Justia Arbitration & Mediation Opinion Summaries

Pagliacci Pizza hired Steven Burnett as a delivery driver. Steven Burnett attended a mandatory new employee orientation at a local Pagliacci Pizza. During the orientation, Pagliacci gave Burnett multiple forms and told him to sign them so that he could start working. One of the forms that Burnett signed was a one-page “Employee Relationship Agreement” (ERA). The ERA mentioned nothing about arbitration of disputes. Pagliacci’s “Mandatory Arbitration Policy” (MAP) was printed in Pagliacci’s employee handbook, “Little Book of Answers,” a 23-page booklet in which Pagliacci’s MAP appeared on page 18. The MAP was not listed in the handbook’s table of contents, and page 18 fell within the “Mutual Fairness Benefits” section. Burnett was given a copy of Little Book of Answers during his orientation and told to read it at home. Consistent with that instruction, the ERA contained a section entitled “Rules and Policies.” Delivery drivers like Burnett filed a class action alleging wage and hour claims against Pagliacci Pizza. At issue on interlocutory review was whether the trial court sustainably denied the employer’s motion to compel arbitration. The Court of Appeals affirmed, determining that the mandatory arbitration policy contained in the employee handbook, which was provided to the named plaintiff after he signed the employment relationship agreement, was procedurally and substantively unconscionable and, thus, unenforceable. The Washington Supreme Court held that the MAP at issue in this case was indeed unenforceable because no arbitration agreement was formed when the employee signed the employment agreement when he had no notice of the arbitration provision contained in the employee handbook. The Court also held that in light of the noted circumstances, even if an arbitration contract existed, it was procedurally unconscionable and unenforceable. Furthermore, the Court held the same arbitration provision was substantively unconscionable because its one-sided terms and limitation provisions would bar any claim by the terminated employee here, an overly harsh result. Accordingly, the trial court’s order denying the employer’s motion to compel arbitration was affirmed and the matter remanded for further proceedings. View "Burnett v. Pagliacci Pizza, Inc." on Justia Law

Davis filed sued individual Red Bull executives for age and sexual harassment and hostile work environment in violation of the Fair Employment and Housing Act, and for intentional and negligent infliction of emotional distress. Davis was 56 years old, had been employed by Red Bull for 15 years, and was in a mid-level managerial sales position until he was terminated.Red Bull filed a demand for arbitration with the American Arbitration Association. The individual defendants moved to compel Davis to submit his claims to arbitration. Davis filed a separate lawsuit against Red Bull seeking a declaratory judgment that his claims were not subject to the arbitration agreement. That agreement specifies it is “intended to cover all civil claims which involve or relate in any way to [Davis’s] employment (or termination of employment) with Red Bull, including, but not limited to, claims of employment discrimination or harassment on the basis of . . . sex, age, . . . claims for wrongful discharge, [and] claims for emotional distress.”The trial court concluded and the court of appeal affirmed that the agreement was unconscionable and unenforceable. The court noted the "adhesion" nature of the agreement, which is not mutual and the arbitral discovery process does not guarantee adequate discovery. View "Davis v. Kozak" on Justia Law

The Ninth Circuit affirmed the district court's denial of Amazon's motion to compel arbitration of one of the named plaintiff's federal and state wage and hour claims. This plaintiff, unlike the other three named plaintiffs, agreed to all of Amazon's Terms of Service (TOS) when he signed up to work as a delivery provider for Amazon's app-based delivery program, Amazon Flex (AmFlex), including the arbitration provision at issue here.The panel held that AmFlex delivery providers in this case are transportation workers engaged in interstate commerce and are thus exempt from the Federal Arbitration Act's enforcement provisions pursuant to 9 U.S.C. 1 where they made "last mile" deliveries of goods in the stream of interstate commerce. The panel explained that the interstate transactions between Amazon and the customer do not conclude until the packages reach their intended destinations, and thus AmFlex drivers are engaged in the movement of interstate commerce, even if they did not themselves need to cross state lines. The panel noted that cases involving delivery services like Postmates or Doordash are distinguishable, because those cases recognize that local food delivery drivers are not "engaged in the interstate transport of goods" where the prepared meals from local restaurants are not a type of good that are "indisputably part of the stream of commerce." In this case, AmFlex workers complete the delivery of goods that Amazon ships across state lines and for which Amazon hires AmFlex workers to complete the delivery. Therefore, AmFlex workers form a part of the channels of interstate commerce and are engaged in interstate commerce.The panel also held that the TOS bars application of Washington state law to the arbitration provision. Therefore, there is no valid and enforceable arbitration agreement. View "Rittmann v. Amazon.com, Inc." on Justia Law

