Justia Arbitration & Mediation Opinion Summaries

Plaintiff, who represents both a Washington and a national class, was incarcerated three times in the Kitsap County Jail. In each instance, the jail confiscated his cash at booking and returned it to him in the form of a prepaid debit card issued and serviced, respectively, by defendants Cache Valley Bank and Rapid Investments, Inc. (collectively, “Rapid”). Plaintiff was not provided an option to receive his money in any other form. Plaintiff claimed that Rapid’s debit cards carried fees that violated the EFTA and Washington state law. Rapid sought arbitration pursuant to an arbitration provision in a cardholder agreement.   The Ninth Circuit affirmed the district court’s order denying Defendants’ motion to compel arbitration. The panel wrote that Plaintiff’s retention of the release card, prior to use, cannot constitute assent to the agreement. The panel next considered whether Plaintiff’s subsequent use of the card to withdraw funds, while remaining silent, constituted assent. The panel held that because the money Plaintiff withdrew was his own, because the card he was issued came pre-activated and there was no other way to obtain immediate use of his own funds, and because Rapid structured its fees to begin deducting after three days regardless of use, Plaintiff’s decision to withdraw his own money cannot reasonably be understood to manifest assent to the contract. View "JEFFREY REICHERT, ET AL V. RAPID INVESTMENTS, INC., ET AL" on Justia Law

HyreCar is an intermediary between people who own vehicles and people who would like to drive for services such as Uber and GrubHub. Before leasing a car, HyreCar sends an applicant’s information, including a photograph, to Mitek, which provides identity-verification services. Johnson, a HyreCar driver, brought a putative class action, alleging Mitek used that information without the consent required by the Illinois Biometric Privacy Act. Mitek asked the district court to send the case to arbitration, citing an Arbitration Agreement in Johnson’s contract with HyreCar, applicable to drivers, HyreCar, and “any subsidiaries, affiliates, agents, employees, predecessors in interest, successors, and assigns, as well as all authorized or unauthorized users or beneficiaries of services or goods provided under the Agreement.The district court concluded that suppliers such as Mitek were not covered. The Seventh Circuit affirmed, rejecting Mitek’s claim that it is a “beneficiary of services or goods provided under the Agreement.” The “services or goods provided under the Agreement” are vehicles. Mitek cannot be classified as a “user” of HyreCar’s services or goods. Mitek has its own contract with HyreCar, but does not have a contract with any HyreCar driver. The Federal Arbitration Act, 9 U.S.C. 2 does not change the result. The court noted that claims under the Illinois Act cannot be litigated in federal court unless the plaintiff can show concrete harm. Johnson seeks only statutory damages. Johnson’s claim must be remanded to state court. View "Johnson v. Mitek Systems, Inc." on Justia Law

The Supreme Court remanded this case after Appellant appealed a circuit court order granting in part and denying in part its motion to enforce arbitration agreements and to compel class members with arbitration agreements to submit their claims to binding arbitration, holding that remand was required.In this case involving several claims against a nursing home, Plaintiff moved to enforce arbitration agreements and to compel other class members with arbitration agreements to submit their claims to binding arbitration, a motion that involved arbitration agreements signed by thirty-three residents at admission. The circuit court granted the motion with respect to fifteen residents and denied it with respect to eighteen residents. The Supreme Court remanded the case with instructions for the circuit court to make findings regarding its order denying Plaintiffs motion to compel arbitration, holding that, in order to conduct a proper appellate review, this Court must know the circuit court's rationale for its decision. View "Robinson Nursing & Rehabilitation Center, LLC v. Phillips" on Justia Law

