Justia Arbitration & Mediation Opinion Summaries

Saxon, a Southwest Airlines ramp supervisor, frequently loads and unloads cargo alongside the ramp agents. Alleging that Southwest was failing to pay proper overtime wages to ramp supervisors, Saxon brought a putative class action under the Fair Labor Standards Act. Saxon’s employment contract required her to arbitrate wage disputes individually; she claimed that ramp supervisors were a “class of workers engaged in foreign or interstate commerce,” exempt from the Federal Arbitration Act, 9 U.S.C. 1.The Supreme Court affirmed the Seventh Circuit, holding that the act of loading cargo onto a vehicle to be transported interstate is itself commerce according to the “ordinary, contemporary, common meaning” of the word. By referring to “workers” rather than “employees,” the FAA directs attention to “the performance of work” and the word “engaged” similarly emphasizes the actual work that class members typically carry out. Saxon is a member of a “class of workers” based on what she frequently does, physically loading and unloading cargo on and off airplanes, and not on what Southwest does generally. Exempted workers must at least play a direct and “necessary role in the free flow of goods” across borders. Cargo loaders exhibit this central feature of a transportation worker. View "Southwest Airlines Co. v. Saxon" on Justia Law

After a construction project fell through, Plaintiff sued Defendant. Defendant filed a motion to compel arbitration. At issue in this case is whether the party who signed the contract on behalf of Plaintiff had authority to do so. The district court concluded they did not and the Eighth Circuit affirmed.The Eighth Circuit found that the signing party neither had actual or apparent authority to sign the contract containing the arbitration agreement. Apparent authority is created by the conduct of the principal, not of the agent. View "GP3 II, LLC v. Litong Capital, LLC" on Justia Law

The Supreme Court reversed the order of the district court denying SR Construction, Inc.'s motion to compel arbitration because its master subcontract agreement (MSA) with Peek Brothers Construction, Inc. constituted a valid arbitration provision that applied to the parties' underlying dispute, holding that the dispute was arbitrable.On appeal, SR argued that the district court erred in holding that the underlying dispute fell outside the bounds of the parties' arbitration agreement.The Supreme Court agreed and reversed, holding (1) as applied, the MSA provision was broad, and an attendant presumption of arbitrability applied; and (2) Peek's dispute was presumptively arbitrable under the parties' agreement. View "SR Construction, Inc. v. Peek Brothers Construction, Inc." on Justia Law

Plaintiff, sued her former employer, alleging a variety of employment law violations. Defendant moved to dismiss her suit and to compel arbitration. Defendant supported the motion by presenting an arbitration agreement bearing what appeared to be the worker’s electronic signature. In a sworn declaration, however, the worker categorically and specifically denied that the signature was hers. She also pointed to other circumstantial evidence as to its inauthenticity. The district court concluded that the worker’s evidence was insufficient to create a triable issue of fact, and so granted the restaurant’s motion.   The Second Circuit vacated the district court’s grant of Defendant’s motion to dismiss and to compel arbitration. The court held that the district court erred when it disregarded Plaintiff’s sworn declaration as “nothing more than a de facto extension of [her] pleadings.”The court explained that it resolves agreement-formation questions by applying the law of the state at issue. Here, under New York law, when moving to compel arbitration, “[t]he party seeking . . . arbitration bears an initial burden of demonstrating that an agreement to arbitrate was made.” As such, the burden shifted to Plaintiff, who needed to counter with at least “some evidence . . . to substantiate [her] denial” that an agreement had been made. Here, Plaintiff’s detailed accounting, under oath, is “some evidence” that she did not agree to arbitration. Thus, there is a triable issue of fact as to whether she ever received, or became aware of, Defendant’s arbitration agreements, regardless of whether she ultimately signed them. View "Barrows v. Brinker Restaurant Corporation" on Justia Law

