Justia Arbitration & Mediation Opinion Summaries

In a case before the Court of Appeal of the State of California Fourth Appellate District Division Two, the plaintiff, a minor identified as J.R., filed a putative class action against Electronic Arts Inc. (EA), alleging causes of action for unlawful and unfair business practices, violation of the Consumer Legal Remedies Act, and unjust enrichment. J.R. claimed that EA deceptively induced players, particularly minors, to purchase in-game currency for its game, Apex Legends. EA sought to compel arbitration under the terms of its user agreement, which J.R. had accepted to play Apex Legends. The lower court denied EA's motion to compel on the grounds that J.R. had exercised his power under Family Code section 6710 to disaffirm all of his contracts with EA, including the arbitration agreement. EA appealed, arguing that an arbitrator, not the court, should decide issues of arbitrability due to a delegation provision within the agreement. The appellate court rejected EA's arguments, affirming the lower court's decision. The court held that J.R.'s disaffirmance of "any... contract or agreement" accepted through his EA account was sufficient to challenge the validity of the delegation provision specifically, thereby authorizing the court to assess the validity of J.R.'s disaffirmance. View "J.R. v. Electronic Arts" on Justia Law

In this case, the plaintiff, Maria Del Rosario Hernandez, filed a lawsuit against MicroBilt Corporation alleging the company violated the Fair Credit Reporting Act after the lender denied her loan application based on inaccurate information provided by a MicroBilt product. MicroBilt moved to compel arbitration based on the terms and conditions that Hernandez agreed to while applying for the loan, which included an arbitration provision. However, Hernandez had already submitted her claims to the American Arbitration Association (AAA) for arbitration.The AAA notified MicroBilt that its agreement with Hernandez was a consumer agreement, which meant the AAA's Consumer Arbitration Rules applied. Applying these rules, the AAA notified MicroBilt that its arbitration provision included a material or substantial deviation from the Consumer Rules and/or Protocol. Specifically, the provision’s limitation on damages conflicted with the Consumer Due Process Protocol, which requires that an arbitrator should be empowered to grant whatever relief would be available in court under law or in equity. After MicroBilt did not waive the damages limitation, the AAA declined to administer the arbitration under Rule 1(d).MicroBilt asked Hernandez to submit her claims to a different arbitrator, but she refused, requesting a hearing before the District Court. She argued that she must now pursue her claims in court because the AAA dismissed the case under Rule 1(d). The District Court reinstated Hernandez’s complaint and granted MicroBilt leave to move to compel arbitration under 9 U.S.C. § 4. However, the District Court denied MicroBilt’s motion to compel, leading to this appeal.The United States Court of Appeals for the Third Circuit affirmed the lower court's decision, stating that Hernandez had fully complied with MicroBilt’s arbitration provision, which allowed her to pursue her claims in court. The court held that it lacked the authority to compel arbitration. The court rejected MicroBilt's arguments that the AAA administrator improperly resolved an arbitrability issue that should have been resolved by an arbitrator, that the provision’s Exclusive Resolution clause conflicted with Hernandez’s return to court, and that the AAA’s application of the Consumer Due Process Protocol was unreasonable. The court concluded that it lacked the authority to review the AAA’s decision or to sever the damages limitation from the arbitration provision. View "Hernandez v. MicroBilt Corp" on Justia Law

In 2017, the plaintiffs leased a Mercedes-Benz B250E from a dealer. In 2020, at the end of the lease, they signed a Retail Installment Sales Contract (RISC) with the dealer to finance the purchase of the vehicle. Both the lease and the RISC contained arbitration agreements.The plaintiffs allege that Mercedes-Benz USA (MBUSA), as the manufacturer or distributor of the vehicle, provided them with two express warranties and a separate implied warranty of merchantability and that the vehicle had undisclosed defects covered by the warranties, They took the vehicle to the dealer, which was authorized by MBUSA for repairs, but despite multiple attempts, the vehicle could not be fixed. The plaintiffs filed suit, alleging violations of the Song-Beverly Consumer Warranty Act. MBUSA moved to compel arbitration, arguing that it had standing to compel arbitration as a third-party beneficiary of both the lease and the RISC, and equitable estoppel. While the trial court rejected MBUSA’s argument that it was a third-party beneficiary of the agreements, it agreed with MBUSA’s equitable estoppel argument. The court of appeal reversed. MBUSA is not a party to the agreements with the vehicle dealer and the claims against MBUSA are not intertwined with those agreements. View "Yeh v. Superior Court of Contra Costa County" on Justia Law

