Justia Arbitration & Mediation Opinion Summaries

Joyce Toth purchased a Food Sensitivity Test from Target's website and followed the instructions to create an account on Everlywell's website, where she clicked a checkbox indicating that she had read and accepted the terms and conditions. These terms included an arbitration agreement. Toth later received test results that she found confusing and inaccurate, leading her to file a putative class action against Everlywell, alleging deceptive marketing and misuse of personal medical information.The United States District Court for the District of Massachusetts granted Everlywell's motion to compel arbitration, holding that Toth had formed a valid "clickwrap" contract by clicking the checkbox. The court found that Everlywell provided reasonable notice of the terms and secured Toth's assent. It also rejected Toth's arguments that the contract lacked consideration, that Everlywell did not provide reasonable notice, and that the contract was illusory or unconscionable.The United States Court of Appeals for the First Circuit affirmed the district court's decision. The appellate court held that Toth had received reasonable notice of the terms and had meaningfully assented to them by clicking the checkbox. The court also found that the arbitration agreement was valid and enforceable, noting that the User Agreement incorporated the AAA rules, which delegate issues of arbitrability to the arbitrator. Toth's arguments regarding the unilateral-modification clauses and the alleged unconscionability of the arbitration agreement were deemed insufficient to invalidate the delegation provision. Thus, the court concluded that the arbitration agreement was enforceable, and Toth's claims must be resolved through arbitration. View "Toth v. Everly Well, Inc." on Justia Law

A former employee, Campbell, filed a putative class action lawsuit against her employer, Sunshine Behavioral Health, LLC, alleging wage and hour violations. Campbell claimed that employees were not paid proper overtime, were required to work through meal and rest breaks without compensation, were not paid minimum wage, and were not paid in a timely manner. Sunshine initially proceeded with litigation and agreed to participate in mediation. However, Sunshine later claimed to have discovered an arbitration agreement signed by Campbell, which included a class action waiver.The Superior Court of Orange County found that Sunshine had waived its right to compel arbitration. Despite allegedly discovering the arbitration agreement in November 2022, Sunshine continued to engage in mediation discussions and did not inform Campbell or the court of its intent to compel arbitration until March 2023. Sunshine's delay and conduct were deemed inconsistent with an intent to arbitrate, leading the court to conclude that Sunshine had waived its right to arbitration.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case and affirmed the lower court's decision. The appellate court found clear and convincing evidence that Sunshine had waived its right to arbitration. The court noted that Sunshine's actions, including agreeing to mediation on a class-wide basis and delaying the motion to compel arbitration, were inconsistent with an intent to arbitrate. The court emphasized that Sunshine's conduct demonstrated an intentional abandonment of the right to arbitrate, thus affirming the order denying the motion to compel arbitration. View "Campbell v. Sunshine Behavioral Health" on Justia Law

Two plaintiffs, Smith-Phifer and Patterson, served with the Charlotte Fire Department for over twenty years and alleged racial discrimination by the department. They filed a lawsuit against the City of Charlotte, claiming violations of Title VII, 42 U.S.C. §§ 1981 & 1983, and the North Carolina Constitution. The case was initially brought in state court but was removed to federal court. Smith-Phifer and the City reached a settlement during her trial, while Patterson's case was delayed due to illness and later went to mediation.The United States District Court for the Western District of North Carolina granted Smith-Phifer and Patterson’s motions to enforce their settlement agreements. The court found that the City breached the agreements by not treating the settlement payments as pension-eligible wages under the Charlotte Firefighters Retirement Systems Act. The City appealed, arguing that the district court erred in its decision, particularly in not holding an evidentiary hearing for Patterson’s case and in its interpretation of the settlement terms regarding pension eligibility.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court vacated the district court’s order regarding Patterson, stating that an evidentiary hearing was necessary to determine whether a complete settlement agreement was reached. The court found that there were unresolved factual disputes about the terms of the agreement, particularly regarding sick leave and pension eligibility.However, the court affirmed the district court’s decision regarding Smith-Phifer. It held that the City breached the settlement agreement by failing to make the required retirement deduction from the payment to Smith-Phifer. The court concluded that the payment was “Compensation” under the Charlotte Firefighters Retirement Systems Act, which mandated the deduction. The case was remanded for further proceedings consistent with these findings. View "Smith-Phifer v. City of Charlotte" on Justia Law

