Justia Arbitration & Mediation Opinion Summaries

Plaintiffs Nicole Leshane, Steve Garner, Justin Prasad, Isaac Saldana, and Maurice West sued defendants Tracy VW, Inc. and RJ Gill Ventures, Inc. alleging several Labor Code violations. Plaintiffs brought suit on behalf of themselves as defendants’ former employees, on behalf of others similarly situated, and on behalf of the state pursuant to the Private Attorneys General Act of 2004. After defendants filed a petition to compel arbitration, plaintiffs filed a first amended complaint alleging violations of the Labor Code solely as representatives of the state under the Private Attorneys General Act. Defendants continued to seek arbitration of plaintiffs’ individual claims and dismissal of their class-wide claims pursuant to the arbitration agreements each plaintiff signed. The trial court denied defendants’ petition to compel arbitration finding plaintiffs’ claim under the Private Attorneys General Act was not subject to arbitration citing Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). Defendants appealed the trial court’s order. Finding no reversible error in the trial court's judgment, the Court of Appeal affirmed. View "Leshane v. Tracy VW, Inc." on Justia Law

The Supreme Court reversed the decision of the court of appeals affirming in part and reversing in part the judgment of the trial court holding that the settlement agreement between the parties in this case barred the claims asserted in this suit and in an arbitration proceeding, holding that the trial court did not err.A billion-dollar break-up between two large corporations engaged in the international petroleum business resulted in numerous claims and lawsuits, which the parties finally resolved through a comprehensive settlement agreement. The trial court concluded that the settlement agreement, including its release provisions and a disclaimer of reliance, were valid and enforceable and barred the claims asserted in both this lawsuit and in the arbitration proceeding. The court of appeals reversed in part, concluding that the settlement agreement did not bar certain claims. The Supreme Court reversed and reinstated the final judgment of the trial court, holding that the parties fully and finally resolved the current claims through their comprehensive settlement agreement. View "Transcor Astra Group S.A. v. Petrobras America Inc." on Justia Law

As a condition of Plaintiff’s employment, she agreed to be bound by Defendant’s Alternative Dispute Resolution Policy (“ADR Policy”), which provided that “final and binding arbitration” would be the exclusive means for resolving “covered disputes” between the employee and employer. Plaintiff provided the required notice of alleged Labor Code violations. The agency did not respond to her notice within the time provided by statute, allowing Plaintiff to file PAGA representative claims. Plaintiff’s lawsuit also alleged class claims. Relying on the ADR Policy, Defendant requested Plaintiff stipulate to arbitrate her individual claims, strike her class claims, and stay her PAGA claims pending the outcome of arbitration. Plaintiff refused; she instead amended her complaint to drop the class claims, leaving only the PAGA claims that were asserted on behalf of herself and all other similarly aggrieved employees. After an unsuccessful mediation, Defendant moved to compel arbitration of Plaintiff’s PAGA claims. The trial court denied the motion. On appeal, Defendant argued that there is no distinction between the agent binding the principal to arbitration under a power of attorney in Kindred Nursing and an employee binding the State of California in a PAGA action.   The Second Appellate Division affirmed the Superior Court’s order denying Defendant’s motion to compel arbitration. The court reasoned that both Epic Systems and Kindred Nursing involved private actions between private parties asserting private rights. It did not involve an action between an employer and a representative of the state to recover civil penalties on the state’s behalf to benefit the general public. View "Wing v. Chico Healthcare & Wellness Centre" on Justia Law

