Justia Arbitration & Mediation Opinion Summaries

Gulfstream, a Georgia corporation, and Oceltip, an Australian company, entered a sales agreement (“Agreement”). Gulfstream terminated the Agreement after Oceltip failed to pay the full amount or cure a defect within the ten-day cure period.Oceltip submitted a demand for arbitration to the AAA, seeking a finding that Gulfstream had anticipatorily repudiated the Agreement and that this conduct suspended Oceltip’s duties, allowing Oceltip to recoup the money it had paid, and entitled Oceltip to damages. On appeal, Oceltip asserts that federal jurisdiction is lacking. It also argues that the district court erred in confirming the arbitration award and denying vacatur because, in Oceltip’s view, the Georgia Arbitration Code’s standards for vacatur—not the FAA’s—govern, and the arbitrators manifestly disregarded the law.First, the court found it has jurisdiction under Sec 203 of the FAA. Next, in resolving the disagreement the court analyzed whether arbitrators’ “manifest disregard of the law” supplies a basis for vacating the award. Under the Georgia Arbitration Code, it does, but federal law—the New York Convention and its implementing statute (Chapter 2 of the FAA)—sets forth seven exclusive grounds for vacatur, which does not include “manifest disregard of the law.” The court concluded that the Agreement’s choice-of-law provision does not supplant federal standards for confirmation or vacatur of an arbitral award, reasoning that the plain meaning of the contractual language does not support Oceltip’s position. Thus, the court affirmed the judgment of the district court. View "Gulfstream Aerospace Corporation v. Oceltip Aviation 1 PTY LTD" on Justia Law

The Supreme Court held that the Virginia Uniform Arbitration Act, Va. Code 8.01-581.01 to -.016 (VUAA), and the Federal Arbitration Act, 9 U.S.C. 1-16 (FAA), do not compel enforcement of an arbitration clause in a trust.The decedent created an inter vivos irrevocable trust that was divided into three shares for his children and grandchildren. The trust contained an unambiguous arbitration clause. Plaintiff filed a complaint against Defendant, the trust's trustee, alleging breach of duty. Defendant filed a motion to compel arbitration, which the circuit court denied. The Supreme Court affirmed, holding (1) a trust is neither a contract nor an agreement that can be enforced against a beneficiary; and (2) therefore, neither the VUAA nor the FAA compel arbitration. View "Boyle v. Anderson" on Justia Law

This case arises from a dispute regarding a joint financial venture between Noble Capital Fund Management, L.L.C. (“Noble”) and US Capital Global Investment Management, L.L.C. (“US Capital”). Noble created two separate funds, collectively the “Feeder Funds."Noble and the Feeder Funds initiated a JAMS arbitration against US Capital, alleging various claims including the breach of contractual and fiduciary duties. US Capital was unable to pay the arbitration fees, and the JAMS panel terminated the arbitration.On November 24, 2020, Noble and the Feeder Funds sued US Capital in Texas state court for various claims including fraud and fraudulent inducement. US Capital appeals the denial of its motion to compel arbitration and stay judicial proceedings and the denial of its motion to transfer.The court explained the Federal Arbitration Act requires that, where a suit is referable to arbitration, judicial proceedings be stayed until arbitration "has been had." Here, there is no arbitration to return this case to and parties may not avoid resolution of live claims by compelling a new arbitration proceeding after the first proceeding failed. Further, the court found no pendent jurisdiction over the denial of the motion to transfer. The court affirmed the district court’s ruling and dismissed the appeal of the district court’s denial of the motion to transfer. View "Noble Capital Fund v. US Capital Global" on Justia Law

Plaintiffs used the defendants’ websites but did not see a notice stating, “I understand and agree to the Terms & Conditions, which includes mandatory arbitration.” When a dispute arose, defendants moved to compel arbitration, arguing that plaintiffs’ use of the website signified their agreement to the mandatory arbitration provision found in the hyperlinked terms.The Ninth Circuit held that plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating through the websites. As a result, they never entered into a binding agreement to arbitrate their dispute, as required under the Federal Arbitration Act. The panel explained that the courts have routinely enforced “clickwrap” agreements, which present users with specified contractual terms on a pop-up screen requiring users to check a box explicitly stating “I agree” to proceed. However, courts are more reluctant to enforce browsewrap agreements, which provides notice only after users click a hyperlink.Finally, the panel held that the district court properly exercised its discretion in denying the defendants’ motion for reconsideration based on deposition testimony taken two months prior to the district court’s ruling on the motion to compel arbitration. Plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating the website. Thus, they never entered into a binding agreement to arbitrate. The court affirmed the district court’s order denying the defendants’ motion to compel arbitration. View "DANIEL BERMAN V. FREEDOM FINANCIAL NETWORK LLC" on Justia Law

Under "loyalty contracts," Physician Buying Groups (PBGs) members are entitled to discounts if they buy a large enough percentage of their vaccines from Merck. The loyalty contracts include an arbitration provision. Membership contracts between PBGs and medical practices give medical practices discounts on Merck vaccines for enrolling in PBGs. PBGs contract with both Merck and medical practices and are middlemen but PBGs never possess the vaccines. Medical practices buy their vaccines directly from Merck, receiving discounts for belonging to a PBG. The Pediatricians, members of PBGs that contracted with Merck, never signed contracts containing an arbitration clause.The Pediatricians filed federal suits alleging Merck’s vaccine bundling program was anticompetitive. Merck moved to compel arbitration. On remand, following discovery, the district court again denied Merck’s motion and granted the Pediatricians summary judgment, reasoning that the Pediatricians were not bound under an agency theory. The Third Circuit reversed. The PBG membership contract made the PBG a “non-exclusive agent to arrange for the purchase of goods and services,” and the PBG acted on this authority by executing the loyalty contract with Merck that included the arbitration clause. The Pediatricians simultaneously demonstrated intent to create an agency relationship and exercised control over the scope of the PBG’s agency by contract. View "In re: Rotavirus Vaccines Antitrust Litigation v." on Justia Law

