Justia Arbitration & Mediation Opinion Summaries

A senior director was employed by a space exploration company from 2020 until his termination in 2022. Upon hiring, he signed an employee agreement containing a broad arbitration provision requiring most disputes with the company and its affiliates to be resolved by arbitration, with some exceptions. After his termination, the employee filed a lawsuit alleging, among other claims, sexual/gender discrimination, sexual/gender harassment, retaliation, wrongful termination, and intentional infliction of emotional distress. The company moved to compel arbitration under the agreement, while the employee argued that the arbitration provision was both unconscionable and unenforceable under federal law.The Superior Court of Los Angeles County reviewed the motion and found that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) applied, concluding that the employee’s allegations sufficiently stated discrimination based on gender. On this basis, the court denied the company’s motion to compel arbitration, without reaching the issue of whether the arbitration agreement was unconscionable. The company filed a timely appeal from the denial of its motion.The California Court of Appeal, Second Appellate District, reviewed the order de novo. The appellate court concluded that the arbitration agreement was both procedurally and substantively unconscionable. Procedural unconscionability was established because the agreement was a contract of adhesion, presented on a take-it-or-leave-it basis with no real opportunity for negotiation. Substantive unconscionability resulted from the agreement’s overbroad coverage, lack of mutuality, waiver of the right to a jury trial, and waiver of representative actions, including those under the Private Attorneys General Act. The court found that severance was not an appropriate remedy because the unconscionable provisions were pervasive and central to the agreement. The Court of Appeal affirmed the lower court’s order denying the motion to compel arbitration. View "Stoker v. Blue Origin, LLC" on Justia Law

An employee began working at a skilled nursing facility, which was later acquired by a new employer. As part of the onboarding process, the employer required the employee to sign three related agreements to arbitrate most employment disputes, except certain representative actions under the California Private Attorneys General Act (PAGA). After ending his employment, the employee filed a class action lawsuit for various wage-and-hour violations, including a PAGA claim. The agreements also contained class action waivers and a confidentiality agreement.The employer moved to compel arbitration of the employee’s individual claims, including his individual PAGA claim, and to enforce the class action waiver. The Superior Court of Los Angeles County denied the motion, ruling that conflicting and ambiguous terms among the three arbitration agreements and other documents meant there was no enforceable agreement to arbitrate. The court also ruled, in the alternative, that the agreement was unconscionable due to both procedural and substantive defects, including an unenforceable waiver of the right to bring a PAGA action and certain provisions in the confidentiality agreement.The California Court of Appeal, Second Appellate District, Division Seven, reviewed the order denying arbitration. The court held that the agreements, although containing some ambiguities and minor inconsistencies, reflected a clear mutual intent to arbitrate employment-related disputes. The court found the agreements were not so uncertain as to be unenforceable, and any conflicting provisions could be severed. The court further determined that, while the agreements reflected some procedural unconscionability as contracts of adhesion, they did not contain substantively unconscionable terms. The Court of Appeal reversed the trial court’s order and directed that arbitration be compelled. View "Santana v. Studebaker Health Care Center" on Justia Law

A union member employed by a county juvenile justice agency was terminated after it was discovered that he had failed to disclose instances of prior disciplinary actions related to his behavior with residents at a previous job in another county. During a background check required by the Prison Rape Elimination Act (PREA), the county learned that the employee had misrepresented the circumstances of his departure from his earlier position, specifically omitting that he resigned while under investigation for inappropriate conduct. Based on PREA regulations, which mandate termination for material omissions regarding such misconduct, the county dismissed the employee.Following his termination, the union initiated a grievance on his behalf under the collective bargaining agreement (CBA) with the county, which allows for arbitration of certain employment disputes. When the county denied the grievance, the union sought arbitration. The county then moved in the Eighth Judicial District Court to stay arbitration, arguing that terminations pursuant to PREA regulations were not subject to arbitration under the CBA. The district court agreed, determining that the arbitration clause was narrow and applied only to disciplinary actions defined as “corrective actions” intended to help an employee overcome deficiencies related to behavior or performance, not to terminations required by federal regulation.The Supreme Court of Nevada reviewed the matter and affirmed the district court’s order granting the motion to stay arbitration. The court held that the arbitration clause in the CBA was narrow and could not be interpreted to cover the termination at issue, as the action was implemented pursuant to federal regulation, not as a corrective measure for employee improvement. The Supreme Court of Nevada did not address the merits of the termination, only its arbitrability under the CBA. View "JUVENILE JUSTICE PROB. OFFICERS ASSOC. VS. CLARK CNTY." on Justia Law

