Justia Arbitration & Mediation Opinion Summaries

Thomas Vo signed an employment arbitration agreement with Technology Credit Union (TCU) before starting his job in 2020. The agreement required both parties to submit any employment-related disputes to binding arbitration. Vo was later terminated and sued TCU for violations of the Fair Employment and Housing Act (FEHA), including harassment, discrimination, and wrongful termination. TCU moved to compel arbitration, but Vo opposed, arguing the agreement was unconscionable because it did not allow for prehearing third-party discovery.The Santa Clara County Superior Court found the arbitration agreement procedurally unconscionable as a contract of adhesion and substantively unconscionable because it did not permit third-party discovery, relying on Aixtron, Inc. v. Veeco Instruments Inc. The court denied TCU's motion to compel arbitration, leading TCU to appeal the decision.The California Court of Appeal, Sixth Appellate District, reviewed the case de novo. The court found that while the agreement was procedurally unconscionable, it was not substantively unconscionable. The court noted that the JAMS Rules incorporated into the agreement allowed the arbitrator to order additional discovery, including third-party discovery, if necessary. The court emphasized that the agreement should be interpreted to allow adequate discovery to vindicate statutory claims, as clarified in Ramirez v. Charter Communications, Inc.The appellate court reversed the trial court's order and remanded with instructions to grant TCU's motion to compel arbitration and stay the proceedings pending arbitration. The court concluded that the arbitration agreement was enforceable and not unconscionable. View "Vo v. Technology Credit Union" on Justia Law

Kristin Casey, a former employee of D.R. Horton, Inc., filed a lawsuit against the company and one of its employees, Kris Hansen, alleging sexual harassment and other claims. D.R. Horton moved to compel arbitration based on an employment agreement that included an arbitration clause governed by California law. Casey opposed the motion, citing the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), which allows plaintiffs to invalidate arbitration agreements in cases involving sexual harassment. The trial court granted the motion to compel arbitration, reasoning that the EFAA was inapplicable due to the choice-of-law provision in the employment agreement.The Contra Costa County Superior Court initially reviewed the case and granted the motion to compel arbitration, accepting Hansen's joinder. The court concluded that the choice-of-law provision in the employment agreement meant that California law, not the EFAA, applied. Casey then filed a petition for a writ of mandate to challenge this decision.The California Court of Appeal, First Appellate District, Division One, reviewed the case. The court held that the EFAA preempts state law attempts to compel arbitration in cases related to sexual harassment disputes. The court determined that the EFAA applies to the parties' transaction because it sufficiently involved interstate commerce. The court also concluded that the EFAA's rule of unenforceability of arbitration agreements in sexual harassment cases preempts the state law and that parties cannot contract around the EFAA through a choice-of-law provision. Consequently, the court granted Casey's petition and directed the trial court to vacate its order compelling arbitration and to enter a new order denying the motion. View "Casey v. Superior Court" on Justia Law

Republic Airways Inc. and Hyannis Air Service, Inc. entered into individual employment agreements with pilot candidates, offering incentives in exchange for employment commitments. The International Brotherhood of Teamsters and its local unions argued that these agreements violated the Railway Labor Act (RLA) because they were not bargained for and fell outside the scope of the collective bargaining agreements (CBAs) between the parties.The United States District Court for the Southern District of Indiana dismissed the unions' complaint for lack of subject-matter jurisdiction, determining that the dispute was "minor" under the RLA and thus subject to arbitration. The court found that the resolution of the dispute required interpretation of the CBAs, which mandated arbitration.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the employment agreements were arguably justified by the broad discretionary language in the CBAs, which allowed the carriers to offer incentives and determine their terms. The court emphasized the RLA's strong preference for arbitration and concluded that the carriers' arguments were not frivolous or insubstantial. Therefore, the dispute was classified as minor and subject to arbitration, not federal court jurisdiction. The court also affirmed the dismissal of the unions' state law claim. View "International Brotherhood of Teamsters v. Republic Airways Inc." on Justia Law

