Justia Arbitration & Mediation Opinion Summaries

An arbitrator determined that a borrower and lender were liable to each other for similar amounts, each roughly two and a half million dollars. He then offset the awards against each other, resolving the disputed issue of whether a setoff was proper. A bank, however, had also lent money to the borrower. The bank was not a party to the arbitration, but believed the setoff effectively circumvented the agreement among it, the borrower, and the other lender that the bank’s loan had priority and would be paid back first. Instead of being offset against the other lender’s award, the bank believed, the borrower’s award should have gone toward satisfying the bank’s loan. It thus convinced the trial court to correct the arbitrator’s award by eliminating the setoff. The Court of Appeal held that on the facts presented, the correction affected the merits of the arbitrator’s decision. Accordingly, the correction was improper, and the Court reversed. View "E-Commerce Lighting, Inc. v. E-Commerce Trade LLC" on Justia Law

Petitioner was an equity partner in Dentons U.S. LLP, a law firm with offices throughout the United States. A dispute arose between them over a multimillion-dollar contingency fee from a client whom Petitioner brought to the firm. The partnership agreement contains a clause providing for arbitration of all disputes in Chicago or New York. The partnership agreement also contains a clause delegating all questions of arbitrability to the arbitrator. Dentons terminated Petitioner for cause, asserting a breach of fiduciary duty, and initiated an arbitration in New York.Petitioner sued Dentons for wrongful termination and other causes of action in Los Angeles Superior Court. Petitioner obtained a temporary restraining order and then a preliminary injunction, enjoining the New York arbitration until the court could decide whether there was a clear and unmistakable delegation clause.Dentons filed a motion under Code of Civil Procedure section 1281.4, seeking a mandatory stay of the case based on its motion to compel arbitration that was then pending in a New York court, which the New York court later granted.Petitioner sought a writ of mandate, which the court previously denied. The Supreme Court granted review and transferred the case back to the Second Appellate District, directing the court to issue an order to show cause. The court did so, and again denies the petition. The court agreed with the trial court that the parties delegated questions of arbitrability to the arbitrator. The arbitrability issues in this case include whether petitioner is an employee who may invoke Labor Code section 925 and require the merits of the dispute to be resolved in California instead of New York. View "Zhang v. Super. Ct." on Justia Law

In 2018, Shiekh hired Davis; both signed an agreement to resolve all disputes by binding arbitration. Davis resigned after three months, claiming she was subjected to sexual harassment by her co-worker and customers. In March 2019, Davis filed a complaint under the California Fair Employment and Housing Act. On May 12, a summons was served. In July, Shiekh, represented by counsel, answered Davis’s complaint, asserting the arbitration agreement as an affirmative defense, and filed a case management statement. In August, the court scheduled a trial for July 2020. Discovery ensued, without Shiekh asserting a right to arbitrate. The trial date was continued. In October 2020 (17 months after service of process; seven months before the trial date) Shiekh moved to compel arbitration, citing the Federal Arbitration Act (9 U.S.C.1) and California Arbitration Act, asserting that its participation in the lawsuit had been de minimis and not inconsistent with an intent to arbitrate, and that the delay was excusable, citing its lack of counsel for several months, pandemic-related disruptions, and “the fact that [an employee] seemed to be the primary target of [the] complaint," until July 2020.The court of appeal affirmed the denial of Shiekh’s motion. Although the Supreme Court recently held that a waiver of the right to arbitrate cannot be conditioned on a showing of prejudice, substantial evidence supports the denial based on relevant factors other than prejudice. Shiekh’s actions were inconsistent with the right to arbitrate. View "Davis v. Shiekh Shoes, LLC" on Justia Law

R.A.C. Rolling Hills LP, dba ActivCare at Rolling Hills Ranch, and ActivCare Living, Inc. (together, ActivCare), appealed an order denying their petition to compel arbitration in the elder abuse lawsuit filed by Mary Leger. ActivCare contended the trial court erred in concluding that it had waived its right to arbitration because it sought to compel arbitration less than 30 days after filing its answer. Under the unique facts of this case, the Court of Appeal concluded substantial evidence supported the trial court’s waiver finding and affirmed the order. View "Leger v. R.A.C. Rolling Hills" on Justia Law

Appellant CVG Ferrominera Orinoco, C.A. (“Ferrominera”), appealed from the district court’s judgment confirming a foreign arbitral award and granting attorney’s fees and costs in favor of Petitioner Commodities & Minerals Enterprise Ltd. (“CME”). Ferrominera challenges the judgment on three grounds. First, it argues that the district court lacked personal jurisdiction because CME never served a summons on Ferrominera in connection with its motion to confirm the arbitral award. Second, Ferrominera contends that the district court erred in confirming the arbitral award based on purported lack of jurisdiction by the arbitral panel, issues with the scope of the award, and conflicts with United States public policy. Third, it argues that the district court abused its discretion in awarding attorney’s fees and costs in favor of CME.   The Second Circuit held that a party is not required to serve a summons in order to confirm a foreign arbitral award under the New York Convention. The court concluded that the district court properly enforced the arbitral award, but that it erred in awarding attorney’s fees and costs. Accordingly, the court affirmed in part and vacated in part. The court wrote that CME complied with the service of notice requirements of the New York Convention and the FAA, and the district court properly exercised personal jurisdiction over Ferrominera. Further, the court explained that Ferrominera has not borne its burden to show that the arbitration agreement is invalid where, as here, it has put forth no arguments whatsoever under the applicable law. View "Commodities & Minerals Enterprise Ltd. v. CVG Ferrominera Orinoco, C.A." on Justia Law

