Justia Arbitration & Mediation Opinion Summaries

Ultra Deep Picasso Pte. Limited (Ultra Deep) is a contractor specializing in undersea vessel operations for marine construction. Dynamic Industries Saudi Arabia Ltd. (Dynamic) subcontracted Ultra Deep for a project related to a contract with Saudi Aramco. Ultra Deep completed work worth over ten million dollars but alleged that Dynamic failed to pay, breaching their agreement. Ultra Deep filed a complaint in the Southern District of Texas, seeking breach of contract damages and a maritime attachment and garnishment of Dynamic’s funds allegedly held by Riyad Bank.The district court granted Ultra Deep an ex parte order for attachment of Dynamic’s assets at Riyad Bank. Dynamic responded with motions to dismiss for lack of personal jurisdiction, improper venue, and to compel arbitration, which were denied. Dynamic and Riyad Bank then moved to vacate the attachment order, arguing that Ultra Deep failed to show Dynamic had property in the Southern District of Texas. The magistrate judge held a hearing and found that Ultra Deep did not present evidence that Dynamic’s property was within the district. The district court adopted the magistrate judge’s recommendation, vacated the attachment order, and dismissed the case with prejudice.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that for a valid Rule B attachment, the property must be found within the district. It concluded that a bank account is located where its funds can be withdrawn. Since Ultra Deep failed to show that Dynamic’s property was within the Southern District of Texas, the court affirmed the district court’s decision to vacate the attachment order and dismiss the case. View "Ultra Deep Picasso v. Dynamic Industries Saudi Arabia Ltd." on Justia Law

Nicholas and Stacy Boerson, owners of New Heights Farm I and II in Michigan, faced a disappointing corn and soybean harvest in 2019. They submitted crop insurance claims to Great American Insurance Company, which were delayed due to an ongoing federal fraud investigation. The Boersons sued Great American, the Federal Crop Insurance Corporation, and the U.S. Department of Agriculture for breach of contract, bad faith adjustment, and violations of insurance laws.The United States District Court for the Western District of Michigan dismissed the Boersons' claims. It ruled that claims related to Great American's nonpayment were unripe due to the ongoing investigation, while claims alleging false measurements and statements by Great American were ripe but subject to arbitration. The court also dismissed claims against the federal defendants on sovereign immunity grounds.The United States Court of Appeals for the Sixth Circuit affirmed the district court's dismissal. It held that the claims related to nonpayment were unripe because the insurance policy barred payment until the investigation concluded. The court also found that the arbitration agreement in the insurance policy covered the ripe claims against Great American, requiring those disputes to be resolved through arbitration. Additionally, the court ruled that sovereign immunity barred the claims against the federal defendants, as there was no clear waiver of immunity for constructive denial claims under the Federal Crop Insurance Act. View "New Heights Farm I, LLC v. Great American Insurance Co." on Justia Law

Heide Montoya, a former Superintendent of On-Board Services at Amtrak, was discharged in 2020 and later rehired to a different position. Montoya filed a lawsuit alleging sex discrimination and other state-law claims. The litigation became complicated due to a dispute over arbitration. Amtrak argued that Montoya had agreed to arbitration by continuing to work after receiving an email notice. Montoya denied receiving the arbitration agreement, and the district judge could not resolve the issue due to a lack of definitive evidence.The United States District Court for the Northern District of Illinois, Eastern Division, held a status hearing where the judge indicated that the evidence was insufficient to determine if an arbitration agreement existed. The judge suggested that the parties confer and possibly provide a joint statement on how to proceed. Instead of following these steps, Amtrak filed a notice of appeal, relying on §16(a)(1) of the Federal Arbitration Act (FAA), which allows interlocutory appeals from orders bypassing arbitration.The United States Court of Appeals for the Seventh Circuit reviewed the case and found that §16 of the FAA only applies when the Act as a whole is applicable. Section 1 of the FAA excludes contracts of employment for railroad employees, among others, from its scope. Since Montoya was an Amtrak employee, the case falls outside the FAA. The court referenced similar cases and legal precedents, including Southwest Airlines Co. v. Saxon and Bissonnette v. LePage Bakeries Park St., LLC, to support its conclusion. Consequently, the Seventh Circuit dismissed Amtrak's appeal for lack of jurisdiction, noting that the district court still needs to resolve whether Montoya agreed to arbitrate disputes under state law. View "Montoya v. National Railroad Passenger Corp." on Justia Law