The plaintiff, a religious organization, sought to reclaim possession of a commercial property occupied by the defendants through a summary process action. The dispute arose after the founder and former president of the plaintiff, D, transferred his responsibilities to S in 2014. S took possession of the property and operated two companies from it, making regular mortgage payments until his relationship with D deteriorated, leading to a cessation of payments. D then ordered S to vacate the property and purported to remove him from his position. The parties agreed to resolve their disputes before a Bais Din, a rabbinical tribunal, which ruled that S would continue as the leader and make mortgage payments, while D retained ownership of the property for three years.The trial court, the Superior Court in the judicial district of Stamford-Norwalk, initially denied the defendants' motion to dismiss the action for lack of subject matter jurisdiction but ordered a stay to allow arbitration before the Bais Din. The court found that D had signed the arbitration agreement intending to bind the plaintiff and that the ownership issue was to be adjudicated by the Bais Din. However, after the stay period, the court denied the defendants' motion to stay the proceedings and compel arbitration, concluding that the plaintiff was not a party to any arbitration agreement and that the court would resolve the ownership and landlord-tenant issues.The Supreme Court of Connecticut reviewed the case and found that the trial court erred in failing to enforce the arbitration agreement. The court held that the plaintiff was bound by the arbitration agreement, as D signed it in a representative capacity with the intent to bind the plaintiff. The court noted that the arbitration agreement covered all disputes between the parties, including the issue of possession of the property. Consequently, the Supreme Court reversed the trial court's judgment and remanded the case with direction to grant the defendants' motion to stay the proceedings and compel arbitration. View "Chabad Lubavitch of Western & Southern New England, Inc. v. Shemtov" on Justia Law

In 2017, the Brotherhood of Railroad Signalmen (the Union) initiated proceedings against the National Railroad Passenger Corporation (Amtrak) in federal district court. The Union contested Amtrak’s refusal to use Union-represented signalmen in a newly acquired building. The district court sent the case to mandatory arbitration under the Railway Labor Act (RLA). The National Railroad Adjustment Board (the Board) dismissed the claim, stating it lacked jurisdiction because the Union was seeking relief based on hypothetical facts.The district court vacated the Board’s award and remanded for further proceedings, holding that the Board did not consider or interpret the parties’ agreement. Amtrak appealed, arguing that the award should be upheld under the highly deferential judicial standard of review because it was at least arguably based on rail industry common law and Rule 56 of the collective bargaining agreement.The United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s decision. The court found that the Board’s award should be vacated because it did not decide the dispute based on the parties’ contract. Instead, the Board relied on legal principles governing federal courts’ subject-matter jurisdiction, which are outside the scope of the Board’s authority. The court emphasized that the Board must interpret the contract and cannot base its decisions on external legal principles unrelated to the contract. The case was remanded to the district court with instructions to remand to the National Railroad Adjustment Board for proceedings consistent with the opinion. View "Brotherhood of Railroad Signalmen v. National Railroad Passenger Corporation" on Justia Law

Petitioners purchased a new 2020 Ford Super Duty F-250 from Fairway Ford in San Bernardino, financing the purchase through the dealer and signing a sale contract that included an arbitration provision. The truck developed mechanical issues during the warranty period, and after unsuccessful repair attempts by Ford of Ventura, the petitioners filed a lawsuit under the Song-Beverly Consumer Warranty Act against Ford Motor Company (FMC) and Ford of Ventura. FMC moved to compel arbitration based on the arbitration provision in the sale contract between the petitioners and the non-party dealer.The trial court granted FMC's motion to compel arbitration, finding that FMC could enforce the arbitration provision as a third-party beneficiary of the sale contract and that the petitioners were estopped from refusing to arbitrate their claims. The petitioners moved for reconsideration twice, citing appellate decisions that disapproved of the precedent relied upon by the trial court. Both motions for reconsideration were denied, with the trial court maintaining its original order compelling arbitration.The California Court of Appeal, Second Appellate District, reviewed the case and concluded that FMC and Ford of Ventura are neither intended third-party beneficiaries of the sale contract nor entitled to enforce the arbitration provision under the doctrine of equitable estoppel. The court found that the sale contract did not express an intent to benefit FMC and that the petitioners' claims against FMC and Ford of Ventura were based on warranty obligations independent of the sale contract. The appellate court issued a writ of mandate directing the trial court to vacate its orders compelling arbitration and denying reconsideration, and to enter a new order denying FMC's motion to compel arbitration. View "Rivera v. Superior Court" on Justia Law

In March 2013, Woodsboro Farmers Cooperative contracted with E.F. Erwin, Inc. to construct two grain silos. Erwin subcontracted AJ Constructors, Inc. (AJC) for the assembly. AJC completed its work by July 2013, and Erwin finished the project in November 2013. However, Woodsboro noticed defects causing leaks and signed an addendum with Erwin for repairs. Erwin's attempts to fix the silos failed, leading Woodsboro to hire Pitcock Supply, Inc. for repairs. Pitcock found numerous faults attributed to AJC's poor workmanship, necessitating complete deconstruction and reconstruction of the silos, costing Woodsboro $805,642.74.Woodsboro sued Erwin in Texas state court for breach of contract, and the case went to arbitration in 2017. The arbitration panel found AJC's construction was negligent, resulting in defective silos, and awarded Woodsboro $988,073.25 in damages. The Texas state court confirmed the award in September 2022. In December 2018, TIG Insurance Company, Erwin's insurer, sought declaratory relief in the United States District Court for the Southern District of Texas, questioning its duty to defend and indemnify Erwin. The district court granted TIG's motion for summary judgment on the duty to defend, finding no "property damage" under the policy, and later ruled there was no duty to indemnify, as the damage was due to defective construction.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that there were factual questions regarding whether the damage constituted "property damage" under the insurance policy, as the silos' metal parts were damaged by wind and weather due to AJC's poor workmanship. The court determined that the district court erred in granting summary judgment for TIG and concluded that additional factual development was needed. The Fifth Circuit reversed the district court's decision and remanded the case for further proceedings. View "TIG Insurance Company v. Woodsboro Farmers Coop" on Justia Law

