Justia Arbitration & Mediation Opinion Summaries

Plaintiffs Charles and Grant Adler, through their business entity CM Adler LLC, distributed tortillas and other food products of Defendant Gruma Corporation to grocery stores in central New Jersey under a "Store Door Distributor Agreement" (SDDA). When Defendant terminated the relationship, Plaintiffs filed a lawsuit alleging retaliatory termination due to their organizing efforts with other distributors. Plaintiffs claimed violations of state and federal labor laws, including failure to pay minimum wages and unlawful deductions, and argued that the SDDA was a franchise agreement subject to New Jersey's Franchise Practices Act, which forbids termination without cause.The United States District Court for the District of New Jersey dismissed the case, concluding that Texas law governed under the SDDA and the case should proceed to arbitration. The District Court did not address the applicability of the Federal Arbitration Act (FAA) or Plaintiffs' exemption argument under 9 U.S.C. § 1. It found the parties had contracted for Texas law, under which the arbitration agreement was enforceable, and rejected Plaintiffs' bid to apply New Jersey law instead. The District Court also decided that Charles and Grant Adler, who did not sign the contract, were estopped from challenging its arbitration provision because they acted as parties to the contract when they performed the LLC’s work.The United States Court of Appeals for the Third Circuit reviewed the case and concluded that the FAA does not apply to the SDDA because Plaintiffs are transportation workers engaged in interstate commerce. The Court of Appeals found that the District Court erred in its choice-of-law analysis by failing to consider the impact of New Jersey public policies on its arbitrability ruling. The Court of Appeals vacated the order compelling arbitration and remanded for the District Court to complete the choice-of-law analysis under the correct framework and to reevaluate whether the individual Plaintiffs, who did not sign the arbitration agreement, are bound by its terms. View "Adler v. Gruma Corporation" on Justia Law

Plaintiffs created accounts on justanswer.com and paid to ask questions. According to JustAnswer's Terms of Service, paying for answers automatically enrolled plaintiffs in a recurring monthly subscription. Plaintiffs alleged that JustAnswer violated the Electronic Funds Transfer Act and various state consumer protection laws by enrolling them in the subscription service without their consent and making cancellation difficult. JustAnswer sought to compel arbitration based on a provision in its Terms of Service, asserting that plaintiffs were put on inquiry notice of those terms and agreed to arbitrate any claims arising from their use of the site.The United States District Court for the Northern District of California denied JustAnswer's motion to compel arbitration. The court held that plaintiffs did not receive sufficient notice of JustAnswer's Terms of Service containing the arbitration clause, and thus no contract was formed. The court found that the payment pages and other advisals presented to plaintiffs were not sufficiently conspicuous to put them on inquiry notice of the terms, and the advisals did not explicitly inform users that clicking a button would constitute assent to the terms.The United States Court of Appeals for the Ninth Circuit affirmed the district court's order. The Ninth Circuit concluded that no contracts were formed between plaintiffs and JustAnswer under an inquiry theory of notice. The court held that the website did not provide reasonably conspicuous notice of the terms, and the advisals did not unambiguously manifest the plaintiffs' assent to those terms. Therefore, plaintiffs were not bound by the arbitration provision in JustAnswer's Terms of Service, and the motion to compel arbitration was denied. View "GODUN V. JUSTANSWER LLC" on Justia Law

Cristina Balan, an automotive design engineer, filed a defamation lawsuit against Tesla, Inc. and Elon Musk, alleging that Tesla made defamatory statements about her, including accusations of theft, after an article about her was published in the Huffington Post. Tesla moved to compel arbitration based on an arbitration agreement in Balan's employment contract. The United States District Court for the Western District of Washington partially granted Tesla's motion, compelling arbitration for part of the defamation claim. Balan then amended her arbitration demand to include a defamation claim against Musk.The Western District of Washington initially denied Tesla's motion to compel arbitration in part, but the Ninth Circuit reversed this decision, ruling that the entire defamation claim was subject to arbitration. Consequently, the district court dismissed the case. The arbitrator applied California law and dismissed Balan's defamation claims against Tesla and Musk based on the statute of limitations, issuing an award in favor of Tesla and Musk.Tesla and Musk petitioned the United States District Court for the Northern District of California to confirm the arbitration award. The district court granted the petition, confirming the award. Balan appealed, arguing that the district court lacked subject matter jurisdiction to confirm the award.The United States Court of Appeals for the Ninth Circuit reviewed the case and held that the district court lacked subject matter jurisdiction to confirm the arbitration award. The Ninth Circuit cited the Supreme Court's decision in Badgerow v. Walters, which prohibits looking past the face of a petition under 9 U.S.C. § 9 to establish jurisdiction. Since Tesla's petition to confirm a zero-dollar award did not meet the amount in controversy requirement, the Ninth Circuit vacated the district court's order and remanded the case with instructions to dismiss for lack of jurisdiction. View "TESLA MOTORS V. BALAN" on Justia Law

