Justia Arbitration & Mediation Opinion Summaries

JustAnswer LLC (JustAnswer) appealed an order denying its petition to compel arbitration. Tina Sellers and Erin O’Grady (together, Plaintiffs) used the JustAnswer website to submit a single question to an “expert” for what they believed would be a one-time fee of $5, but JustAnswer automatically enrolled them in a costlier monthly membership. After discovering additional charges to their credit cards, Plaintiffs filed a class action lawsuit against JustAnswer, alleging it routinely enrolled online consumers like them in automatic renewal membership programs without providing “clear and conspicuous” disclosures and obtaining their “affirmative consent” as mandated by the California Automatic Renewal Law. Seeking to avoid the class action litigation, JustAnswer filed a petition to compel individual arbitration, claiming Plaintiffs agreed to their “Terms of Service,” which included a class action waiver and a binding arbitration clause, when they entered their payment information on the website and clicked a button that read, “Start my trial.” In a case of first impression under California law, the Court of Appeal considered whether, and under what circumstances, a “sign-in wrap” agreement was valid and enforceable. The Court concluded the notices on the “Start my trial” screens of the JustAnswer website were not sufficiently conspicuous to bind Plaintiffs, because they were less conspicuous than the statutory notice requirements, and they were not sufficiently conspicuous under other criteria courts have considered in determining whether a hyperlinked notice to terms of services was sufficient to put a user on inquiry notice of an arbitration agreement. The Court therefore affirmed the trial court’s order denying JustAnswer’s petition to compel arbitration. View "Sellers v. JustAnswer LLC" on Justia Law

The Alabama Space Science Exhibit Commission d/b/a U.S. Space & Rocket Center ("ASSEC") filed suit against Space Race, LLC ("Space Race"), seeking to avoid an arbitration award entered in favor of Space Race and against ASSEC by an arbitration panel in New York. In July 2016, Space Race agreed to produce an animated series for ASSEC aimed at promoting the interest of children in space exploration and science. The series was to be created and released to the public over a three-year period. In exchange, ASSEC agreed to compensate Space Race with funds ASSEC would receive from a grant from the National Aeronautics and Space Administration ("NASA"), which had contracted with ASSEC to provide funding for the series. The compensation was to be paid to Space Race annually as the series episodes were created during the three-year contract term. The parties' agreement provided that it "shall be governed" by Alabama law. Space Race produced the series before the contract term expired, but ASSEC failed to pay the amount owed for the last year of the series. Space Race claimed that ASSEC still owed Space Race approximately $1.3 million when the contract term expired. The parties' agreement contained an arbitration provision. In December 2017, after being notified by ASSEC that it would no longer make payments to Space Race because the grant from NASA had been terminated, Space Race commenced arbitration proceedings against ASSEC in New York. Space Race moved to dismiss ASSEC's Alabama action, asserting that a New York court had already entered a final judgment confirming the arbitration award. The Alabama trial court denied Space Race's motion to dismiss, and Space Race petitioned the Alabama Supreme Court for a writ of mandamus directing the trial court to dismiss ASSEC's action. Because the New York judgment confirming the arbitration award against ASSEC was entitled to full faith and credit and res judicata effect, the Supreme Court granted Space Race's mandamus petition. The trial court was directed to vacate its order denying Space Race's motion to dismiss and to enter an order granting that motion. View "Ex parte Space Race, LLC." on Justia Law

The DC Circuit affirmed the district court's grant of Tatneft's petition to confirm and enforce its arbitral award against Ukraine. The court agreed with the district court's decision rejecting Ukraine's arguments that the court should have declined to enforce the award under The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), and should have dismissed the petition on the basis of forum non conveniens. In this case, the enforcement of the arbitral award should not have been denied under the New York Convention arti. (V)(1)(C) where the district court neither exceeded its discretion nor made legal error when it denied Ukraine's motion for supplemental briefing, made years after the parties had initially briefed the merits; Ukraine can pay the $173 million judgment without risking a collapse; the district court did not exceed its authority under the New York Convention; and the court rejected Ukraine's contention that the district court mistakenly enforced the award in spite of the public policy and improper composition exceptions. Furthermore, the court has squarely held that forum non conveniens is not available in proceedings to confirm a foreign arbitral award because only U.S. courts can attach foreign commercial assets found within the United States. View "Tatneft v. Ukraine" on Justia Law