Plaintiff filed a complaint against his former employer, Facility Solutions Group, Inc. (FSG), for disability discrimination and related causes of action under the Fair Employment & Housing Act. The same month Plaintiff filed this class action against FSG for Labor Code violations, which also included a claim under the Private Attorneys General Act of 2004.   The trial court in this action denied FSG’s motion, finding unconscionability permeated the arbitration agreement because it had a low to moderate level of procedural unconscionability and at least six substantively unconscionable terms, making severance infeasible. On appeal, FSG contends claim and issue preclusion required the trial court in this action to enforce the arbitration agreement.   The Second Appellate District affirmed. The court agreed with the trial court that the arbitration agreement is permeated with unconscionability, and the court cannot simply sever the offending provisions. Rather, the court would need to rewrite the agreement, creating a new agreement to which the parties never agreed. Moreover, upholding this type of agreement with multiple unconscionable terms would create an incentive for an employer to draft a onesided arbitration agreement in the hope employees would not challenge the unlawful provisions, but if they do, the court would simply modify the agreement to include the bilateral terms the employer should have included in the first place. View "Mills v. Facility Solutions Group" on Justia Law

Plaintiffs deliver baked goods by truck to stores and restaurants in designated territories within Connecticut. They brought an action in district court on behalf of a putative class against Flowers Foods, Inc. and two of its subsidiaries, which manufacture the baked goods that the plaintiffs deliver. Plaintiffs allege unpaid or withheld wages, unpaid overtime wages, and unjust enrichment pursuant to the Fair Labor Standards Act and Connecticut wage laws. The district court granted Defendants’ motion to compel arbitration and dismissed the case.   The Second Circuit affirmed the district court’s order compelling arbitration and dismissing the case. The court explained that it concludes that an individual works in a transportation industry if the industry in which the individual works pegs its charges chiefly to the movement of goods or passengers, and the industry’s predominant source of commercial revenue is generated by that movement. Here, because Plaintiffs do not work in the transportation industry, they are not excluded from the FAA, and the district court appropriately compelled arbitration under the Arbitration Agreement. View "Bissonnette v. LePage Bakeries" on Justia Law

Hudson Valley Federal Credit Union (“HVCU”) appealed from the district court’s ruling denying HVCU’s motion to compel arbitration of Plaintiff’s putative class action claims for breach of contract, breach of the covenant of good faith and fair dealing, and claims under New York law and the Federal Electronic Fund Transfer Act.   The Second Circuit vacated and remanded the district court’s ruling, holding that the record was insufficiently developed for the district court to deny the motion to compel arbitration. The court concluded that the record is insufficiently developed on the issue of whether the parties entered into an agreement to arbitrate and, as a consequence, the court wrote it cannot determine the matter of arbitrability “as a matter of law.” Therefore, the court remanded for the district court to consider further evidence or, if necessary, hold a trial.   The court further explained that it was an error for the district court to engage in the inquiry notice analysis based on the copy of the Internet Banking Agreement, which does not depict the content and design of the webpage as seen by users signing up for online banking. The court wrote that on remand, the district court should consider the design and content of the Internet Banking Agreement as it was presented to users in determining whether Plaintiff assented to its terms. And the district court should assess whether the Account Agreements are clearly identified and available to the users based on the court’s precedents. View "Zachman v. Hudson Valley Federal Credit Union" on Justia Law

California’s Labor Code Private Attorneys General Act (PAGA) authorizes any “aggrieved employee” to initiate an action against a former employer on behalf of himself and other current or former employees to obtain civil penalties that previously could have been recovered only by California’s Labor and Workforce Development Agency. California precedent holds that a PAGA suit is a “representative action” in which the plaintiff sues as an “agent or proxy” of the state. Moriana filed a PAGA action against her former employer, Viking, alleging multiple violations with respect to herself and other employees. Moriana’s employment contract contained a mandatory arbitration agreement with a “Class Action Waiver,” providing that the parties could not bring any class, collective, or representative action under PAGA, and a severability clause. California courts denied Viking’s motion to compel arbitration.The Supreme Court reversed. The Federal Arbitration Act, 9 U.S.C. 1 (FAA), preempts California precedent that precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. Viking was entitled to compel arbitration of Moriana’s individual claim. Moriana would then lack standing to maintain her non-individual claims in court.A PAGA action asserting multiple violations under California’s Labor Code affecting a range of different employees does not constitute “a single claim.” Nothing in the FAA establishes a categorical rule mandating enforcement of waivers of standing to assert claims on behalf of absent principals. PAGA’s built-in mechanism of claim joinder is in conflict with the FAA. State law cannot condition the enforceability of an agreement to arbitrate on the availability of a procedural mechanism that would permit a party to expand the scope of the anticipated arbitration by introducing claims that the parties did not jointly agree to arbitrate. View "Viking River Cruises, Inc. v. Moriana" on Justia Law