Trudy Maxwell, a 93-year-old resident of Atria Park of San Mateo, died after ingesting an industrial strength cleaner mistakenly served to her by an Atria employee. Trudy’s eight surviving children, including James Maxwell III (James III), filed a lawsuit against Atria Management Company and related entities, alleging negligence, wrongful death, and elder abuse. The trial court denied Atria’s motion to compel arbitration, concluding that James III, who signed the arbitration agreement, was not authorized to do so under his durable power of attorney (DPOA) because he was not authorized to make health care decisions for Trudy. Instead, Trudy’s daughter, Marybeth, held the power of attorney for health care.The Atria defendants appealed, arguing that James III had the authority to sign the arbitration agreement and that all of Trudy’s heirs were bound to arbitrate their wrongful death claims. They also contended that California’s Code of Civil Procedure section 1281.2(c), which allows an exception to arbitration when third-party claims may be affected, was preempted by the Federal Arbitration Act (FAA).The California Court of Appeal, First Appellate District, Division One, reversed the trial court’s order denying arbitration and remanded the case for further proceedings. The appellate court instructed the trial court to reconsider the validity of the arbitration agreement in light of the California Supreme Court’s recent decision in Harrod v. Country Oaks Partners, LLC, which held that agreeing to an optional arbitration agreement is not a health care decision. The appellate court also directed the trial court to determine whether the DPOA was valid and whether James III had the authority to agree to arbitration despite Marybeth holding the health care POA. Additionally, the court noted that the wrongful death claims of Trudy’s children were not subject to arbitration as they were not parties to the arbitration agreement. View "Maxwell v. Atria Management Co., LLC" on Justia Law

In 2001, RSM Production Corporation (RSM) and the Republic of Cameroon signed a concession contract granting RSM the right to explore and develop hydrocarbons in the Logbaba Block. In 2005, RSM and Gaz du Cameroun (GdC) entered into a Farmin Agreement and a Joint Operating Agreement (JOA), with GdC becoming the project operator. The Farmin Agreement allowed GdC to recover its drilling costs from production revenues before sharing profits with RSM. A dispute arose over the Payout date, with RSM claiming it was February 1, 2016, and GdC asserting it was June 1, 2016.The dispute was submitted to arbitration under the International Chamber of Commerce (ICC) Rules. The arbitral tribunal ruled in favor of RSM, awarding $10,578,123.28 based on a February 1, 2016, Payout date. GdC requested corrections, arguing the tribunal included damages for claims not substantively addressed. The tribunal issued an Addendum Award, reducing RSM's award by $4,011,625.90, citing computational errors.RSM sought to vacate the Addendum Award in the United States District Court for the Southern District of Texas. The district court vacated the part of the Addendum Award that reduced RSM's recovery, concluding the tribunal exceeded its powers by reconsidering the merits of RSM's claims under the guise of correcting computational errors.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the tribunal had the authority to correct computational errors and to determine what constituted such errors under ICC Rule 36. The tribunal's interpretation of the rule and the parties' agreements was entitled to deference. The Fifth Circuit reversed the district court's judgment and remanded with instructions to confirm the Addendum Award. View "RSM Prod v. Gaz du Cameroun" on Justia Law

Sarah Anoke and other employees initiated arbitration proceedings against their employer, X (comprising Twitter, Inc., X Holdings I, Inc., X Holdings Corp., X Corp., and Elon Musk), for employment-related disputes. The arbitration provider issued an invoice for $27,200, which Anoke’s counsel mistakenly paid. The arbitration provider marked the invoice as paid and closed, then refunded the payment and issued a new invoice to X, which X paid within 30 days.Anoke petitioned the Superior Court of the City and County of San Francisco to compel X to pay her arbitration-related attorney fees and costs, arguing that X’s payment was untimely because it was not made within 30 days of the first invoice. The superior court denied the petition, reasoning that since the first invoice was nullified after Anoke’s attorney mistakenly paid it and X timely paid the second invoice, X met the statutory deadline.The California Court of Appeal, First Appellate District, reviewed the case. The court held that the statutory deadline for payment was tied to the due date set by the arbitration provider’s invoice. Since the first invoice was paid (albeit mistakenly) and the second invoice was paid within 30 days, there was no default. The court affirmed the superior court’s order, concluding that the arbitrator acted within its authority by issuing a second invoice and that the statute did not require the arbitrator to reinstate the first invoice after it had been paid and closed. The court also noted that the reasons for a timely payment are irrelevant under the statute. View "Anoke v. Twitter" on Justia Law