to compel arbitration for Cox's counterclaim, holding that the arbitration provision was valid and enforceable. The court determined that challenges to the agreement's validity, including claims of voidness and unconscionability, were for an arbitrator to decide. However, the court affirmed the circuit court's decision that UHG waived its right to arbitrate its initial collection claim by pursuing it in court. The case was remanded for further proceedings consistent with these findings. View "CNU of Alabama, LLC v. Cox" on Justia Law

In February 2013, the decedent was admitted to Elmcrest Care Center, suffering from Parkinson’s disease, dysphagia, and dementia. On August 4, 2017, he was found nonresponsive and later died in the hospital. The Estate of Jose de Jesus Ortiz, represented by Ericka Ortiz, filed a civil action against Elmcrest and its staff for elder abuse, neglect, negligence, willful misconduct, and fraud, alleging that their failure to provide necessary care led to his death. The trial court compelled arbitration based on an agreement signed upon the decedent’s admission.The arbitrator issued a First Interim Award on March 30, 2022, finding that the Estate did not meet its burden of proof on any claims. The award allowed for further submissions to address any omitted issues. The Estate requested an amendment, arguing the arbitrator had omitted damages for pre-death loss of dignity. The arbitrator issued a Second Interim Award on May 26, 2022, awarding $100,000 in damages for pre-death pain and suffering. Respondents moved to vacate this award, arguing the First Interim Award was final. The arbitrator denied the motion, stating the First Interim Award was not final and had omitted a necessary issue.The trial court initially denied the Estate’s petition to vacate the First Interim Award, ruling it was not final. However, it later vacated the Final Award and confirmed the First Interim Award, finding the First Interim Award had resolved all necessary issues. The Estate appealed.The California Court of Appeal, Second Appellate District, reversed the trial court’s order, holding that the First Interim Award was not final as it expressly reserved jurisdiction for further proceedings. The court directed the trial court to confirm the Final Award issued on September 30, 2022, which included the damages for pre-death pain and suffering. View "Ortiz v. Elmcrest Care Center, LLC" on Justia Law

Four plaintiffs were injured when a railing collapsed at FedExField during a professional football game. They sued the owner of the football team, the owner of the stadium, the security services provider, and unidentified maintenance persons for negligence. The defendants moved to compel arbitration based on an arbitration clause in the terms and conditions of the tickets, which were purchased online by a friend of the plaintiffs, Brandon Gordon.The United States District Court for the District of Maryland denied the motion to compel arbitration. The court found factual disputes regarding whether Gordon agreed to the arbitration clause. Additionally, the court held that even if Gordon had agreed to the arbitration clause, the defendants did not demonstrate that Gordon was an agent of the plaintiffs who could bind them to the arbitration clause.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court reversed the district court's decision regarding the plaintiffs being bound by any contract Gordon may have entered into, finding that Gordon had apparent authority to bind the plaintiffs to the arbitration clause. The court held that the Washington Football Team's reliance on Gordon's apparent authority was reasonable and traceable to the plaintiffs' actions of using the tickets to enter the stadium. The court vacated the district court's order denying arbitration and remanded the case to resolve the factual disputes about whether Gordon entered into a contract that included the arbitration clause. View "Naimoli v. Pro-Football, Inc." on Justia Law

A union representing over 9,000 pilots employed by an airline alleged that the airline violated the Railway Labor Act (RLA) by intimidating and disciplining pilots who affiliated with the union. The union claimed that the airline had a history of isolating a special category of pilots known as "check pilots" and "standards check pilots," who are responsible for training and evaluating other pilots. The union alleged that the airline unilaterally established working conditions for check pilots without bargaining and that check pilots were threatened with losing their qualifications if they affiliated with the union. The union also claimed that the airline retaliated against a pilot, Captain Timothy Roebling, by stripping him of his check-pilot qualifications after he joined a union committee.The United States District Court for the Northern District of Texas dismissed the union's complaint, concluding that the dispute was subject to arbitration under the RLA and that no exception applied to vest the court with jurisdiction. The district court found that the airline had an arguable basis for its actions under the collective bargaining agreement, making the dispute a "minor" one subject to arbitration.The United States Court of Appeals for the Fifth Circuit reviewed the case and concluded that the union had sufficiently pleaded the anti-union animus exception to the RLA's arbitration requirement. The court found that the union's allegations, including threats and retaliatory actions against check pilots, supported the claim that the airline's actions were intended to weaken or destroy the union. The court reversed the district court's dismissal and remanded the case for further proceedings, holding that the union's complaint sufficiently alleged anti-union animus to warrant judicial intervention. View "Southwest Airlines Pilots Assn v. Southwest Airlines" on Justia Law

Plaintiffs brought a putative class action against Live Nation Entertainment, Inc., and Ticketmaster LLC, alleging anticompetitive practices in violation of the Sherman Act. The plaintiffs had purchased tickets through Ticketmaster’s website, which required them to agree to Ticketmaster’s Terms of Use. These terms included an arbitration agreement mandating that disputes be resolved by an arbitrator from New Era ADR, using expedited/mass arbitration procedures.The United States District Court for the Central District of California denied the defendants' motion to compel arbitration. The court found that the clause delegating the authority to determine the validity of the arbitration agreement to the arbitrator was unconscionable under California law, both procedurally and substantively. The court also held that the entire arbitration agreement was unconscionable and unenforceable. The defendants appealed this decision.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The appellate court held that the delegation clause and the arbitration agreement as a whole were unconscionable under California law. The court found that the delegation clause was part of a contract of adhesion and that the terms on Ticketmaster’s website exhibited extreme procedural unconscionability. Additionally, the court identified several features of New Era’s arbitration rules that contributed to substantive unconscionability, including the mass arbitration protocol, lack of discovery, limited right of appeal, and arbitrator selection provisions.The Ninth Circuit also held that the application of California’s unconscionability law to the arbitration agreement was not preempted by the Federal Arbitration Act (FAA). As an alternate and independent ground, the court held that the FAA does not preempt California’s prohibition of class action waivers in contracts of adhesion in large-scale small-stakes consumer cases, as established in Discover Bank v. Superior Court. The court concluded that Ticketmaster’s Terms and New Era’s Rules were independently unconscionable under Discover Bank. The decision of the district court was affirmed. View "HECKMAN V. LIVE NATION ENTERTAINMENT, INC." on Justia Law

