Justia Arbitration & Mediation Opinion Summaries

Defendants Pinnacle Property Management Services, LLC (Pinnacle) and Jennifer Stewart (Stewart) appealed a trial court’s order denying their motion to compel arbitration. The court denied the motion because it determined the arbitration agreement was procedurally and substantively unconscionable. As to the former, the court noted the agreement was unconscionable because plaintiff Anthony De Leon was required to sign the arbitration agreement as a precondition to his employment. As to the latter, the court found the agreement was substantively unconscionable because of its limits on discovery and because it shortened the statute of limitations to one year on all claims. On appeal, defendants contended the arbitration agreement had low procedural unconscionability and contained only one substantively unconscionable provision: the statute of limitations provision. They alternatively claimed the court erred by failing to sever any unconscionable provisions. After careful consideration of the agreement at issue, the Court of Appeal agreed with the court’s unconscionability findings. Further, the Court held the trial court also did not abuse its discretion by refusing to sever any portion of the arbitration agreement. View "De Leon v. Pinnacle Property Management Services, LLC" on Justia Law

Beginning in 1986, Arabian was the sole authorized dealer for Ford brands in Kuwait. In a 2005 Agreement, the companies agreed to use “binding arbitration” as the “exclusive recourse” for any dispute. Ford ended the Agreement in 2016 and applied to the American Arbitration Association for a declaration that it permissibly ended the Agreement. Arabian sued, seeking an injunction prohibiting Ford from proceeding with arbitration and asserting breach of contract and fraud. Arabian argued that the Motor Vehicle Franchise Contract Arbitration Fairness Act, 15 U.S.C. 1226, requires that arbitration between dealers and car manufacturers requires that the parties consent to it after the dispute arises. The district court denied the motion, deciding that the arbitrator must resolve the gateway issue.The arbitral tribunal decided that the Act did not deprive it of authority and held that Ford permissibly terminated the Agreement; it taxed Arabian $1.35 million for fees and costs. Arabian brought counterclaims for breach of contract and fraud but withdrew them before the award. The Sixth Circuit confirmed the award. On remand, Ford moved to stay the federal action to allow the arbitrator to resolve Arabian’s common law claims. The district court dismissed the case without prejudice. The Sixth Circuit reversed. The Act’s command, 9 U.S.C. 3, that a district court “shall on application of one of the parties stay the trial,” conveys a mandatory obligation. Dismissal, unlike a stay, permits an objecting party to file an immediate appeal; a dismissal order undercuts the Act's pro-arbitration appellate-review provisions. View "Arabian Motors Group W.L.L. v. Ford Motor Co." on Justia Law

This case stems from plaintiffs' claim of rights under a 1933 agreement between Standard Oil of California and the Kingdom of Saudi Arabia and a 1949 agreement between the purported ancestors of plaintiffs and the Arabian American Oil Company. Plaintiffs seek to enforce an arbitral award against defendant, Saudi Arabian Oil Company (Saudi Aramco), which they were awarded by an Egyptian arbitration panel.After determining that plaintiffs' motion for reconsideration tolled the period for filing a notice of appeal, consistent with Federal Rule of Civil Procedure 83(a)(2), the Fifth Circuit vacated the district court's judgment and remanded with instructions for the district court to dismiss the case based on lack of jurisdiction. The court concluded that Saudi Arabian Oil Company is an instrumentality of a foreign state and is therefore immune from suit under the Foreign Sovereign Immunities Act of 1976 (FSIA). The court stated that the arbitral proceedings give every appearance of having been a sham, and there exists no agreement among these parties to arbitrate this dispute, or anything else for that matter. The court decided that, instead of denying the petition for enforcement, the case is more properly dismissed for lack of jurisdiction, given that Saudi Aramco qualifies as a foreign state for purposes of the FSIA. View "Al-Qarqani v. Saudi Arabian Oil Co." on Justia Law

