In 1997, the Village of Derby Center and the City of Newport entered into a contract whereby the Village would supply 10,000 gallons of water per day to the City. The City claimed that the contract did not authorize the Village to adopt a new rate schedule in 2006 that included a ready-to-serve fee on top of actual water usage charges. The Village counterclaimed, alleging that the City connected customers who were not authorized under the contract, and that the City’s water use was chronically underreported due to equipment malfunction. After a trial, the superior court ruled for the City on its contract claim, holding that the ready-to-serve fee was not authorized by either contract or statute. As to the Village’s counterclaims, the court found that there was insufficient evidence to support the unauthorized-connection claim, and referred the water-usage-reconstruction claim to mediation. The Village appealed on all counts. The Supreme Court found: the plain language of the agreement authorized the use of a ready-to-serve fee to support the Village’s maintenance of its facilities. "The court erred in concluding otherwise." With respect to the Village's counterclaims, the Supreme Court found that the trial court indicated that it was clear, based on the billing periods showing a reading of zero usage by the City, that there were some erroneous readings, but it referred the Village’s claims to mediation without further resolution. After the City brought suit, the Village filed a motion to allow its counterclaim as to the underreported usage, which the trial court granted. The trial court’s decision to refer the Village’s counterclaim to mediation in its order, after it had already granted the Village’s motion to allow the counterclaim at trial, served only to create greater delay and expense to the parties, thus undermining the purpose of the alternative dispute resolution clause. "Even if the trial court would ordinarily have discretion over whether to send a counterclaim to mediation, under these circumstances the trial court could not properly rescind its decision, relied on by the parties, to allow the counterclaim after the trial had already taken place. Therefore, we remand the Village’s counterclaim for resolution by the trial court." View "City of Newport v. Village of Derby Center" on Justia Law

Buyers, a married couple from Cuba who were only able to communicate in Spanish, purchased a vehicle from a Dealership. Two of the documents Buyers signed with regard to the purchase contained arbitration clauses, and all of the documents were written in English. Buyers subsequently sued the Dealership for fraud in the inducement and violation of the Florida Deceptive and Unfair Trade Practices Act. The Dealership moved to dismiss the complaint and/or compel arbitration. The trial court denied the motion, concluding that no valid agreement to arbitrate existed because the arbitration provisions were not agreed upon by the parties and that the provisions were unenforceable because they were procedurally and substantively unconscionable. The Third District Court of Appeal affirmed the trial court’s order denying enforcement of the agreement to arbitrate disputes but reversed the order insofar as it declined to enforce the arbitration on the reverse side of the retail installment contract with respect to Buyers’ claims for monetary relief. The Supreme Court quashed the decision of the Third District and remanded with instructions to reinstate the trial court’s judgment based on controlling precedent.View "Basulto v. Hialeah Auto." on Justia Law

A school librarian having professional teacher status was suspended for conduct deemed to be unbecoming a teacher. An arbitrator considered the merits of the suspension. Applying a “just cause” standard, the arbitrator overturned the suspension, concluding that the school district failed to meet its burden of proof. A superior court judge confirmed the arbitrator’s award. The Supreme Judicial Court affirmed, holding that the arbitrator did not exceed his authority by reviewing the merits of the librarian’s twenty-day suspension and concluding that the school district had not met its burden of proving the alleged just cause for the suspension. View "Superintendent-Dir. of Assabet Valley Reg’l Sch. Dist. v. Speicher" on Justia Law

Shirley Henry, as special administrator of the Estate of Lucill Betncourt, filed a complaint against a nursing-home facility (Woodland Hills) asserting, among other claims, negligence, medical malpractice, and violations of the Arkansas Long-Term Care Residents’ Act. Woodland Hills moved to dismiss and to compel arbitration of these claims, relying on arbitration clauses found in the admission agreements that Betncourt, Betncourt’s husband, and Henry signed when Betncourt entered the facility eight times in a four-year period. The circuit court denied Woodland Hills’ motion to dismiss and compel arbitration, concluding that mutuality of obligation was lacking. The Supreme Court affirmed, holding that the arbitration clause offended the law requiring mutuality of obligation and could not be enforced because Woodland Hills reserved the right to litigate billing or collection disputes and thus excluded from arbitration the only claim it might have against a resident. View "Reg'l Care of Jacksonville, LLC v. Henry" on Justia Law

Appellee, as special administrator of the estate of Rufus Owens and on behalf of the wrongful death beneficiaries of Owens, filed a lawsuit against Pine Hills Health and Rehabilitation, LLC and others for injuries Owens sustained during his care and treatment at Pine Hills. Appellants moved to dismiss the complaint and compel arbitration pursuant to an arbitration agreement. Appellee argued that the arbitration agreement was unenforceable because there was no evidence of mutual assent where the agreement was signed by Appellee as the "responsible party" but did not bear the signature of a representative of Pine Hills. The circuit court denied the motion to compel arbitration. The Supreme Court affirmed, holding that there was no objective evidence of mutual assent, and therefore, the arbitration agreement was unenforceable.View "Pine Hills Health & Rehab., LLC v. Matthews" on Justia Law

