Justia Arbitration & Mediation Opinion Summaries

The Andermanns obtained mobile phone service from U.S. Cellular in 2000. Their renewable two-year contract was renewed for the last time in 2012. It included an arbitration clause that “survives the termination of this service agreement” and provided that “U.S. Cellular may assign this Agreement … without notice.” In 2013 U.S. Cellular sold the Andermanns’ contract to Sprint, without notice to the Andermanns. Months later Sprint sent Andermanns a letter, informing them of the sale and that their mobile service would be terminated on January 31, 2014 because Andermanns’ phones were not compatible with Sprint’s network. In December Sprint phoned to remind them that their service was about to expire, and added that Sprint had “a great set of offers and devices available to fit [their] needs.” Sprint made six such calls. Andermanns answered none, but filed a purported class action, contending that the unsolicited advertisements contained in the calls violated the Telephone Consumer Protection Act, 47 U.S.C. 227. Sprint requested arbitration, 9 U.S.C. 4. The district court denied Sprint’s motion. The Seventh Circuit reversed, finding connection to the contract, asking: What would Sprint have done if forbidden to call the customers whom it had inherited from U.S. Cellular and must now terminate because of technical incompatibility? View "Andermann v. Sprint Spectrum, L.P." on Justia Law

A franchisee janitorial worker, on behalf of himself and other similarly situated individuals, filed a complaint against System4 LLC, a master franchisor, and NECCS, Inc., a regional subfranchisor, alleging, among other claims, breach of contract, misclassification as independent contractors in their franchise agreements, and rescission of the franchise agreements. The franchise agreements, signed only by Plaintiffs and NEECS, required the franchisees to arbitrate virtually all disputes. Defendants, citing the arbitration clause in the franchise agreement, moved to stay the court proceedings pending arbitration. The judge concluded that because System4 was not a nonsignatory to the agreements, Plaintiffs could proceed to litigate their claims against System4 in court. The Supreme Judicial Court reversed, holding that, by reason of equitable estoppel, System4 could compel Plaintiffs to arbitrate their substantive claims in accordance with the arbitration provision in Plaintiffs’ franchise agreements. Remanded. View "Machado v. System4 LLC" on Justia Law

Stratus Franchising sells master franchises, which grant a master franchiser the exclusive right to sell Stratus unit franchises in a particular regional market. Each plaintiff (current or former unit franchisees of the commercial cleaning business) entered into a standard unit-franchise agreement that included a broad, standard-form arbitration provision. They filed a putative class-action suit against their respective master franchisers and other individuals and entities associated with the Stratus Group, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968. Applying Missouri contract law, the district court granted the Stratus Group’s motion to compel individual arbitration. The Eighth Circuit affirmed, rejecting an argument that the arbitration provision was unenforceable as unconscionable and that members of the Stratus Group who were not signatories to their respective Agreements could not invoke or enforce the arbitration provision. View "Torres v. Simpatico, Inc." on Justia Law

Alleging illegal tip pooling Conners filed a collective action against her former employer (a restaurant) under the Fair Labor Standards Act, 29 U.S.C. 216(b). The employer then implemented a new arbitration policy that requires all employment-related disputes between current employees and the employer to be resolved though individual arbitration. The policy purports to bind all current employees who did not opt out; each employee received an opt-out form. Citing public policy, the district court declared the policy unenforceable insofar as it could prevent current employees from joining this collective action. On interlocutory appeal, the Eighth Circuit vacated, holding that former employees like Conners lack standing under Article III of the United States Constitution to challenge the arbitration agreement, which applied only to current employees. View "Conners v. Gusano's Chicago Style Pizzeria" on Justia Law

The law firm of Leeds, Morelli & Brown, representing 587 plaintiffs with discrimination claims against their employer, Nextel Communications, agreed with Nextel to set up a dispute resolution process whereby all of the plaintiffs’ claims against Nextel would be resolved without litigation. After most of the cases were settled through that process, a group of Nextel employees sued on behalf of the entire class of the firm’s Nextel clients against both the law firm and Nextel, alleging breach of fiduciary duty, legal malpractice, and breach of contract. The Second Circuit vacated dismissal of the case. On remand the district court certified a class under FRCP(b)(3), applying New York law to all of the class members’ claims, even though the class members came from 27 different states, and holding that common issues predominated over any individual issues, even though prior state court litigation indicated that for Colorado class members, individual waivers of the law firm’s conflict of interest could have vitiated defendants’ liability. The Second Circuit vacated: the district court erred in its choice‐of‐law analysis, and a proper analysis makes clear that the individual issues in this case will overwhelm common issues. View "Johnson v. Nextel Communications Inc." on Justia Law