Plaintiff-appellant Eleni Gavriiloglou brought this action against her former employer and its alleged alter egos. She asserted, among other things: (1) individual claims for damages based on Labor Code violations; and (2) a representative claim for civil penalties for Labor Code violations under the Private Attorneys General Act (PAGA). Gavriiloglou had signed an arbitration agreement, so the trial court compelled her to arbitrate her non-PAGA claims and stayed her PAGA claim while she did. The arbitrator found that the alleged Labor Code violations had not occurred. The trial court then granted judgment on the pleadings against Gavriiloglou on her PAGA claim, ruling that the arbitrator’s findings established that she was not an “aggrieved employee” within the meaning of PAGA, and therefore that she lacked standing to bring a PAGA claim. Gavriiloglou appealed, contending: (1) the trial court erred by denying her petition to vacate the arbitration award; and (2) the trial court erred by ruling that the arbitration award barred her PAGA claim. The Court of Appeal found that the trial court properly denied the motion to vacate the arbitration award. However, the Court also held that the arbitration did not bar the PAGA claim because Gavriiloglou was acting in different capacities and asserting different rights. Accordingly, judgment was reversed and the matter remanded for further proceedings. View "Gavriiloglou v. Prime Healthcare Management" on Justia Law

R&C, run by two employees, entered an agreement to haul equipment for American Wind. The agreement’s arbitration clause provides: any claim, dispute or controversy including, but not limited to the interpretation of any federal statutory or regulatory provisions purported to be encompassed by this Agreement; or the enforcement of any statutory rights emanating or relating to this Agreement shall be resolved on an individual basis (and not as part of a class action) exclusively between Contractor and Carrier by final and binding arbitration.R&C alleges that American Wind failed to make agreed-upon detention payments, resulting in a cash shortfall, forcing R&C to sell its trucks. R&C continued to haul equipment for American Wind but on behalf of the trucks’ new owner. R&C filed suit, alleging breach of contract and contending that the arbitration clause was unenforceable because R&C is a transportation worker operating under a contract of employment, exempt from the Federal Arbitration Act (FAA). R&C also argued that the arbitration provision was unconscionable. After R&C refused to arbitrate, the case was dismissed for failure to prosecute. The Third Circuit affirmed, noting that R&C had not sought interlocutory review of the order compelling arbitration, as permitted by the FAA. The interlocutory order was not part of the final order, so the court concluded it lacked jurisdiction to review it. View "R & C Oilfield Services LLC v. American Wind Transport Group, LLC" on Justia Law

The dispute at issue is between Jones Day and one of its former partners, a German national who was based in its Paris office until he left to join Orrick, Herrington & Sutcliffe (“Orrick”). Jones Day’s partnership agreement provides for mandatory arbitration of all disputes among partners, and that all such arbitration proceedings are governed by the FAA. The partnership dispute proceeded to arbitration in Washington D.C., the location designated in the arbitration agreement.   The Ninth Circuit reversed the district court’s order denying Jones Day’s petitions to compel Orrick to comply with an arbitrator’s subpoena. First, the court held that the district court had subject matter jurisdiction over the action to enforce arbitral summonses issued by the arbitrator in an ongoing international arbitration being conducted in Washington, D.C., under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention. The court further held that venue was proper in the Northern District of California. The court reversed and remanded with instructions to enforce Jones Day’s petitions to compel Orrick and its partners to comply with the arbitral summonses. View "JONES DAY V. ORRICK, HERRINGTON & SUTCLIFFE" on Justia Law

The San Diego City Attorney brought an enforcement action under the Unfair Competition Law, Business and Professions Code sections 17200, et seq. (UCL), on behalf of the State of California against Maplebear Inc. DBA Instacart (Instacart). In their complaint, the State alleged Instacart unlawfully misclassified its employees as independent contractors in order to deny workers employee protections, harming its alleged employees and the public at large through a loss of significant payroll tax revenue, and giving Instacart an unfair advantage against its competitors. In response to the complaint, Instacart brought a motion to compel arbitration of a portion of the City’s action based on its agreements with the individuals it hires ("Shoppers"). The trial court denied the motion, concluding Instacart failed to meet its burden to show a valid agreement to arbitrate between it and the State. Instacart challenged the trial court’s order, arguing that even though the State was not a party to its Shopper agreements, they were bound by its arbitration provision to the extent they seek injunctive relief and restitution because these remedies were “primarily for the benefit of” the Shoppers. The Court of Appeal rejected this argument and affirmed the trial court’s order. View "California v. Maplebear Inc." on Justia Law

The issue presented for the Court of Appeal's review in this case centered on whether California Code of Civil Procedure Section 1281.4 authorized the trial court to stay a plaintiff’s action on the basis of a pending arbitration to which the plaintiff was not a party. Ann Leenay brought an action against her former employer, Lowe’s Home Centers, LLC (Lowe’s), under the Private Attorneys General Act of 2004 (PAGA). The trial court granted a petition to coordinate her action with a number of other PAGA actions against Lowe’s. Lowe’s then moved to stay the coordinated actions under section 1281.4. Lowe’s based the motion on over 50 arbitration proceedings against it, but Leenay and the other plaintiffs in the coordinated actions were not parties in any of those arbitration proceedings. The trial court granted the motion to stay, and Leenay filed a petition for writ of mandate asking the Court of Appeal to vacate the order. The Court of Appeal concluded the trial court erred by granting the motion to stay. "[S]ection 1281.4 applies only when a court has ordered parties to arbitration, the arbitrable issue arises in the pending court action, and the parties in the arbitration are also parties to the court action. Under those circumstances, the court must stay the action (or enter a stay with respect to the arbitrable issue, if the issue is severable)." Those circumstances did not exist in this case. The Court therefore granted Leenay’s writ petition. View "Leenay v. Super. Ct." on Justia Law