Justia Arbitration & Mediation Opinion Summaries

Off-Spec Solutions LLC was a trucking company located in Nampa, Idaho, that was formed by two brothers: Christopher and Daniel Salvador. The Salvadors sold 51 percent of their ownership interest in Off-Spec Solutions to Transportation Investors LLC. To implement the transaction, the Salvadors and Transportation Investors entered into a purchase agreement and an LLC agreement. The purchase agreement identified “The Central Valley Fund II” and “The Central Valley Fund III” as affiliates of Transportation Investors. Off-Spec Solutions also entered into separate employment agreements with the Salvadors. The purchase agreement stated that all disputes concerning the agreement would be governed by California law. After disputes arose between the parties, Off-Spec Solutions petitioned an Idaho district court to compel the Salvadors to arbitrate claims relating to the employment agreements in Idaho instead of California. The Salvadors subsequently filed a cross-application with the district court seeking to compel Off-Spec Solutions and Transportation Investors and its affiliates to arbitrate all claims between the parties in a consolidated arbitration in Idaho. While those applications were pending, Transportation Investors and its affiliates filed a petition with a California Superior Court seeking to compel the Salvadors to arbitrate all claims arising from the purchase agreement and the LLC agreement in Sacramento County, California. The questions this case presented for the Idaho Supreme Court’s review were: (1) whether a forum selection clause was unenforceable under California law if enforcement would contravene a strong public policy of the forum where suit is brought (in this case, Idaho); and, if yes, then (2) whether the forum selection clauses at issue must be invalidated based on the public policy set forth in Idaho Code section 29-110(1). The Supreme Court held California law required an examination of the public policy of the forum in which suit was brought, and that the forum selection clauses at issue violated the strong public policy of the State of Idaho. The Court affirmed the district court’s ruling that claims arising from the parties’ purchase agreement and LLC agreement had to be arbitrated in Idaho. View "Off-Spec Solutions LLC v. Transportation Investors LLC" on Justia Law

The Oklahoma Supreme Court granted certiorari to address this first impression issue of whether the right to compel arbitration was waived when it is not raised as an affirmative defense in a responsive pleading. Plaintiffs-appellees filed suit alleging various claims stemming from the parties' investment relationships. Nearly seventeen months after they filed their answer in which they omitted arbitration as an affirmative defense, defendants-appellants moved to compel arbitration pursuant to the parties' agreements. Very little case activity involving defendants had taken place during that time. The Court of Civil Appeals affirmed the trial court's denial of the motion to compel, holding that defendants-appellants waived any right to arbitration by failing to raise it in their answer. The Supreme Court held the right to compel arbitration was not waived in this case: defendants-appellants' motion to compel arbitration met the statutory requirements of the OUAA. “This finding, however, did not end our analysis because Oklahoma law provides that a party may waive their right to arbitration even when properly requested. After conducting an examination of the pertinent facts herein, we conclude Plaintiffs/Appellees failed to satisfy their burden of proof on the issue of waiver of the right to arbitration.” Accordingly, the judgment of the trial court was reversed. View "Howell's Well Service v. Focus Group Advisors" on Justia Law

The Department of Labor brought an enforcement action against Larry Browne and his companies, alleging that Browne and his entities violated the Fair Labor Standards Act's (FLSA) minimum wage, overtime, record-keeping, and antiretaliation requirements by misclassifying delivery drivers as independent contractors rather than employees. The district court denied Browne's motion to compel arbitration pursuant to EEOC v. Waffle House, Inc., 534 U.S. 279 (2002).The Ninth Circuit concluded, in light of Waffle House, that a private arbitration agreement does not bind the Secretary of Labor when bringing a FLSA enforcement action that seeks relief on behalf of one party to the arbitration agreement against the other party to that agreement. In Waffle House, the Supreme Court ruled that the EEOC was not party to Waffle House's arbitration agreement, and it was not bound by the agreement because the FAA "does not require parties to arbitrate when they have not agreed to do so." The panel explained that this same reasoning dictates that the Secretary cannot be compelled to arbitrate this case. Here, as in Waffle House, the remedial statute at issue unambiguously authorizes the Secretary to obtain monetary relief on behalf of specific aggrieved employees. The panel explained that, like the EEOC in Waffle House, the Secretary is not party to the arbitration agreement between Browne and his entities and the delivery drivers. Therefore, the panel affirmed the district court's denial of the motion to compel arbitration. View "Walsh v. Arizona Logistics, Inc." on Justia Law

