Justia Arbitration & Mediation Opinion Summaries

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

The case involves a dispute between Robert and Stephen Samuelian (the Samuelians) and Life Generations Healthcare, LLC (the Company), which they co-founded along with Thomas Olds, Jr. The Samuelians sold a portion of their interest in the Company, and the new operating agreement included a noncompetition provision. The Samuelians later challenged this provision in arbitration, arguing it was unenforceable under California law.The arbitrator found the noncompetition provision invalid per se under California Business and Professions Code section 16600, as it arose from the sale of a business interest. The arbitrator also ruled that the Samuelians did not owe fiduciary duties to the Company because they were members of a manager-managed limited liability company. The Company argued that the arbitrator had legally erred by applying the per se standard instead of the reasonableness standard. The trial court reviewed the arbitrator’s ruling de novo, found no error, and confirmed the award.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. The court held that the arbitrator had applied the wrong standard under section 16600. The court concluded that noncompetition agreements arising from the partial sale of a business interest should be evaluated under the reasonableness standard, not the per se standard. The court reasoned that a partial sale leaves the seller with some ongoing connection to the business, which could have procompetitive benefits. Therefore, such restraints require further scrutiny to determine their reasonableness.The court reversed the trial court’s judgment confirming the arbitration award and directed the trial court to enter an order denying the Samuelians’ petition to confirm the award and granting the Company’s motion to vacate the entire award, including the portion awarding attorney fees and costs. View "Samuelian v. Life Generations Healthcare, LLC" on Justia Law

The case involves International Petroleum Products and Additives Company (IPAC), a California-based company, which entered into sales and distribution agreements with Black Gold S.A.R.L., a Monaco-based company. Black Gold breached these agreements by using IPAC’s confidential information to develop competing products. IPAC won an arbitration award of over $1 million against Black Gold. However, Black Gold declared bankruptcy in Monaco, complicating IPAC’s efforts to collect the award.The United States District Court for the Northern District of California confirmed the arbitration award and entered judgment against Black Gold. During post-judgment discovery, Black Gold engaged in misconduct, leading the district court to sanction Black Gold and add Lorenzo and Sofia Napoleoni, Black Gold’s owners, as judgment debtors on the grounds that they were Black Gold’s alter egos. Black Gold’s petition for recognition of its Monaco bankruptcy proceedings was initially denied by the bankruptcy court, but this decision was later reversed by the Bankruptcy Appellate Panel (BAP), which mandated recognition of the Monaco proceedings.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the automatic bankruptcy stay under 11 U.S.C. § 1520 did not retroactively apply to the date of the bankruptcy court’s initial denial of Black Gold’s petition. The court also held that the automatic stay did not extend to IPAC’s alter ego claim against the Napoleonis. The court affirmed the district court’s judgment and the award of attorneys’ fees and costs in favor of IPAC, concluding that the alter ego claim was not the property of Black Gold’s estate under California law. View "International Petroleum Products and Additives Co, Inc. v. Black Gold S.A.R.L." on Justia Law