Justia Arbitration & Mediation Opinion Summaries

The employer, Luxor Cabs, obtained workers' compensation insurance through AUCRA under an EquityComp program. The EquityComp workers’ compensation insurance program has garnered nationwide attention from administrative agencies and judicial tribunals. In 2016, the California Insurance Commissioner issued an administrative decision concluding that the EquityComp program violated state insurance laws and that the reinsurance participation agreement (RPA) between AUCRA and the insured employer, in that case, was void as a matter of law. In 2018, the Fourth Appellate District came to a similar decision in a case essentially identical to this one involving arbitrability under an RPA. Luxor, unhappy with AUCRA's handling of claims, filed suit. The court of appeal affirmed the denial of AUCRA’s motion to compel arbitration pursuant to the terms of an RPA between an employer, Luxor Cabs, and AUCRA. The trial court properly rejected an argument that the validity of the arbitration clause should, itself, have been referred to arbitration in accordance with the RPA’s “delegation clause.” Both the delegation clause and the arbitration provision in the RPA were void and unenforceable because they each separately constituted an “endorsement” to the Policy which was not properly vetted and approved as required by Insurance Code section 11658. View "Luxor Cabs, Inc. v. Applied Underwriters Captive Risk Assurance Co." on Justia Law

Plaintiffs Jose Robles, Christopher Rymel, and David Hagins sued defendant Save Mart Supermarkets, Inc., alleging various state law statutory employment claims. After successfully moving to sever, Save Mart moved to compel arbitration as to each plaintiff. The motions were heard together, and the trial court denied the motions by substantively identical orders. Save Mart appealed in each case. The original complaint alleged each plaintiff had been employed as an order selector at Save Mart’s Roseville Distribution Center (Rymel was also a forklift driver). Each alleged an industrial injury and torts stemming from their injuries under the California Fair Employment and Housing Act (FEHA). Hagins also alleged he was retaliated against after he reported a workplace safety hazard, purportedly a whistleblower violation under Labor Code section 1102.5. Save Mart alleged plaintiffs were members of Teamsters Local 150 and were employed by Save Mart under a CBA that covered the pleaded disputes. Save Mart argued that resolving the disputes would require interpretation of the CBA or would be “substantially dependent” on such interpretation, that the claims were “inextricably intertwined” with parts of the CBA, and that judicial resolution of them would infringe on the arbitration process set forth in the CBA. Plaintiffs opposed the motions, arguing the pleaded claims did not fall within the scope of the CBA. The Court of Appeal concurred plaintiffs' claims did not require an interpretation of the CBA, and that their claims fell outside the scope of the CBA: "Save Mart explains that disputes about the employee termination and production norm provisions of the CBA are intended to be resolved through grievances. As an abstract proposition we do not disagree. But ...plaintiffs retain an independent (nonnegotiable) state law right to be free of discipline caused by protected activity, such as whistleblowing (Hagins) or exercising his FEHA rights (all plaintiffs)." View "Rymel v. Save Mart Supermarkets" on Justia Law

Federal Rule of Civil Procedure 6(a) governs how to calculate the Federal Arbitration Act's three-month filing deadline. The Ninth Circuit affirmed the district court's denial of a petition to vacate an arbitral award because the petition was filed one day late. The panel clarified how to perform the Rule 6(a) calculation and held that the petition to vacate was untimely. View "Stevens v. Jiffy Lube International" on Justia Law

Wakaya Perfection, LLC and its principals sued Youngevity International Corp. and its principals in Utah state court. The Youngevity parties responded by bringing their own suit against the Wakaya parties in a California federal district court, then removing the Utah case to federal court. These steps resulted in concurrent federal cases sharing at least some claims and issues. The California litigation progressed; and in November 2017, the federal district court in Utah ordered dismissal. The issues presented for the Tenth Circuit's review centered on whether: (1) the federal district court should have abstained from exercising jurisdiction under the Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976) test; and (2) and arbitrator would have needed to decide the arbitrability of Wakaya's claims. The Tenth Circuit reversed on both grounds: the federal trial court applied the wrong abstention test and erroneously ruled that an arbitrator should have decided whether Wakaya's claims were arbitrable. View "Wakaya Perfection, LLC v. Youngevity International" on Justia Law

The plaintiff, who arbitrated a claim that arose under a federal statute, the Electronic Communications Privacy Act of 1986 (known as the Stored Communications Act), 18 U.S.C. 2701, sought to vacate or modify the arbitration award. The plaintiff filed a motion in the district court; for jurisdiction, he invoked 28 U.S.C. 1331 (federal-question jurisdiction) and 1332 (diversity jurisdiction). The Federal Arbitration Act, 9 U.S.C. 10-11, which provides for the enforceability of arbitration agreements and specifies procedures for conducting arbitrations and enforcing arbitration awards, does not provide an independent jurisdictional basis for disputes under the Act. The Fourth Circuit vacated the dismissal of the action, stating that the better approach for determining subject-matter jurisdiction over section 10 and 11 motions is to look to the nature of the underlying claim in dispute, as is done with respect to section 4 petitions to compel arbitration. If the underlying claim is one that otherwise could be litigated in federal court, the motion can likewise be resolved in federal court. The district court had federal-question jurisdiction because the plaintiff’s underlying claim arose under federal law. View "McCormick v. America Online, Inc." on Justia Law

