Justia Arbitration & Mediation Opinion Summaries

Robert King signed an arbitration agreement at the time of his initial appointment with Dr. Michael Bryant, who was to perform a bilateral inguinal hernia repair on King. In the course of the surgery, Bryant injured King’s distal abdominal aorta, resulting in complications. King and his wife, Jo Ann O’Neal (together, Plaintiffs) filed a complaint against Bryant and Village Surgical Associations, P.A. (collectively, Defendants). Defendants filed a motion to stay and enforce the arbitration agreement. The trial court denied Defendants’ motion to enforce the arbitration agreement, concluding that the agreement was too indefinite to be enforced. The court of appeals reversed. On remand, the trial court again declined to enforce the arbitration agreement, concluding that it was the product of constructive fraud and was unconscionable and, therefore, was unenforceable. The court of appeals affirmed on unconscionability grounds. The Supreme Court affirmed as modified, holding that the arbitration agreement was unenforceable on breach of fiduciary duty, as opposed to unconscionability, grounds. View "King v. Bryant" on Justia Law

University Toyota and University Chevrolet Buick GMC (collectively referred to as "the University dealerships") appealed a circuit court order allowing Beverly Hardeman and Vivian Roberts to pursue their claims against the University dealerships in arbitration proceedings. conducted by the American Arbitration Association ("the AAA") instead of the Better Business Bureau of North Alabama ("the BBB"), the entity identified in the controlling arbitration agreements. In conjunction with their purchases of new vehicles from the University dealerships’ predecessor, Jim Bishop, Hardeman and Roberts purchased service contracts entitling them to no-cost oil changes for as long as they owned their respective vehicles. When the Jim Bishop dealerships were sold and rebranded as the University dealerships, initially the University dealerships honored the no-cost oil-change service contracts sold by the Jim Bishop dealerships. However, they eventually stopped providing no-cost oil changes to customers who held those contracts. On October 29, 2015, Hardeman and Roberts filed a demand for arbitration with the BBB, the dispute-resolution entity identified in arbitration agreements they had executed when they purchased their vehicles, on behalf of themselves and all similarly situated individuals, based on the University dealerships' refusal to honor the service contracts. Because a trial court can compel arbitration only in a manner consistent with the terms of the applicable arbitration agreement, the Supreme Court reversed the trial court's order compelling arbitration and remanded the case for the entry of a new order compelling Hardeman and Roberts to arbitrate their claims against the University dealerships before the BBB if they chose to pursue those claims. View "University Toyota v. Hardeman" on Justia Law

Appellants sought arbitration with BBVA Securities of Puerto Rico, Inc. and one of its securities brokers, asserting several claims under both federal and Puerto Rico law. An arbitration panel issued an award denying Appellants’ claims. Appellants then filed a complaint in the Puerto Rico Court of First Instance requesting that the court vacate or modify the arbitration award, seeking relief under the Puerto Rico Arbitration Act. Defendants removed the case to the U.S. District Court of the District of Puerto Rico, arguing that the district court had federal question jurisdiction and also had supplemental jurisdiction over the state law claims. Appellants moved to remand the case to Puerto Rico state court for lack of jurisdiction. The district court denied the motion after applying the look-through approach and determining that the underlying statement of claim alleged federal claims. The district court subsequently confirmed the award. The First Circuit affirmed, holding (1) the look-through approach was the correct test in this case; (2) federal jurisdiction existed; and (3) the district court did not err in refusing to vacate the award and in confirming it. View "Ortiz-Espinosa v. BBVA Securities of Puerto Rico, Inc." on Justia Law

In 2012, Nappa Construction Management, LLC (Nappa) and Caroline and Vincent Flynn (the Flynns) entered into a contract for a commercial construction project. Service Insurance Company, Inc. (Service Insurance) furnished a performance bond on the contract. In 2013, the Flynns directed Nappa to stop work on the project. Nappa subsequently submitted an application for payment, which the Flynns declined to pay. Nappa then terminated the contract due to nonpayment. The Flynns filed an action alleging that Nappa had wrongfully terminated the contract. Nappa filed a demand for arbitration in accordance with an arbitration provision in the contract and also named Service Insurance as a party to the arbitration. The arbitrator found that Nappa was not justified in terminating the contract but concluded that, under the termination-for-convenience clause in the contract, neither Nappa nor the Flynns were in breach of the contract. The arbitrator awarded Nappa $37,980. The superior court granted Nappa’s petition to confirm the arbitration award, concluding that the arbitrator did not exceed his powers in holding that the contract was terminated for convenience. The Supreme Court vacated the superior court’s judgment, holding that the arbitrator exceeded his authority in interpreting the contract. View "Nappa Construction Management, LLC v. Flynn" on Justia Law

