Justia Arbitration & Mediation Opinion Summaries

The Cintas “defined contribution” retirement plan has a “menu” of investment options in which each participant can invest. Each Plan participant maintains an individual account, the value of which is based on the amount contributed, market performance, and associated fees. Under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. 1102(a)(1), the Plan’s fiduciaries have the duty of loyalty—managing the plan for the best interests of its participants and beneficiaries—and a duty of prudence— managing the plan with the care and skill of a prudent person acting under like circumstances. Plaintiffs, two Plan participants, brought a putative class action, contending that Cintas breached both duties. Plaintiffs had entered into multiple employment agreements with Cintas; all contained similar arbitration provisions and a provision preventing class actions.The district court declined to compel arbitration, reasoning that the action was brought on behalf of the Plan, so that it was irrelevant that the two Plaintiffs had consented to arbitration through their employment agreements–the Plan itself did not consent. The Sixth Circuit affirmed. The weight of authority and the nature of ERISA section 502(a)(2) claims suggest that these claims belong to the Plan, not to individual plaintiffs. The actions of Cintas and the other defendants do not support a conclusion that the plan has consented to arbitration. View "Hawkins v. Cintas Corp." on Justia Law

This case arises from a dispute regarding a joint financial venture between Noble Capital Fund Management, L.L.C. (“Noble”) and US Capital Global Investment Management, L.L.C. (“US Capital”). Noble created two separate funds, collectively the “Feeder Funds."Noble and the Feeder Funds initiated a JAMS arbitration against US Capital, alleging various claims including the breach of contractual and fiduciary duties. US Capital was unable to pay the arbitration fees, and the JAMS panel terminated the arbitration.On November 24, 2020, Noble and the Feeder Funds sued US Capital in Texas state court for various claims including fraud and fraudulent inducement. US Capital appeals the denial of its motion to compel arbitration and stay judicial proceedings and the denial of its motion to transfer.The court explained the Federal Arbitration Act requires that, where a suit is referable to arbitration, judicial proceedings be stayed until arbitration "has been had." Here, there is no arbitration to return this case to and parties may not avoid resolution of live claims by compelling a new arbitration proceeding after the first proceeding failed. Further, the court found no pendent jurisdiction over the denial of the motion to transfer. The court affirmed the district court’s ruling and dismissed the appeal of the district court’s denial of the motion to transfer. View "Noble Capital Fund v. US Capital Global" on Justia Law

Badgerow initiated an arbitration proceeding, alleging that her employment was unlawfully terminated. After arbitrators dismissed Badgerow’s claims, she filed suit in Louisiana state court to vacate the arbitral award. Walters removed the case and applied to confirm the award. Badgerow then moved to remand the case to state court, arguing that the federal court lacked jurisdiction to resolve the parties’ requests to vacate or confirm the award under Federal Arbitration Act (FAA) Sections 10 and 9. Normally, a court has federal-question jurisdiction whenever federal law authorizes an action but the FAA does not itself support federal jurisdiction. A federal court must find an independent basis for jurisdiction to resolve an arbitral dispute. In this case, neither application revealed a jurisdictional basis on its face. The district court applied the “look-through” approach, finding jurisdiction in the federal-law claims contained in Badgerow’s underlying employment action. The Fifth Circuit affirmed.The Supreme Court reversed and remanded. The “look-through” approach to determining federal jurisdiction does not apply to requests to confirm or vacate arbitral awards under Sections 9 and 10 of the FAA. The Court distinguished precedent that interpreted other FAA sections. Sections 9 and 10 lack specific statutory language that instructs a federal court to “look through” the petition to the “underlying substantive controversy.” When Congress includes particular language in one section of a statute but omits it in another section of the same Act, the choice is considered deliberate. View "Badgerow v. Walters" on Justia Law