Former employees of a travel-nursing agency brought a putative class action against the agency, alleging wage-related violations. Each employee had signed an arbitration agreement with the agency that contained a delegation clause requiring an arbitrator—not a court—to decide on the validity of the agreement. Four initial plaintiffs had their disputes sent to arbitration: two arbitrators found the agreements valid, while two found them invalid due to unconscionable fee and venue provisions.After these initial arbitrations, the United States District Court for the Southern District of California confirmed three out of four arbitral awards. At this stage, an additional 255 employees joined the action as opt-in plaintiffs under the Fair Labor Standards Act. The agency moved to compel arbitration for these additional plaintiffs under their individual agreements. However, a different district judge raised the issue of whether non-mutual offensive collateral estoppel barred the enforcement of the arbitration agreements. After briefing, the district court denied the agency’s motion, concluding that the two arbitral awards finding the agreements invalid precluded arbitration for all 255 employees, effectively rendering their agreements unenforceable.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s judgment. The Ninth Circuit held that the application of non-mutual offensive collateral estoppel to preclude the enforcement of arbitration agreements is incompatible with the Federal Arbitration Act (FAA). The court reasoned that such an approach undermined the principle of individualized arbitration and the parties’ consent, which are fundamental to the FAA. The Ninth Circuit concluded that the FAA does not permit using non-mutual offensive collateral estoppel to invalidate arbitration agreements and remanded the case for further proceedings. View "O'DELL V. AYA HEALTHCARE SERVICES, INC." on Justia Law

Energy Harbor Nuclear Corporation operated a power plant in Pennsylvania, where its employees were represented by the International Brotherhood of Electrical Workers, Local 29. After a 2021 dispute over health care benefit contributions, an arbitrator found that Energy Harbor had underpaid and ordered it to make additional contributions for 2021. Later, the parties entered into a new collective-bargaining agreement (CBA) on October 1, 2021, which included a broad arbitration clause and a merger clause voiding prior agreements not incorporated into the new CBA. When the union later alleged that Energy Harbor similarly underpaid contributions for 2022, it filed a grievance, contending that Energy Harbor failed to adjust 2022 contributions as required by the prior arbitration award.The United States District Court for the Western District of Pennsylvania reviewed the matter after the union sought to compel arbitration. The District Court, adopting a magistrate judge’s recommendation, held that the broad arbitration clause in the new CBA covered the dispute regarding the 2022 contributions. The court reasoned that because the grievance referenced the contribution-increase provision of the CBA, the dispute was subject to arbitration, and found no evidence that the parties intended to exclude such claims from arbitration.On appeal, the United States Court of Appeals for the Third Circuit reversed. The Third Circuit held that, although the arbitration clause was broad, the union’s grievance regarding 2022 contributions did not arise under the new CBA but instead relied on the prior arbitration award, which was not incorporated into the new agreement. The court concluded that the dispute had “nothing to do with” the rights under the CBA because there was no evidence of a required increase in Energy Harbor’s health care plan costs from 2021 to 2022. The Third Circuit reversed and remanded with instructions to grant summary judgment for Energy Harbor. View "International Brotherhood of Electrical Workers Local Union 29 v. Energy Harbor Nuclear Corp" on Justia Law

