Justia Arbitration & Mediation Opinion Summaries
Ebbe v. Concorde Investment Services, LLC
The First Circuit affirmed the judgment of the district court confirming a Financial Industry Regulatory Authority (FINRA) arbitral award denying certain claims against Concorde Investment Services, LLC, holding that the arbitrator's conclusion was reasonable in light of the claims made and the evidence presented. Appellant's claims against Concorde were for negligence, breach of fiduciary duty, violations of FINRA sustainability rules and regulations against deceptive securities practices, and failure to properly supervise. Appellant's claims against Concorde were denied. Appellant filed a motion to vacate in part and confirm in part the award, and Concorde filed a motion to confirm the award. The district court denied the motion to vacate and granted the motion to confirm. The First Circuit affirmed, holding that the arbitrators did not engage in a manifest disregard of the law and that none of the statutory bases for vacating the awards set forth in the Federal Arbitration Act were met. View "Ebbe v. Concorde Investment Services, LLC" on Justia Law
Lanza v. Financial Industry Regulatory Authority
In this dispute over the handling of brokerage accounts the First Circuit affirmed the judgment of the federal district court dismissing Plaintiffs' complaint against the Financial Industry Regulatory Authority (FINRA) for failure to state a claim, holding that Plaintiffs' complaint failed to state a plausible claim for breach of the covenant of good faith and fair dealing implied under Massachusetts law. Plaintiffs, a married couple, submitted their dispute with their quondam stockbroker over the handling of their brokerage accounts to FINRA for arbitration. A panel of arbitrators summarily dismissed Plaintiffs' claims. Plaintiffs then brought this action claiming that the arbitrators' failure to state an explained decision breached the implied covenant of good faith and fair dealing. The First Circuit affirmed, holding that the district court appropriately dismissed Plaintiffs' complaint because Plaintiffs did not plausibly allege a breach of the implied covenant. View "Lanza v. Financial Industry Regulatory Authority" on Justia Law
Depuy Synthes Sales, Inc. v. Orthola, Inc.
DePuy manufactures medical instruments. Its Los Angeles area exclusive distributor was OrthoLA. The agreement included an arbitration provision. When that distribution arrangement ended, OrthoLA sued in Los Angeles Superior Court, alleging tort and contract claims. DePuy moved, unsuccessfully, to refer those claims to arbitration. DePuy appealed and filed a demand for arbitration with the American Arbitration Association. Three days later, DePuy filed this suit in the federal district court in Indianapolis, seeking an order compelling arbitration and an injunction against the state court proceedings. The district court stayed the case, pending the resolution of the California action. The Seventh Circuit affirmed. The lawsuits are parallel by any definition. Evaluating the “exceptional circumstances,” the court reasoned that the risk of splintering this litigation was great: functionally identical suits in two places creates a high risk of inconsistent results and wasteful duplication. The California courts were the first to take jurisdiction; that litigation is well along the road to resolution. The state courts are co-equal partners with the federal courts in protecting federal rights. The court speculated that “DePuy’s decision to open a second front in its effort to obtain arbitration just three days after it filed its appeal in the California courts was at best opportunistic and at worst manipulative.” View "Depuy Synthes Sales, Inc. v. Orthola, Inc." on Justia Law
Camara v. Mastro’s Restaurants LLC
Plaintiff filed suit against his former employer, claiming that Mastro's deprived him and other servers of a minimum wage in violation of the Fair Labor Standards Act and the District of Columbia's Minimum Wage Revision Act. The DC Circuit affirmed the district court's denial of Mastro's motion to compel arbitration, holding that a reasonable factfinder could conclude that plaintiff was unaware of the arbitration agreement during the course of his work at Mastro's, and that he therefore had no reason to believe his continued employment could be seen as an intent to be bound by the agreement. The court held that the district judge, in a comprehensive opinion, correctly treated Mastro's motion as if it sought summary judgment under Federal Rule of Civil Procedure 56(c) with respect to the question whether plaintiff had agreed to arbitrate. In this case, Mastro's was unable to produce a copy of an arbitration agreement bearing plaintiff's signature, or any other direct evidence of his assent to be bound by the policy. Furthermore, nothing in the record negates plaintiff's sworn declaration that he was unaware of the agreement's existence and had no reason to believe he had relinquished his right to a trial. View "Camara v. Mastro's Restaurants LLC" on Justia Law
Morgan Stanley Smith Barney LLC v. Johnson
Morgan Stanley filed suit under the Federal Arbitration Act (FAA) to confirm an arbitration award against defendant. After defendant did not respond, the district court entered judgment in favor of Morgan Stanley. Then the district court entered an order granting in part Morgan Stanley's motions to appoint a receiver under Federal Rule of Civil Procedure 66 and to enter a charging order under Rule 69(a) and Minn. Stat. 322C.0503. Defendant appealed. The Eighth Circuit affirmed, holding that the district court did not abuse its discretion in appointing a receiver under Federal Rule 66 to exercise extraordinary investigative powers to determine whether Morgan Stanley's substantial judgment can be paid within a reasonable time. The court also held that the district court did not abuse its discretion by appointing a general receiver over his interests in the LLCs. In this case, Morgan Stanley's motion for a charging order under Minn. Stat. 322C.0503 properly relied on Federal Rule 69(a) and state law, while its motion for a receiver relied on the district court's federal equitable powers under Rule 66. View "Morgan Stanley Smith Barney LLC v. Johnson" on Justia Law
Lange v. Monster Energy Co.
