Justia Arbitration & Mediation Opinion Summaries

The case involves AURC III LLC, an Oregon limited liability company, and several Washington and Delaware limited liability companies collectively referred to as Point Ruston. Point Ruston purchased a 97-acre former copper smelter and environmental clean-up site located on the Puget Sound waterfront in Ruston and Tacoma, Washington, for $169,000,000 and developed it in phases. To fund the second phase of development, Point Ruston negotiated a $66 million loan from American United Development Group, which created AURC III LLC to raise and manage funds from foreign investors seeking United States residency. After disbursing the full amount of the loan, AURC filed an amended complaint against Point Ruston, alleging that Point Ruston was delinquent on interest payments in breach of its loan agreement. The superior court ordered Point Ruston and AURC to engage in arbitration as per their loan agreement.The arbitrator issued an interim award only on the amount of current and default interest due and awarded $10,969,015 to AURC. The arbitrator then issued a final award for the same amount, as well as awarding attorney fees and arbitration fees and expenses. In total, Point Ruston was required to pay over $11.4 million. AURC moved to confirm the award and for presentation of judgment. Initially, Point Ruston agreed AURC was “entitled to confirmation of the Award and entry of a Final Judgment” but opposed attaching the arbitrator’s awards to that judgment. Before the court could enter the written confirmation order and judgment, Point Ruston paid the award and filed a motion to dismiss the case as moot because no live dispute remained. After AURC alerted the court that it received the award amount from Point Ruston, the court denied the motion to dismiss. The court entered the confirmation order with the interim and final awards attached as exhibits, as well as a judgment against Point Ruston. AURC filed a full satisfaction of judgment.Point Ruston appealed on two grounds. It challenged (1) the superior court’s denial of the motion to dismiss and (2) the court’s decision to attach the arbitration awards to the confirmation order. Division Two of the Court of Appeals affirmed in an unpublished opinion. Point Ruston sought review in the Supreme Court of the State of Washington, which was granted.The Supreme Court of the State of Washington held that when a party seeks a confirmation order, RCW 7.04A.220 requires issuance of the order subject to narrow exceptions inapplicable here. Payment of an arbitration award does not render the underlying case moot. The court also held that attaching an arbitrator’s award merely identifies the basis for the confirmation order. Accordingly, the court affirmed the Court of Appeals. View "AURC III, LLC v. Point Ruston Phase II, LLC" on Justia Law

The case involves a dispute between Amazon and its delivery service partners (DSPs), who are business entities that entered into Delivery Service Program Agreements with Amazon. These agreements contained an arbitration provision, stipulating that disputes arising from the agreements would be resolved by binding arbitration conducted by the American Arbitration Association, rather than in court. The plaintiffs, who are or were DSPs, argued that the Federal Arbitration Act's (FAA) "transportation worker exemption" applied to them, which would exempt them from the FAA's coverage and allow them to bring their dispute to court.The United States District Court for the Western District of Washington rejected the plaintiffs' argument and granted Amazon's motion to compel arbitration, dismissing the case without prejudice. The plaintiffs appealed this decision.The United States Court of Appeals for the Ninth Circuit affirmed the district court's decision. The court held that the FAA's "transportation worker exemption" did not extend to business entities or to commercial contracts like the DSP Agreement. The court also rejected the plaintiffs' argument that the arbitration agreement was unconscionable. The court found that the arbitration agreement contained a delegation provision, which incorporated AAA rules delegating threshold issues to the arbitrator. The court concluded that the delegation provision was between sophisticated parties, incorporated the AAA rules, and therefore must be enforced. Thus, the plaintiffs' remaining unconscionability arguments directed at the arbitration agreement as a whole must be decided by the arbitrator. View "FLI-LO Falcon, LLC V. Amazon.com, Inc." on Justia Law