Nabors Corporate Services, Inc. (Nabors) performed oil well plug and abandonment work for the City of Long Beach (the City) between 2012 and 2014. The City had contracted with Tidelands Oil Production Company (Tidelands) for services on the Gerald Desmond Bridge Replacement Project, and Tidelands subcontracted the work to Nabors. The City and Tidelands had concluded that the work was not subject to prevailing wage laws, and Nabors was not informed otherwise during the bid process. After completing the work, Nabors faced a class action from its employees for unpaid prevailing wages, which led to arbitration awards and federal court judgments against Nabors.The Superior Court of Los Angeles County sustained demurrers by the City and Tidelands, dismissing Nabors’s claims for indemnity under Labor Code sections 1781 and 1784. The court ruled that section 1784 could not be applied retroactively to Tidelands and that the arbitration awards confirmed by the federal court did not qualify as court decisions under section 1781.The California Court of Appeal, Second Appellate District, Division Five, reviewed the case. The court affirmed the dismissal of the section 1784 claim against Tidelands, agreeing that the statute could not be applied retroactively. However, the court reversed the dismissal of the section 1781 claim against the City, holding that the federal court’s confirmation of arbitration awards did qualify as court decisions classifying the work as public work. The case was remanded with instructions to enter a new order overruling the City’s demurrer to the section 1781 cause of action. Nabors was awarded costs on appeal against the City, while Tidelands was awarded costs on appeal against Nabors. View "Nabors Corporate Services, Inc. v. City of Long Beach" on Justia Law

A financial advisor, employed by Principal Securities, Inc., was terminated for failing to obtain a second client consent when rebalancing accounts using a new trading system. The advisor argued that the termination report filed by Principal with the Financial Industry Regulatory Authority (FINRA) was misleading and initiated arbitration to seek changes to the report. The arbitrator ruled in favor of the advisor, recommending changes to the termination report to reflect that the advisor's failure was due to a lack of training and that the advisor was encouraged not to resign during the investigation.The Iowa District Court for Polk County vacated the arbitration award, finding it unsupported by substantial evidence. The advisor appealed, and the case was transferred to the Iowa Court of Appeals. A divided panel of the Court of Appeals affirmed the district court's decision, with the majority agreeing that the information provided by Principal was not defamatory or misleading. The dissenting judge believed that substantial evidence supported the arbitration award.The Iowa Supreme Court reviewed the case and applied a highly deferential standard of review. The court concluded that substantial evidence supported the arbitrator's determination that the termination report was misleading and that the recommended changes were justified. The court vacated the decision of the Court of Appeals, reversed the district court's judgment, and remanded the case with instructions to confirm the arbitration award. View "Principal Securities, Inc. v. Gelbman" on Justia Law

Caroline Retzios was terminated by Epic Systems Corporation after she refused to be vaccinated against COVID-19, citing religious objections. She filed a lawsuit under Title VII of the Civil Rights Act of 1964, claiming that Epic was required to accommodate her religious beliefs. Epic requested the district court to compel arbitration based on an agreement Retzios had signed, which the court granted, subsequently dismissing the suit.The United States District Court for the Northern District of Illinois dismissed the case after referring it to arbitration, despite Epic's request for a stay. According to the Federal Arbitration Act, a stay should have been issued instead of a dismissal when arbitration is requested. This dismissal allowed Retzios to appeal the decision.The United States Court of Appeals for the Seventh Circuit reviewed the case and determined that the district court erred in dismissing the suit instead of staying it. However, the appellate court proceeded with the case due to the district court's actions. The appellate court found that Retzios's claims fell within the scope of the arbitration agreement she had signed with Epic. The court rejected Retzios's arguments against the enforceability of the arbitration agreement, including her claims of promissory estoppel and waiver. The court also found her objections to arbitration to be frivolous and granted Epic's motion for sanctions, directing Retzios to reimburse Epic for its legal expenses incurred on appeal. The decision of the district court was affirmed, with sanctions imposed on Retzios. View "Retzios v Epic Systems Corp." on Justia Law

