Justia Arbitration & Mediation Opinion Summaries

Prospect Funding Holdings (NY), LLC, won arbitration awards against Ronald Palagi and his law firm, Ronald J. Palagi, P.C., LLC. Palagi and his firm filed an application to vacate the awards in federal court, which the district court granted.   The Eighth Circuit vacated the district court’s order and remanded with instructions to dismiss for lack of subject matter jurisdiction. The court reasoned that applicants seeking to vacate or confirm awards under Section 9 and Section 10 must identify an “independent jurisdictional basis” for their actions. The court wrote that the dispute between Prospect and Palagi and his firm does not contain a federal question, so diversity of citizenship between the parties must exist. Here, the application to vacate the 2021 awards does not identify any jurisdictional basis whatsoever. Crucially, Palagi and his firm failed to plead the parties’ citizenship in the application. Palagi’s individual citizenship has never been pleaded before the court. Diversity of citizenship has not been established so the district court lacked jurisdiction over the case. View "Prospect Funding Holdings (NY) v. Ronald J. Palagi, P.C., L.L.C." on Justia Law

Plaintiffs are twenty-six former employees of International Business Machines Corporation (“IBM”) who signed separation agreements requiring them to arbitrate any claims arising from their termination by IBM. The agreements set a deadline for initiating arbitration and included a confidentiality requirement. Plaintiffs missed the deadline but nonetheless tried to arbitrate claims under the Age Discrimination in Employment Act of 1967 (“ADEA”). Their arbitrations were dismissed as untimely. They then sued IBM in district court, seeking a declaration that the deadline is unenforceable because it does not incorporate the “piggybacking rule,” a judge-made exception to the ADEA’s administrative exhaustion requirements. Shortly after filing suit, Plaintiffs moved for summary judgment and attached various documents obtained by Plaintiffs’ counsel in other confidential arbitration proceedings. IBM moved to seal the confidential documents. The district court granted IBM’s motions to dismiss and seal the documents. On appeal, Plaintiffs argued that (1) the filing deadline in their separation agreements is unenforceable and (2) the district court abused its discretion by granting IBM’s motion to seal.   The Second Circuit affirmed. The court first wrote that the piggybacking rule does not apply to arbitration and, in any event, it is not a substantive right under the ADEA. Second, the court held that the presumption of public access to judicial documents is outweighed here by the Federal Arbitration Act’s (“FAA”) strong policy in favor of enforcing arbitral confidentiality provisions and the impropriety of counsel’s attempt to evade the agreement by attaching confidential documents to a premature motion for summary judgment. View "In re IBM Arb. Agreement Litig." on Justia Law

Plaintiff sued Defendant PeopleConnect, Inc., alleging that it violated his right of publicity by using his photo on its website, Classmates.com. PeopleConnect responded by seeking two forms of relief. First, it sought to compel Plaintiff to arbitrate his claims under section 4 of the Federal Arbitration Act (FAA). Second, it sought to dismiss Plaintiff’s complaint, arguing in relevant part that it was entitled to section 230 immunity under the Communications Decency Act. In a 26-page document labeled a single “order,” the district court denied both requests for relief. PeopleConnect filed an interlocutory appeal, attempting to challenge both denials by relying on the FAA as the basis for interlocutory appellate jurisdiction.   The Ninth Circuit dismissed in part, vacated in part, and remanded. The panel determined that it had jurisdiction to review the district court’s order denying the motion to compel arbitration. The panel held that two orders do not become one “order” for the purposes of § 16(a) solely by virtue of the fact that they appear in the same document. Notwithstanding its label as a single “order,” the document clearly contained multiple orders. Because Section 16(a) grants jurisdiction to review only an order denying a motion to compel arbitration, and because the district court’s denial of the motion to dismiss was not part of such an order, the panel lacked jurisdiction to review it. View "JOHN BOSHEARS V. PEOPLECONNECT, INC." on Justia Law

HomeServices of America, Inc.; BHH Affiliates, LLC; and HSF Affiliates, LLC (collectively, “HomeServices”) appealed from the district court’s denial of HomeServices’s motion to compel unnamed class members to arbitrate their claims against it.   The Eighth Circuit affirmed. The court explained that here, HomeServices conceded before the district court that “neither the named plaintiffs nor any purported class member has any contract or direct relationship with HomeServices relevant to the claims asserted in this case.” Moreover, the Listing Agreements and their included Arbitration Agreements do not name HomeServices as a party or third-party beneficiary. The court explained that the district court correctly concluded this “narrow, party-specific language . . . does not clearly and unmistakably delegate to an arbitrator threshold issue of arbitrability between nonparties, including HomeServices.” Thus, the court held that the district court correctly concluded that “the court—not an arbitrator—must address whether HomeServices can enforce the Arbitration Agreements.” Moreover, the court held that the district court did not err in denying HomeServices’s motion to compel the unnamed class members to arbitrate their claims against it. View "Scott Burnett v. HomeServices of America, Inc." on Justia Law

