Justia Arbitration & Mediation Opinion Summaries

A dispute arose from the design and installation of cabinetry in a luxury home in Charleston, South Carolina. Design Gaps, Inc., owned by David and Eva Glover, had a longstanding business relationship with Shelter, LLC, a general contractor operated by Ryan and Jenny Butler. After being dissatisfied with Design Gaps’ performance, the homeowners, Dr. Jason and Kacie Highsmith, and Shelter terminated their contract with Design Gaps and hired Distinctive Design & Construction LLC, owned by Bryan and Wendy Reiss, to complete the work. The Highsmiths and Shelter initiated arbitration against Design Gaps, which led to the arbitrator ruling in favor of the homeowners and Shelter on their claims, and against Design Gaps on its counterclaims, including those for copyright infringement, tortious interference, and unfair trade practices.After the arbitration, Design Gaps sought to vacate the arbitration award in the United States District Court for the District of South Carolina, but the court instead confirmed the award. Concurrently, Design Gaps filed a separate federal lawsuit against several parties, including some who were not part of the arbitration. The defendants moved to dismiss, arguing that res judicata and collateral estoppel barred the new claims, or alternatively, that the claims failed on other grounds such as the statute of limitations and laches. The district court agreed, dismissing most claims based on preclusion or other legal bars, and granted summary judgment on the remaining claims.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s decisions. The court held that res judicata and collateral estoppel applied to bar most of Design Gaps’ claims, even against parties not directly involved in the arbitration but in privity with those who were. For the remaining claims, the court found they were properly dismissed on grounds such as the statute of limitations, waiver, or laches. The Fourth Circuit affirmed the district court’s judgment in full. View "Design Gaps, Inc. v. Distinctive Design & Construction LLC" on Justia Law

Jason and Kacie Highsmith hired Shelter, LLC to manage a home renovation project and later contracted with Design Gaps, Inc. to design and install cabinets and closets. The contracts required arbitration for disputes but did not specify completion dates. Design Gaps failed to meet multiple promised deadlines, leading the Highsmiths to terminate the contracts and hire another company. The Highsmiths shared Design Gaps' copyrighted drawings with the new contractor. They then filed for arbitration, alleging breach of contract and other claims, while Design Gaps counterclaimed for various issues, including copyright infringement.The arbitrator held a three-day hearing, during which the Highsmiths presented multiple witnesses, while Design Gaps only presented David Glover. The arbitrator found in favor of the Highsmiths, awarding them damages and attorney’s fees, and denied Design Gaps' counterclaims, including the copyright claim, citing fair use and lack of evidence for copyright registration.Design Gaps petitioned the United States District Court for the District of South Carolina to vacate the arbitration award, arguing the arbitrator disregarded the law and failed to issue a reasoned award. The district court denied the petition and confirmed the arbitration award, also granting the Highsmiths' motion for attorney’s fees.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court dismissed the appeal, citing lack of federal jurisdiction based on the precedent set in Friedler v. Stifel, Nicolaus, & Co., which held that federal courts do not have jurisdiction over motions to vacate arbitration awards unless there is an independent basis for federal jurisdiction beyond the Federal Arbitration Act. The court concluded that the petition did not meet this requirement. View "Design Gaps, Inc. v. Shelter, LLC" on Justia Law

The district court erred in granting Defendant’s motion to dismiss, based on an arbitration provision, Plaintiff’s claims that Defendant violated various articles of the Puerto Rico Civil Code and federal copyright and trademark laws.This suit stemmed from a songwriting contest held in Puerto Rico in 2014. As a contestant, Plaintiff agreed to the terms of the contest’s rules, which included an arbitration provision. The provision compelled the submission to arbitration of those claims that “aris[e] in connection with, touch upon or relat[e] to” those rules. The district court granted Defendant’s motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) based on that arbitration provision. The First Circuit reversed, holding that the arbitration provision did not reveal that the parties to it intended for Defendant, a third party, to benefit from it with the requisite clarity. View "Cortes-Ramos v. Martin-Morales" on Justia Law

This case stemmed from a dispute between the parties over license agreements which allowed Myriad access to Oracle's Java programming language. On appeal, Myriad challenged the district court's partial denial of its motion to compel arbitration. The court concluded that the incorporation of the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules into the parties' commercial contract constituted clear and unmistakable evidence that the parties agreed to arbitrate arbitrability. Accordingly, the court reversed and remanded for further proceedings. View "Oracle America, Inc. v. Myriad Group A.G." on Justia Law

Art Etc., LLC sought a declaratory judgment that the sale of inventory purchased from Angel Gifts, Inc. and Donald Schmit would amount to copyright infringement in violation of the United States Copyright Act. Angel Gifts and Donald Schmit moved to stay the proceedings pending arbitration, invoking an arbitration provision in an agreement between the parties. The district court denied the motion. The Eighth Circuit Court of Appeals affirmed, holding (1) the parties intended for the arbitration provision to apply only under certain circumstances; and (2) Art. Etc.'s claims did not fall within the scope of the arbitration provision. Thus, arbitration in this case was not required. View "Art Etc. LLC v. Angel Gifts, Inc." on Justia Law