Appeals consolidated for the Delaware Supreme Court’s review centered on the Rent Increase Justification Act, which governed rent increases in manufactured home communities. The Rehoboth Bay Manufactured Home Community (the “Community”) was owned/managed by Hometown Rehoboth Bay, LLC (“Hometown”). The Appellant in Case No. 139, 2020 was Rehoboth Bay Homeowners’ Association (the “HOA”), the homeowners’ association. The Appellants in Case No. 296, 2020 were two individual tenants, John Iacona and Robert Weymouth. Hometown sought to raise the rents in both cases: in case No. 296, 2020, rents would be raised an amount in excess of the Consumer Price Index for this area (the “CPI-U”), for the calendar year 2017; in case No. 139, 2020, for the calendar year 2018. Under the Act, proposed rent increases that exceed the CPI-U must be justified by certain factors. Separate arbitrators in both cases found that a Bulkhead Stabilization project performed by Hometown in phases over more than one year was a capital improvement or rehabilitation work, which, along with other capital improvements and other expenses, justified rent increases in excess of the CPI-U in both years. The Appellants claimed the Superior Court erred by affirming the arbitrators’ decisions that the Bulkhead Stabilization project was a “capital improvement or rehabilitation work” and not “ordinary repair, replacement, and maintenance.” They also claimed the Superior Court should have ruled that the Act did not permit Hometown to incorporate the capital improvement component of the rent increases into each lot’s base rent so as to carry those increases forward into ensuing years. The Delaware Supreme Court concluded the Superior Court’s rulings on the Bulkhead Stabilization project as a capital improvement or rehabilitation work was correct, however, the Act did not permit Hometown to incorporate the capital improvement component of the 2017 and 2018 rent increases into a lot’s base rent for succeeding years after recovering that lot’s full, proportionate share of those costs in those years. Therefore, the Superior Court’s judgment was affirmed in part, reversed in part, and the cases remanded for further proceedings. View "Rehoboth Bay Homeowners' Assoc, et al. v. Hometown Rehoboth Bay" on Justia Law

Plaintiff-appellant Joanna Grabowski brought claims for medical malpractice against Kaiser Foundation Health Plan, Inc., Southern California Permanente Medical Group, and various associated physicians (collectively, Kaiser). The claims were heard by an arbitrator, pursuant to a contractual arbitration agreement. After a contested hearing, the arbitrator awarded judgment in favor of Kaiser. Grabowski petitioned the trial court to vacate the arbitration award, alleging: (1) the arbitrator committed misconduct, and revealed disqualifying bias, by engaging in an ex parte communication with Kaiser’s counsel about Grabowski’s self-represented status; (2) the arbitrator failed to disclose two matters involving Kaiser where he was selected as an arbitrator; and (3) the arbitrator improperly denied Grabowski’s request for a continuance of the arbitration hearing. The trial court found that “the arbitrator’s conduct did not rise to a level that substantially prejudiced [Grabowski’s] rights” and dismissed her petition. Grabowski appealed. After review, the Court of Appeal agrees the award should have been vacated. The Court concluded the arbitrator committed misconduct on several levels, at least one required vacating the arbitration award. The ex parte communication between the arbitrator and Kaiser’s counsel was recorded by Grabowski’s mother as part of her effort to document the arbitration hearing; the audio recording revealed comments by the arbitrator making light of Grabowski’s self- representation and her inability, in the arbitrator’s view, to effectively represent herself. The arbitrator volunteered these comments to Kaiser’s counsel, ex parte, and “they shared a hearty laugh about Grabowski’s perceived shortcomings as an advocate.” Because the arbitrator was aware of this communication and did not disclose it to Grabowski, the award had to be vacated. View "Grabowski v. Kaiser Foundation Health Plan, Inc." on Justia Law