The Court of Appeal affirmed the trial court's denial of Monster Energy's motion to compel arbitration of a disability discrimination action brought by plaintiff. While the court agreed with Monster Energy that the trial court relied on an erroneous understanding of applicable law regarding the number of unconscionable provisions that may render an arbitration agreement irreparable by severance, the court held that there has been no argument here about the alternative ground for the ruling. Therefore, the court could not conclude that the trial court abused its discretion when it denied Monster Energy's motion. Rather, the court agreed with the trial court that the parties' arbitration agreement is permeated with too high a degree of unconscionability for severance to rehabilitate. View "Lange v. Monster Energy Co." on Justia Law
Allied Professionals Insurance Co. v. Anglesey
The Ninth Circuit affirmed the district court's order compelling arbitration, holding that the Washington anti-arbitration statute was preempted by the federal Liability Risk Retention Act of 1986 (LRRA) as it applied to risk retention groups chartered in another state. The panel held that the McCarran-Ferguson Act does not reverse-preempt the LRRA. The panel also held that the LRRA preempts Washington's anti-arbitration statute because it offends the LRRA's broad preemption language and fails to fall into one of its exceptions. View "Allied Professionals Insurance Co. v. Anglesey" on Justia Law
Brickstructures, Inc. v. Coaster Dynamix, Inc.
Brickstructures and Coaster executed a fill‐in‐the‐blank joint venture agreement to design a roller coaster kit, compatible with LEGOs. Many of the blanks went unfilled. The agreement contained an arbitration clause. They successfully released one product but the relationship fizzled. Coaster independently launched another LEGO‐compatible kit, without any credit to Brickstructures. Brickstructures sued, claiming that Coaster breached the agreement and its fiduciary duties and violated the Lanham Act. Coaster moved to dismiss, arguing that the arrangement was not an enforceable contract. The court dismissed the complaint for a jurisdictional defect. An amendment cured that issue. Coaster again moved to dismiss, arguing that the amended complaint did not allege a binding joint venture or, alternatively, that arbitration was the exclusive forum for the claims. Brickstructures demanded that Coaster withdraw the arbitration arguments, claiming Coaster waived them by not advancing them in its first motion. Coaster formally withdrew those arguments. The court found that the amended complaint adequately alleged a binding agreement. Coaster then moved to compel arbitration. The court found that Coaster waived arbitration, rejecting an argument that it was reasonable to abandon an arbitration demand in acquiescence to Brickstructures’s threat to seek sanctions. The Seventh Circuit affirmed. "Having put the arbitration card on the table and then taken it back, Coaster was not permitted to play that card again." A court has the discretion to allow recission of a waiver of the right to arbitrate only in “abnormal” circumstances, View "Brickstructures, Inc. v. Coaster Dynamix, Inc." on Justia Law
Victrola 89, LLC v. Jaman Properties 8 LLC
After Victrola filed suit against the Jaman Parties, defendants moved to compel arbitration under the Federal Arbitration Act (FAA) based on the parties' real estate purchase agreement. The trial court denied the motion, finding that the procedural provisions of the California Arbitration Act (CAA), rather than those of the FAA, applied to its ruling on the motion. The Court of Appeal reversed, finding that the parties incorporated the procedural provisions of the FAA into the agreement and thus the trial court could not look to section 1281.2(c) of the CAA to deny defendants' motion; the agreement's arbitration clause encompasses all of Victrola's claims against defendants; the FAA preempts section 1298.7 in this instance; and JP and Manheim have standing to enforce the arbitration provision. The court vacated the trial court's order, with instructions to determine whether defendants are prejudicially estopped from claiming the FAA's procedural provisions apply. View "Victrola 89, LLC v. Jaman Properties 8 LLC" on Justia Law
Seldin v. Estate of Silverman
The Supreme Court affirmed as modified the district court's confirmation of an arbitration award of almost $3 million under the Federal Arbitration Act (FAA) and awarding attorney fees as a sanction under Neb. Rev. Stat. 25-824, holding that no grounds existed for vacating or modifying the award, and therefore, the parties were bound by their agreement to arbitrate and the arbitrator's construction of that agreement. The Supreme Court affirmed the district court's confirmation of the arbitration award and the denial of Appellants' motions to vacate and/or modify the award, holding (1) the district court did not err in confirming the arbitration award and denying the motions to vacate and/or modify the award; (2) the district court did not err by denying a motion to supplement the record; (3) the district court did not abuse its discretion in awarding attorney fees; and (4) the court did not err in awarding sanctions. View "Seldin v. Estate of Silverman" on Justia Law