The Supreme Court reversed the judgment of the court of appeals in this second lawsuit brought by AJZ's Hauling, LLC against TruNorth Warranty Programs of North American (TruNorth) affirming the decision of the trial court denying TruNorth's motion to stay and compel arbitration, holding that the claims filed by AJZ's Hauling against TruNorth were subject to arbitration.AJZ's Hauling purchased a truck that came with a TruNorth warranty. AJZ's Hauling later sued TruNorth, and the trial court granted TruNorth's motion to stay the proceedings and to compel arbitration. AJZ's then filed a second lawsuit raising the same claims it had alleged against TruNorth in the first lawsuit. TruNorth again filed a motion to stay and to compel arbitration, which the trial court denied. The court of appeals affirmed, concluding that application of the doctrine of res judicata would be unreasonable or unjust. The Supreme Court reversed, holding (1) AJZ's Hauling's claims filed against TruNorth in the second lawsuit were subject to arbitration; and (2) an exception to application of the doctrine of res judicata to avoid unjust results does not apply when the parties had a full opportunity to litigate the issue and chose not to do so. View "AJZ Hauling, LLC v. TruNorth Warranty Program of N. America" on Justia Law

Mark Kielar challenged a superior court’s decision to grant Hyundai Motor America’s (Hyundai) motion to compel arbitration of his causes of action for violation of the Song-Beverly Consumer Warranty Act, and fraudulent inducement arising from alleged mechanical defects in the condition of his 2012 Hyundai Tucson. The superior court’s ruling followed Court of Appeal's earlier decision in Felisilda v. FCA US LLC, 53 Cal.App.5th 486 (2020) and concluded Hyundai, a nonsignatory manufacturer, could enforce the arbitration provision in the sales contract between Kielar and his local car dealership under the doctrine of equitable estoppel. The Court of Appeal joined recent decisions that have disagreed with Felisilda and concluded the court erred in ordering arbitration. Therefore, it issued a preemptory writ of mandate compelling the superior court to vacate its June 16, 2022 order and enter a new order denying Hyundai’s motion. View "Kielar v. Super. Ct." on Justia Law

Petitioners Rick Hendrick Dodge Chrysler Jeep Ram (Rick Hendrick Dodge) and Isiah White argued an arbitrator had to decide whether they could enforce an arbitration provision in a contract even after that contract had been assigned to a third party. The court of appeals rejected this argument and affirmed the circuit court's determinations that: (1) the circuit court was the proper forum for deciding the gateway question of whether the dispute is arbitrable; and (2) Petitioners could not compel arbitration because Rick Hendrick Dodge assigned the contract to a third party. The South Carolina Supreme Court held that the doctrine announced in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) required the arbitrator to decide whether the assignment extinguished Petitioners' right to compel arbitration. Therefore, the Court reversed the court of appeals' decision and vacated the circuit court's discovery order. View "Sanders v. Savannah Highway Automotive Company" on Justia Law

The Supreme Court reversed the judgment of the circuit court finding that Ford Motor Credit Company, LLC failed to meet its evidentiary burden to show the existence of an arbitration agreement in this case surrounding a dispute over the unpaid balance on an automobile loan, holding that the circuit court erred.Ford Credit sued Ronald Miller for the alleged balance due on a loan. Miller asserted a class action counterclaim for unlawful debt collection practices, in response to which Ford Credit filed a motion to compel arbitration. The circuit court denied the motion, concluding that Ford Credit failed to provide evidence that an arbitration agreement existed. The Supreme Court reversed and remanded the case, holding that the existence of an arbitration agreement between the parties had been established. View "Ford Motor Credit Co. v. Miller" on Justia Law

