Justia Arbitration & Mediation Opinion Summaries

In September 2021, cybercriminals targeted a chain of pawnshops, a payday lender, and a prepaid-card company, exposing customers' personal information. The companies informed customers of the breach weeks later, leading to three nationwide class-action lawsuits in the District of Minnesota. The companies moved to dismiss the cases, arguing lack of standing and failure to state a claim, but did not mention arbitration. They continued to engage in litigation activities, including briefing issues, preparing a discovery plan, and requesting a pretrial conference. There is a dispute about whether the companies mentioned arbitration during the pretrial conference, but no formal motion to compel arbitration was filed until months later.The United States District Court for the District of Minnesota found that the companies had waived their right to arbitration by substantially engaging in litigation. The court noted that the companies had no credible explanation for their delay in filing the motion to compel arbitration, despite allegedly deciding to do so during the pretrial conference.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's decision. The appellate court applied a two-part test to determine waiver of the right to arbitration, focusing on whether the party knew of the right and acted inconsistently with it. The court concluded that the companies had knowledge of their right to arbitration and acted inconsistently by engaging in extensive litigation activities. The companies' actions, including participating in a motion-to-dismiss hearing and scheduling mediation, were deemed to have substantially invoked the litigation machinery, thus waiving their right to arbitration. The court emphasized that the companies' delay and litigation conduct were inconsistent with promptly seeking arbitration. View "Thomas v. Pawn America Minnesota, LLC" on Justia Law

The plaintiff, Mary Rodgers-Rouzier, worked as a bartender on steamboats operated by American Queen. She alleged that she and her coworkers were wrongly denied overtime wages. Rodgers-Rouzier filed a suit as a collective action, and over one hundred of her coworkers joined her proposed collective action. Meanwhile, American Queen moved to dismiss the case, arguing that Rodgers-Rouzier had agreed to arbitration. The district court denied the motion, but American Queen moved again to dismiss based on the arbitration agreement, this time invoking Indiana state law. The district court granted this motion, over Rodgers-Rouzier’s objections.The district court had previously denied American Queen's motion to dismiss the case for improper venue because Rodgers-Rouzier had agreed to arbitration. However, American Queen then moved again to dismiss based on the arbitration agreement, this time invoking Indiana state law. The district court granted this motion, over Rodgers-Rouzier’s objections that American Queen had waived its argument and the court lacked authority to apply Indiana law in this context. The court further determined that all the workers who had filed consent forms were not parties to the action.The United States Court of Appeals for the Seventh Circuit reversed the district court's decision. The court concluded that although American Queen’s arguments were not waived and the court had authority to enforce the arbitration agreement under Indiana law, Indiana law would hold American Queen to its bargain that its arbitration agreement was governed by the Federal Arbitration Act (FAA). Therefore, Rodgers-Rouzier’s case may continue in federal court. The court did not decide whether it may do so as a collective action and left that question for further litigation. View "Rodgers-Rouzier v. American Queen Steamboat Operating Company, LLC" on Justia Law

Joseph Work, a former employee of Intertek, filed a collective action against the company for unpaid overtime, liquidated damages, attorneys’ fees, and relief for the collective class. Intertek objected to the judicial forum and requested arbitration. The dispute centered on whether the agreed-upon Arbitration Agreement provided for individual or class arbitration. Work sought class arbitration, while Intertek sought individual arbitration. Intertek filed a Motion to Compel Individual Arbitration, arguing that the Arbitration Agreement did not contain an express delegation clause and was silent on class arbitration.The United States District Court for the Southern District of Texas ruled that the issue of class arbitrability was delegated to the arbitrator. The court held that the Arbitration Agreement incorporated certain JAMS Rules by reference, which delegate questions of arbitrability to the arbitrator, including the question of class arbitrability. The district court granted Work’s motion to dismiss and denied Intertek’s motion to compel individual arbitration.On appeal to the United States Court of Appeals for the Fifth Circuit, Intertek argued that consent to class arbitration was absent and that the language in the Arbitration Agreement was not clear. The court rejected both arguments, affirming the district court's decision. The court held that the Arbitration Agreement was not ambiguous and that it clearly incorporated the JAMS Rules by reference. The court concluded that the language in the Arbitration Agreement was "clear and unmistakable" in its incorporation of the JAMS Rules, which provide that the arbitrator decides the question of arbitrability. View "Work v. Intertek" on Justia Law