Jarboe was hired by DKD. Shortly after he began working, Jarboe was transferred to Leehan. Following his termination at Leehan, Jarboe brought this wage and hour action individually and on behalf of a putative class against the Hanlees Auto Group, its 12 affiliated dealerships (each us a separate corporate entity), including DKD and Leehan, and three individuals. The defendants moved to compel arbitration based on an employment agreement between Jarboe and DKD. The trial court granted the motion as to 11 of the 12 causes of action against DKD but denied the motion as to the other defendants. The trial court allowed Jarboe’s claim under the Private Attorneys General Act of 2004 (PAGA), Labor Code section 2698, to proceed in court against all defendants. The trial court refused to stay the litigation pending arbitration of Jarboe’s claims against DKD. The court of appeal affirmed, rejecting an argument that the other defendants are entitled to enforce the arbitration agreement between Jarboe and DKD as third party beneficiaries of Jarboe’s employment agreement or under the doctrine of equitable estoppel. View "Jarboe v. Hanlees Auto Group" on Justia Law

Grubhub, an online and mobile food-ordering and delivery marketplace, considers its delivery drivers to be independent contractors rather than employees. The plaintiffs alleged, in separate suits, that Grubhub violated the Fair Labor Standards Act by failing to pay them overtime but each plaintiff had signed a “Delivery Service Provider Agreement” that required them to submit to arbitration for “any and all claims” arising out of their relationship with Grubhub. Grubhub moved to compel arbitration. The plaintiffs responded that their Grubhub contracts were exempt from the Federal Arbitration Act (FAA). Section 1 of the FAA provides that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” 9 U.S.C. 1. Both district courts compelled arbitration.The Seventh Circuit affirmed. The FAA carves out a narrow exception to the obligation of federal courts to enforce arbitration agreements. To show that they fall within this exception, the plaintiffs had to demonstrate that the interstate movement of goods was a central part of the job description of the class of workers to which they belong. They did not even try to do that. View "Wallace v. Grubhub Holdings, Inc." on Justia Law

The Eighth Circuit reversed the district court's dismissal of the union's claims against Trane concerning an arbitration award. In this case, the June Award indicated that the arbitrator did not intend for it to be final because he explicitly retained jurisdiction "until the terms of the award are met." When a dispute did arise regarding damages, the arbitrator resolved that dispute in the September Award and then expressly stated that he was "no longer retaining jurisdiction in this matter." Therefore, the express relinquishment of jurisdiction in the September Award indicated that the arbitrator intended the September Award to be final and did not contemplate further disputes regarding the award.The court held that the union is not time-barred from seeking to vacate the arbitration award because the text of the June Award indicates that it was not the final award. The court stated that the September Award is the final award and the union filed its claim to vacate within 90 days of it. Therefore, the union's claim was timely and the district court erred in concluding otherwise. The court remanded for further proceedings. View "International Union v. Trane U.S. Inc." on Justia Law