Eight named plaintiffs, including two minors, brought a nationwide putative class action against e-commerce provider StockX for allegedly failing to protect millions of StockX users’ personal account information obtained through a cyber-attack in May 2019. Since 2015, StockX’s terms of service included an arbitration agreement, a delegation provision, a class action waiver, and instructions for how to opt-out of the arbitration agreement. Since 2017, StockX's website has stated: StockX may change these Terms without notice to you. “YOUR CONTINUED USE OF THE SITE AFTER WE CHANGE THESE TERMS CONSTITUTES YOUR ACCEPTANCE OF THE CHANGES. IF YOU DO NOT AGREE TO ANY CHANGES, YOU MUST CANCEL YOUR ACCOUNT.The Sixth Circuit affirmed the dismissal of the suit and an order compelling arbitration. The court rejected arguments that there is an issue of fact as to whether four of the plaintiffs agreed to the current terms of service and that the defenses of infancy and unconscionability render the terms of service and the arbitration agreement (including the delegation provision) invalid and unenforceable. The arbitrator must decide in the first instance whether the defenses of infancy and unconscionability allow plaintiffs to avoid arbitrating the merits of their claims. View "I. C. v. StockX, LLC" on Justia Law

The Clinic hired Gamboa, who signed several onboarding documents. Weeks later, Gamboa sustained an injury to her hand that affected her work. After Gamboa requested medical accommodations, the Clinic terminated her employment. Gamboa sued for discrimination, retaliation, and failure to provide reasonable accommodation. The Clinic moved to compel arbitration, arguing that Gamboa had signed an arbitration agreement as part of her required onboarding documents.The court of appeal affirmed the denial of that motion. The Clinic failed to prove the existence of an arbitration agreement by a preponderance of the evidence after Gamboa produced evidence disputing an agreement. The Clinic may have met its burden on the first step by attaching to Lopez’s (the Clinic’s director of human resources) declaration a copy of the arbitration agreement purporting to bear Gamboa’s signature but Gamboa met her burden on the second step by filing an opposing declaration, saying she did not recall the agreement and would not have signed it if she had been aware of it. Lopez did not explain how she knew Gamboa had seen, much less signed, the arbitration agreement. View "Gamboa v. Northeast Community Clinic" on Justia Law

PG sought to vacate a labor arbitration award. In many labor disputes, both the Labor Management Relations Act (LMRA), 29 U.S.C. 185(a), and the Federal Arbitration Act (FAA), 9 U.S.C. 10, provide means for seeking vacatur or confirmation of arbitration awards. The statutes employ distinct procedural vehicles, require litigants to meet different legal standards, and prescribe separate limitations periods. PG argued that even if it filed its complaint outside of the applicable limitations period for an LMRA action, it filed within the FAA’s 90-day limitations period for motions to vacate an arbitration award.The Third Circuit affirmed the dismissal of PG’s action as untimely. Although a party may bring both an LMRA action and an FAA motion challenging or confirming certain labor arbitration awards, PG did not proceed by motion as required by the FAA, and so did not properly invoke that statute. PG’s LMRA Section 301 action was untimely. The court clarified the procedures for seeking to vacate or confirm an arbitration award under the LMRA and under the FAA. View "PG Publishing Co v. Newspaper Guild of Pittsburgh" on Justia Law

The Union represents employees at Constellium’s plant. In 2013, after Constellium attempted to change retirees’ health benefits, the Union sued. In 2017, the Fourth Circuit held, in "Barton," that, because the collective bargaining agreement (CBA) stated that retiree health benefits would endure only for the CBA's term, they did not vest. Constellium and the Union subsequently negotiated another CBA, effective through September 2022, which outlines retiree healthcare benefits. Constellium sent a letter to its Medicare-eligible retirees, announcing changes to their healthcare coverage.The Union initiated a grievance, citing the CBA’s guarantee of retiree health benefits for the CBA’s term. Constellium claimed that the change did not violate the CBA and that Barton permitted the change with respect to retirees who retired under previous CBAs. Constellium unsuccessfully sought a declaratory judgment that it prevailed on preclusion grounds; the district court reasoned that whether Barton precluded arbitration was a question for the arbitrator.An arbitrator ruled in favor of the Union, reasoning that “the question of whether retiree health benefits were vested or durational”—which was “central” in Barton—was "a red herring” because the Union’s new claims did not depend on whether the benefits were vested or durational, but focused on the terms of the 2017 CBA, under which Constellium was obligated to maintain the same health benefits for the relevant retirees throughout the CBA's full term. The Fourth Circuit affirmed the denial of Constellium’s motion to vacate the arbitrator’s award. View "Constellium Rolled Products Ravenswood, LLC v. United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union" on Justia Law