PayPal users can transfer money to businesses and people; they can donate to charities through the Giving Fund, its 501(c)(3) charitable organization. Kass created a PayPal account and accepted PayPal’s 2004 User Agreement, including a non-mandatory arbitration clause and allowing PayPal to amend the Agreement at any time by posting the amended terms on its website. In 2012 PayPal amended the Agreement, adding a mandatory arbitration provision. Users could opt out until December 2012. In 2016, PayPal sent emails to Kass encouraging her to make year-end donations. Kass donated $3,250 to 13 charities through the Giving Fund website. Kass alleges she later learned that only three of those charities actually received her gifts; none knew that Kass had made the donations. Kass claims that, although Giving Fund created profile pages for these charities, it would transfer donated funds only to charities that created a PayPal “business” account; otherwise PayPal would “redistribute” the funds to similar charities.Kass and a charity to which she had donated filed a purported class action. The district court granted a motion to compel arbitration, then affirmed the arbitrator’s decision in favor of the defendants. The Seventh Circuit vacated. In concluding that Kass had consented to the amended Agreement, the district court erred by deciding a disputed issue of fact that must be decided by a trier of fact: whether Kass received notice of the amended Agreement and implicitly agreed to the new arbitration clause. View "Kass v. PayPal Inc." on Justia Law

Petitioners Rick Hendrick Dodge Chrysler Jeep Ram (Rick Hendrick Dodge) and Isiah White argued an arbitrator had to decide whether they could enforce an arbitration provision in a contract even after that contract had been assigned to a third party. The court of appeals rejected this argument and affirmed the circuit court's determinations that: (1) the circuit court was the proper forum for deciding the gateway question of whether the dispute is arbitrable; and (2) Petitioners could not compel arbitration because Rick Hendrick Dodge assigned the contract to a third party. The South Carolina Supreme Court held that the doctrine announced in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) required the arbitrator to decide whether the assignment extinguished Petitioners' right to compel arbitration. Therefore, the Court reversed the court of appeals' decision and vacated the circuit court's discovery order. View "Sanders v. Savannah Highway Automotive Company" on Justia Law

In this appeal from the district court, Plaintiffs A.A. and Kirk Amos Delivery and Courier, LLC (“Kirk Delivery”) challenged an order of the district court compelling the arbitration of various claims that Plaintiffs seek to pursue against Amazon Logistics, Inc. (“Amazon”).  Conceding that each of their claims against Amazon falls within the scope of a binding commercial contract made between Kirk Delivery and Amazon in 2019 — and that an arbitration clause governed by the Federal Arbitration Act (the “FAA”) is set forth within that contract — Plaintiffs contend, in relevant part, that arbitration is not required due to the FAA’s exemption for “contracts of employment” with “transportation workers.”   The Fourth Circuit affirmed the district court’s judgment. The court held that the binding commercial contract is a business services deal struck between two corporate entities, not a “contract of employment” — the FAA’s so-called “transportation worker” exemption is inapplicable in these circumstances. The FAA thus mandates arbitration of all Plaintiffs’ claims. View "Ahaji Amos v. Amazon Logistics, INC." on Justia Law

Discover Bank seeks to compel Plaintiff to arbitrate her claims that Discover Bank unlawfully discriminated against her based on citizenship and immigration status when it denied her application for a consolidation loan for her student loan. Discover Bank argues that two arbitration agreements—one Plaintiff made in connection with the student loan and one she made in connection with the application for the consolidation loan—require arbitration here. The district court declined to compel arbitration, finding that neither agreement required arbitration.   The Ninth Circuit affirmed the district court’s order declining to compel Plaintiff to arbitrate. The panel held that Discover Bank was judicially estopped from arguing that Perez did not opt out of the Discover Bank agreement. The panel determined that Discover Bank’s past position clearly contradicted its current position that the opt-out would only apply to Plaintiff’s future discrimination claims, Discover Bank persuaded the court to accept its previous position, and Discover Bank would derive an unfair advantage absent estoppel. Citing Revitch v. DIRECTV, LLC, 977 F.3d 713 (9th Cir. 2020), the panel further held that Perez and Discover Bank never formed an agreement to arbitrate her discrimination claims involving her application for a consolidation loan via the Citibank agreement. View "ILIANA PEREZ, ET AL V. DISCOVER BANK" on Justia Law

Petitioner appealed from a district court judgment dismissing his to confirm an arbitral award. The court held that a forum selection 2 clause in the parties’ arbitration agreement required that any confirmation action be brought in the state courts of New Jersey or New York, and that this deprived the district court of subject matter jurisdiction.   The Second Circuit vacated. The court concluded that the district court erred in dismissing Petitioner’s petition. First, the court held that the petition adequately pleaded subject matter jurisdiction based on diversity of citizenship. Because parties cannot contractually strip a district court of its subject matter jurisdiction, it was error to conclude that the forum selection clause did so. Second, the court interpreted the relevant forum selection clauses as permissive arrangements that merely allow litigation in certain fora, rather than mandatory provisions that require litigation to occur only there. Accordingly, applying the modified forum non conveniens framework, the court held that the forum selection clauses did not bar proceedings from going forward in the United States District Court for the Southern District of New York. View "Rabinowitz v. Kelman" on Justia Law

Defendant-Appellant TA Operating LLC (TA) appeals the district court’s denial of its motion to compel arbitration of employment-related claims brought by Plaintiff.   The Ninth Circuit vacated the district court’s order denying Defendant’s motion to compel arbitration. The panel held that the district court erred in finding that the arbitration agreement’s delegation clause was unenforceable because it was substantively unconscionable. The district court properly considered whether an “unrelated” jury waiver provision made the delegation clause unconscionable. Here, though, the jury waiver provision applied only if the Agreement were determined to be unenforceable. As such, it could not support the conclusion that an agreement to arbitrate enforceability (i.e., the delegation clause) was unenforceable. View "KENNETH HOLLEY-GALLEGLY V. TA OPERATING, LLC" on Justia Law