Justia Arbitration & Mediation Opinion Summaries

An Agreement was signed by ISC and by Gerber, treasurer of Nobel, under which ISC was to manage $200 million of Nobel assets; the Agreement provided for arbitration. Months later, ISC filed a petition to compel arbitration. Nobel argued that the court lacked personal jurisdiction and that the Agreement had been fraudulently procured by ISC, a firm with no history of asset management, and Gerber, who, without authority, had signed in exchange for a kickback. The district court denied the petition, noting that the American Arbitration Association had refused to arbitrate, because rules specified in the Agreement were incompatible with AAA arbitration. On remand, discovery problems arose; the court allowed withdrawal by ISC counsel; ISC filed notice of voluntary dismissal without prejudice and requested that the judge recuse himself because of his conversation with counsel about reasons for withdrawal. The court denied recusal, vacated notice of dismissal, and rescheduled the trial. ISC unsuccessfully attempted to obtain a stay. At trial, ISC declined to call witnesses or introduce evidence; the court dismissed with prejudice. The Second Circuit affirmed. Even if ISC counsel conveyed extrajudicial information, denial of recusal was appropriate. ISC’s purported voluntary dismissal was improper because Rule 41(a)(1)(A)(i) does not apply to petitions to compel arbitration. View "ISC Holding AG v. Nobel Biocare Fin. AG" on Justia Law

DynMcDermott Petroleum Operations Company (DM) subcontracted with Petrofac, Inc. to design and install a plant to serve the Strategic Petroleum Reserve for the Department of Energy. DM and Petrofac agreed to resolve any claim under the subcontract through binding arbitration. Later, Petrofac sent DM a multi-volume Request for Equitable Adjustment (REA), asserting that DM disputed Petrofac's ability to perform its work and seeking damages. An arbitration panel awarded Petrofac damages. The district court affirmed. The Fifth Circuit Court of Appeals affirmed, holding that the district court properly confirmed the arbitration panel's arbitration award, as DM failed to demonstrate reversible error on appeal. View "Petrofac, Inc. v. DynMcDermott Petro. Operations Co." on Justia Law

Gove worked for TDC, which had a contract with Loring. TDC employees were informed that CSD had been awarded the Loring contract and would be providing services previously furnished by TDC. Gove applied online for a CSD position, similar to the one that she held with TDC. The application included a provision that any dispute with respect to any issue prior to employment, arising out of the employment process, would resolved in accord with the Dispute Resolution Policy and Arbitration Agreement adopted by CSD for its employees. When Gove was interviewed by CSD, she was visibly pregnant and was asked whether she had other children. Gove was not hired, although CSD continued to have a need for the position and continued to advertise the position. Gove filed a complaint with the Maine Human Rights Commission, which found reasonable grounds, but was unable to persuade the parties to reach agreement. She sued under Title VII of the Civil Rights Act, 42 U.S.C. 2000e, and the Maine Human Rights Act. CSD moved to compel arbitration. The district court found that the arbitration clause was ambiguous as to whether it covered an applicant who was never hired and should be construed against CSD. The First Circuit affirmed. View "Gove v. Career Sys. Dev. Corp." on Justia Law

Brentwood Homes, Inc. and the other appellants in this case (collectively "Brentwood Homes") appealed a circuit court's order denying a motion to stay the proceedings and compel arbitration in a lawsuit filed by Petitioner Fred Bradley that arose out of his purchase of a home in South Carolina. Although Brentwood Homes conceded the Home Purchase Agreement did not meet the technical requirements of the South Carolina Uniform Arbitration Act (the "UAA"), it claimed the court erred in denying the motion because the transaction involved interstate commerce and thus was subject to the Federal Arbitration Act ("FAA"). Upon review, the Supreme Court concluded that because the essential character of the Agreement was strictly for the purchase of a completed residential dwelling and not the construction, the Court found the FAA did not apply. Furthermore, the existence of the national warranty and Bradley's use of out-of-state financing did not negate the intrastate nature of the transaction. Accordingly, the Court affirmed the circuit court's order denying Brentwood Homes' motion to stay the proceedings and compel arbitration as Brentwood Homes failed to offer sufficient evidence that the transaction involved interstate commerce to subject the Agreement to the FAA. View "Bradley v. Brentwood Homes" on Justia Law

