Justia Arbitration & Mediation Opinion Summaries

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

Three West Virginia residents, dissatisfied with their cable and internet service provided by Suddenlink, sued Cebridge Acquisition, LLC, Cequel III Communications I, LLC, Cequel III Communications II, LLC, and Altice USA, Inc. They alleged that Suddenlink failed to provide reliable services and sought damages for negligence, unjust enrichment, and breach of contract. Suddenlink moved to compel arbitration based on the arbitration agreement in its 2021 Residential Services Agreement (RSA). The district court denied the motions, concluding that a 2017 arbitration agreement controlled, was unconscionable, and could not be enforced.The United States District Court for the Southern District of West Virginia found the 2017 arbitration agreement procedurally and substantively unconscionable, citing the unequal bargaining power between the parties, the adhesive nature of the contract, and the complexity of the terms. The court also noted that the 2017 agreement lacked an opt-out provision and included terms that were overly harsh and lacked mutuality. Consequently, the district court denied Suddenlink’s motions to compel arbitration in all three cases.The United States Court of Appeals for the Fourth Circuit reviewed the case and determined that the 2021 arbitration agreement, not the 2017 version, governed the disputes. The court found that the 2021 agreement was valid and enforceable, as it satisfied all elements of contract formation, including mutual assent and valuable consideration. The court also concluded that the 2021 arbitration agreement was not procedurally or substantively unconscionable. The court reversed the district court’s judgments and remanded the cases with instructions to compel arbitration. View "Meadows v. Cebridge Acquisition, LLC" on Justia Law

Armando Ballesteros purchased a new car from Fairview Ford Sales, Inc. (Fairview) under a retail installment contract. The contract included an arbitration provision applicable to disputes between Ballesteros and Fairview. After discovering defects in the car that were not repaired, Ballesteros sued Fairview and Ford Motor Company (Ford), the car manufacturer, under the Song-Beverly Consumer Warranty Act. Both defendants moved to compel arbitration based on the contract's arbitration provision, but the trial court compelled arbitration only as to Fairview, denying the motion as to Ford.The trial court, San Bernardino County Superior Court, ruled that Ford, as a nonsignatory to the contract, could not compel arbitration. Ford appealed, arguing that Ballesteros's claims against it were intertwined with the contract and that equitable estoppel should apply to compel arbitration.The California Court of Appeal, First Appellate District, Division Five, reviewed the case. The court affirmed the trial court's decision, rejecting Ford's arguments. The appellate court concluded that Ballesteros's statutory claims against Ford were based on warranties that fell outside the contract with Fairview. The court emphasized that Ford, not being a party to the contract, could not invoke the arbitration provision. The court also noted that equitable estoppel did not apply because Ballesteros's claims did not rely on the contract's terms but on independent warranties recognized by the Song-Beverly Act. The court joined other appellate courts in disagreeing with the precedent set by Felisilda v. FCA US LLC, which had allowed a nonsignatory manufacturer to compel arbitration under similar circumstances. The court highlighted broader equitable concerns, stating that arbitration cannot be imposed on a signatory plaintiff’s claims against a nonsignatory without a clear showing of inequity, which Ford failed to demonstrate. View "Ballesteros v. Ford Motor Co." on Justia Law

HollyFrontier Cheyenne Refining, LLC transitioned a petroleum refinery into a renewable diesel production facility in 2021. During this transition, HollyFrontier reassigned work from hourly workers to salaried employees with higher education and technical expertise. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union Local 11-574 filed a grievance, alleging that this reassignment violated their collective bargaining agreement (CBA). An arbitrator ruled in favor of HollyFrontier on the reassignment issue but also decided that salaried employees should be included in the bargaining unit, an issue not submitted for arbitration.The United States District Court for the District of Wyoming reviewed the case and granted HollyFrontier's petition to vacate the arbitrator's decision regarding the inclusion of salaried employees in the bargaining unit. The court reasoned that the arbitrator exceeded his authority by deciding an issue that was not submitted for arbitration.The United States Court of Appeals for the Tenth Circuit reviewed the district court's decision. The Tenth Circuit affirmed the district court's vacatur of the arbitration award. The court held that the arbitrator exceeded his authority by addressing an issue not submitted for arbitration. The parties had only submitted the issue of whether HollyFrontier's reassignment of work violated the CBA, and the arbitrator's decision to include salaried employees in the bargaining unit was beyond the scope of the submitted issue. The court emphasized that arbitration is limited to the issues the parties agree to submit, and the arbitrator must stay within those bounds. View "HollyFrontier Cheyenne Refining, LLC v. United Steel Paper" on Justia Law