Blizzard Entertainment, Inc. (Blizzard) appealed an order denying its motion to compel arbitration. B.D., a minor, played Blizzard’s online videogame “Overwatch,” and used “real money” to make in-game purchases of “Loot Boxes” - items that offer “randomized chances . . . to obtain desirable or helpful ‘loot’ in the game.” B.D. and his father (together, Plaintiffs) sued Blizzard, alleging the sale of loot boxes with randomized values constituted unlawful gambling, and, thus, violated the California Unfair Competition Law (UCL). Plaintiffs sought only prospective injunctive relief, plus attorney fees and costs. Blizzard moved to compel arbitration based on the dispute resolution policy incorporated into various iterations of the online license agreement that Blizzard presented to users when they signed up for, downloaded, and used Blizzard’s service. The trial court denied the motion, finding a “reasonably prudent user would not have inquiry notice of the agreement” to arbitrate because “there was no conspicuous notice of an arbitration” provision in any of the license agreements. The Court of Appeal disagreed: the operative version of Blizzard’s license agreement was presented to users in an online pop-up window that contained the entire agreement within a scrollable text box. View "B.D. v. Blizzard Entertainment" on Justia Law

Aronow sued Emergent for legal malpractice. Based on an arbitration provision in the retainer agreement, the trial court granted Emegent's motion to compel arbitration after finding the agreement was valid. Aronow and Emergent agreed on an arbitrator. Aronow was required to make a $1,500 advance payment for the arbitrator’s fee. At the initial conference with the arbitrator, Aronow, currently receiving public assistance relief in Alaska, advised that he was unable to pay the arbitration fees. In the trial court, Aronow sought a waiver of arbitration fees and costs or alternatively to lift the court stay.The court of appeal addressed a certified question and held that a trial court that granted a defendant’s petition to compel arbitration has jurisdiction to lift the stay of court proceedings where a plaintiff demonstrates financial inability to pay anticipated arbitration costs. Aronow must be allowed to attempt to demonstrate his inability to pay the arbitrator’s fees. If the trial court finds Aronow is unable to pay that fee, it should give Emergent the choice either to pay Aronow’s share of the fee or to waive the right to arbitrate. View "Aronow v. Superior Court" on Justia Law

The Supreme Court quashed the decision of the Third District Court of Appeal concluding that the circuit court had personal jurisdiction over Tribeca Asset Management, Inc., holding that the parties' agreement did not provide for arbitration in Florida.Tribeca and Ancla International, S.A. entered into a confidentiality agreement. Ancla later filed a petition to compel arbitration. The circuit court dismissed the petition for lack of personal jurisdiction, concluding that a provision in the parties' agreement did not contain a forum selection clause and merely contained a choice of law provision. The Third District reversed, concluding that the provision contained a forum selection clause. The Supreme Court reversed, holding that the agreement did not provide for arbitration in Florida. View "Tribeca Asset Management, Inc. v. Ancla International, S.A." on Justia Law

Robinson submitted an “uninsured driver” claim to State Farm for injuries sustained in an accident involving her car and an unidentified vehicle. Coverage was available only if the two cars came into contact. (Ins. Code 11580.2(b)(1).) In arbitration, State Farm propounded requests for admissions that there was either no contact between the two cars or that no damage resulted from any contact. Robinson failed to respond by the due date. After finding that Robinson had not “substantially complied” with Code of Civil Procedure sections 2033.220 or 2015.5, the court deemed the requests admitted and awarded sanctions. Robinson unsuccessfully moved to withdraw or amend the deemed admissions, citing inadvertence. The arbitrator entered an award in favor of State Farm, relying on the established admissions.The trial court confirmed the award. The court of appeal affirmed. In typical arbitration proceedings, discovery disputes are resolved by the arbitrator but in uninsured-motorist arbitration proceedings, discovery disputes are resolved by a trial court. Trial court discovery orders in these proceedings are not reviewable on appeal from a judgment confirming the arbitration award. A party’s recourse to challenge an allegedly improper discovery ruling in an uninsured-motorist arbitration proceeding is through a timely petition for a writ of mandamus. View "State Farm Mutual Automobile Insurance Co. v. Robinson" on Justia Law