The Cintas “defined contribution” retirement plan has a “menu” of investment options in which each participant can invest. Each Plan participant maintains an individual account, the value of which is based on the amount contributed, market performance, and associated fees. Under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. 1102(a)(1), the Plan’s fiduciaries have the duty of loyalty—managing the plan for the best interests of its participants and beneficiaries—and a duty of prudence— managing the plan with the care and skill of a prudent person acting under like circumstances. Plaintiffs, two Plan participants, brought a putative class action, contending that Cintas breached both duties. Plaintiffs had entered into multiple employment agreements with Cintas; all contained similar arbitration provisions and a provision preventing class actions.The district court declined to compel arbitration, reasoning that the action was brought on behalf of the Plan, so that it was irrelevant that the two Plaintiffs had consented to arbitration through their employment agreements–the Plan itself did not consent. The Sixth Circuit affirmed. The weight of authority and the nature of ERISA section 502(a)(2) claims suggest that these claims belong to the Plan, not to individual plaintiffs. The actions of Cintas and the other defendants do not support a conclusion that the plan has consented to arbitration. View "Hawkins v. Cintas Corp." on Justia Law

The Supreme Court affirmed the order of the circuit court confirming an arbitration award in favor of Car Credit, Inc., holding that the arbitration agreement was valid and that the circuit court did not err.Cathy Pitts entered into a retail installment contract and security agreement with Car Credit to purchase and finance a vehicle. The parties also entered into a written arbitration agreement. After Car Credit repossessed the vehicle and sued Pitts for the remaining deficiency balance Pitts filed a counterclaim alleging an unlawful and deceptive pattern of wrongdoing followed by Car Credit. The circuit court sustained Car Credit's motion to compel arbitration. The arbitrator entered an award on the merits' of Pitts' claim in favor of Car Credit. The circuit court entered judgment for Car Credit on all causes of action in accordance with the arbitration award. The Supreme Court affirmed, holding that the arbitration agreement was enforceable. View "Car Credit, Inc. v. Pitts" on Justia Law

Plaintiff sued her employer, the Institute of International Education, for discrimination in violation of federal, state, and local, employment law. The district court referred the matter to New York’s mediation program and the parties reached an agreement to settle the case. The parties committed that agreement to writing, signed it, had their counsel sign it, and had the mediator sign it. The week after the mediation, Plaintiff contacted the district court seeking to revoke her acceptance of the mediation agreement and to continue the litigation. The Institute then moved to enforce the mediation agreement. The district court enforced the mediation agreement and entered judgment in favor of the Institute.   The Second Circuit affirmed the district court judgment. The court concluded that the mediation agreement bound the parties to its terms. The court reasoned that the case is not one in which the language of the agreement merely committed the parties to “work together in accordance with the terms and conditions outlined in” the agreement, which would be an agreement to continue negotiating. And while this language was pre-printed, the parties could have crossed it out if they did not intend to acknowledge that agreement on all issues had been reached or they could have added language in the handwritten portion of the mediation agreement reserving the right not to be bound by the mediation agreement’s terms until the final agreement was drafted. Further, the court found that Plaintiff was not under duress when she signed the mediation agreement. View "Murphy v. Inst. of Int'l Educ." on Justia Law

Roe invented a nozzle that transforms gas into liquid. Roe assigned the nozzle to Nano Gas, in exchange for 20% equity in Nano and a board seat. The relationship floundered. Roe left Nano, taking a prototype machine and some of Nano’s intellectual property produced by Hardin, another employee, and continued to develop the technology.An arbitrator determined that Roe should compensate Nano ($1,500,000) but that Roe deserved compensation for his work ($1,000,000) in the form of an offset against Nano's award. The arbitrator noted that Roe remained a Nano shareholder and could benefit financially in the future, then ordered Roe to return the Hardin work-papers to Nano, or, if unable to do that, to pay Nano $150,000. Nano sought to enforce the award and obtained judgment for $650,000. Nano filed a turnover motion seeking Roe’s Nano stock, valued at approximately $117,000. Roe argued that the award explicitly stated he could pay the remaining amount “in such manner as Roe chooses,” and provided he would remain a shareholder.The district court reasoned that Roe could choose how to pay the $500,000 award, but ordered Roe to turn over the stock or identify other assets to satisfy the $150,000 award. The Seventh Circuit reversed regarding Roe’s discretion to satisfy the $500,000 award and affirmed the $150,000 award for the Hardin papers. The award is devoid of any language indicating Roe shall remain a shareholder indefinitely or that Roe has complete discretion to decide if, when, and how Roe pays the award. View "Nano Gas Technologies, Inc. v. Roe" on Justia Law