Plaintiff filed a class action against Samsung, alleging that it made misrepresentations as to the performance of the Galaxy S4 phone. The district court denied Samsung's motion to compel arbitration based on an arbitration provision contained in a warranty brochure included in the Galaxy S4 box. Determining that its analysis is governed by California contract, rather than warranty, law, the court concluded plaintiff did not assent to any agreement in the brochure, nor did he sign or otherwise act in a manner that showed he accepted the arbitration agreement. The court concluded that Samsung failed to demonstrate the applicability of any exception to the general California rule that an offeree’s silence does not constitute consent. Therefore, in the absence of an applicable exception, California’s general rule for contract formation applies. The court also concluded that, under the circumstances of this case, Samsung's inclusion of a brochure in the Galaxy S4 box, and plaintiff's failure to opt out, does not make the arbitration provision enforceable against plaintiff. Finally, the court concluded that Samsung's argument that plaintiff agreed to arbitrate his claims by signing the Customer Agreement with Verizon Wireless is meritless. The court explained that Samsung is not a signatory to the Customer Agreement between Verizon Wireless and its customer. Furthermore, Samsung is not a third-party beneficiary to the Customer Agreement. Accordingly, the court affirmed the judgment. View "Norcia v. Samsung Telecommunications" on Justia Law

CBF, appellants and award-creditors, challenged the district court's two judgments dismissing CBF's initial action to enforce and subsequent action to confirm a foreign arbitral award against appellees as alter-egos of the then defunct award-debtor. The court held that the district court erred in determining that the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards and Chapter 2 of the Federal Arbitration Act, 9 U.S.C. 201 et seq., require appellants to seek confirmation of a foreign arbitral award before the award may be enforced by a United States District Court, and in holding that appellants’ fraud claims should be dismissed prior to discovery on the ground of issue preclusion as issue preclusion is an equitable doctrine and appellants plausibly allege that appellees engaged in fraud. In No. 15-1133, the court vacated the dismissal of the action to enforce and remanded for further proceedings. In No. 15-1146, the court found the appeal of the district court's order in the action to conform is moot and dismissed the appeal. View "CBF Industria De Gusa S/A v. AMCI Holdings, Inc." on Justia Law

Lee Tillett, Inc. developed and registered a trademark for a line of cosmetics products known as Kroma cosmetics. Tillett entered into an agreement with Kroma EU to give it exclusive rights to sell and distribute Kroma products. Kimberly, Kourtney, and Khloe Kardashian entered into a licensing agreement with Boldface Licensing + Branding, Inc. to create a Kardashian makeup line called “Khroma.” After Tillett, Boldface, and the Kardashians settled a cosmetics trademark infringement suit, Tillett refused to share any of its settlement recovery with Kroma EU. Kroma EU subsequently filed this suit alleging trademark infringement and tortious interference claims against Boldface, vicarious liability for trademark infringement claims against the Kardashians, and a promissory estoppel claim against Tillett. The district court granted Tillett’s motion to compel Kroma EU to arbitrate, but denied the Kardashians’ motion to compel Kroma EU to arbitrate its claims against them. In this case, while the Kardashians are not signatories to the agreement between Kroma EU and Tillett, they contend that they can compel arbitration of Kroma EU’s claims against them by using Florida’s doctrine of equitable estoppel. The court held, however, that Florida’s doctrine of equitable estoppel permits a nonsignatory to an agreement to avail herself of an arbitration clause only when the claims asserted against her fall within the scope of the clause that the signatories had agreed upon. Accordingly, the court concluded that the district court correctly denied the Kardashians’ motion to compel arbitration. View "Kroma Makeup EU, LLC v. Kardashian" on Justia Law