An individual brought suit against her employer, a Delaware corporation, alleging various claims of discrimination based on age and disability under state and federal law. The employment contract between the parties included an arbitration provision, specifying that all employment-related disputes were to be resolved through binding arbitration under the Federal Arbitration Act (FAA), in accordance with procedures outlined in the California Arbitration Act. The contract also incorporated JAMS rules, which assign the arbitrator authority to resolve issues regarding the validity and enforceability of the arbitration agreement itself.The United States District Court for the Southern District of California reviewed the employer’s motion to compel arbitration. The court recognized that the arbitration agreement, by incorporating the JAMS rules, delegated questions about the agreement's validity to an arbitrator. However, relying on California state court decisions, the district court determined that the presence of a severability clause—allowing a court or other competent body to sever invalid provisions—negated a “clear and unmistakable” delegation to the arbitrator. Consequently, the district court concluded it was responsible for determining validity and found the arbitration agreement unconscionable, denying the motion to compel arbitration.The United States Court of Appeals for the Ninth Circuit reviewed the district court’s judgment de novo. The appellate court held that the contract’s delegation clause, by clearly incorporating JAMS rules, unmistakably reserved the issue of the arbitration agreement’s validity for the arbitrator. The existence of a severability clause did not undermine this delegation. The Ninth Circuit reversed the district court’s denial of the motion to compel arbitration, vacated its unconscionability judgment, and remanded with instructions to compel arbitration and stay the case pending arbitration. View "SANDLER V. MODERNIZING MEDICINE, INC." on Justia Law

Abdulkadir Abdisalam worked as a courier delivering medical supplies for a company that classified its couriers as independent contractors. To work for the company, Abdisalam was required to form his own corporation, Abdul Courier, LLC, which then entered into a contract with the company. This contract included an arbitration provision requiring disputes to be arbitrated. Abdisalam signed the contract as the owner of his corporation, not in his individual capacity. After several years of providing courier services, Abdisalam alleged that the company misclassified him and others as independent contractors and failed to pay them proper wages, in violation of Massachusetts law. He filed a lawsuit on behalf of himself and a proposed class of couriers seeking remedies under Massachusetts statutes.The company removed the case to the United States District Court for the District of Massachusetts and filed a motion to compel arbitration based on the arbitration provision in its contract with Abdul Courier, LLC. The district court denied the motion, finding that Abdisalam, having signed only as the owner of the LLC and not in his personal capacity, was not bound by the contract’s arbitration clause. The court also rejected the company’s arguments that Abdisalam should be compelled to arbitrate under theories of direct benefits estoppel, intertwined claims estoppel, or as a successor in interest.The United States Court of Appeals for the First Circuit affirmed the district court’s order. The First Circuit held that, under Massachusetts law, it was for the court—not an arbitrator—to decide whether Abdisalam was bound by the arbitration agreement. The court further held that Abdisalam, as a nonsignatory to the agreement in his personal capacity, was not bound by its arbitration provision, and none of the equitable estoppel or successor theories advanced by the defendant provided a basis to compel arbitration. View "Abdisalam v. Strategic Delivery Solutions, LLC" on Justia Law