In this case, the United States Court of Appeals for the Ninth Circuit affirmed the district court's decision to vacate the plaintiffs' quasi in rem attachment of a vessel owned by Bergshav Aframax Ltd., a defendant in an admiralty action seeking fulfillment of arbitration awards. The arbitration awards were owed to the plaintiffs by B-Gas Ltd., renamed Bepalo, a different corporate entity. The plaintiffs tried to hold Aframax liable for the arbitration awards by arguing that Aframax and Bepalo were alter egos, essentially the same entity.However, the court found that the plaintiffs failed to show a reasonable probability of success on their veil piercing theory, which would be required to establish that Aframax and Bepalo were alter egos. The court found that the plaintiffs did not demonstrate that Bepalo was dominated and controlled by the Bergshav Group, the parent corporate group of Aframax. The court noted that the minority shareholders of Bepalo exercised independent judgment in approving the relevant transactions, countering the claim that the Bergshav Group had total domination of Bepalo. Therefore, the court concluded that the plaintiffs had not met their burden of demonstrating a reasonable probability of success on their veil-piercing claim, leading to the affirmation of the district court's decision to vacate the attachment of the vessel. View "SIKOUSIS LEGACY, INC. V. B-GAS LIMITED" on Justia Law

The United States Court of Appeals for the Ninth Circuit heard an appeal by Cathay Pacific Airways Limited, from a district court's decision denying its motion to compel arbitration in a class action lawsuit. The plaintiffs, Winifredo and Macaria Herrera, alleged that Cathay Pacific breached their contract by failing to issue a refund following flight cancellations for tickets they purchased through a third-party booking website, ASAP Tickets.The court ruled that when a non-signatory, in this case Cathay Pacific, seeks to enforce an arbitration provision, an order denying a motion to compel arbitration based on the doctrine of equitable estoppel is reviewed de novo. Applying California contract law, the court held that the plaintiffs' allegations that Cathay Pacific breached its General Conditions of Carriage were intimately intertwined with ASAP’s alleged conduct under its Terms and Conditions. Thus, it was appropriate to enforce the arbitration clause contained in ASAP’s Terms and Conditions.Accordingly, the court reversed the district court’s denial of Cathay Pacific’s motion to compel arbitration and remanded with instructions to either dismiss or stay the action pending arbitration of the plaintiffs’ breach-of-contract claim. View "HERRERA V. CATHAY PACIFIC AIRWAYS LIMITED" on Justia Law

In this case, decided by the United States Court of Appeals for the First Circuit, the dispute involved Aeroballoon USA, Inc., and its owner Douglas Hase (collectively, Aeroballoon/Hase), and Jiajing (Beijing) Tourism Co., Ltd. (Jiajing). In 2016, Jiajing contracted Aeroballoon for two tethered helium balloons at a total price of $1.8 million. Despite Jiajing making regular payments totaling $1,018,940, Aeroballoon failed to deliver the balloons. An arbitration panel awarded Jiajing $1,410,739.01 plus interest for Aeroballoon's breach of contract. Following the award, Hase dissolved Aeroballoon and Jiajing subsequently filed a complaint seeking enforcement of the arbitration award.The case focused on two counts: fraudulent transfers in violation of the Massachusetts Uniform Fraudulent Transfer Act (UFTA) and unfair business practices under Chapter 93A of the Massachusetts General Laws. The jury awarded Jiajing $1.6 million for each count. The district court later reduced the damages to $1.113 million for each count, a decision unchallenged by either party.The Court of Appeals affirmed the lower court's decision. The court held that the evidence was sufficient to support a finding that Aeroballoon had engaged in fraudulent transfers of at least $1.113 million. The court further held that even a single fraudulent transfer is sufficient to create liability under Chapter 93A, thereby affirming the verdict on the claim of unfair business practices. The court also awarded costs to Jiajing. View "Jiajing (Beijing) Tourism Co. Ltd. v. AeroBalloon USA, Inc." on Justia Law

In a dispute between SmartSky Networks, LLC and DAG Wireless, Ltd., DAG Wireless USA, LLC, Laslo Gross, Susan Gross, Wireless Systems Solutions, LLC, and David D. Gross over alleged breach of contract, trade secret misappropriation, and deceptive trade practices, the United States Court of Appeals for the Fourth Circuit ruled that the district court did not have the jurisdiction to enforce an arbitration award. Initially, the case was stayed by the district court pending arbitration. The arbitration tribunal found in favor of SmartSky and issued an award, which SmartSky sought to enforce in district court. The defendants-appellants argued that, based on the Supreme Court decision in Badgerow v. Walters, the district court lacked subject matter jurisdiction to enforce the arbitration award. The Fourth Circuit agreed, noting that a court must have a basis for subject matter jurisdiction independent from the Federal Arbitration Act (FAA) and apparent on the face of the application to enforce or vacate an arbitration award. The court concluded that the district court did not have an independent basis of subject matter jurisdiction to confirm the arbitration award. As such, the court reversed and remanded the case to the district court for further proceedings. View "Smartsky Networks, LLC v. DAG Wireless, LTD." on Justia Law