In connection with an attempted purchase of a California residence, Kum Tat filed a motion to compel arbitration of a claim against Linden Ox. The district court denied the motion and Kum Tat filed this interlocutory appeal. The court held that the order denying the motion to compel arbitration was not an order from which section 16(a)(1) of the Federal Arbitration Act (FAA), 9 U.S.C. 16(a)(1), permits an interlocutory appeal. In this case, Kum Tat's motion was neither under section 3 nor 4 of the FAA, and the motion expressly urged application only of California arbitration law and contained no citation to the FAA. Significantly, Kum Tat later emphasized that the motion was not made under the FAA. In the alternative, the court concluded that the district court's order was not clearly erroneous and did not warrant mandamus relief. Here, the district court did not clearly err in reserving for itself the question whether the parties agreed to arbitrate, nor did the district court clearly err in concluding the parties did not form a contract. Accordingly, the court dismissed the appeal for lack of jurisdiction. View "Kum Tat Limited v. Linden Ox Pasture, LLC" on Justia Law

FMR Corp. n/k/a FMR LLC, Fidelity Management Trust Company, and Fidelity Brokerage Services LLC (collectively, "Fidelity") appealed a circuit court order denying their motion asking the court to compel Elizabeth Howard n/k/a Elizabeth Hart ("Hart") to arbitrate Fidelity's dispute with her regarding her responsibility to indemnify Fidelity for losses it might suffer if Hart's stepchildren prevailed on claims they asserted against Fidelity that were the subject of a separate pending arbitration proceeding. In 2006, Hart's husband, Frederick Howard, opened an individual retirement account with Fidelity ("the Fidelity IRA"), funding it with money previously been held in a retirement account administered by Howard's former employer. Although Howard had previously designated his three children from a prior marriage as beneficiaries of the employer's retirement account, he did not designate any beneficiary for the Fidelity IRA at the time it was opened or at anytime thereafter. Howard died in 2011. His will left all his personal property to the children, explaining that Hart "has a sizeable separate estate of her own." However, because Howard never designated a beneficiary for the Fidelity IRA, Fidelity distributed the money held in that account to Hart in accordance with the terms of the Fidelity IRA, which provided that any assets in the account would become the property of a surviving spouse when the account holder died if no beneficiary had been named. The Howard children unsuccessfully challenged that distribution in Probate Court. Then the Howard children sued Fidelity and Hart, asserting claims of undue influence, fraud, and conversion against Hart and a claim of negligence against Fidelity, contending their father was incompetent at the time the Fidelity IRA was opened and that Hart was the impetus behind the opening of the Fidelity IRA, Fidelity was negligent for failing to implement adequate procedures governing its online-account-opening process that would prevent either fraudulent activity or invalid actions by incompetent individuals. Fidelity moved the Circuit Court to compel arbitration, noting in its motion that Howard, Hart, and the Howard children had all executed documents related to accounts with Fidelity that contained arbitration provisions. The Supreme Court reversed, finding that the circuit court denied Fidelity's motion notwithstanding the submission of competent evidence establishing Fidelity had a right to arbitrate these claims. View "FMR Corp. n/k/a FMR LLC, et al. v. Howard n/k/a Hart" on Justia Law

Hopkins died in a nursing home. Her estate sued the nursing home, Preferred Care, which asked a federal court to enforce the arbitration provision in Hopkins’ admissions agreement. The district court compelled arbitration, enjoined Hopkins from proceeding in the Kentucky state court action, and stayed the federal case until arbitration concluded. The Sixth Circuit dismissed an appeal as prohibited by the Federal Arbitration Act, 9 U.S.C. 16(a). The Act permits review of orders that interfere with arbitration, such as those “refusing” stays of federal proceedings in favor of arbitration and those “denying” petitions to enforce arbitration agreements, as well as interlocutory orders “granting, continuing, or modifying an injunction against an arbitration,” but prohibits appeals from other interlocutory orders that favor arbitration, such as those “granting” stays in favor of arbitration, “directing” or “compelling” arbitration, or “refusing” to enjoin an arbitration. View "Preferred Care of Delaware, Inc. v. Estate of Hopkins" on Justia Law