Justia Arbitration & Mediation Opinion Summaries

Dayana Garcia worked as a server at Gloria’s Restaurant for several months. After her employment ended, she filed a Fair Labor Standards Act (FLSA) suit against the restaurant's management entities and co-founder, alleging failure to pay minimum wage. The defendants initially participated in litigation, including answering the lawsuit, engaging in discovery, and mediating. They also filed a joint status report stating they had no intent to arbitrate. Five months after the lawsuit was filed, the defendants moved to compel arbitration.The United States District Court for the Northern District of Texas denied the motion to compel arbitration, finding that the defendants had waived their right to arbitrate by substantially invoking the judicial process. The defendants appealed the decision.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court noted that the defendants had engaged in several litigative actions, including filing an answer without mentioning arbitration, participating in discovery, and mediating the dispute. The court also highlighted the defendants' explicit statement in the joint status report that they were not considering arbitration. The court concluded that these actions constituted a substantial invocation of the judicial process, thereby waiving the right to arbitrate. The Fifth Circuit affirmed the district court's denial of the motion to compel arbitration. View "Garcia v. Fuentes" on Justia Law

Christopher Morrow, a sergeant with the Lexington Police Department and a member of the Fraternal Order of Police, Lodge #4 (the Lodge), was accused of sexual assault by Kellie Jo Bell in 2017. Bell filed a civil complaint against Morrow and the Lexington-Fayette Urban County Government (LFUCG), alleging that Morrow assaulted her while on duty. Morrow requested LFUCG to provide legal defense under the collective bargaining agreement (CBA), which LFUCG did under a reservation of rights.The Lodge and Morrow filed a grievance in 2020, claiming LFUCG intended to withdraw its defense, which LFUCG denied as premature. They then filed a complaint to compel arbitration, and LFUCG counterclaimed for a declaration of its rights under the CBA, asserting no duty to defend Morrow as he was off duty during the alleged assault. The Fayette Circuit Court granted summary judgment in favor of LFUCG, ruling that Morrow's actions were outside the scope of his employment and not covered by the CBA or LFUCG’s self-insurance policy. The court also awarded LFUCG attorney’s fees.The Kentucky Court of Appeals affirmed the circuit court’s decision, agreeing that the dispute was not arbitrable under the CBA as Morrow was off duty. The Court of Appeals did not address whether LFUCG’s refusal to arbitrate the initial grievance constituted a breach of the CBA.The Supreme Court of Kentucky reversed and remanded, holding that the circuit court erred by ruling on the merits of the dispute without first determining if the parties agreed to arbitrate it. The court directed that the issue of whether Morrow’s actions were within the scope of his employment under the CBA should be submitted to arbitration, as the CBA required arbitration for any controversy concerning its meaning and application. The court vacated the circuit court’s summary judgment and attorney’s fees award, instructing the lower court to order arbitration on the issue. View "Fraternal Order of Police, Lodge #4 v. Lexington-Fayette Urban County Government" on Justia Law

The case involves a dispute between several plaintiffs, who are foreign nationals participating in an au pair program, and Cultural Care, Inc., a Massachusetts company that places au pairs with host families in the U.S. The plaintiffs allege that Cultural Care violated their rights under the Fair Labor Standards Act (FLSA) and various state wage and hour laws by failing to pay them legal wages. They also claim violations of state deceptive trade practices laws.The United States District Court for the District of Massachusetts denied Cultural Care's motion to dismiss the complaint, including its defense of derivative sovereign immunity under Yearsley v. W.A. Ross Construction Company. Cultural Care appealed, but the United States Court of Appeals for the First Circuit affirmed the District Court's decision, concluding that Cultural Care had not established entitlement to protection under Yearsley. After the case returned to the District Court, Cultural Care filed a motion to compel arbitration based on agreements in contracts signed by the au pairs with International Care Ltd. (ICL), a Swiss company. The District Court denied this motion, ruling that Cultural Care had waived its right to compel arbitration and that it could not enforce the arbitration agreement as a nonsignatory.The United States Court of Appeals for the First Circuit reviewed the case and affirmed the District Court's denial of the motion to compel arbitration. The court held that Cultural Care, as a nonsignatory to the ICL Contract, could not enforce the arbitration agreement under either third-party beneficiary theory or equitable estoppel. The court emphasized that the arbitration agreement did not demonstrate with "special clarity" that the signatories intended to confer arbitration rights on Cultural Care. Additionally, the plaintiffs' statutory claims did not depend on the ICL Contract, making equitable estoppel inapplicable. View "Posada v. Cultural Care, Inc." on Justia Law