The issue before the Supreme Court in this case centered on a binding arbitration clause in an attorney-client retainer agreement and whether that clause was enforceable where the client filed suit for legal malpractice. This case presented two important countervailing public policies: Louisiana and federal law explicitly favor the enforcement of arbitration clauses in written contracts; by the same token, Louisiana law also imposes a fiduciary duty "of the highest order" requiring attorneys to act with "the utmost fidelity and forthrightness" in their dealings with clients, and any contractual clause which may limit the client's rights against the attorney is subject to close scrutiny. After its careful study, the Supreme Court held there is no per se rule against arbitration clauses in attorney-client retainer agreements, provided the clause is fair and reasonable to the client. However, the attorneys' fiduciary obligation to the client encompasses ethical duties of loyalty and candor, which in turn require attorneys to fully disclose the scope and the terms of the arbitration clause. An attorney must clearly explain the precise types of disputes the arbitration clause is meant to cover and must set forth, in plain language, those legal rights the parties will give up by agreeing to arbitration. In this case, the Defendants did not make the necessary disclosures, thus, the arbitration clause was unenforceable. Accordingly, the judgment of the lower courts was affirmed. View "Hodges v. Reasonover" on Justia Law

The United States Bankruptcy Appellate Panel of the Court of Appeals for the Ninth Circuit ("the BAP") certified a question to the Alabama Supreme Court: "In Alabama, is a 'default' judgment premised upon discovery sanctions or other post-answer conduct of the defendant sufficient to support the application of issue preclusion in a later proceeding?" Debtor-Defendant Anthony Malfatti was one of three principals of TA Financial Group ('TAF') purportedly designed to assist credit card holders in arbitration of disputes with the card issuers. The arbitration providers were selected by the card holders from a list provided by TAF. Among the arbitration providers was Arbitration Forum of America, Inc. ('AFOA'). AFOA was not conducting legitimate arbitrations; every arbitration resulted in an award in favor of the card holder, which was then reduced to judgment. Malfatti claims he was unaware that AFOA's practices and the judgments stemming therefrom were illegitimate. At some time after the banks involved learned of the judgments, they filed cross-complaints against the card holders to set aside the judgments as fraudulently obtained. In September 2005, the banks, including Bank of America, N.A. (USA) filed Amended Third Party Complaints against, among others, Malfatti and TAF, alleging tortious interference with contract, abuse of process, wantonness, and civil conspiracy, and sought an injunction against further arbitrations. The Banks moved for default judgments against Malfatti and TAF for failing to comply with discovery orders, repeated failures to appear for depositions, and failure to respond to written discovery. Malfatti and TAF filed a motion to set aside the defaults. The court found Malfatti and TAF to be jointly and severally liable for compensatory damages, awarded punitive damages against Malfatti, and found Malfatti to be liable for punitive damages awarded against TAF under the alter ego doctrine. Malfatti filed for Chapter 7 bankruptcy the Banks filed an adversary proceeding alleging the debt owed to them by Malfatti was nondischargeable. Upon review, the Alabama Supreme Court answered the certified question in the negative: "[f]or purposes of determining whether an issue is precluded by the doctrine of collateral estoppel, Alabama law makes no distinction between a simple default and a penalty default." View "Malfatti v. Bank of America, N.A." on Justia Law

Auto Owners Insurance, Inc. ("Auto Owners"), appealed a circuit court's denial of its motion to dismiss or, in the alternative, to compel arbitration in an action against it filed by Blackmon Insurance Agency, Inc. Blackmon served as an agent for Auto Owners since 1995. The agency agreement the parties signed provided for commission to Blackmon for the sale of Auto Owners policies; the agreement also included an arbitration agreement should there be a dispute among them. In 2010, Blackmon filed a complaint in the circuit court seeking a declaratory judgment as to the arbitrability of a dispute between Blackmon and Auto Owners as to which Auto Owners had already initiated arbitration proceedings. In its complaint, Blackmon alleged that Auto Owners had initiated the arbitration proceedings against Blackmon in Eaton County, Michigan. Blackmon also alleged that in the Michigan arbitration proceeding Auto Owners bases its claims on a 2005 document and 2009 supplemental agreement. Auto Owners moved to dismiss, or in the alternative, to compel arbitration. The circuit court denied Auto Owners' motion, and Auto Owners appealed. Upon review of the documents at the heart of this dispute, the Supreme Court concluded the circuit court erred in denying Auto Owners' motion to compel arbitration. The Court therefore reversed the circuit court and remanded the case with instructions that the lower court grant the motion and either issue a stay of these proceedings pending arbitration, or dismiss the case. View "Auto Owners Insurance, Inc. v. Blackmon Insurance Agency, Inc." on Justia Law