Plaintiffs Nicole Leshane, Steve Garner, Justin Prasad, Isaac Saldana, and Maurice West sued defendants Tracy VW, Inc. and RJ Gill Ventures, Inc. alleging several Labor Code violations. Plaintiffs brought suit on behalf of themselves as defendants’ former employees, on behalf of others similarly situated, and on behalf of the state pursuant to the Private Attorneys General Act of 2004. After defendants filed a petition to compel arbitration, plaintiffs filed a first amended complaint alleging violations of the Labor Code solely as representatives of the state under the Private Attorneys General Act. Defendants continued to seek arbitration of plaintiffs’ individual claims and dismissal of their class-wide claims pursuant to the arbitration agreements each plaintiff signed. The trial court denied defendants’ petition to compel arbitration finding plaintiffs’ claim under the Private Attorneys General Act was not subject to arbitration citing Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). Defendants appealed the trial court’s order. Finding no reversible error in the trial court's judgment, the Court of Appeal affirmed. View "Leshane v. Tracy VW, Inc." 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

Isabel Garibay appealed a trial court's confirmation of a class action settlement reached between Josue Uribe and Crown Building Maintenance Company (Crown). Uribe sued Crown as an individual regarding alleged Labor Code violations for failure to reimburse him for the cost of uniform cleaning and required footwear as a day porter doing janitorial-type work. Uribe’s suit also included a cause of action in a representative capacity for civil penalties and injunctive relief under the Labor Code Private Attorneys General Act of 2004 (PAGA). The parties reached a settlement conditioned on Uribe filing an amended complaint converting his lawsuit into a class action on his Labor Code claims and including unreimbursed employee cell phone usage costs as an additional basis for both his Labor Code and PAGA causes of action. Garibay, an unnamed member of the class once it was formed, had earlier filed in the Alameda County Superior Court a putative class action asserting Labor Code claims for unreimbursed cell phone use by Crown employees, together with a representative PAGA cause of action on that basis. When Uribe and Crown sought preliminary approval of their agreement to settle Uribe’s lawsuit on a class-wide basis, the trial court authorized Garibay to intervene as a named party in the lawsuit to oppose the settlement. The trial court later granted Uribe’s motion for preliminary approval of the settlement, and then Crown and Uribe’s joint motion for final approval. Meanwhile, the Judicial Council had referred Crown’s petition to coordinate Uribe’s and Garibay’s lawsuits to the presiding judge of the Alameda court to appoint a judge to hear the petition; that appointment remained pending at the time the judgment in Orange County was entered. After the parties advised the Alameda court no stay had been entered in the coordination proceedings, the court subsequently entered judgment. Garibay challenged the settlement after the trial court declined to rule on both Crown’s motion to dismiss Garibay’s complaint in intervention and Garibay’s motion to vacate the judgment. The Court of Appeal found Uribe's PAGA notice did not encompass a claim for unreimbursed cell phone expenses, making the notice was inadequate to support Uribe’s PAGA cause of action on that theory in his lawsuit. And because Uribe and Crown’s agreement did not allow for severance of nonviable settlement terms, judicial approval of a settlement that included Uribe’s PAGA cause of action could not survive review. The Court therefore reversed the judgment. View "Uribe v. Crown Building Maintenance Co." on Justia Law