A motor vehicle collision occurred in Sussex County, Delaware, involving Joanne Dudsak, a New Jersey resident insured by New Jersey Manufacturers (NJM), and Christopher Koester, a Maryland resident insured by Allstate Insurance Company. NJM paid Personal Injury Protection (PIP) benefits to Dudsak and sought inter-company arbitration in Delaware to recover these costs. Allstate opposed, arguing that NJM's policy, being from New Jersey, did not qualify for arbitration under Delaware law, which requires the vehicle to be registered in Delaware for PIP subrogation rights.The arbitrator ruled in favor of NJM, awarding the full amount and rejecting Allstate's jurisdictional challenge. Allstate then filed a Petition to Vacate the Arbitration Award in the Delaware Chancery Court, arguing that the arbitrator exceeded his authority. NJM moved to dismiss the petition, claiming the issue was moot because Allstate had agreed to tender its policy limits, which would extinguish NJM's subrogation rights under Delaware law.The Delaware Chancery Court denied NJM's Motion to Dismiss, finding that a real dispute remained. The court then addressed the merits of Allstate's Motion for Summary Judgment. The court applied the standard of review under 10 Del. C. §5714(a)(5), which allows vacating an arbitration award if the arbitrated claim was barred by limitation and the objection was raised from the outset. The court found that §2118 of the Delaware PIP statute applies only to vehicles required to be registered in Delaware and does not cover out-of-state policies like NJM's. Consequently, the arbitrator exceeded his authority by accepting jurisdiction over the case. The court granted Allstate's Motion for Summary Judgment, vacating the arbitration award. View "Allstate Insurance Co. v. New Jersey Manufacturers Insurance Co." on Justia Law

A woman named Lisa was under a conservatorship due to being gravely disabled from a mental disorder. Her father, Scott, was appointed as her conservator and placed her in a skilled nursing facility. Scott signed two optional arbitration agreements with the facility on Lisa's behalf. After Lisa died, her parents sued the facility's owners and operators, alleging various claims including wrongful death. The defendants sought to compel arbitration based on the agreements Scott signed.The Superior Court of Los Angeles County denied the petition to compel arbitration. The court found no evidence that Scott had the authority to bind Lisa to the arbitration agreements for the successor claims. Additionally, the court found that neither Scott nor Lisa's mother, Marilyn, signed the agreements in their individual capacities, thus the wrongful death claim was not subject to arbitration.The California Court of Appeal, Second Appellate District, reviewed the case. The court held that the conservatorship order did not give Scott the authority to sign the arbitration agreements on Lisa's behalf. The court reasoned that the conservatorship order did not explicitly or implicitly authorize Scott to waive Lisa's right to a jury trial. Furthermore, the court found that the wrongful death claim was not subject to arbitration because Scott did not sign the agreements in his individual capacity, and Marilyn did not sign them at all. The court affirmed the lower court's decision, denying the petition to compel arbitration. View "Enmark v. KC Community Care" on Justia Law

Richard Wade, the former president, CEO, and director of Vertical Computer Systems, Inc., was sued in April 2020 by the company's chief technical officer and several shareholders for breach of fiduciary duty and fraud. Wade's address was initially listed as "3717 Cole Avenue, Apt. 293, Dallas, Texas 75204." After a year, the claims against Wade were severed into a separate action, and the trial court ordered binding arbitration. Wade's attorney later filed a motion to withdraw, listing Wade's address as "3717 Cole Ave., Apt. 277, Dallas, Texas 75204." Notice of the trial was sent to this incorrect address.The trial court scheduled a bench trial for April 19, 2022, and Wade appeared pro se but did not present any evidence. The court ruled in favor of the plaintiffs, awarding them over $21 million. Wade filed a pro se notice of appeal, arguing that he did not receive proper notice of the trial. The Court of Appeals for the Fifth District of Texas affirmed the judgment.The Supreme Court of Texas reviewed the case and found that Wade did not receive proper notice of the trial setting, which violated his due process rights. The court noted that the notice was sent to an incorrect address and that Wade had informed the trial court of this issue. The court held that proceeding to trial without proper notice was reversible error and that Wade was entitled to a new trial. The court reversed the judgment of the Court of Appeals and remanded the case to the trial court for further proceedings. View "Wade v. Vertical Computer Systems, Inc." on Justia Law

Plaintiffs Tommy Coleman and Jason Perkins, who worked as oil and gas pipeline inspectors for System One Holdings, LLC, were paid a flat daily rate without overtime compensation, even when working over forty hours a week. They filed a lawsuit claiming this violated the Fair Labor Standards Act (FLSA) and sought unpaid overtime on behalf of themselves and a putative class of similarly compensated inspectors.The United States District Court for the Western District of Pennsylvania reviewed the case. System One moved to dismiss and compel arbitration, arguing that the plaintiffs had signed arbitration agreements enforceable under the Federal Arbitration Act (FAA). The plaintiffs countered that they fell under the transportation workers' exemption to the FAA. The District Court, following the precedent set in Guidotti v. Legal Helpers Debt Resolution, L.L.C., ordered limited discovery into the arbitrability of the claims before deciding on the motion to compel arbitration. System One's motion for reconsideration of this order was denied.The United States Court of Appeals for the Third Circuit reviewed the case to determine if it had jurisdiction over the interlocutory appeal from the District Court's order. The Third Circuit held that it lacked appellate jurisdiction because the District Court's order did not formally deny the motion to compel arbitration but rather deferred its decision pending limited discovery. The court emphasized that the FAA permits appeals from specific types of orders, and the order in question did not fall within those categories. Consequently, the appeal was dismissed for lack of jurisdiction. View "Coleman v. System One Holdings LLC" on Justia Law

