Justia Arbitration & Mediation Opinion Summaries

Kathleen Melaas appealed a district court order granting a motion to compel arbitration and dismissing her complaint against Diamond Resorts U.S. Collection Development, LLC. She alleged Diamond Resorts offered vacation and timeshare packages, she attended a sales meeting with a Diamond Resorts representative, the sales meeting lasted approximately five hours, and she asked to leave the meeting on at least one occasion and Diamond Resorts refused to allow her to leave. She claimed Diamond Resorts knew she was a diabetic and experienced fatigue and confusion, Diamond Resorts knew she was a vulnerable adult subject to a durable power of attorney for financial management, and Diamond Resorts would not allow her to leave the sales meeting until she signed the timeshare agreement. Melaas asserted she lacked the capacity to enter into the agreement, Diamond Resorts used high-pressure and abusive sales tactics and knowledge of her medical condition to unduly influence and coerce her into signing the agreement, and any consent was obtained by duress and menace. After a hearing, the district court granted Diamond Resorts’ motion to compel arbitration and dismissed Melaas’ complaint. The North Dakota Supreme Court found that the forum selection clause in section 17 of the contract was not part of the arbitration agreement. The forum selection clause stated, “This Agreement is governed by Nevada law without regard to Nevada’s choice of law rules. You must bring any legal action in Clark County, Nevada.” When the term “Agreement” was used in the contract, the Court found it referred to the entire contract and not the arbitration agreement. To the extent Diamond Resorts argued the action should have been brought in Nevada, it was a venue issue and not a jurisdictional issue, and the right could be waived. The issue of improper venue was waived if it was omitted from a motion to dismiss or if it was not made by motion or included in the responsive pleading. On remand, if any of the parties argue the case must be dismissed under the forum selection clause, the district court must first determine whether a contract exists. If the court determines a contract exists, it could then consider the forum selection clause issue, including whether the issue was waived. The order compelling arbitration and dismissing Melaas' complaint was reversed, and the matter remanded for further proceedings. View "Melaas v. Diamond Resorts U.S. Collection Development" on Justia Law

The issue this case presented for the Oregon Supreme Court's review centered on whether ORS 652.200(2) and ORCP 54 E(3) could be construed in a way that “will give effect” to both, in the words of the Oregon Legislature’s longstanding requirement for construing statutes. Plaintiff was employed by defendant for several years. Defendant terminated plaintiff’s employment, and, several months later, plaintiff filed the underlying action alleging defendant failed to pay wages that were due at termination. The case was assigned to mandatory court-annexed arbitration, and defendant made an offer of judgment under ORCP 54 E, which plaintiff rejected. The arbitrator ultimately found that defendant had failed to timely pay some of the wages that plaintiff claimed and that the failure was willful, entitling plaintiff to a statutory penalty. In addition, the arbitrator awarded plaintiff an attorney fee under ORS 652.200(2) and costs, but he applied ORCP 54 E(3) to limit those awards to fees and costs that plaintiff had incurred before defendant’s offer of judgment, because that offer of judgment exceeded the amount that plaintiff had ultimately recovered on his claims. Plaintiff filed exceptions to the arbitrator’s application of ORCP 54 E(3) to limit the award of fees and costs, but the award was affirmed by operation of law when the court failed to enter a decision within 20 days. In a divided en banc opinion, the Court of Appeals held that ORCP 54 E(3) could be applied to wage claims without negating the effect of ORS 652.200(2) and thus, both could be given effect. The Supreme Court concurred with the appellate dissent, finding that and need to limit the attorney fees of an employee who unreasonably rejects a good faith offer or tender could be addressed on a case-by-case basis under ORS 20.075(2), but the “reasonable” attorney fee required by ORS 652.200(2) could not be categorically limited through ORCP 54 E(3). Judgment was reversed and the matter returned to the circuit court for further proceedings. View "Mathis v. St. Helens Auto Center, Inc." on Justia Law