Claude Rogers, a former resident of a residential care facility for the elderly known as Meadow Oaks of Roseville, died after experiencing heatstroke. His wife and successor-in-interest Kathryn and sons Jeffrey, Phillip and Richard sued Meadow Oaks of Roseville, Roseville SH, LLC, CPR/AR Roseville SH Owner, LLC, DCP Investors Roseville SH, LLC, DCP Management Roseville SH, LLC, Westmont Living, Inc., Tanysha Borromeo, Ana Rojas, and Andrew Badoud for elder abuse, fraud, and wrongful death. Defendants appealed an order denying their petition to compel plaintiffs to arbitrate their claims pursuant to an arbitration agreement that was part of the Residency Agreement Richard signed as Claude’s representative. Although defendants filed a notice of appeal, the appellate briefs were filed on behalf of Roseville SH, LLC only. Roseville SH, LLC contended that in denying the petition to compel arbitration: (1) the trial court erroneously believed defendants had to show that Claude lacked mental capacity to consent before they could prove that Richard had the authority to sign the arbitration agreement for Claude; (2) the trial court erred in concluding that Richard did not act as Claude’s actual or ostensible agent when he signed the arbitration agreement on Claude’s behalf; and (3) the trial court’s order violated the Federal Arbitration Act. The Court of Appeal concluded: (1) Roseville SH, LLC misconstrued the trial court’s analysis; (2) the trial court did not err in denying the petition to compel arbitration; and (3) the trial court’s order did not violate the Federal Arbitration Act. Accordingly, judgment was affirmed. View "Rogers v. Roseville SH, LLC" on Justia Law

Sacks is a law firm with a 20-year history of working with the International Monetary Fund (IMF). In 2011, IMF hired Sacks to negotiate disputed claims of various contractors that worked on the renovation of its headquarters. The parties’ contract asserts IMF’s immunity from suit and provides that any disputes not settled by mutual agreement shall be resolved by arbitration. In a subsequent fee dispute between Sacks and IMF, Sacks filed a demand for arbitration with the AAA. The arbitration panel awarded Sacks $39,918.82 plus interest but denied Sacks’ claim of underpayment in connection with earlier work.Sacks sued the Fund, claiming that the award should be vacated pursuant to the D.C. Code as “the result of misconduct by the arbitrators.” IMF removed the case to federal court and moved to dismiss it on immunity grounds pursuant to its Articles of Agreement, given effect in the U.S. by the Bretton Woods Act, 22 U.S.C. 286h. Sacks asserted the contract waived immunity by expressly providing for arbitration pursuant to the AAA Rules, which contemplate courts’ entry of judgment on arbitral awards. The D.C. Circuit affirmed the dismissal of the suit. The AAA Rules and D.C. law contemplate judicial involvement in the enforcement of arbitral awards, so arguably the contract also does so but an international organization's waiver of the immunity must be explicit. The parties' contract expressly retains the IMF’s immunity, reiterating it even within the arbitration clause. View "Leonard A. Sacks & Associates P.C. v. International Monetary Fund" on Justia Law

Kirk, an actress, using a pseudonym, entered into a confidential settlement agreement in August 2017 with four entertainment industry executives, who used fictitious names in the agreement and documents filed in the superior court. The agreement contained an arbitration clause. The executives filed a demand for arbitration in June 2020, asserting breach of contract, interference with contract, and civil extortion. The executives obtained from an emergency arbitrator a preliminary injunction prohibiting the actress, her fiance, and two others from disclosing confidential information as that term is defined in the settlement agreement, including any disclosures in court documents, and from initiating any lawsuit against the executives in violation of the arbitration provisions in the settlement agreement.Kirk and her fiance filed a petition in superior court to vacate the preliminary injunction. Because the emergency arbitrator’s ruling was not an “award” under Code of Civil Procedure section 1283.4,1 the court dismissed the petition for lack of jurisdiction. The court of appeal dismissed their appeal as taken from a non-appealable order. An arbitrator's interim rulings are not reviewable until the final award is entered; no appeal is available from a court's dismissal of a petition to vacate such an interim ruling. View "Kirk v. Ratner" on Justia Law