The Supreme Court quashed the decision of the Second District Court of Appeal reversing the circuit court's grant of Airbnb, Inc.'s motion to compel arbitration, holding that the circuit court did not err in compelling arbitration.Plaintiffs brought this complaint against Airbnb, alleging constructive intrusion and loss of consortium. After a hearing, the circuit court granted Airbnb's motion to compel arbitration and stayed the underlying lawsuit pending arbitration, finding that the parties entered into an express agreement that incorporated the the American Arbitration Association (AAA) rules, requiring Airbnb to submit the issue of arbitrability to the arbitrator. The Second District Court reversed, concluding that the arbitration provision and the AAA rule it referenced did not amount to "clear and unmistakable" evidence that the parties agreed to arbitrate arbitrability. The Supreme Court reversed, holding that Airbnb's terms of service that incorporate by reference rules that expressly delegate arbitrability determinations to an arbitrator constitute clear and unmistakable evidence of the parties' intent to authorize an arbitrator, rather than a court, to resolve questions of arbitrability. View "Airbnb, Inc. v. Doe" on Justia Law

The Unions represent PG employees. Each union's collective bargaining agreement (CBA) with PG required PG to provide health insurance to union employees. A separate provision governed dispute resolution with a grievance procedure that culminated in binding arbitration. The CBAs had durational clauses and expired in March 2017; the arbitration provisions had no separate durational clauses. Two months before their expiration, PG sent letters to the unions, stating that upon expiration, "all contractual obligations of the current agreement shall expire. [PG] will continue to observe all established wages, hours and terms and conditions of employment as required by law, except those recognized by law as strictly contractual, after the Agreement expires. With respect to arbitration, the Company will decide its obligation to arbitrate grievances on a case-by-case basis." While negotiating new CBAs, the parties operated under certain terms of the expired agreements. The unions claim that in 2019, PG violated the expired CBAs by failing to provide certain health-insurance benefits. The unions filed grievances under the dispute-resolution provisions. PG refused to arbitrate, stating that the grievance involved occurrences that arose after the contract expired. The Unions argued implied-in-fact contracts had been formed.The district court granted PG summary judgment. The Third Circuit affirmed, overruling its own precedent. As a matter of contract law, the arbitration provisions here, because they do not have their own durational clauses, expired with the CBAs. View "Pittsburgh Mailers Union Local Union 22 v. PG Publishing Co., Inc." on Justia Law

Blizzard Entertainment, Inc. (Blizzard) appealed an order denying its motion to compel arbitration. B.D., a minor, played Blizzard’s online videogame “Overwatch,” and used “real money” to make in-game purchases of “Loot Boxes” - items that offer “randomized chances . . . to obtain desirable or helpful ‘loot’ in the game.” B.D. and his father (together, Plaintiffs) sued Blizzard, alleging the sale of loot boxes with randomized values constituted unlawful gambling, and, thus, violated the California Unfair Competition Law (UCL). Plaintiffs sought only prospective injunctive relief, plus attorney fees and costs. Blizzard moved to compel arbitration based on the dispute resolution policy incorporated into various iterations of the online license agreement that Blizzard presented to users when they signed up for, downloaded, and used Blizzard’s service. The trial court denied the motion, finding a “reasonably prudent user would not have inquiry notice of the agreement” to arbitrate because “there was no conspicuous notice of an arbitration” provision in any of the license agreements. The Court of Appeal disagreed: the operative version of Blizzard’s license agreement was presented to users in an online pop-up window that contained the entire agreement within a scrollable text box. View "B.D. v. Blizzard Entertainment" on Justia Law

K.F.C., age 11, signed up for a Snapchat account. Snapchat's terms specify that a person must be at least 13 to have an account. K.F.C. lied about her age. Before she turned 18, K.F.C. sued, alleging that Snapchat’s features amount to facial recognition, which violates the Illinois Biometric Privacy Act, K.F.C. acknowledges that she accepted Snapchat’s terms but denies that its arbitration clause binds her although she continued using Snapchat after turning 13.The Seventh Circuit affirmed the dismissal of the case. An arbitrator, not a court, must decide whether K.F.C.’s youth is a defense to the contract’s enforcement. While even the most sweeping delegation cannot send the contract-formation issue to the arbitrator, state law does not provide that agreements between adults and children are void but treats such agreements as voidable (capable of ratification), so the age of the contracting parties is a potential defense to enforcement. The Federal Arbitration Act provides that arbitration is enforceable to the extent any promise is enforceable as a matter of state law, 9 U.S.C. 2. A challenge to the validity (as opposed to the existence) of a contract goes to the arbitrator; K.F.C.’s arguments about her youth and public policy concern the contract’s validity, not its existence. View "K.F.C. v. Snap Inc." on Justia Law

The Supreme Court quashed the decision of the Third District Court of Appeal concluding that the circuit court had personal jurisdiction over Tribeca Asset Management, Inc., holding that the parties' agreement did not provide for arbitration in Florida.Tribeca and Ancla International, S.A. entered into a confidentiality agreement. Ancla later filed a petition to compel arbitration. The circuit court dismissed the petition for lack of personal jurisdiction, concluding that a provision in the parties' agreement did not contain a forum selection clause and merely contained a choice of law provision. The Third District reversed, concluding that the provision contained a forum selection clause. The Supreme Court reversed, holding that the agreement did not provide for arbitration in Florida. View "Tribeca Asset Management, Inc. v. Ancla International, S.A." on Justia Law