Forby filed a state court class action against Tech for violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) and unjust enrichment under Illinois law. In its notice of removal, Tech did not reference arbitration but argued that Forby’s claims were baseless and that no class should be certified. Tech later moved to dismiss for failure to state a claim and, in the alternative, moved to transfer the case, arguing that Forby’s claims were subject to arbitration in Texas and that an Illinois district court could not compel arbitration outside of its district. After the case was transferred, Tech filed a 12(b)(6) motion to dismiss that did not mention arbitration. In its reply to Forby’s response, Tech again did not mention compelling arbitration. The district court denied the motion with respect to Forby’s ICFA claim and dismissed the unjust enrichment claim. Four days after attending a Rule 26(f) conference and receiving Forby’s requests for production, Tech filed its motion to compel arbitration and an expedited motion to stay discovery. The court granted the motions, finding that Tech had substantially invoked the judicial process but that Forby had not suffered prejudice. The Fifth Circuit reversed. When a party will have to re-litigate in the arbitration forum an issue already decided by the district court in its favor, that party is prejudiced. View "Forby v. One Technologies, L.P." on Justia Law

The Supreme Court vacated the decision of the court of appeals reversing the judgment of the district court that concluded that a fee agreement between the parties was not void and thus ordering arbitration, holding that the district court erred by directing entry of final judgment rather than staying the proceedings, and therefore, there was no proper final judgment from which to take an appeal.Plaintiffs sued Defendants after learning that Defendants had provided brokerage services to Plaintiffs without the requisite state license. Specifically, Plaintiffs alleged that the fee agreement obligating Defendants to pay for the services provided was void as against public policy. Defendants, in turn, moved to compel arbitration pursuant to the terms of the fee agreement and to dismiss or to stay the underlying proceedings. The district court ordered arbitration and dismissed the case, concluding that the fee agreement was not void. The court of appeals reversed, determining that the fee agreement was void. The Supreme Court vacated the court of appeals’ decision, holding that the district court erred by dismissing the case instead of staying proceedings and that the court of appeals erred when it concluded that it had jurisdiction over the merits of this case. View "Woischke v. Stursberg & Fine, Inc." on Justia Law

In 2014, Jeremy Gowan filed this action against Cavalier Home Builders, LLC, d/b/a Buccaneer Homes ("Buccaneer"), Minton Industries, Inc. ("Minton"), Monster Movers, LLC ("Monster Movers"), Jerry Dudley, and Britt Richards. Buccaneer, Dudley, Richards, and Minton moved to compel arbitration based on an arbitration agreement Gowan had signed relating to the sale of a manufactured home. Although Monster Movers was not a party to the arbitration agreement, Gowan's claims against Monster Movers were submitted to arbitration by consent of the parties. While the arbitration proceeding was pending, Monster Movers entered into a joint dismissal with Gowan. The case proceeded to arbitration against the remaining defendants. In 2017, the arbitrator issued an award in favor of Gowan and against Buccaneer in the amount of $10,000. As to Gowan's claims against all other remaining defendants, the award was adverse to Gowan. Gowan appealed the award to the circuit court on the basis that the award was insufficient against Buccaneer. The Alabama Supreme Court determined the circuit court deviated from the procedure for the appeal of an arbitration award established by Rule 71B, Ala. R. Civ. P. The issue raised in the mandamus petition was made moot, and the Supreme Court declined further review. View "Ex parte Cavalier Home Builders, LLC, d/b/a Buccaneer Homes." on Justia Law

Au pairs and former au pairs filed a class action lawsuit against AuPairCare, Inc. (“APC”) and other au pair sponsoring companies alleging violations of antitrust laws, the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Fair Labor Standards Act (“FLSA”), federal and state minimum wage laws, and other state laws. Eventually, the au pairs amended their complaint and added two former au pairs, Juliane Harning and Laura Mejia Jimenez, who were sponsored by APC. In response, APC filed a motion to compel arbitration, which the district court denied. The district court found the arbitration provision between the parties both procedurally and substantively unconscionable and declined to enforce it. Because the arbitration provision contained only one substantively unconscionable clause, the Tenth Circuit concluded the district court abused its discretion by refusing to sever the offending clause and otherwise enforce the agreement to arbitrate. The Court therefore reversed the district court’s ruling and remanded for further proceedings. View "Beltran v. Interexchange, Inc." on Justia Law

Singing River Health System a/k/a Singing River Hospital System (“Singing River”) sued KPMG, LLP, alleging separate counts of breach of contract and negligence and/or professional malpractice based on the audits KPMG performed for Singing River in fiscal years 2008 through 2012. Singing River alleged that KPMG failed to comply with the professional auditing and accounting standards expressed in GAAS (Generally Accepted Auditing Standards), GAGAS (Generally Accepted Government Auditing Standards), and GAAP (Generally Accepted Accounting Principles), which KPMG had agreed to follow. Singing River specifically alleged that KPMG’s audits were replete with computational errors and incorrect assumptions, and that KPMG had not performed basic tests to substantiate its opinions. Singing River separately alleged that KPMG was negligent and committed professional malpractice by failing to use the skill, prudence, and diligence other reasonable and prudent auditors would use in similar circumstances, as expressed in the GAAS, GAGAS and GAAP. Singing River alleged, inter alia, that, as a direct and proximate result of KPMG’s audits, Singing River was unaware that its employee-pension plan was underfunded by approximately one-hundred-fifty million dollars ($150,000,000.00). Further, Singing River alleged that it was unaware that it was not in compliance with certain bond covenants due to KPMG’s negligence. KPMG sought to compel arbitration of Singing River’s claims. The circuit court declined to order Singing River to arbitration. The Mississippi Supreme Court determined KPMG’s 2008, 2009, 2010, 2011, and 2012 letters were not spread across the Board’s minutes. The Court could not enforce these contracts or the dispute-resolution clauses attached to them. KPMG’s additional arguments concerning the delegation clause, collateral estoppel, and direct-benefit estoppel were without merit. The trial court’s order denying KPMG’s motion to compel arbitration was affirmed, and the case was remanded for further proceedings. View "KPMG, LLP v. Singing River Health System" on Justia Law