Jesus Yanez was hired by EchoStar Communications Corporation in 2001 and signed an arbitration agreement as part of his employment. Over the years, EchoStar underwent several corporate changes, including a name change to DISH Network Corporation and the creation of a new company, EchoStar Corporation. Yanez was terminated in 2018 and subsequently filed discrimination claims. After receiving right to sue letters, he sued in Texas state court, alleging age and nationality discrimination. The case was removed to federal court, where the district court granted a motion to compel arbitration and transferred the case. The arbitration proceeded slowly, and the district court eventually dismissed the case without prejudice due to the parties' failure to file a status report.The United States District Court for the Western District of Texas granted the motion to compel arbitration and stayed the case pending arbitration. The case was transferred to the Western District of Texas, El Paso division. The district court issued multiple show cause notices due to slow arbitration proceedings and ultimately dismissed the case without prejudice when the parties failed to file a required status report. Yanez filed a motion to alter or amend the judgment, which was denied by the district court, citing a recent Supreme Court decision.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the district court's decision to compel arbitration, finding that the arbitration agreement was valid and enforceable under Texas law. However, the court reversed the district court's dismissal of the case, holding that the dismissal was effectively with prejudice due to the statute of limitations and did not meet the heightened standard required for dismissals with prejudice. The case was remanded for further proceedings consistent with the ruling. View "Yanez v. Dish Network" on Justia Law

Three former or current employees of Cross Country Staffing, Inc. (plaintiffs) filed a lawsuit against their employer, alleging various labor law violations. Upon hiring, each plaintiff signed two agreements: an Arbitration Agreement mandating arbitration for all employment-related claims and an Employment Agreement that included provisions favoring the employer, such as non-compete clauses and the right to seek injunctive relief in court without posting a bond.The Superior Court of Los Angeles County denied Cross Country Staffing's motion to compel arbitration, finding that the Arbitration Agreement, when read together with the Employment Agreement, was unconscionable. The court determined that the agreements were procedurally unconscionable due to their adhesive nature and substantively unconscionable because they unfairly favored the employer by allowing it to litigate its likely claims in court while forcing employees to arbitrate their likely claims. The court also noted the non-mutual attorney fees provisions and the employee's mandated concessions regarding injunctive relief.The California Court of Appeal, Second Appellate District, Division Five, affirmed the trial court's decision. The appellate court agreed that the two agreements should be read together under Civil Code section 1642, as they were part of the same transaction and related to the same subject matter. The court found significant substantive unconscionability in the agreements' imbalance of arbitration obligations and the employer's access to court for its claims. The court also upheld the trial court's refusal to sever the unconscionable provisions, concluding that the agreements' unconscionability permeated the entire arbitration framework and that refusing to enforce the Arbitration Agreement served the interests of justice. View "Silva v. Cross Country Healthcare, Inc." on Justia Law

Michael Satink, an employee of the City of Lakewood's Department of Public Works, was terminated for alleged insubordinate and inappropriate behavior. The union representing Satink, Ohio Council 8, AFSCME, AFL-CIO, filed a grievance, leading to a last-chance agreement (LCA) that reinstated Satink with the condition that any further misconduct would result in immediate termination without recourse to the grievance or arbitration provisions of the collective-bargaining agreement (CBA). Satink was terminated again for workplace misconduct, and the union filed another grievance. The city refused to arbitrate, citing the LCA, prompting the union to seek arbitration through the Cuyahoga County Court of Common Pleas.The common pleas court denied the city's motion to dismiss for lack of subject-matter jurisdiction and granted the union's motion to compel arbitration. The city appealed to the Eighth District Court of Appeals, which reversed the lower court's decision, holding that the State Employment Relations Board (SERB) had exclusive jurisdiction over the matter because the union's claims were dependent on collective-bargaining rights created by R.C. Chapter 4117.The Supreme Court of Ohio reviewed the case and held that the union's claims did not allege an unfair labor practice or conduct constituting an unfair labor practice under R.C. 4117.11. Therefore, SERB did not have exclusive jurisdiction. The court emphasized that the right to arbitrate is a contractual right derived from the CBA, independent of R.C. Chapter 4117. The court also noted that R.C. 4117.09(B)(1) allows a party to bring a suit for a violation of a collective-bargaining agreement in a court of common pleas. Consequently, the Supreme Court of Ohio reversed the Eighth District's judgment and remanded the case for further proceedings. View "Ohio Council 8, AFSCME, AFL-CIO v. Lakewood" on Justia Law

Jessica Hines, a dancer, sued National Entertainment Group, LLC (NEG), an adult entertainment club, for failing to properly compensate its employees under various federal and state laws, including the Fair Labor Standards Act and Ohio wage laws. Hines had signed three separate Lease Agreement Waivers with NEG, each containing an arbitration provision. NEG moved to dismiss the suit or stay the proceedings pending arbitration, arguing that Hines had agreed to arbitrate any disputes.The United States District Court for the Southern District of Ohio denied NEG’s motion to dismiss, finding that Hines had plausibly alleged sufficient facts to support standing. The court also denied NEG’s motion to stay the proceedings pending arbitration, concluding that the arbitration provision was both procedurally and substantively unconscionable, and thus unenforceable.The United States Court of Appeals for the Sixth Circuit reviewed the case and vacated the district court’s denial of NEG’s motion to stay. The appellate court held that the arbitration provision was neither procedurally nor substantively unconscionable. The court found that Hines had reasonable opportunity to understand the plain terms of the arbitration clause, which were not hidden in fine print. The court also determined that the arbitration agreement was supported by adequate consideration and that any inconvenience or potential inconsistency caused by separate actions was not a legitimate basis for overriding the arbitration agreement.The Sixth Circuit remanded the case for the district court to consider the remaining factors under Stout v. J.D. Byrider, which include whether the claims fall within the scope of the arbitration agreement, whether Congress intended the federal claims to be arbitrable, and whether to stay the case pending arbitration if some but not all claims are subject to arbitration. View "Hines v. National Entertainment Group" on Justia Law