A former employee brought suit against his prior employer, alleging that the employer’s compensation plan for commissions violated several provisions of the California Labor Code. The employee claimed that the employer’s use of a “windfall” provision, which limited commission payments when revenue goals were substantially exceeded, resulted in retroactive reductions to earned commissions. The employer invoked this provision after the employee and others exceeded their sales goals, causing the employee’s final commission payment to be lower than anticipated. The employee resigned and later sought civil penalties under the Private Attorneys General Act (PAGA), as well as damages for alleged unpaid wages and other Labor Code violations.The Superior Court of Alameda County compelled arbitration of the employee’s individual claims but allowed the PAGA claims to proceed in court. During arbitration, the arbitrator found in favor of the employer on all individual claims, concluding that the compensation plan’s “windfall” provision did not violate the Labor Code sections at issue. The arbitrator determined that the commissions in question were not subject to the statutory requirements argued by the employee, and that the plan did not involve unlawful wage recapture or secret underpayment. The trial court confirmed the arbitration award, denied the employee’s motion for summary adjudication on the PAGA claim, and subsequently granted the employer’s motion for judgment on the pleadings, finding that the arbitration resolved the issue of whether the employee was an “aggrieved employee” with standing under PAGA.The California Court of Appeal, First Appellate District, Division Four, affirmed the lower court’s judgment. The court held that the arbitration agreement was not illusory, that the arbitrator’s findings precluded the employee from maintaining PAGA standing, and that the employer’s commission plan did not violate the cited Labor Code provisions. The judgment in favor of the employer was affirmed. View "Sorokunov v. NetApp, Inc." on Justia Law

The plaintiff was employed as a legal assistant and later a paralegal in a law firm’s Liquor Group, initially at one firm and then at another firm, Adams and Reese, LLP, after her group switched employers. She alleged that a supervisor, who moved with the group, persistently directed sexualized comments and jokes at her in the workplace, which included derogatory remarks, inappropriate suggestions, and comments about her appearance and personal life. She also claimed that after her employer changed her work schedule, she experienced difficulties related to her disabilities and was subsequently terminated when she was unable to comply with the new attendance requirements. She brought claims of sexual harassment and violations of the Americans with Disabilities Act (ADA).The United States District Court for the Middle District of Tennessee reviewed the employer’s motions to dismiss the sexual harassment claim and to compel arbitration of the ADA claims, based on an arbitration agreement between the parties. The district court denied both motions, holding that the plaintiff sufficiently stated a plausible sexual harassment claim under applicable standards and that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) barred enforcement of the arbitration agreement as to her entire case, not just the sexual harassment claim.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s decision. The court held that the plaintiff’s complaint plausibly alleged pervasive sexual harassment sufficient to survive a motion to dismiss. It further determined that the EFAA renders predispute arbitration agreements unenforceable with respect to an entire “case” relating to a sexual harassment dispute, not just the specific sexual harassment claim. Therefore, the arbitration agreement could not be enforced as to any of the plaintiff’s claims in this action. The disposition was to affirm and remand for further proceedings. View "Bruce v. Adams & Reese, LLP" on Justia Law

David Christianson was employed during the 2023-24 school year as a teacher at Grand Forks Red River High School, holding both a standard teaching contract and two additional “director contracts” for Pep Band Director and Music-Instrumental Head Director. After two pranks occurred under his supervision at graduation events, Christianson was reassigned to a different school and his director contracts were not renewed. He pursued a grievance with the School District, culminating in a formal hearing and a School Board denial of his appeal. The School Board subsequently issued a written decision two days after the contractual deadline, prompting Christianson to formally object.The case was reviewed by the District Court of Grand Forks County, Northeast Central Judicial District. Both parties moved for summary judgment. The School District argued Christianson was required to arbitrate his grievance before pursuing litigation, while Christianson claimed the School District failed to follow mandatory nonrenewal procedures. The district court found that the School District had waived its right to enforce arbitration by not complying with contractual notice requirements and determined that Christianson’s director contracts were extracurricular, not curricular. Therefore, statutory nonrenewal procedures did not apply. Summary judgment was granted in favor of the School District.Upon appeal, the Supreme Court of the State of North Dakota reviewed the case de novo. The Court affirmed the district court’s judgment, holding that the School District’s failure to timely provide written notice constituted a waiver of its right to require arbitration. The Court further held that Christianson’s director contracts were extracurricular and not subject to teacher contract nonrenewal protections under North Dakota law. The judgment of the district court was affirmed. View "Christianson v. Grand Forks Public School District" on Justia Law