The case involves a dispute between Coinbase, Inc., a cryptocurrency exchange platform, and its users. The users had agreed to two contracts with Coinbase. The first contract, the User Agreement, contained an arbitration provision stating that an arbitrator must decide all disputes, including whether a disagreement is arbitrable. The second contract, the Official Rules for a promotional sweepstakes, contained a forum selection clause stating that California courts have sole jurisdiction over any controversies regarding the promotion. The users filed a class action in the U.S. District Court for the Northern District of California, alleging that the sweepstakes violated various California laws. Coinbase moved to compel arbitration based on the User Agreement’s arbitration provision. The District Court denied the motion, ruling that the Official Rules’ forum selection clause controlled the dispute. The Ninth Circuit affirmed this decision.The Supreme Court of the United States affirmed the Ninth Circuit's decision. The Court held that when parties have agreed to two contracts—one sending arbitrability disputes to arbitration, and the other either explicitly or implicitly sending arbitrability disputes to the courts—a court must decide which contract governs. The Court rejected Coinbase's arguments that the Ninth Circuit should have applied the severability principle and that the Ninth Circuit erroneously held that the Official Rules’ forum selection clause superseded the User Agreement’s arbitration provision. The Court also dismissed Coinbase's concern that its ruling would invite chaos by facilitating challenges to delegation clauses. The Court concluded that a court, not an arbitrator, must decide whether the parties’ first agreement was superseded by their second. View "Coinbase v. Suski" on Justia Law

A group of individuals, including a minor, filed a class action lawsuit against Warner Bros. Entertainment, Inc. for alleged misrepresentations related to the mobile application Game of Thrones: Conquest (GOTC). The plaintiffs claimed that Warner Bros. engaged in false and misleading advertising within the game. In response, Warner Bros. moved to compel arbitration of all claims based on the GOTC Terms of Service, which users agree to by tapping a “Play” button located on the app’s sign-in screen. The district court denied Warner Bros.' motion, finding that the notice of the Terms of Service was insufficiently conspicuous to bind users to them.The case was appealed to the United States Court of Appeals for the Ninth Circuit. The lower court had found that Warner Bros. failed to provide reasonably conspicuous notice of its Terms of Service, thus denying the motion to compel arbitration. The district court focused on whether the context of the transaction put the plaintiffs on notice that they were agreeing to the Terms of Service, concluding that the app did not involve a continuing relationship that would require some terms and conditions.The Ninth Circuit Court of Appeals reversed the district court's decision. The appellate court held that the district court erred in finding that Warner Bros. failed to provide reasonably conspicuous notice. The court found that the context of the transaction and the placement of the notice were both sufficient to provide reasonably conspicuous notice. The court also rejected the plaintiffs' argument that the arbitration agreement was unconscionable due to its ban on public injunctive relief. The court concluded that the unenforceability of the waiver of one’s right to seek public injunctive relief did not make either this provision or the arbitration agreement unconscionable or otherwise unenforceable. The case was remanded for further proceedings. View "KEEBAUGH V. WARNER BROS. ENTERTAINMENT INC." on Justia Law

Yasmin Varela filed a class action lawsuit against State Farm Mutual Automobile Insurance Company (State Farm) after a car accident. Varela's insurance policy with State Farm entitled her to the "actual cash value" of her totaled car. However, she alleged that State Farm improperly adjusted the value of her car based on a "typical negotiation" deduction, which was not defined or mentioned in the policy. Varela claimed this deduction was arbitrary, did not reflect market realities, and was not authorized by Minnesota law. She sued State Farm for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and violation of the Minnesota Consumer Fraud Act (MCFA).State Farm moved to dismiss the complaint, arguing that Varela's claims were subject to mandatory, binding arbitration under the Minnesota No-Fault Automobile Insurance Act (No-Fault Act). The district court granted State Farm's motion in part, agreeing that Varela's claims for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment fell within the No-Fault Act's mandatory arbitration provision. However, the court found that Varela's MCFA claim did not seek the type of relief addressed by the No-Fault Act and was neither time-barred nor improperly pleaded, and thus denied State Farm's motion to dismiss this claim.State Farm appealed, arguing that Varela's MCFA claim was subject to mandatory arbitration and should have been dismissed. However, the United States Court of Appeals for the Eighth Circuit dismissed the appeal for lack of jurisdiction. The court found that State Farm did not invoke the Federal Arbitration Act (FAA) in its motion to dismiss and did not file a motion to compel arbitration. The court concluded that the district court's order turned entirely on a question of state law, and the policy contained no arbitration provision for the district court to "compel." Therefore, State Farm failed to establish the court's jurisdiction over the interlocutory appeal. View "Varela v. State Farm Mutual Automobile Insurance Co." on Justia Law