In this case, employers M&K Employee Solutions, LLC and Ohio Magnetics, Inc. withdrew from the IAM National Pension Fund during the 2018 plan year. The Fund assessed withdrawal liability for each entity based on actuarial assumptions. Both employers challenged their respective assessments and won in arbitration, with the arbitrator ruling that the Fund's actuary erred in setting actuarial assumptions for a given measurement date after the measurement date based on information available at that date. The Fund appealed and the district court vacated the arbitration awards, ruling that an actuary may indeed set actuarial assumptions for a given measurement date after the measurement date based on information available "as of" the measurement date.The Court of Appeals for the District of Columbia Circuit affirmed the district court's decision. The court held that it would be contrary to the legislative intent of the Multiemployer Pension Plan Amendments Act to require an actuary to determine what assumptions to use before the close of business on the measurement date. The court also ruled that M&K was entitled to a “free-look” exception because it partially withdrew from the Fund within a period of less than five years, meaning it could withdraw without incurring liability. View "Trustees of the IAM National Pension Fund v. M & K Employee Solutions, LLC" on Justia Law

In a dispute between Jonathan H. Paul and Rockpoint Group, LLC, the Delaware Court of Chancery denied Rockpoint's motion to dismiss Count III and granted Paul's cross-motion for partial summary judgement. The case stemmed from a disagreement about how to divide the proceeds from a transaction involving the investment fund complex that Paul co-founded and later left. After Paul's departure, he and his former partners agreed to an amendment to the company’s limited liability agreement, which stipulated Paul would receive a share of the proceeds from certain future transactions. A dispute arose over the calculation of Paul’s share when a qualifying transaction occurred. The court determined that the dispute resolution mechanism in the agreement called for an expert determination, not a plenary arbitration. The court also affirmed that the third amended and restated LLC agreement, not the first, governed the dispute. The court ruled that the appraiser could not consider extrinsic evidence, such as legal arguments and affidavits, presented by Rockpoint in its valuation. The court further directed that Rockpoint's appraisal must be redacted to omit the offending material. View "Paul v. Rockpoint Group, LLC" on Justia Law

In this action to compel the issuance of a replacement stock certificate the Court of Chancery ordered PDV Holding, Inc. (PDVH), a Delaware corporation, to issue a replacement stock certificate conditioned upon Venezuela's state-owned oil company, Petroleos de Venezuela, S.A. (PDVSA), posting an unsecured bond in the amount of $10,000, holding that the relief sought is granted.In the main dispute, non-party Crystallex International Corporation sought to collect on an arbitration award by executing on PDVSA's U.S.-based assets, and the federal district court ordered a sale of PDVH's stock. PDVSA, the registered owner of all shares of PDVH's stock, filed this action seeking to compel the issuance of a replacement stock certificate representing all 1,000 shares of PDVH that PDVSA owned. The Court of Chancery ordered PDVH to issue a replacement stock certificate conditioned upon PDVSA posting an unsecured bond, holding that PDVH failed to demonstrate good cause for the Court to decline to issue a replacement stock certificate to PDVSA, and PDVSA's entitlement to a replacement stock certificate was conditioned upon its posting of an unsecured bond of $10,000 within seven business days. View "Petroleos de Venezuela, S.A. v. PDV Holding, Inc." on Justia Law

An arbitrator found the seller in breach based largely on an assessment of witness credibility. In the arbitrator’s view, defendant Phuong Pham lacked credibility because she used an interpreter during the arbitration proceedings. Reasoning that she had been in the country for decades, engaged in sophisticated business transactions, and previously functioned in some undisclosed capacity as an interpreter, the arbitrator felt that her use of an interpreter at the arbitration was a tactical ploy to seem less sophisticated. The Court of Appeal found here, the arbitrator’s credibility finding rested on unacceptable misconceptions about English proficiency and language acquisition. "These misconceptions, in turn, give rise to a reasonable impression of possible bias on the part of the arbitrator requiring reversal of the judgment and vacating the arbitration award." View "FCM Investments v. Grove Pham, LLC" on Justia Law