ABM appealed the district court's denial of its motion to confirm an arbitration award and granting in part the union's motion to vacate the award, under Section 301 of the Labor Management Relations Act (LMRA). In this case, the arbitrator issued an opinion and award, concluding that two employees were not entitled to termination pay and directing them to repay certain amounts to ABM. The district court denied the motion to confirm the arbitrator's award, concluding that the award was ultra vires and unenforceable.The Second Circuit held that the arbitrator did not exceed her authority because, under both agency law principles and federal labor law, the union possessed the authority to bind the employees to the arbitration award. The court stated that the district court plainly erred by reasoning that no precedent or authority supported the proposition that a union can bind its members to make payments ordered by an arbitrator under an arbitration agreement to which they were not signatories, following a process in which they did not participate. Rather, the court held that the record is clear that the employees did participate in the arbitration proceeding and the union possessed both agency and statutory authority to appear in the arbitration on their behalf. View "ABM Industry Groups, LLC v. International Union of Operating Engineers" on Justia Law

Chris Garner sued Inter-State Oil Company alleging employment claims and seeking certification of a class action. Based on an arbitration agreement between Garner and Inter-State Oil, the trial court granted Inter-State Oil’s petition to compel arbitration of individual claims only, effectively denying Garner the ability to pursue class action claims. The trial court relied on language in the arbitration agreement stating that Garner waived his right to participate in class action lawsuits. On appeal of the order granting the motion to compel arbitration, Garner contended: (1) the plain language of the arbitration agreement gave him the right to pursue his class claims in arbitration; and (2) Inter-State Oil waived reliance on the arbitration agreement. The Court of Appeal concluded: (1) the arbitration agreement required arbitration of Garner’s class claims; and (2) Inter-State Oil did not waive reliance on the arbitration agreement. The Court modified the trial court’s order to require arbitration of both individual and class claims, and affirmed the order as modified. View "Garner v. Inter-State Oil Co." on Justia Law

The Icee Company and J & J Snack Foods Corp. (collectively, Icee) appealed a trial court’s order denying their motion to compel arbitration of a dispute with a former employee. The employee, Taraun Collie, alleged a single cause of action against Icee under the Private Attorneys General Act of 2004 (PAGA). Collie alleged that he worked for Icee from November 2014 to August 2015. When he began his employment, he signed an arbitration agreement. In July 2016, Collie filed his PAGA complaint on behalf of himself and other aggrieved employees. Icee moved to compel arbitration of Collie’s “individual claim” in August 2018. It argued that the parties had agreed to bilateral arbitration only, so Collie had to arbitrate his PAGA cause of action on an individual basis—that is, he could not seek PAGA penalties on behalf of other Icee employees. And because Collie had agreed to arbitrate all claims or controversies with Icee, he had effectively waived his right to bring a PAGA action on behalf of other employees in any forum. The trial court denied Icee’s motion, concluding that the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles LLC, 59 Cal.4th 348 (2014), required that result. The Court of Appeal concluded that under Iskanian, an employee could not be compelled to arbitrate a PAGA cause of action on the basis of a predispute arbitration agreement, thereby affirming the trial court. View "Collie v. The Icee Co." on Justia Law

The First Circuit affirmed the district court's denial of Appellants' motion to compel arbitration in this putative class action, holding that the Federal Arbitration Act's (FAA) exemption for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce" encompasses the contracts of transportation workers who transport goods or people within the flow of interstate commerce.Plaintiff was a delivery driver for Amazon.com, Inc. and its subsidiary, Amazon Logistics, Inc. (collectively, Amazon) who collected packages for delivery in Massachusetts and did not cross state lines during the course of his deliveries. Plaintiff filed this putative class action asserting misclassification of Amazon's drivers contracted with through its smartphone application as independent contractors and violations of Massachusetts labor laws. Amazon moved to compel arbitration pursuant to the mandatory arbitration provision of Plaintiff's employment agreement with Amazon. The district court denied the motion in part, concluding that Plaintiff's agreement was exempt from the FAA and that the provision was unenforceable based on Massachusetts public policy. The First Circuit affirmed, holding (1) the FAA does not govern the enforceability of the dispute resolution section of the agreement; and (2) the district court rightly refused to compel arbitration pursuant to state law. View "Waithaka v. Amazon.com, Inc." on Justia Law