The Supreme Court held that a party who does not receive notice of an interlocutory order denying arbitration under the Federal Arbitration Act in time to appeal because of the trial court clerk's error may seek review by mandamus.Plaintiff sued her employer alleging negligence. Defendant moved to compel arbitration based on its mandatory arbitration policy. The trial court denied the motion to compel, ruling that the policy was unconscionable. The court of appeals remanded the case, after which Defendant filed a supplemental motion to compel arbitration. The trial court denied the motion, but the clerk failed to give Defendant notice of the order. Defendant finally received notice of the order five months after it issued. The Supreme Court issued a writ of mandamus and directed the trial court promptly to issue an order compelling arbitration of Plaintiff's claims, holding (1) the clerk's failure to give notice of the trial court's order deprived Defendant of an adequate appellate remedy; and (2) the arbitration agreement was not illusory. View "In re Whataburger Restaurants LLC" on Justia Law

Dual Diagnosis Treatment Center, Inc., d/b/a Sovereign Health of San Clemente, and its owner, Tonmoy Sharma, (collectively Sovereign) appealed the trial court's denial of Sovereign's motion to compel arbitration of claims asserted by Allen and Rose Nelson for themselves and on behalf of their deceased son, Brandon. The Nelsons alleged a cause of action for wrongful death, and on behalf of Brandon, negligence, negligence per se, dependent adult abuse or neglect, negligent misrepresentation, and fraud. According to the complaint, despite concluding that 26-year-old "Brandon requires 24 hour supervision ... at this time" after admitting him to its residential facility following his recent symptoms of psychosis, Sovereign personnel allowed him to go to his room alone, where he hung himself with the drawstring of his sweatpants. The trial court denied Sovereign's motion to compel arbitration because: (1) the court found Sovereign failed to meet its burden to authenticate an electronic signature as Brandon's on Sovereign's treatment center emollment agreement; and (2) even assuming Brandon signed the agreement, it was procedurally and substantively unconscionable, precluding enforcement against Brandon or, derivatively, his parents. Sovereign challenged the trial court's authentication and unconscionability findings. Finding no reversible error, the Court of Appeal affirmed the trial court's judgment. View "Nelson v. Dual Diagnosis Treatment Center" on Justia Law

Gulfstream, a Georgia corporation, and Oceltip, an Australian company, entered a sales agreement (“Agreement”). Gulfstream terminated the Agreement after Oceltip failed to pay the full amount or cure a defect within the ten-day cure period.Oceltip submitted a demand for arbitration to the AAA, seeking a finding that Gulfstream had anticipatorily repudiated the Agreement and that this conduct suspended Oceltip’s duties, allowing Oceltip to recoup the money it had paid, and entitled Oceltip to damages. On appeal, Oceltip asserts that federal jurisdiction is lacking. It also argues that the district court erred in confirming the arbitration award and denying vacatur because, in Oceltip’s view, the Georgia Arbitration Code’s standards for vacatur—not the FAA’s—govern, and the arbitrators manifestly disregarded the law.First, the court found it has jurisdiction under Sec 203 of the FAA. Next, in resolving the disagreement the court analyzed whether arbitrators’ “manifest disregard of the law” supplies a basis for vacating the award. Under the Georgia Arbitration Code, it does, but federal law—the New York Convention and its implementing statute (Chapter 2 of the FAA)—sets forth seven exclusive grounds for vacatur, which does not include “manifest disregard of the law.” The court concluded that the Agreement’s choice-of-law provision does not supplant federal standards for confirmation or vacatur of an arbitral award, reasoning that the plain meaning of the contractual language does not support Oceltip’s position. Thus, the court affirmed the judgment of the district court. View "Gulfstream Aerospace Corporation v. Oceltip Aviation 1 PTY LTD" on Justia Law