The case involves the Police Jury of Calcasieu Parish, a political subdivision of Louisiana, which suffered property damage from Hurricanes Laura and Delta in 2020. The Police Jury had insurance policies with a syndicate of eight domestic insurers. The insurers sought to compel arbitration in New York under New York law for the approximately 300 property damage claims. The Police Jury alleged underpayment and untimely payments by the insurers and filed suit in state court, which was later removed to the United States District Court for the Western District of Louisiana.The Western District Court granted the Police Jury's motion to certify three questions of Louisiana law to the Louisiana Supreme Court. The questions concerned the validity of arbitration clauses in insurance policies issued to Louisiana political subdivisions, particularly in light of a 2020 amendment to La. R.S. 22:868 and the applicability of La. R.S. 9:2778, which bars arbitration clauses in contracts with the state or its political subdivisions.The Louisiana Supreme Court addressed the certified questions. First, it held that the 2020 amendment to La. R.S. 22:868, which allowed forum or venue selection clauses in certain insurance contracts, did not implicitly repeal the prohibition of arbitration clauses in all insurance contracts under La. R.S. 22:868(A). Second, the court determined that La. R.S. 9:2778 applies to all contracts with political subdivisions, including insurance contracts, thereby prohibiting arbitration outside Louisiana or the application of foreign law. Third, the court held that a domestic insurer cannot use equitable estoppel to enforce an arbitration clause in another insurer’s policy against a political subdivision, as it would contravene the positive law prohibiting arbitration clauses in La. R.S. 22:868(A)(2).The Louisiana Supreme Court answered all three certified questions, maintaining the prohibition of arbitration clauses in insurance policies issued to Louisiana political subdivisions and affirming the applicability of La. R.S. 9:2778 to such contracts. View "POLICE JURY OF CALCASIEU PARISH VS. INDIAN HARBOR INSURANCE CO." on Justia Law

State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Insurance Company (collectively, “State Farm”) provide automobile insurance in New York and are required to reimburse individuals injured in automobile accidents for necessary health expenses under New York’s No-Fault Act. State Farm alleges that several health care providers and related entities engaged in a scheme to fraudulently obtain No-Fault benefits by providing unnecessary treatments and services, and then pursued baseless arbitrations and state-court proceedings to seek reimbursement for unpaid bills.The United States District Court for the Eastern District of New York granted State Farm’s motion for a preliminary injunction in part, enjoining the defendants from proceeding with pending arbitrations and from initiating new arbitrations and state-court proceedings, but denied an injunction of the pending state-court proceedings. The district court found that State Farm demonstrated irreparable harm due to the fragmented nature of the proceedings, which obscured the alleged fraud, and the risk of inconsistent judgments and preclusive effects.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court’s decision to grant the preliminary injunction in part. The appellate court held that the district court did not abuse its discretion in finding that State Farm demonstrated irreparable harm, serious questions going to the merits, a balance of hardships tipping in its favor, and that the injunction was in the public interest. The court also concluded that the Federal Arbitration Act did not bar the injunction of the arbitrations because the arbitrations would prevent State Farm from effectively vindicating its RICO claims.Additionally, the appellate court reversed the district court’s decision not to enjoin the pending state-court proceedings, finding that the Anti-Injunction Act’s “expressly-authorized” exception applied. The court determined that the state-court proceedings were part of a pattern of baseless, repetitive claims that furthered the alleged RICO violation, and that enjoining these proceedings was necessary to give RICO its intended scope. The case was remanded for further proceedings consistent with this opinion. View "State Farm Mutual v. Tri-Borough" on Justia Law

Ultra Deep Picasso Pte. Limited (Ultra Deep) is a contractor specializing in undersea vessel operations for marine construction. Dynamic Industries Saudi Arabia Ltd. (Dynamic) subcontracted Ultra Deep for a project related to a contract with Saudi Aramco. Ultra Deep completed work worth over ten million dollars but alleged that Dynamic failed to pay, breaching their agreement. Ultra Deep filed a complaint in the Southern District of Texas, seeking breach of contract damages and a maritime attachment and garnishment of Dynamic’s funds allegedly held by Riyad Bank.The district court granted Ultra Deep an ex parte order for attachment of Dynamic’s assets at Riyad Bank. Dynamic responded with motions to dismiss for lack of personal jurisdiction, improper venue, and to compel arbitration, which were denied. Dynamic and Riyad Bank then moved to vacate the attachment order, arguing that Ultra Deep failed to show Dynamic had property in the Southern District of Texas. The magistrate judge held a hearing and found that Ultra Deep did not present evidence that Dynamic’s property was within the district. The district court adopted the magistrate judge’s recommendation, vacated the attachment order, and dismissed the case with prejudice.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that for a valid Rule B attachment, the property must be found within the district. It concluded that a bank account is located where its funds can be withdrawn. Since Ultra Deep failed to show that Dynamic’s property was within the Southern District of Texas, the court affirmed the district court’s decision to vacate the attachment order and dismiss the case. View "Ultra Deep Picasso v. Dynamic Industries Saudi Arabia Ltd." on Justia Law