The First Circuit vacated the judgment of the judgment of the district court granting a motion to compel arbitration filed by the personal representative of the estate of a famous American artist (Estate), dismissing an art publisher's (Publisher) motion for a preliminary injunction as moot, and eventually dismissing the case, holding that the district court erred.At issue was an agreement between the Estate and Publisher. Publisher asserted that the parties' original contract, which included an agreement to arbitration, was terminated and supplanted by a superseding contract that did not contain an arbitration provision. In question was whether the arbitrability of the parties' dispute about the newer contract's enforceability and impact on the earlier agreement to arbitrate should be decided by the court or by arbitrators. The district court concluded that the gateway question of arbitrability was for the arbitrators. The First Circuit reversed, holding that it is the court, and not the arbitrators, that must resolve the disagreement in this case. View "McKenzie v. Brannan" on Justia Law

SHI, owned by Vik, borrowed funds from Deutsche Bank (Bank). SHI entered a limited partnership (LP) agreement with Devon and invested $25 million, Bank issued margin calls. SHI claimed that it lacked funds to satisfy the calls. Bank sued SHI in England and Wales and received a $235,646,345 judgment, which SHI has not satisfied. SHI transferred the Devon Interest to CPR (allegedly related to Vik's father). SHI paid Devon millions of dollars for the transfer. Devon made fund distributions to the limited partners but had difficulties transmitting proceeds to CPR. CPR initiated arbitration to compel Devon to release the Proceeds. The arbitrator denied Bank’s request to intervene. Devon raised counterclaims, seeking a declaration whether the assignment to CPR was enforceable.Meanwhile, Bank sued CPR, SHI, and Devon in Delaware, alleging a conspiracy to commit fraud. The arbitrator denied Devon’s motion to stay proceedings. Devon then refused to participate in the arbitration. The arbitrator awarded CPR the proceeds, plus prejudgment interest, CPR petitioned to confirm the arbitration award; in the Eastern District of Pennsylvania, Devon attempted to interplead Deutsche Bank. Bank answered and sought to set aside the purported transfer of the Devon Interest to CPR, to declare SHI and CPR alter egos, and to find Devon, CPR, and SHI liable for fraud and conspiracy. The Third Circuit affirmed orders confirming the arbitration award, striking the interpleader complaint, and dismissing all third parties and claims and Devon’s counterclaim. View "CPR Management SA v. Devon Park Bioventures LP" on Justia Law

In 1972, P&A signed a collective bargaining agreement (CBA) with Local 15024. In the early 1980s, according to P&A, Local 825 pressured P&A to employ them instead. P&A created Utility Systems to hire Local 825 workers. Utility signed a CBA with Local 825. In 2016-2018, Utility subcontracted a number of construction projects to P&A, which used its workers from Local 15024 on those jobs. Local 825 brought grievances against Utility. P&A feared that if Local 825’s arbitrator ruled that Utility’s subcontractors must use Local 825 workers, that might force P&A to violate its CBA with Local 15024. P&A and Utility filed suit, requesting an order compelling joint arbitration with both employers and both unions. The district court held that it could enforce joint arbitration under the Labor Management Relations Act, 29 U.S.C. 185(a), but that it would be inappropriate here because there was an insufficient risk that P&A and Utility would face conflicting arbitration awards simultaneously granting the same jobs to both unions. It also determined that P&A and Utility could not be deemed a single or joint employer.The Seventh Circuit affirmed. Joint arbitration is available under the Act as a general matter, either before or after the bipartite arbitration award at issue has become final, but the employers here which are two at least nominally separate companies, cannot invoke that general rule. View "P&A Construction Inc v. International Union of Operating Engineers" on Justia Law