Appellant is a pipeline-inspection company that hires inspectors and sends them to work for its clients. When Plaintiff was hired, Appellant had him sign an Employment Agreement that contained an arbitration clause. That arbitration provision explained that Plaintiff and Appellant agree to arbitrate all claims that have arisen or will arise out of Plaintiff’s employment. Appellant staffed Plaintiff on a project with Defendant, a diversified energy company that stores and transports natural gas and crude oil.   Alleging that the Fair Labor Standards Act entitled him to overtime pay, Plaintiff filed a collective action against Defendant; he brought no claims against Appellant. Appellant moved to intervene. The magistrate judge granted that motion, explaining that Appellant met the criteria for both permissive intervention and intervention as of right. Appellant claimed that it was an “aggrieved party” under Section 4 of the Federal Arbitration Act (“FAA”) and thus could compel arbitration. The magistrate judge rejected all the motions. The district court affirmed.   The Fifth Circuit dismissed for lack of jurisdiction Appellant’s appeal. The court held that Appellant is not an aggrieved party under Section 4 of the FAA and cannot compel arbitration. The court explained it is only where the arbitration may not proceed under the provisions of the contract without a court order that the other party is really aggrieved. Here, Plaintiff only promised to arbitrate claims brought against Appellant. Claiming that Plaintiff did not arbitrate its claims with Defendant is therefore not an allegation that he violated his agreement with Appellant. View "Hinkle v. Phillips 66 Company" on Justia Law

Corporacion AIC, SA (“AICSA”) and Hidroelectrica Santa Rita S.A. (“HSR”), signed a contract for the construction of a hydroelectric power plant in Guatemala. Under the contract, AICSA was responsible for creating a new power plant for HSR. However, AICSA had to discontinue the project because HSR issued a force majeure notice. HSR sought reimbursement for the advance payments it had made to AICSA and ultimately commenced arbitration proceedings.   AICSA sought dismissal of HSR’s claims, counterclaimed and sought to enjoin a subcontractor. A split, three-member arbitration panel denied AICSA’s request to join the subcontractor to the arbitration and ruled for HSR on the merits claims. The district court denied AICSA’s petition seeking to vacate the arbitral award on the basis that the arbitration panel had exceeded its powers. It said that Eleventh Circuit precedent foreclosed AICSA’s claim that a party to a New York Convention arbitration could challenge an arbitration panel’s decision on the exceeding powers ground.   The Eleventh Circuit noted that the Circuit is out of line with Supreme Court precedent, however, the court affirmed the district court’s determination. On appeal the relevant questions were whether: (1) an arbitration panel exceeded its powers in a non-domestic arbitration under the New York Convention?  And if so, (2) did the arbitration panel in this case indeed exceed its powers. The court held it was compelled to say, under Inversiones, that it may not vacate the arbitration award in this case on the exceeding powers ground. Consequently, the court could not the reach the merits of whether vacatur would be appropriate in the case. View "Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A." on Justia Law

Plaintiff sued his mortgage service asserting claims under the Fair Debt Collection Practices Act and Florida law. Plaintiff’s claims arose from a mortgage payment he made to Defendant using an automated pay-by-phone service provided by a third-party payment service provider. Before making his mortgage payment, Plaintiff agreed to be bound by the service’s terms and conditions. Those terms and conditions provided that “any dispute arising from” Plaintiff’s use of the service “shall be” arbitrated. They also provided that an “arbitrator shall also decide what is subject to arbitration unless prohibited by law,” and incorporated by reference an arbitration provision of the American Arbitration Association.  The district court denied Defendant’s motion to compel arbitration and ruled that the Dodd-Frank Act prohibited enforcement of the parties’ arbitration agreement.   The Eleventh Circuit reversed and remanded the district court’s ruling with instructions to compel arbitration. The court explained that in the terms and conditions governing Plaintiff’s use of the service, Plaintiff and Defendant clearly and unmistakably agreed that an arbitrator would decide all threshold questions about the arbitrability of Plaintiff’s claims, including whether their arbitration agreement is enforceable. Plaintiff has not specifically challenged the enforceability of the parties’ agreement to arbitrate threshold questions about the arbitrability of his claims. Plaintiff’s Dodd-Frank Act challenge related only to the enforceability of the parties’ separate agreement to arbitrate the merits of his claims, and the parties have agreed to submit questions about the enforceability of that agreement to an arbitrator. View "William Attix v. Carrington Mortgage Services, LLC" on Justia Law