Appellants, two individuals who have traveled on Amtrak in connection with their work and expect to continue doing so, sought declaratory and injunctive relief to prevent Amtrak from imposing an arbitration requirement on rail passengers and purchasers of rail tickets.The DC Circuit affirmed the district court's dismissal of the complaint because appellants have not plausibly alleged an actual injury-in-fact and therefore lack Article III standing. In this case, appellants have alleged neither ongoing nor imminent future injury. Rather, appellants assert only one cognizable interest, the interest in purchasing tickets to travel by rail, but Amtrak's new term of service has not meaningfully abridged that interest. View "Weissman v. National Railroad Passenger Corp." on Justia Law

Beginning in 1986, Arabian was the sole authorized dealer for Ford brands in Kuwait. In a 2005 Agreement, the companies agreed to use “binding arbitration” as the “exclusive recourse” for any dispute. Ford ended the Agreement in 2016 and applied to the American Arbitration Association for a declaration that it permissibly ended the Agreement. Arabian sued, seeking an injunction prohibiting Ford from proceeding with arbitration and asserting breach of contract and fraud. Arabian argued that the Motor Vehicle Franchise Contract Arbitration Fairness Act, 15 U.S.C. 1226, requires that arbitration between dealers and car manufacturers requires that the parties consent to it after the dispute arises. The district court denied the motion, deciding that the arbitrator must resolve the gateway issue.The arbitral tribunal decided that the Act did not deprive it of authority and held that Ford permissibly terminated the Agreement; it taxed Arabian $1.35 million for fees and costs. Arabian brought counterclaims for breach of contract and fraud but withdrew them before the award. The Sixth Circuit confirmed the award. On remand, Ford moved to stay the federal action to allow the arbitrator to resolve Arabian’s common law claims. The district court dismissed the case without prejudice. The Sixth Circuit reversed. The Act’s command, 9 U.S.C. 3, that a district court “shall on application of one of the parties stay the trial,” conveys a mandatory obligation. Dismissal, unlike a stay, permits an objecting party to file an immediate appeal; a dismissal order undercuts the Act's pro-arbitration appellate-review provisions. View "Arabian Motors Group W.L.L. v. Ford Motor Co." on Justia Law

This case stems from plaintiffs' claim of rights under a 1933 agreement between Standard Oil of California and the Kingdom of Saudi Arabia and a 1949 agreement between the purported ancestors of plaintiffs and the Arabian American Oil Company. Plaintiffs seek to enforce an arbitral award against defendant, Saudi Arabian Oil Company (Saudi Aramco), which they were awarded by an Egyptian arbitration panel.After determining that plaintiffs' motion for reconsideration tolled the period for filing a notice of appeal, consistent with Federal Rule of Civil Procedure 83(a)(2), the Fifth Circuit vacated the district court's judgment and remanded with instructions for the district court to dismiss the case based on lack of jurisdiction. The court concluded that Saudi Arabian Oil Company is an instrumentality of a foreign state and is therefore immune from suit under the Foreign Sovereign Immunities Act of 1976 (FSIA). The court stated that the arbitral proceedings give every appearance of having been a sham, and there exists no agreement among these parties to arbitrate this dispute, or anything else for that matter. The court decided that, instead of denying the petition for enforcement, the case is more properly dismissed for lack of jurisdiction, given that Saudi Aramco qualifies as a foreign state for purposes of the FSIA. View "Al-Qarqani v. Saudi Arabian Oil Co." on Justia Law

Eight named plaintiffs, including two minors, brought a nationwide putative class action against e-commerce provider StockX for allegedly failing to protect millions of StockX users’ personal account information obtained through a cyber-attack in May 2019. Since 2015, StockX’s terms of service included an arbitration agreement, a delegation provision, a class action waiver, and instructions for how to opt-out of the arbitration agreement. Since 2017, StockX's website has stated: StockX may change these Terms without notice to you. “YOUR CONTINUED USE OF THE SITE AFTER WE CHANGE THESE TERMS CONSTITUTES YOUR ACCEPTANCE OF THE CHANGES. IF YOU DO NOT AGREE TO ANY CHANGES, YOU MUST CANCEL YOUR ACCOUNT.The Sixth Circuit affirmed the dismissal of the suit and an order compelling arbitration. The court rejected arguments that there is an issue of fact as to whether four of the plaintiffs agreed to the current terms of service and that the defenses of infancy and unconscionability render the terms of service and the arbitration agreement (including the delegation provision) invalid and unenforceable. The arbitrator must decide in the first instance whether the defenses of infancy and unconscionability allow plaintiffs to avoid arbitrating the merits of their claims. View "I. C. v. StockX, LLC" on Justia Law