Vermont Mutual Insurance Company issued a homeowners insurance policy to Joanne St. Vil for property in Rumford, Rhode Island. St. Vil filed a claim for windstorm damage, which Vermont Mutual paid after an inspection. St. Vil later engaged New England Property Services Group, LLC (NEPSG) for additional repairs, leading to a dispute over the scope of damages. St. Vil assigned her insurance claim to NEPSG, which demanded an appraisal. Vermont Mutual objected to NEPSG's appraiser, Steven Ceceri, due to his financial interest but proceeded with the appraisal, reserving the right to dispute the award. The appraisal resulted in a final award of $144,855.37, which Vermont Mutual contested.The Superior Court denied Vermont Mutual's petition to vacate the appraisal award and granted NEPSG's cross-petition to confirm it. The court ruled that the policy did not require the appraiser to be disinterested, referencing a similar case it had previously decided.The Rhode Island Supreme Court reviewed the case and held that the appraisal process in Vermont Mutual's policy constituted arbitration under the Arbitration Act. The Court found that Steven Ceceri had a direct financial interest in the award, establishing evident partiality. The Court also determined a causal nexus between Ceceri's conduct and the final award, as the award was not unanimous and significantly higher than Vermont Mutual's appraiser's estimate. Consequently, the Supreme Court vacated the Superior Court's order and remanded the case for a new appraisal. View "Vermont Mutual Insurance Company v. New England Property Services Group, LLC" on Justia Law

Trista Carter entered into a contract with Johnny Mack Morrow and Martha Morrow to purchase a house and 245 acres for $1,600,000. The contract included provisions for earnest money and an arbitration clause. The sale did not close, and the Morrows sued Carter for breach of contract and sought damages, including the earnest money. They also named Crye-Leike, Inc., the company holding the earnest money, as a defendant.The Franklin Circuit Court reviewed the case and denied Carter's motion to compel arbitration. The court found that the arbitration clause did not apply to disputes arising under paragraphs 11 and 12 of the contract, which included the earnest money dispute. Carter filed a motion to alter, amend, or vacate the judgment, arguing that the breach-of-contract claim was not solely an interpleader action regarding the earnest money. The trial court denied Carter's postjudgment motions by operation of law.The Supreme Court of Alabama reviewed the case and held that the arbitration agreement in the contract specifically excluded disputes related to the earnest money, as outlined in paragraph 12. Therefore, the trial court properly denied the motion to compel arbitration for the interpleader claim. However, the court found that the breach-of-contract claim, which sought damages beyond the earnest money, was subject to arbitration under the contract's arbitration clause. The Supreme Court of Alabama affirmed the trial court's decision regarding the interpleader claim but reversed the decision regarding the breach-of-contract claim and remanded the case for further proceedings consistent with its opinion. View "Carter v. Morrow" on Justia Law

Haylee Hinton was injured in a car accident caused by another motorist running a red light. She initially sought compensation from her employer’s workers’ compensation insurer and later settled with the motorist’s insurance carrier. Hinton then filed a claim for underinsured motorist benefits with Midwest Family Mutual Insurance, her underinsured motorist coverage provider, and submitted the claim to arbitration as permitted by Utah law.Midwest sought a declaratory judgment from the district court to limit the categories of damages Hinton could recover in arbitration, citing Utah Code section 31A-22-305.3(4)(c)(i), which excludes benefits paid or payable under the Workers’ Compensation Act from underinsured motorist coverage. The district court interpreted the statute to mean that past and future medical expenses and two-thirds of lost wages were payable under workers’ compensation and ruled that Hinton could not recover these categories of damages from Midwest.Hinton petitioned for interlocutory review, arguing that the district court lacked jurisdiction and misinterpreted the statute. The Utah Supreme Court found that the district court had jurisdiction but misinterpreted the statute. The court concluded that “payable” means benefits that can or may be paid to a specific claimant in a particular case, not just categories of damages generally available under workers’ compensation. The court vacated the district court’s order and remanded the matter for further proceedings to determine what benefits remain payable to Hinton under the Workers’ Compensation Act. View "Hinton v. Midwest Family Mutual Insurance" on Justia Law