Wayne Farms LLC appealed a circuit court order compelling it to arbitrate its claims asserted against Primus Builders, Inc., and staying the action. Wayne Farms was a poultry producer located in Dothan, Alabama. Wayne Farms sought to expand its poultry-processing facility, and, to that end, entered into a "Design/Build Agreement" with Primus in 2017, that specifically addressed work to be completed by Primus in connection with the expansion of Wayne Farms' freezer warehouse. Primus subcontracted with Republic Refrigeration, Inc.; Republic hired Steam-Co, LLC for "passivation services." Upon draining a condenser for the freezer warehouse, it was discovered that the interior of the condenser was coated with corrosive "white rust." Primus then replaced the damaged condenser at a cost of approximately $500,000 under a change order, pursuant the Design/Build Agreement with Wayne Farms. Wayne Farms paid Primus for both the original damaged condenser and the replacement condenser. Both Primus and Steam-Co have claimed that the other is responsible for the damage to the condenser. Wayne Farms sued Primus and Steam-Co asserting claims of breach of contract and negligence and seeking damages for the damaged condenser and the cost of replacing it. Primus moved the trial court to compel arbitration as to the claims asserted against it by Wayne Farms. Primus also moved the trial court to dismiss, or in the alternative, stay Steam-Co's cross-claims against it. Wayne Farms opposed Primus's motion to compel arbitration, arguing that no contract existed between the parties requiring it to arbitrate claims arising from the passivation process. The Alabama Supreme Court found that the contract between Wayne Farms and Primus specified arbitration would apply to only those disputes arising from obligations or performance under the Design/Build Agreement, Wayne Farms could not be compelled to arbitrate with Primus a dispute arising from the performance of passivation work that was not an obligation agreed to in the Design/Build Agreement. Judgment was reversed and the matter remanded for further proceedings. View "Wayne Farms LLC v. Primus Builders, Inc." on Justia Law

Dorsa, a Miraca executive, learned of a purported scheme to defraud the government. Dorsa filed a qui tam action, alleging violations of the False Claims Act (FCA). Dorsa was fired and added a claim for FCA retaliation, 31 U.S.C. 3730(h). The government intervened. Dorsa and the government dismissed the qui tam claims. Miraca unsuccessfully moved to dismiss the retaliation claim because Dorsa had agreed to binding arbitration in his employment agreement. The court found that the arbitration clause did not cover Dorsa’s claim, which did not "have any connection with, an employment agreement."The Sixth Circuit dismissed an appeal for lack of jurisdiction. There was no final order and the narrow provision of the Federal Arbitration Act (FAA, 9 U.S.C. 16) that authorizes immediate appeals of certain interlocutory orders does not apply. Miraca filed its motion to dismiss without asking the court for a stay or an order compelling arbitration. The FAA provides that “[a]n appeal may be taken from an order” either “refusing a stay of any action,” or “denying a petition ... to order arbitration.” Even if the denial of the motion to dismiss had the same impact as refusing to stay the action or denying a petition to order arbitration, there is no test for appealability that hinges on the practical effect of a court’s order. View "Dorsa v. Miraca Life Sciences, Inc." on Justia Law

Hale, employed by Morgan Stanley since 1984, was disciplined on several occasions between 2013 and 2016. Hale initiated an arbitration action and requested damages for his claims of negligence, defamation, breach of fiduciary duty, and intentional infliction of emotional distress. Following a four-day hearing, the arbitrator issued an award denying all of Hale’s claims. Hale filed suit, requesting that the arbitration award be vacated pursuant to the Federal Arbitration Act, 9 U.S.C. 1. The district court dismissed, holding that it lacked diversity and federal question jurisdiction over the suit.The Sixth Circuit reversed and remanded. There is complete diversity of citizenship between the disputing parties as required by 28 U.S.C. 1332(a) and the amount in controversy is met because Hale requested a damages award of $14.75 million in his complaint (filed as a motion to vacate). In actions where a party seeks to vacate a $0 arbitration award pursuant to section 10 of the FAA, courts should look to the complaint, including the amount sought in the underlying arbitration, for purposes of assessing whether the jurisdictional amount in controversy requirement has been met. View "Hale v. Morgan Stanley Smith Barney LLC" on Justia Law

Plaintiff Anna Sandoval-Ryan signed admission documents on behalf of her brother, Jesus Sandoval, following his admission to Sacramento Post-Acute (Post- Acute), a skilled nursing facility owned by Oleander Holdings, LLC (Oleander) and Plum Healthcare Group, LLC (Plum Healthcare). Among the documents plaintiff signed were two agreements to arbitrate claims arising out of the facility’s care for Sandoval. Sandoval’s condition deteriorated while being cared for at the facility, and he was transferred to a hospital where he later died. Plaintiff sued defendants Post-Acute, Oleander, and Plum Healthcare in superior court; she brought claims on her own behalf and on behalf of Sandoval. Defendants moved to compel arbitration of plaintiff’s claims. The trial court denied the motion on the basis the agreements were invalid because they were secured by fraud, undue influence, and duress. Defendants appealed the trial court’s ruling, contending the parties agreed to allow the arbitrator to decide threshold questions of arbitrability, and the trial court erred by deciding the issue instead. Absent clear and unmistakable language delegating threshold arbitrability issues to the arbitrator, the Court of Appeal concluded defendants’ claim lacked merit. View "Sandoval-Ryan v. Oleander Holdings" on Justia Law