Monroe Operations, LLC, doing business as Newport Healthcare, hired Karla Velarde as a care coordinator and required her to sign an arbitration agreement as a condition of employment. Velarde was later terminated and filed a lawsuit alleging discrimination, retaliation, and violation of whistleblower protections. Newport Healthcare and its director of residential services, Amanda Seymour, filed a motion to compel arbitration, which the trial court denied. The court found that Velarde was pressured to sign the agreement, which she did not want to do, and that the agreement unlawfully prohibited her from seeking judicial review of an arbitration award.The Superior Court of Orange County ruled that the arbitration agreement was procedurally unconscionable because it was presented as an adhesive contract buried among 31 documents that Velarde had to sign quickly while an HR manager waited. Additionally, Newport Healthcare's HR manager made false representations about the nature and terms of the agreement, which contradicted the written terms, rendering the agreement substantively unconscionable. The court denied the motion to compel arbitration based on these findings.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case and affirmed the trial court's decision. The appellate court found ample evidence of procedural unconscionability due to the pressure and misrepresentations made by Newport Healthcare. The court also found substantive unconscionability because the agreement did not conform to Velarde's reasonable expectations and placed her in a disadvantageous position. The appellate court concluded that the arbitration agreement was unenforceable and affirmed the order denying the motion to compel arbitration. View "Velarde v. Monroe Operations, LLC" on Justia Law

Respondent George Zeber filed a workers' compensation claim for cumulative injury sustained during his employment with the New York Yankees from 1968 to 1978. The Workers’ Compensation Appeals Board (WCAB) found Zeber had a compensable injury but deferred any award pending further proceedings, including mandatory arbitration of the insurance coverage dispute. Travelers Indemnity Company (Travelers) disputed the applicability of mandatory arbitration, arguing it only applies to injuries occurring on or after January 1, 1994, while Zeber's injury occurred no later than 1978.The Workers’ Compensation Judge (WCJ) found Zeber sustained an injury during his employment but deferred findings on permanent disability and other issues. The WCJ also found the statute of limitations did not bar Zeber’s claim, as he only became aware of his right to file a claim in 2017 or 2018. The WCJ determined the New York Yankees had insurance coverage provided by Travelers and noted that disputes involving the right of contribution must be sent to arbitration. Travelers filed for reconsideration, which the WCAB partially granted, amending the WCJ’s decision to defer the insurance coverage issue to mandatory arbitration.The California Court of Appeal, Fourth Appellate District, reviewed the case. The court concluded that section 5275, subdivision (a)(1) applies only to injuries occurring on or after January 1, 1990. The WCJ had not made a finding on the date of injury for purposes of section 5275. The court annulled the WCAB’s decision and remanded the case for further proceedings, including a determination of the date of injury for the purposes of mandatory arbitration. The court emphasized that the "date of injury" for cumulative injuries should be determined under section 5412, which considers when the employee first suffered disability and knew or should have known it was work-related. View "Travelers Indemnity Co. v. Workers' Compensation Appeals Bd." on Justia Law

Edgar Osuna sued Spectrum Security Services, Inc., alleging violations of the California Labor Code. He brought five individual and class claims, and a sixth representative claim under the Labor Code Private Attorneys General Act of 2004 (PAGA). The trial court dismissed Osuna’s class claims, sent his individual claims to arbitration, and sustained Spectrum’s demurrer to his PAGA claim without leave to amend. The court concluded that Osuna lacked standing to bring the PAGA claim because he did not suffer a Labor Code violation within the one-year statute of limitations for recovering civil penalties.The trial court’s decision was based on the interpretation that Osuna needed to have suffered a violation within the one-year period before filing his PAGA notice. Osuna appealed, arguing that he is an aggrieved employee with standing to assert a representative PAGA claim because he suffered Labor Code violations during his employment with Spectrum.The California Court of Appeal, Second Appellate District, Division Six, reviewed the case. The court concluded that the trial court erred in its interpretation of the standing requirements under PAGA. The appellate court held that to have standing under PAGA, an employee must have been employed by the alleged violator and suffered at least one Labor Code violation, regardless of whether the violation occurred within the one-year statute of limitations for recovering civil penalties. The court emphasized that the statute of limitations is an affirmative defense and does not affect standing.The appellate court reversed the portion of the trial court’s order sustaining Spectrum’s demurrer to Osuna’s representative PAGA claim and remanded the case for further proceedings consistent with its opinion. View "Osuna v. Spectrum Security Services, Inc." on Justia Law