Franco filed a purported class action as an employee of Athens Services, claiming Labor Code and wage-order violations. He also sued in a representative capacity under the Private Attorneys General Act (Lab. Code 2698) and alleged violation of state unfair competition law. (Bus. & Prof. Code 17200). Athens petitioned to compel arbitration based on Franco’s employment agreement, alleging that it was engaged in interstate commerce under the Federal Arbitration Act (9 U.S.C. 1-16). The trial court agreed. The appeal court concluded that provisions requiring arbitration and waiving class actions were unenforceable. On remand, Athens informed the court that Franco’s actual employer was Arakelian. Franco amended the complaint to add Arakelian, which filed another petition to compel arbitration, arguing that authorities cited by the prior decision had been overruled by the U.S. Supreme Court in 2010. The trial court denied the petition, citing the law of the case doctrine and finding that Arakelian waived its right to compel arbitration by failing to earlier identify itself as Franco’s true employer. The court of appeal affirmed. The California Supreme Court vacated. The court of appeal reversed denial of the petition to compel arbitration, in light of the rule announced by the California Supreme Court in Iskanian. View "Franco v. Arakelian Enters., Inc." on Justia Law

This appeal stemmed from five putative class actions filed against Wells Fargo and its predecessor, Wachovia Bank. At issue was whether Wells Fargo's waiver of its right to compel arbitration of the named plaintiffs' claims should be extended to preclude Wells Fargo from compelling arbitration of the unnamed putative class members' claims. The court concluded that because a class including the unnamed putative class members had not been certified, Article III's jurisdictional limitations precluded the district court from entertaining Wells Fargo's conditional motions to dismiss those members' claims as subject to arbitration; contrary to the position they take in this appeal, the named plaintiffs lack Article III standing to seek the court's affirmance of the district court's provision holding that if a class is certified, Wells Fargo will be estopped to assert its contractual rights to arbitration; and, therefore, the court vacated and remanded for further proceedings. View "Spears-Haymond v. Wells Fargo Bank" on Justia Law

Before it was acquired by DirecTV, 180 Connect entered into an employment arbitration agreement with Marenco, which prohibited filing a class or collective action, or a representative or private attorney general action. After acquiring 180 Connect, DirecTV retained employees, including Marenco. Marenco later filed suit, alleging that DirecTV had issued debit cards in payment of wages to a putative class of employees. Plaintiffs who used their cards to withdraw cash at ATM machines were required to pay an activation fee and a cash withdrawal fee, resulting in DirecTV’s failure to pay plaintiffs’ full wages in violation of the Unfair Competition Law and Labor Code 212. DirecTV moved to compel arbitration of Marenco’s individual claims, and stay the class claims. Marenco argued that DirecTV lacked standing to enforce the agreement and that the agreement was unconscionable and unenforceable under California law. The U.S. Supreme Court then issued its 2011 decision, AT&T Mobility v. Concepcion, holding that the Federal Arbitration Act preempts the California rule of unconscionability. The trial court ordered arbitration of Marenco’s individual claims, holding that DirecTV had standing; the class action waiver is not unconscionable; and prohibition of representative actions does not violate the National Labor Relations Act (29 U.S.C. 157). The court of appeal affirmed. View "Marenco v. DirecTV, LLC" on Justia Law

Montano filed a putative class action against Wet Seal, alleging that it failed to offer all required meal and rest periods to its California non-exempt retail employees; failed to provide all regular and overtime pay when due or when employment terminated; and failed to provide accurate semi-monthly itemized wage statements, in violation of the Labor and Business and Professions Codes, Industrial Welfare Commission Wage Order No. 7, and Title 8 of the California Code of Regulations. She included a representative claim under the Private Attorneys General Act. Montano propounded discovery requests and Wet Seal responded with objections but no substantive information. Montano moved to compel discovery responses. Before the hearing, Wet Seal moved to compel arbitration of Montano’s individual claims and to stay the action pending completion of arbitration, based on a “Mutual Agreement to Arbitrate Claims." The trial court ultimately denied the motion for arbitration and granted the discovery motion. The court of appeal affirmed. View "Montano v. Wet Seal Retail, Inc." on Justia Law

Bower was hired by Inter-Con in 2007 and executed an arbitration agreement, covering claims for compensation and wages. In 2008, Bower executed a second arbitration agreement that added clauses prohibiting claims on behalf of a class or in a representative capacity and covering claims for breaks and rest periods. After his 2011 termination, Bower filed a putative class action, claiming failure to: provide meal and rest periods, pay wages, provide accurate itemized wage statements, pay wages upon termination, with claims under the Unfair Competition Act and the Private Attorneys General Act. Instead of moving to compel arbitration, Inter-Con answered, asserting, as an affirmative defense, that Bower’s claims were subject to arbitration. Inter-Con responded to discovery, but objected based on the arbitration agreement, and agreed to provide responses only to Bower in his individual capacity. Inter-Con did respond to an interrogatory concerning the number of class members employed during the class period and propounded its own discovery. Bower moved for leave to file an amended complaint to allege a broader class and additional theories and to compel further discovery responses. Inter-Con then moved to compel arbitration. The court held that “Defendant waived the right to arbitrate by propounding and responding to class discovery.” The court of appeal affirmed. View "Bower v. Inter-Con Sec. Sys., Inc." on Justia Law