Michael Falligant, as next friend of Michelle McElroy, who Falligant alleged was an incapacitated person, filed an action against TitleMax of Alabama, Inc. ("TitleMax"), alleging that TitleMax wrongfully repossessed and sold McElroy's vehicle. TitleMax filed a motion to compel arbitration of Falligant's claims, which the circuit court denied. TitleMax appealed. After review, the Alabama Supreme Court determined TitleMax met its burden of proving that a contract affecting interstate commerce existed, and that that contract was signed by McElroy and contained an arbitration agreement. The burden then shifted to Falligant to prove that the arbitration agreement was void. But the Court concluded Falligant failed to present substantial evidence indicating that McElroy was permanently incapacitated and, thus, lacked the mental capacity to enter into the contracts. Because Falligant failed to create a genuine issue of fact, the circuit court erred in ordering the issue of McElroy's mental capacity to trial. Accordingly, the circuit court's decision was reversed, and the matter remanded back to the circuit court for further proceedings. View "TitleMax of Alabama, Inc. v. Falligant" on Justia Law

Plaintiff-respondent Sarah Coughenour worked for defendant-appellant Del Taco, LLC, starting when she was 16 years old. When she was first employed by Del Taco, she signed a “Mutual Agreement to Arbitrate” (Agreement). After Coughenour reached the age of 18, she continued working for Del Taco for four months. Coughenour quit and filed a lawsuit against Del Taco for sexual harassment committed by one of their employees, wage and hour claims brought pursuant to the Labor Code, and other claims under the Fair Housing and Employment Housing Act. Del Taco moved to compel arbitration. The trial court denied the Motion, finding that Coughenour’s filing of the lawsuit was a disaffirmance of the Agreement within the meaning of Family Code section 6710, which allowed a person upon reaching majority age to disaffirm a contract entered into while a minor. Del Taco appealed the denial of its motion, arguing that by working for Del Taco for four months after she reached the age of majority, Coughenour ratified the Agreement, which estopped her power to disaffirm the Agreement. In the alternative, Del Taco argued that Coughenour did not disaffirm the Agreement within a “reasonable time” after reaching the age of 18 as required by Family Code section 6710. The Court of Appeal affirmed denial of Del Taco's motion: [t]he filing of the lawsuit was notice that [Coughenour] disaffirmed the Agreement." The trial court did not abuse its discretion by concluding that Coughenour disaffirmed the Agreement within a reasonable time. View "Coughenour v. Del Taco" on Justia Law

Olson is a driver for Lyft, whose terms of service include an agreement he could not bring a Private Attorney General Act (PAGA), Labor Code 2698, claim in court, and that disputes with Lyft must be resolved by individual arbitration. Olson sued Lyft alleging six PAGA claims. Lyft petitioned to compel to arbitration. The petition acknowledged that a 2014 precedent (Iskanian) precluded enforcement of PAGA waivers, but asserted that Iskanian was wrongly decided and was no longer good law in light of the U.S. Supreme Court’s 2018 decision, Epic Systems. The trial court rejected Lyft’s arguments.The court of appeal affirmed. Epic Systems addressed the question of whether the NLRA renders unenforceable arbitration agreements containing class action waivers that interfere with workers’ right to engage in “concerted activities.” It did not address private attorney general laws like PAGA or qui tam suit. View "Olson v. Lyft, Inc." on Justia Law

Oro contracted for Borror to manage Oro’s residential apartments. Each management contract stated: “If either party shall notify the other that any matter is to be determined by arbitration,” the parties would proceed to arbitration unless they first resolved the dispute. A dispute arose and resulted in Borror’s ceasing to manage Oro’s properties. Oro responded by letter asserting that Borror was in breach of the contracts and that Oro planned “to proceed directly to litigation in either state or federal court,” as the contracts “do not limit litigation exclusively to arbitration.” Nonetheless, Oro asked Borror to notify it within six days if Borror preferred arbitration. A week after receiving Oro’s letter, Borror filed a federal court complaint asserting its own breach of contract claims. Rather than filing an answer or another responsive pleading, Oro moved to compel arbitration.The district court held that Oro had waived its contractual right to arbitration through its pre-litigation conduct. Invoking its appeal rights under the Federal Arbitration Act, 9 U.S.C. 1, Oro timely appealed. The Sixth Circuit reversed. Correspondence is not equivalent to formal litigation; parties often posture their claims with “loose rhetorical flair.” Oro’s pre-trial “posturing” correspondence was neither inconsistent with its arbitration right nor prejudicial to Borror. View "Borror Property Management, LLC v. Oro Karric North, LLC" on Justia Law