Steak n Shake owns and operates 415 restaurants and grants about 100 franchises for the operation of Steak n Shake restaurants by others. The operators of franchises in Missouri, Georgia, and Pennsylvania claim that since 1939, franchisees have set their own menu prices and participated in corporate pricing promotions at their option. After a corporate takeover in 2010, Steak n Shake enacted a new policy that requires them to adhere to company pricing on every menu item and to participate in all promotions. They also must purchase all products from a single distributor at a price negotiated by Steak n Shake. The policy had an adverse effect on revenues. The franchisees sought a declaratory judgment. About a month later, Steak n Shake adopted an arbitration policy requiring the franchisees to engage in nonbinding arbitration at Steak n Shake’s request and moved to stay the federal lawsuits. The district court refused to compel arbitration. Although each franchise agreement (except one) contained a clause in which Steak n Shake “reserve[d] the right to institute at any time a system of nonbinding arbitration or mediation,” the district court concluded that any agreement to arbitrate was illusory. The Seventh Circuit affirmed, agreeing that the arbitration clauses are illusory and unenforceable under Indiana law, and declining to address whether the disputes were within the scope of the arbitration agreements or whether nonbinding arbitration fits within the definition of arbitration under the Federal Arbitration Act. View "Druco Rests., Inc. v. Steak N Shake Enters., Inc." on Justia Law

After losing millions of dollars because of delays and coordination failures in building a hospital, W.J. O’Neil Company sued its construction manager in state court. In subsequent arbitration, the architect and a design subcontractor (defendants) were added to the arbitration on indemnity claims. In the arbitration, O’Neil did not formally assert claims against those defendants, but O’Neil’s claims against its construction manager arose from the defendants’ defective and inadequate design of the hospital. O’Neil won the arbitration against its construction manager, but the construction manager did not establish its indemnity claims, so the defendants were not held liable. No party sought judicial confirmation or review of the arbitration award. O’Neil then sued the defendants in federal court. The district court dismissed, finding the claims barred by Michigan’s doctrine of res judicata. The Sixth Circuit reversed. An arbitration award cannot bar a claim that the arbitrator lacked authority to decide, and an arbitrator lacks authority to decide a claim that the parties did not agree to arbitrate. O’Neil did not agree to arbitrate the claims at issue. View "W.J. O'Neil Co. v. Shepley, Bulfinch, Richardson & Abbott, Inc." on Justia Law

Kroger appealed the trial court's order denying its motion to compel arbitration of plaintiff's employment discrimination action. The trial court concluded that Kroger failed to meet its burden to prove the existence of an arbitration agreement. The court concluded that the arbitration clause in the employment application, standing alone, was sufficient to establish that the parties agreed to arbitrate their employment-related disputes, and that plaintiff's claims against Kroger fell within the ambit of the arbitration agreement. However, Kroger failed to establish that the parties agreed to govern their arbitration by procedures different from those prescribed in the California Arbitration Act (CAA), Section 1280 et seq., and, therefore, the arbitration is to be governed by the CAA rather than the procedures set forth in the employer's Arbitration Policy. Accordingly, the court reversed the judgment of the trial court. View "Cruise v. Kroger Co." on Justia Law

Petitioners entered into a written agreement with Bastian Homes and Lion Enterprises, Inc. (collectively, “Bastian Homes”) for the construction of a new home. The agreement contained an arbitration clause. After a water leak allegedly substantially damaged major portions of the partially-constructed home, Petitioners sued Bastian Homes. Bastian Homes filed a motion to dismiss the complaint, arguing that the arbitration clause in the construction contract required the matter to be submitted to arbitration. Petitioners opposed the motion to dismiss, contending that the arbitration clause in this case was not bargained for and was therefore invalid. The circuit court granted the motion to dismiss. The Supreme Court affirmed in part and reversed in part, holding (1) because the construction contract was properly formed and supported by sufficient consideration, there was no requirement that the arbitration clause be independently “bargained for”; and (2) because the circuit court decided the arbitration clause not unconscionable without the issue being fairly argued by the parties and without any factual development, this issue needed to be remanded for further development of the record.View "Kirby v. Lion Enters., Inc." on Justia Law

After filing for bankruptcy, Houston Refining, L.P., suspended matching contributions to its employees' 401(k) plans. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, acting on behalf of itself and its local unions (collectively "Union"), filed a grievance under the then-current collective bargaining agreement seeking resumption of the matching contributions. Houston Refining refused to process the grievance, claiming that the suspension was not a grievable issue. Months later, the Union commenced an adversary proceeding in the bankruptcy court to compel Houston Refining to arbitrate the grievance under the CBA. Houston Refining agreed to submit the matter to arbitration. Following a two-day hearing, the arbitrator rendered an award in favor of the Union. Houston Refining filed suit in the district court seeking to vacate the arbitral award, and the Union counterclaimed to enforce the award. The district court found that because the Settlement Agreement evinced the parties’ clear agreement to have the arbitrator decide questions of arbitrability, its review of this issue would be deferential. On the merits, the district court upheld the arbitrator’s finding that Houston Refining violated portions of the CBA, but concluded that the arbitral award’s remedy was ambiguous in certain respects. The district court accordingly denied the company’s motion and granted the Union’s motion in part, but remanded to the arbitrator for clarification of the award’s monetary value, among other issues. Houston Refining appealed, arguing that the district court erred in deferring to the arbitrator’s determination of the grievance’s arbitrability. According to the company, because the parties never agreed in clear and unmistakable terms to give the issue of arbitrability to the arbitrator, the district court was obligated to decide the issue independently. The Fifth Circuit found after review of the matter that "the party contending that an arbitrator has authority to decide arbitrability 'bears the burden of demonstrating clearly and unmistakably that the parties agreed to have the arbitrator decide that threshold question.'" In this case, the Union did not meet its burden, and therefore the district court erred in failing to decide arbitrability “just as it would decide any other question that the parties did not submit to arbitration, namely, independently.” The Court reversed and remanded this case to the district court to decide arbitrability issues raised by this opinion, "independently" without deference to the arbitral decision. View "Houston Refining, L.P. v. United Steel, Paper & Forestry, et al" on Justia Law