The First Circuit affirmed the judgment of the district court confirming an arbitration award denying the claims brought by Asociacion de Empleados del Estado Libre Asociado de Puerto Rico (AEELA), holding that the district court did not abuse its discretion by confirming the award.AEELA was a private financial institution serving Puerto Rico government employees. AEELA suffered major investment losses when, in 2013, the market for municipal bonds in Puerto Rico crashed. AEELA initiated arbitration with UBS Financial Services, Inc., its former financial consultant, before the Financial Industry Regulatory Authority (FINRA), and a panel of arbitrators entered an award denying AEELA's claims. AEELA sought to vacate the award, arguing that one of the arbitrators had failed to disclose his professional connections to UBS. The district court confirmed the arbitration award. The First Circuit affirmed, holding that the district court did not err in finding that AEELA did not meet its burden of showing that the arbitrator was partial to UBS. View "UBS Financial Services Inc. v. Asociacion de Empleados del Estado Libre Asociado de Puerto Rico" on Justia Law

Four business partners had a dispute that ultimately led to a nine-day arbitration hearing. During the hearing, the arbitrator openly took pain medications. After the arbitrator issued a final ruling, the two losing partners filed a petition in the trial court to vacate the arbitration award. They alleged for the first time, that the arbitrator was “unable to properly perceive the evidence or . . . unable to properly conduct the proceeding.” The trial court denied the petition based on principles of forfeiture: the losing partners failed to demand, at any point during the nine-day hearing, that the arbitrator needed to disqualify himself. The Court of Appeal agreed with the trial court, thus affirming the order denying the petition to vacate the arbitration award. View "Alper v. Rotella" on Justia Law

The Court of Appeal affirmed the trial court's denial of Uber's motion to compel arbitration in an action brought by plaintiff, alleging a single cause of action for wage violations under the Private Attorneys General Act (PAGA), Lab. Code, 2698 et seq. Plaintiff was an Uber driver under a written agreement stating she was an independent contractor and all disputes would be resolved by arbitration under the Federal Arbitration Act (FAA), and the agreement delegated to the arbitrator decisions on the enforceability or validity of the arbitration provision.The court concluded, as has every other California court presented with this or similar issues, that the threshold question of whether plaintiff is an employee or an independent contractor cannot be delegated to an arbitrator. The court found that this issue has been resolved adversely to Uber in two cases decided during and after briefing in this case: Provost v. YourMechanic, Inc. (2020) 55 Cal.App.5th 982, and Contreras v. Superior Court (2021) 61 Cal.App.5th 461. The court was not persuaded to depart from the analyses in Provost and Contreras and all the authorities they cite. The court rejected Uber's claims to the contrary and affirmed the trial court's order. View "Rosales v. Uber Technologies, Inc." on Justia Law

The First Circuit affirmed the judgment of the district court granting summary judgment to Defendant on Plaintiff's challenge to an arbitration award in favor of Defendant, holding that the district court did not err.After Plaintiff was summarily dismissed from his employment he challenged his dismissal by filing a complaint and submitting the grievance to arbitration pursuant to his union's collective bargaining agreement with the union. The arbitrator issued an arbitral award dismissing Plaintiff's complaint. The district court dismissed Plaintiff's petition for judicial review. The First Circuit affirmed, holding that the district court did not err in finding that the arbitrator's ruling was not in manifest disregard of the law. View "Torres-Burgos v. Crowley Liner Service, Inc." on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the circuit court compelling Plaintiff to arbitrate his claims of wrongful death and negligence against Signature HealthCARE of East Louisville, holding that arbitration was required on all claims.To secure his father's admittance into Signature, a long-term care facility, Plaintiff signed an arbitration agreement as his father's authorized representative. After his father died, Plaintiff brought a negligence and wrongful death claim against Signature. Signature filed a motion to compel arbitration. The trial court denied the motion. The court of appeals reversed in part, holding that Plaintiff's wrongful death claim was arbitrable because he signed the arbitration agreement in his individual capacity. The Supreme Court affirmed in part and reversed in part, holding that both Plaintiff's individual claims and that claims he brought as the representative of his father's estate were subject to arbitration. View "LP Louisville East, LLC v. Patton" on Justia Law