Alison George sought to represent a class and obtain damages from Rushmore Service Center, LLC, based on a letter that identified Premier Bankcard, LLC as the “current/original creditor” instead of the actual credit card company. George alleged that this violated the Fair Debt Collection Practices Act (FDCPA) by failing to identify the creditor to whom the debt was owed and providing misleading information. She claimed that this would confuse the least sophisticated consumer about the legitimacy of the debt.The United States District Court for the District of New Jersey granted Rushmore’s motion to stay proceedings and compel individual arbitration. George lost in arbitration, where the arbitrator ruled in favor of Rushmore, finding that George was not misled because she admitted she did not read the letter. The District Court then declined to vacate the arbitration award, rejecting George’s arguments that the arbitrator disregarded evidence and law.The United States Court of Appeals for the Third Circuit reviewed the case and focused on whether George had standing to sue. The court concluded that George lacked standing from the outset because her complaint did not allege any specific adverse effects or confusion she personally experienced due to the letter. The court held that confusion alone is insufficient to establish a concrete injury under Article III. Consequently, the Third Circuit vacated the District Court’s orders and remanded with instructions to dismiss the case for lack of standing. The court declined to vacate the arbitration award itself, leaving its enforceability to be determined in a jurisdictionally correct proceeding. View "George v. Rushmore Service Center LLC" on Justia Law

A member of the United Mine Workers of America arbitrated a dispute against Consol Energy, Inc. and won. The Union then sued to confirm the arbitration award, while Consol and its subsidiaries counterclaimed to vacate the award. The Union argued that the subsidiaries could not unilaterally reduce health benefits promised to miners for life, even if they no longer mined coal. Consol, which served as the health-plan administrator, had sent a letter indicating potential changes to benefits after the agreement expired, prompting the arbitration.The United States District Court for the District of Columbia dismissed the Union’s claim for lack of standing, reasoning that the Union was not injured as Consol had not actually modified the benefits. The court also declined to vacate the arbitration award on the merits of the Subsidiaries’ counterclaim. Both parties appealed the decision.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court found that the Union’s claim did not fall under § 301(a) of the Labor Management Relations Act, which only authorizes suits for actual violations of contracts, not anticipated future violations. Consequently, the Union’s claim was dismissed for lack of subject-matter jurisdiction. Regarding the Subsidiaries’ counterclaim, the court determined that the Subsidiaries lacked standing as they were not named in the arbitration award and had not shown a concrete and imminent injury. The court vacated the district court’s orders on the Subsidiaries’ counterclaim and remanded it with instructions to dismiss for lack of standing.Thus, the appellate court affirmed the dismissal of the Union’s claim and vacated and remanded the Subsidiaries’ counterclaim for dismissal due to lack of standing. View "International Union, United Mine Workers of America v. Consol Energy Inc." on Justia Law

Martin Brauner transmitted HPV to M.O. through sexual activity in Brauner’s GEICO-insured automobile. M.O. threatened to sue Brauner for negligence and demanded $1,000,000 from GEICO, which denied the claim and sought a federal court declaration that the policy did not cover M.O.’s injuries. Brauner and M.O. settled the threatened lawsuit, agreeing that M.O. would collect only from GEICO if an arbitrator found Brauner negligent. The arbitrator awarded M.O. $5,200,000, which M.O. sought to confirm in Missouri state court. The Supreme Court of Missouri vacated the confirmation and remanded the case to allow GEICO to intervene.The United States District Court for the District of Kansas initially handled the case but transferred it to the United States District Court for the Western District of Missouri due to lack of personal jurisdiction over M.O. The district court granted GEICO’s motion for summary judgment, ruling that the policy required bodily injury to arise out of the use of the automobile, and that sexual activity in an automobile did not constitute “use” under Kansas insurance law. Brauner and M.O. appealed.The United States Court of Appeals for the Eighth Circuit reviewed the grant of summary judgment de novo. The court affirmed the district court’s decision, holding that the insurance policy unambiguously required bodily injury to arise out of the ownership, maintenance, or use of the automobile. The court found that sexual activity in an automobile did not meet this requirement, as the automobile was merely the situs of the injury and not causally connected to the negligent act. Therefore, M.O.’s injuries were not covered under the policy. View "GEICO General Insurance Co. v. M.O." on Justia Law