The Cumberland Teachers Association (union), appealed to the Supreme Court that confirmed an arbitrator's award in favor of the Cumberland School Committee (school committee). After protracted contract negotiations, the school committee and the union agreed on a three-year collective bargaining agreement (CBA) that would govern their relations for the 2006-2007, 2007-2008 and 2008-2009 academic years. "However, the parties soon discovered that they had left the negotiating table with two very different understandings of how a key component of their agreement would be implemented." An arbitrator was selected and the parties agreed that the issue to be decided by the arbitrator was whether “the Cumberland School Committee place[d] the aggrieved teachers at the correct salary level for the 2007-08 school year?” On appeal to the Supreme Court, the union argued that the arbitrator manifestly disregarded a contract provision when he found that there was no written agreement about how the new salary schedule would be implemented for the 2007-2008 year. Upon review, the Supreme Court concluded that the union did not demonstrate that the arbitrator manifestly disregarded the contract or that he was completely irrational in arriving at his decision and award. View "Cumberland Teachers Association v. Cumberland School Committee" on Justia Law

After a school district (District) approved the conversion of an existing public school into a charter school, a union (UTLA) claimed that the District failed to comply with collective bargaining agreement provisions (CBPs) concerning charter school conversion. UTLA petitioned to compel arbitration pursuant to the collective bargaining agreement. The trial court denied the petition, finding that the collective bargaining provisions (CBPs) regulating charter school conversion were unlawful because they conflicted with the Education Code, and therefore, arbitration of those unlawful provisions should not be compelled. The court of appeals reversed, holding that the court's function in adjudicating a petition to compel arbitration was limited to determining whether there was a valid arbitration agreement that had not been waived. The Supreme Court reversed, holding (1) a court faced with a petition to compel arbitration to enforce CBPs between a union and a school district should deny the petition if the CBPs at issue directly conflict with provisions of the Education Code; and (2) because UTLA had not identified with sufficient specificity which CBPs the District allegedly violated, the case was remanded for identification of those specific provisions and to address whether the provisions conflicted with the Education Code. View "United Teachers of L.A. v. L.A. Unified Sch. Dist." on Justia Law

This case arose from a foreign shipping contract billing dispute between Consorcio Ecuatoriano de Telecomunicaciones S.A. (CONECEL) and Jet Air Service Equador S.A. (JASE). CONECEL filed an application in the Southern District of Florida under 28 U.S.C. 1782 to obtain discovery for use in foreign proceedings in Ecuador. According to CONECEL, the foreign proceedings included both a pending arbitration brought by JASE against CONECEL for nonpayment under the contract, and contemplated civil and private criminal suits CONECEL might bring against two of its former employees who, CONECEL claims, may have violated Ecuador's collusion laws in connection with processing and approving JASE's allegedly inflated invoices. CONECEL's application sought discovery from JASE's United States counterpart, JAS Forwarding (USA), Inc. (JAS USA), which does business in Miami and was involved in the invoicing operations at issue in the dispute. The district court granted the application and authorized CONECEL to issue a subpoena. Thereafter, JASE intervened and moved to quash the subpoena and vacate the order granting the application. The district court denied the motion, as well as a subsequent motion for reconsideration. JASE appealed the denial of both. After thorough review and having had the benefit of oral argument, the Eleventh Circuit affirmed the orders of the district court. the Court concluded that the panel before which which JASE and CONECEL's dispute was pending acts as a first-instance decisionmaker; it permits the gathering and submission of evidence; it resolves the dispute; it issues a binding order; and its order is subject to judicial review. The discovery statute requires nothing more. The Court also held that the district court did not abuse its considerable discretion in granting the section 1782 discovery application over JASE's objections that it would be forced to produce proprietary and confidential information. The application was narrowly tailored and primarily requested information concerning JASE's billing of CONECEL, which was undeniably at issue in the current dispute between the parties." Finally, the district court did not abuse its discretion in denying JASE's motion for reconsideration. View "In re: Application of Consorcio Ecuatoriano" on Justia Law