Maria Wilson purchased an insurance policy from Union National Fire Insurance Company (UNFIC) through agent Robin Wilson. The policy covered personal property at 2170A Tillman Chapel Road, which included a house and a travel trailer. Maria, who is illiterate, relied on Robin's verbal description of the policy. After a fire destroyed the house and her personal property, Maria filed a claim, which was denied by UNFIC, citing that she did not live in the house, a purported requirement for coverage.Maria sued UNFIC, Kemper Corporate Services, Robin Wilson, and others in the Circuit Court of Claiborne County, Mississippi, alleging breach of contract, negligence, fraud, and other claims. The defendants removed the case to federal court, asserting diversity jurisdiction and claiming that the non-diverse defendants were improperly joined. The district court agreed, denied Maria's motion to remand, and compelled arbitration based on the policy's arbitration clause. The arbitrator ruled in favor of the defendants, and the district court confirmed the arbitration award.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the district court erred in denying Maria's motion to remand because non-diverse defendant Robin Wilson was properly joined. The court found that the insurance policy did not clearly require Maria to live in the house for her personal property to be covered, thus her negligence claim against Robin Wilson was viable. Consequently, the Fifth Circuit reversed the district court's denial of the motion to remand, vacated the order compelling arbitration and the confirmation of the arbitration award, and remanded the case to the district court with instructions to remand it to state court. View "Wilson v. Kemper Corporate Services" on Justia Law

Overhead Door Company of Indianapolis contracted with Blue Giant Equipment Corporation, a Canadian company, for the purchase of multiple dock levelers. After installation, Overhead experienced issues with the levelers and sued Blue Giant in federal court under diversity jurisdiction for breach of contract and warranty. Blue Giant moved to dismiss, citing a provision in its standard terms requiring arbitration in Ontario, Canada. The district court denied the motion, concluding that the standard terms were not incorporated into the parties' contract.The United States District Court for the Southern District of Indiana reviewed the case and denied Blue Giant's motion to dismiss. The court found that the mere reference to standard terms on a website was insufficient to incorporate those terms into the contract between Overhead and Blue Giant. Blue Giant appealed the decision.The United States Court of Appeals for the Seventh Circuit reviewed the case and reversed the district court's decision. The appellate court held that Blue Giant's reference to its Terms and Conditions on its website was sufficient to incorporate those terms into the contract. The court noted that the reference was conspicuous and provided Overhead with reasonable opportunity to take notice of the terms. The court concluded that the parties were obligated to resolve their dispute through arbitration in Ontario, Canada, as specified in the incorporated terms. The case was reversed and remanded for further proceedings consistent with this opinion. View "Garage Door Systems, LLC v Blue Giant Equipment Corp." on Justia Law

Sarah Knell and Catlin Kinden, who married in 2003 and have four children, divorced in October 2020. They initially agreed to share equal residential responsibility for their children, with the children spending most of the school year with Knell. Conflicts arose, particularly regarding the medical care of their two minor children, B.K. and P.K., who require medication. Kinden meticulously monitored P.K.'s diabetes care, often initiating conflicts with Knell over it. In July 2021, Kinden moved to modify residential responsibility, alleging Knell's disregard for the children's health. The district court ordered mediation, which was unsuccessful.In December 2021, Knell filed a countermotion to modify residential responsibility. The parties agreed to a parenting investigation, which did not recommend changing their equal residential responsibility. They signed a stipulation to modify the judgment, which the court adopted in September 2022. In 2023, Kinden moved to Bismarck, prompting Knell to seek primary residential responsibility, arguing that the two-year moratorium on modifications did not apply due to Kinden's relocation. Both parties made prima facie cases for modification, leading to an evidentiary hearing in July 2024.The North Dakota Supreme Court reviewed the case, affirming the district court's decision. The court found that N.D.C.C. § 14-09-06.6, which governs modifications of primary residential responsibility, did not apply as there was no prior order establishing primary residential responsibility. Instead, the court made an original determination based on the best interests of the children, weighing the factors under N.D.C.C. § 14-09-06.2(1). The court concluded that awarding Kinden primary residential responsibility was in the children's best interests, particularly due to his diligence in addressing their medical and educational needs. The Supreme Court found no clear error in the district court's findings and affirmed the second amended judgment. View "Kinden v. Kinden" on Justia Law

Billy Ford worked as a full-time security guard for Parkwest Casino Lotus from September 2018 to December 2021. Upon hiring, Ford signed an arbitration agreement that excluded claims for workers' compensation, unemployment compensation, certain administrative complaints, ERISA claims, and "representative claims under [PAGA]." In February 2022, Ford filed a complaint against Parkwest under PAGA, alleging Labor Code violations, including mandatory off-the-clock health screenings and inaccurate wage statements. Parkwest moved to compel arbitration of Ford's individual PAGA claims and to dismiss the representative PAGA claims, citing Viking River Cruises, Inc. v. Moriana.The Superior Court of Sacramento County denied Parkwest's motion to compel arbitration, finding that the arbitration agreement specifically excluded all PAGA claims. Parkwest appealed, arguing that the agreement was ambiguous regarding the exclusion of individual PAGA claims and that such ambiguity should be resolved in favor of arbitration.The Court of Appeal of the State of California, Third Appellate District, reviewed the case. The court concluded that the arbitration agreement unambiguously excluded all PAGA claims, including individual claims. The court reasoned that the language of the agreement and the circumstances under which it was executed indicated that the parties intended to exclude all PAGA claims from arbitration. The court affirmed the trial court's order denying Parkwest's motion to compel arbitration. View "Ford v. The Silver F" on Justia Law