Plaintiff sued her employer, Life Insurance Company of North America, and several related individuals (collectively, Employer) for discrimination, harassment and wrongful termination. In response, Employer moved to compel arbitration based on a 2014 arbitration agreement. However, Employer did not present a copy of the agreement. Instead, Employer presented an auto-generated acknowledgment indicating Plaintiff read and consented to the terms of the agreement.The trial court denied Employer's motion to compel arbitration, finding that Employer did not establish an agreement to arbitrate and, even if an agreement existed, it was both procedurally and substantively unconscionable.The Second Appellate District affirmed. The trial court had the authority to review the "gateway" issue of arbitrability because Plaintiff claimed to have never seen or agreed to the arbitration agreement. Further, the fact that Employer's system created an auto-generated acknowledgment that Plaintiff consented to the agreement did not overcome Plaintiff's claim that she was not presented with the agreement and never would have agreed to it. View "Trinity v. Life Ins. Co. of North America" on Justia Law

Morgan, an hourly employee at Sundance's Taco Bell franchise, had signed an agreement to arbitrate any employment dispute. Morgan later filed a nationwide collective action asserting that Sundance had violated federal law regarding overtime pay. Sundance initially defended as if no arbitration agreement existed, filing an unsuccessful motion to dismiss and engaging in unsuccessful mediation. Months after Morgan filed suit, Sundance unsuccessfully moved to compel arbitration under the Federal Arbitration Act (FAA). Under Eighth Circuit precedent, a party waived its right to arbitration if it knew of the right; “acted inconsistently with that right”; and “prejudiced the other party by its inconsistent actions.”The Supreme Court vacated and remanded. The Eighth Circuit erred in conditioning a waiver of the right to arbitrate on a showing of prejudice. A court must hold a party to its arbitration contract just as the court would to any other kind and may not devise novel rules to favor arbitration over litigation. Federal policy is to treat arbitration contracts like all others, not to foster arbitration. Courts may not create arbitration-specific procedural rules. Because the usual federal rule concerning waiver does not include a prejudice requirement, prejudice is not a condition of finding that a party waived its right to stay litigation or compel arbitration under the FAA. The proper inquiry would focus on Sundance’s conduct. Did Sundance knowingly relinquish the right to arbitrate by acting inconsistently with that right? View "Morgan v. Sundance, Inc." on Justia Law

James P. Key, Jr. appealed a circuit court order denying his motion to compel arbitration of his claims against Warren Averett, LLC, and Warren Averett Companies, LLC (collectively, "WA"). Key alleged that he was a certified public accountant who had been employed by WA for 25 years and had been a member of WA for 15 years; that he had executed a personal-services agreement ("PSA") with WA that included a noncompete clause; and that WA had sent him a letter terminating his employment. Key sought a judgment declaring "that the Non-Compete Clause and the financial penalty provision contained in the PSA is not applicable to Key and is an unlawful restraint of Key's ability to serve his clients as a professional." The Alabama Supreme Court found that whether Key's claims against WA had to be arbitrated was a threshold issue that should not have been decided by the circuit court; nor was it appropriate for the Supreme Court to settle the issue in this appeal. Accordingly, the circuit court's order was reversed, and the case was remanded for the circuit court to enter an order sending the case to arbitration for a determination of the threshold issue of arbitrability and staying proceedings in the circuit court during the pendency of the arbitration proceedings. View "Key v. Warren Averett, LLC, et al." on Justia Law