SHI, owned by Vik, borrowed funds from Deutsche Bank (Bank). SHI entered a limited partnership (LP) agreement with Devon and invested $25 million, Bank issued margin calls. SHI claimed that it lacked funds to satisfy the calls. Bank sued SHI in England and Wales and received a $235,646,345 judgment, which SHI has not satisfied. SHI transferred the Devon Interest to CPR (allegedly related to Vik's father). SHI paid Devon millions of dollars for the transfer. Devon made fund distributions to the limited partners but had difficulties transmitting proceeds to CPR. CPR initiated arbitration to compel Devon to release the Proceeds. The arbitrator denied Bank’s request to intervene. Devon raised counterclaims, seeking a declaration whether the assignment to CPR was enforceable.Meanwhile, Bank sued CPR, SHI, and Devon in Delaware, alleging a conspiracy to commit fraud. The arbitrator denied Devon’s motion to stay proceedings. Devon then refused to participate in the arbitration. The arbitrator awarded CPR the proceeds, plus prejudgment interest, CPR petitioned to confirm the arbitration award; in the Eastern District of Pennsylvania, Devon attempted to interplead Deutsche Bank. Bank answered and sought to set aside the purported transfer of the Devon Interest to CPR, to declare SHI and CPR alter egos, and to find Devon, CPR, and SHI liable for fraud and conspiracy. The Third Circuit affirmed orders confirming the arbitration award, striking the interpleader complaint, and dismissing all third parties and claims and Devon’s counterclaim. View "CPR Management SA v. Devon Park Bioventures LP" on Justia Law

In 2007, ROHM Japan and MaxPower entered into a technology license agreement (TLA). ROHM Japan was permitted “to use certain power [metal oxide semiconductor field-effect transistors (MOSFET)]-related technologies of” MaxPower (Licensor) developed under a Development and Stock Purchase Agreement in exchange for royalties paid to MaxPower. The TLA, as amended in 2011, includes an agreement to arbitrate “[a]ny dispute, controversy, or claim arising out of or in relation to this Agreement or at law, or the breach, termination, or validity thereof.” Arbitration is to be conducted “in accordance with the provisions of the California Code of Civil Procedure.”In 2019, a dispute arose between ROHM Japan and MaxPower concerning whether the TLA covers ROHM’s silicon carbide MOSFET products. MaxPower notified ROHM Japan of its intent to initiate arbitration. Shortly thereafter, ROHM's subsidiary, ROHM USA, sought a declaratory judgment of noninfringement of four MaxPower patents in the Northern District of California and four inter partes review petitions. The district court granted MaxPower’s motion to compel arbitration and dismissed the case without prejudice, reasoning that the TLA “unmistakably delegate[s] the question of arbitrability to the arbitrator.” The Federal Circuit affirmed. In contracts between sophisticated parties, incorporation of rules with a provision on the subject is normally sufficient “clear and unmistakable” evidence of the parties’ intent to delegate arbitrability to an arbitrator. View "ROHM Semiconductor USA, LLC v. MaxPower Semiconductor, Inc." on Justia Law

In her complaint, plaintiff Pamela Chambers alleged that she received a written communication from a debt collector contracted by Crown that failed to comply with the CFDBPA’s notice formatting requirement. She filed a putative class action lawsuit against Crown Asset Management, LLC. Crown moved to compel arbitration, relying on an affidavit from an employee of Chambers’s original creditor, Synchrony Bank (Synchrony), who stated in part that “Synchrony’s records” showed a credit card account agreement containing an arbitration clause was mailed to Chambers. Chambers objected to the affidavit on various evidentiary grounds. The trial court sustained the objections and denied Crown’s motion to compel arbitration. Crown appealed, contending the trial court erred by sustaining Chambers’s evidentiary objections and denying the motion to compel. Finding no reversible error, the Court of Appeal affirmed. View "Chambers v. Crown Asset Management, LLC" on Justia Law