Ring manufactures and sells home security and smart home devices including video doorbells, security cameras, and alarms. The plaintiffs purchased video doorbell and security camera products from Ring and subsequently filed a class action complaint against Ring asserting claims under the Consumer Legal Remedies Act, false advertising law, and Unfair Competition Law. They sought injunctive relief requiring Ring to prominently disclose to consumers certain information about its products and services.Ring moved to compel arbitration based on an arbitration provision in its terms of service. The plaintiffs did not dispute that they agreed to Ring’s terms of service but argued the arbitration provision violates the California Supreme Court’s 2017 “McGill” holding that a pre-dispute arbitration agreement is invalid and unenforceable under state law insofar as it purports to waive a party’s statutory right to seek public injunctive relief.The court of appeal affirmed the denial of Ring's motion to compel arbitration. The parties did not “clearly and unmistakably" delegate to the arbitrator exclusive authority to decide whether the arbitration provision is valid under McGill. The contract language at issue is commonly understood to preclude public injunctive relief in arbitration. The Federal Arbitration Act, 9 U.S.C. 1, does not preempt McGill’s holding. The contract’s severability clause means the plaintiffs’ claims cannot be arbitrated and may be brought in court. View "Jack v. Ring LLC" on Justia Law

Plaintiffs represent a putative class of ticket purchasers (“Ticket Purchasers”) against Defendants Ticketmaster LLC and Live Nation Entertainment, Inc. (“Defendants”). Ticket Purchasers sued Defendants in federal district court, alleging anticompetitive practices in violation of the Sherman Act. Defendants moved to compel arbitration on the basis of their websites’ terms of use (“Terms”). The court granted the motion and dismissed the case, holding that the Terms constituted a valid agreement between the parties and that the requirements for mutual assent were met.   The Ninth Circuit affirmed. The panel held that the terms of use were not invalid under California law for failure to identify Defendants as parties to the agreement properly. The panel concluded that it was possible for a reasonable user to identify the parties to the contract based on the terms’ repeated references to Defendants' common trade names, express references to “Live Nation Entertainment, Inc.,” and available avenues that would enable a reasonable user to identify Ticketmaster’s full legal name. The panel further held that Defendants did not fail to provide constructive notice of the terms of use. The panel concluded that it need not engage in a detailed choice-of-law analysis between California and Massachusetts law because the two states’ laws apply substantially similar rules. Finally, the panel held the district court did not err in deciding the constructive notice issue as a matter of law. View "MITCH OBERSTEIN, ET AL V. LIVE NATION ENT'M'T, INC., ET AL" on Justia Law

Plaintiff brought a putative class action against Cash Advance Centers, Inc., alleging a violation of the Telephone Consumer Protection Act, 47 U.S.C. Section 227. Counsel purporting to represent Cash Advance Centers, Inc., moved to compel arbitration based on arbitration provisions contained in loan agreements between Plaintiff and non-party Advance America, Cash Advance Centers of Missouri, Inc. The district court denied the motion to compel. Counsel also moved to substitute Advance America, Cash Advance Centers of Missouri, Inc., for Cash Advance Centers, Inc., as the party defendant, but the district court denied that motion as well.
The Eighth Circuit affirmed. The court explained only parties to a lawsuit may appeal an adverse judgment. Because Advance America, Cash Advance Centers of Missouri, Inc., is not a party to the lawsuit, its notice of appeal is insufficient to confer jurisdiction on the Court. The non-party Advance America, Cash Advance Centers of Missouri, Inc., made no appearance in connection with the motion, and the court’s order addressed only a motion advanced by the party Defendant. The notice of appeal also names Cash Advance Centers, Inc., the party Defendant, as an appellant. But while attorneys purporting to represent Cash Advance Centers, Inc., filed a notice of appeal, counsel acknowledged at oral argument that she represented only non-party Advance America, Cash Advance Centers of Missouri, Inc., and not Cash Advance Centers, Inc. View "Kamisha Stanton v. Cash Advance Centers, Inc" on Justia Law