Michele Cornelius sued CVS Pharmacy Inc., New Jersey CVS Pharmacy, L.L.C., and her former supervisor, Shardul Patel, alleging a hostile work environment. Cornelius claimed that Patel targeted her with negative treatment because she is a woman, including denying her promotions, overworking her, and undermining her relationships with employees. Despite her multiple complaints to CVS, no action was taken against Patel. Cornelius resigned in October 2021, but Patel did not respond, and she was subsequently fired on November 4, 2021.The United States District Court for the District of New Jersey granted CVS's motion to compel arbitration and dismissed Cornelius's complaint. The court concluded that Cornelius's claims were not protected from arbitration under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) because her hostile work environment claim did not constitute a "sexual harassment dispute." The court also found that Cornelius and CVS had entered into a valid arbitration agreement and that the agreement was not unconscionable.The United States Court of Appeals for the Third Circuit reviewed the case. The court agreed with the District Court that the EFAA did not cover Cornelius's claims but reached this conclusion on different grounds, determining that her dispute arose before the EFAA's effective date of March 3, 2022. However, the Third Circuit found that the District Court abused its discretion by not considering whether discovery was necessary before deciding that Cornelius and CVS had a valid agreement to arbitrate. Consequently, the Third Circuit affirmed in part, vacated the judgment, and remanded the case to the District Court for further proceedings, including consideration of whether discovery on the validity of the arbitration agreement was warranted. View "Cornelius v. CVS Pharmacy Inc" on Justia Law

The case involves a dispute among members of several limited liability companies, which was arbitrated according to the parties' agreement. The arbitrator issued a series of awards, ultimately granting plaintiff Laurence Rappaport $4.9 million on various claims, offset by an award to defendant Kenneth Pasternak, resulting in a net award of approximately $3.8 million. The arbitrator did not award Rappaport damages for the loss of future distributions of carried interest. Rappaport contended that the issue of carried interest was not presented to the arbitrator and that the arbitrator improperly ruled on it.The Chancery Division confirmed the arbitrator's awards after remanding for clarification that the arbitrator intended to resolve the issue of carried interest. Rappaport appealed, and the Appellate Division affirmed the awards for Rappaport’s claims for lost income and future income based on his termination as a manager. However, the Appellate Division ruled that the parties had excluded the question of carried interest from the arbitration and concluded that the arbitrator had raised the issue sua sponte. It modified the awards to exclude any inclusion of Rappaport’s membership interest, including future carried interest, and reversed the Chancery Division’s judgment.The Supreme Court of New Jersey reviewed the case and disagreed with the Appellate Division’s conclusion. The Court found that the issue of carried interest was arbitrable and had been raised by the parties at several stages of the arbitration. The Court held that the remedy of modification under N.J.S.A. 2A:23B-24(a)(2) was not warranted and that the Appellate Division’s review did not conform to the deferential standard governing judicial review of arbitration awards. The Court reversed the Appellate Division’s judgment and reinstated the Chancery Division’s decision confirming the arbitration award. View "Rappaport v. Pasternak" on Justia Law

Brian Prahl filed a petition to compel arbitration of an uninsured motorist claim, alleging he was involved in a multiple vehicle accident in March 2016 while insured by Allstate Northbrook Indemnity Company. The insurance proceeds from the at-fault drivers were insufficient to cover his damages, leading him to seek arbitration for his underinsured motorist claim. Allstate agreed to arbitration in May 2018, but the arbitration was delayed and not concluded within the five-year deadline set by Insurance Code section 11580.2, subdivision (i). Prahl argued that Judicial Council Emergency Rule 10 extended this deadline by six months due to the COVID-19 pandemic.The Superior Court of Sacramento County denied Prahl's petition, concluding that the five-year deadline had expired and that Emergency Rule 10 did not apply to extend the deadline for arbitration. Prahl also contended that the court should have granted his petition because Allstate's opposition was not filed timely. However, the court found good cause to consider the late opposition, noting that Prahl had filed a reply on the merits.The California Court of Appeal, Third Appellate District, reviewed the case de novo and affirmed the lower court's decision. The appellate court held that Emergency Rule 10, which extends the time to bring a civil action to trial by six months, did not apply to arbitration proceedings. The court reasoned that the term "civil action" refers to court actions and does not include arbitration, which is an alternative to a civil action. Consequently, Prahl's failure to conclude the arbitration within the statutory five-year period resulted in the loss of his right to compel arbitration. The appellate court also upheld the lower court's decision to consider Allstate's late opposition, finding no undue prejudice to Prahl. View "Prahl v. Allstate Northbrook Indemnity Co." on Justia Law