The case involves an appeal by SaniSure, Inc., against a trial court's decision not to compel arbitration in a dispute with its former employee, Jasmin Vazquez. Vazquez initially worked for SaniSure from July 2019, and as part of her employment, she signed an agreement to resort to arbitration for any disputes that might arise from her employment. She eventually terminated this employment in May 2021. She returned to work for SaniSure four months later without signing any new arbitration agreement or discussing the application of the previous arbitration agreement to her new employment.Vazquez's second employment with SaniSure ended in July 2022. Later, she filed a class-action complaint alleging that SaniSure had failed to provide accurate wage statements during her second tenure. She also signaled her intent to add a derivative action under the Labor Code Private Attorney Generals Act (PAGA). SaniSure responded by submitting a “cure letter” claiming that its wage statements now comply with the Labor Code and requested that Vazquez submit her claims to binding arbitration, which Vazquez disputed.The Court of Appeal of the State of California Second Appellate District Division Six affirmed the trial court's denial of SaniSure’s motion to compel arbitration. The court found that SaniSure failed to show that Vazquez agreed to arbitrate claims arising from her second stint of employment. The court further concluded that there was no evidence of an implied agreement to arbitrate claims arising from the second employment period, as the agreement covering Vazquez’s first employment period terminated in May 2021. View "Vazquez v. SaniSure" on Justia Law

The case at hand involves a putative class action brought against RAC Acceptance East, LLC, by Shannon McBurnie and April Spruell. The plaintiffs argue that two fees imposed by RAC, operators of retail stores that lease household and electronic items through rent-to-own contracts, violated California consumer protection laws. RAC sought to compel arbitration, citing an arbitration agreement with the plaintiffs. The district court denied RAC's motion, and RAC appealed the decision.RAC argued that a recent Supreme Court decision, Viking River Cruises, Inc. v. Moriana, implicitly abrogated a prior Ninth Circuit decision, Blair v. Rent-A-Center, Inc., which held that RAC's arbitration agreement was unenforceable under California law. The Ninth Circuit disagreed, stating that Viking River was not irreconcilable with Blair, and that Viking River dealt with different claims from those at issue in this case. Therefore, Blair remained binding.RAC also argued that the plaintiffs' claim for public injunctive relief was mooted by a Consent Decree it entered into with the California Attorney General. The court disagreed, stating that the Consent Decree did not address whether the $45 processing fee in this case violates the law, and therefore, the challenge to the fee was not moot.However, RAC contended that the plaintiffs lacked standing to challenge a $1.99 expedited payment fee because Spruell did not actually pay the fee. The court remanded this issue to the district court for further consideration. As a result, the Ninth Circuit affirmed the district court's denial of RAC's motion to compel arbitration in part and remanded the case for further proceedings on the issue of the standing of the plaintiffs to challenge the $1.99 expedited payment fee. View "McBurnie v. RAC Acceptance East, LLC" on Justia Law

The plaintiff, Adan Ortiz, worked for two companies, GXO Logistics Supply Chain, Inc., and Randstad Inhouse Services, LLC, both of which were his former employers. Ortiz's role involved handling goods in a California warehouse facility operated by GXO. The goods, primarily Adidas products, were received from mostly international locations and stored at the warehouse for several days to a few weeks before being shipped to customers and retailers in various states.Ortiz filed a class action lawsuit against his former employers alleging various violations of California labor law. The defendants moved to compel arbitration pursuant to an arbitration agreement in Ortiz's employment contract. Ortiz opposed this on the grounds that the agreement could not be enforced under federal or state law.The United States Court of Appeals for the Ninth Circuit affirmed in part the district court's order denying the appellants' motion to compel arbitration. It concluded that Ortiz belonged to a class of workers engaged in foreign or interstate commerce and was therefore exempted from the Federal Arbitration Act (FAA). The court reasoned that although Ortiz's duties were performed entirely within one state's borders, his role facilitated the continued travel of goods through an interstate supply chain, making him a necessary part of the flow of goods in interstate commerce. The court also rejected the argument that an employee must necessarily be employed by a transportation industry company to qualify for the transportation worker exemption. View "ORTIZ V. RANDSTAD INHOUSE SERVICES, LLC" on Justia Law

The Indiana Supreme Court heard a case involving a dispute between Tonia Land and the IU Credit Union (IUCU). When Land became a customer at the credit union, she was given an account agreement that could be modified at any time. Later, when she registered for online banking, she accepted another agreement that allowed the IUCU to modify the terms and conditions of the services. In 2019, the IUCU proposed changes to these agreements, which would require disputes to be resolved through arbitration and prevent Land from initiating or participating in a class-action lawsuit. Land did not opt out of these changes within thirty days as required, which, according to the IUCU, made the terms binding. However, Land later filed a class-action lawsuit against the credit union, which attempted to compel arbitration based on the addendum.The court held that while the IUCU did provide Land with reasonable notice of its offer to amend the original agreements, Land's subsequent silence and inaction did not result in her assent to that offer, according to Section 69 of the Restatement (Second) of Contracts. The credit union petitioned for rehearing, claiming that the court failed to address certain legal authorities and arguments raised on appeal and in the transfer proceedings.Upon rehearing, the court affirmed its original decision, rejecting the credit union's arguments. However, the court also expressed a willingness to consider a different standard governing the offer and acceptance of unilateral contracts between businesses and consumers in future cases. The court found no merit in the credit union's arguments on rehearing and affirmed its original opinion in full. View "Land v. IU Credit Union" on Justia Law