An employee, Brandon Smith, was fired by Kansas City Southern Railway Company (KCSR) in 2018. His union, the International Association of Sheet Metal, Air, Rail, and Transportation Workers, Transportation Division (SMART-TD), challenged the dismissal under the collective-bargaining agreement (CBA) and the Railway Labor Act (RLA). The dispute went to arbitration, and in 2022, the National Railroad Adjustment Board (Board) overturned Smith's discharge, ordering his reinstatement with full benefits and back pay without deductions for outside earnings.The district court enforced the arbitration award, rejecting KCSR's argument that the award was ambiguous and required clarification. The court ordered KCSR to provide Smith with back pay without deductions and vacation benefits, and also awarded attorney fees to SMART-TD. KCSR appealed, arguing that the district court lacked jurisdiction and should have remanded the case to the Board for interpretation of the ambiguous award.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court found that the district court erred in enforcing the award without remanding it to the Board for clarification, particularly regarding the vacation benefits, which were not explicitly addressed in the award. The court noted that the district court overstepped by interpreting the CBA, which is outside its jurisdiction under the RLA. The court also acknowledged that the Board had since clarified the back pay issue, rendering that part of the dispute moot.The Eighth Circuit reversed and vacated the district court's judgments, including the award of attorney fees, and remanded the case for further proceedings consistent with its opinion. The court emphasized the need for the Board to interpret any ambiguities in the arbitration award. View "Assoc.of Sheet Metal Workers v. K.C. Southern Railway" on Justia Law

Sarah Anoke and other employees initiated arbitration proceedings against their employer, X (comprising Twitter, Inc., X Holdings I, Inc., X Holdings Corp., X Corp., and Elon Musk), to resolve employment-related disputes. The arbitration provider issued an invoice for $27,200, which was mistakenly paid by Anoke’s counsel. The arbitration provider marked the invoice as paid and closed, refunded the payment to Anoke’s counsel, and issued a new invoice to X, which X paid within 30 days.Anoke petitioned the Superior Court of the City and County of San Francisco for an order compelling X to pay their arbitration-related attorney fees and costs, arguing that X’s payment was untimely as it was not made within 30 days of the first invoice. The superior court denied the petition, reasoning that since the arbitrator nullified the first invoice after Anoke’s attorney mistakenly paid it and X timely paid the second invoice, X met the statutory deadline.The Court of Appeal of the State of California, First Appellate District, Division Five, reviewed the case. The court held that the statutory deadline for payment of arbitration fees under Code of Civil Procedure section 1281.97 was not violated. The court found that the first invoice was paid by Anoke’s counsel, and the second invoice was paid by X within the 30-day period. The court concluded that the arbitrator acted within its authority by issuing a second invoice after refunding the mistaken payment. The court affirmed the superior court’s order denying Anoke’s motion to compel arbitration with attorney fees and costs. View "Anoke v. Twitter" on Justia Law

A former employee, Liu, sued her employer, Miniso, alleging various employment-related claims, including sexual harassment, sex discrimination, and wage and hour violations. Liu claimed that she was subjected to severe and pervasive sexual harassment and discrimination based on her sexual orientation and gender identity. She also alleged that Miniso misclassified her as an exempt employee, resulting in unpaid wages and denied rest and meal breaks. Liu further claimed that she faced retaliation for refusing to participate in illegal practices and for whistleblowing, leading to her constructive termination.The Superior Court of Los Angeles County denied Miniso's motion to compel arbitration of Liu's claims. Miniso argued that the arbitration agreement Liu signed should compel arbitration of all her claims, except for the sexual harassment claims, which they conceded were exempt under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA). The trial court found that Liu had adequately stated a claim for sexual harassment and ruled that the EFAA invalidated the arbitration agreement for all of Liu's claims, not just the sexual harassment claims.The California Court of Appeal, Second Appellate District, affirmed the trial court's decision. The appellate court held that under the EFAA, if a plaintiff's case includes at least one claim related to sexual harassment, the entire case is exempt from arbitration. The court reasoned that the plain language of the EFAA invalidates the arbitration agreement with respect to the entire case, not just the specific claims of sexual harassment. Consequently, Liu could not be compelled to arbitrate any of her claims, and the trial court's denial of Miniso's motion to compel arbitration was upheld. View "Liu v. Miniso Depot CA, Inc." on Justia Law

Former police officer Sergio Ramirez was terminated by the City of Indio Police Department following an internal affairs investigation. Ramirez was initially placed on administrative leave after being charged with rape and sexual assault, though he was later acquitted of all criminal charges. The internal investigation produced conflicting reports, with one concluding Ramirez violated multiple conduct standards and another finding the allegations "not sustained." The Chief of Police issued a Notice of Termination, citing Ramirez's poor judgment, dishonesty, and conduct unbecoming of an officer.Ramirez appealed the termination through the administrative appeal procedure outlined in the Memorandum of Understanding (MOU) between the City and the Indio Police Officers’ Association. An arbitrator conducted a three-day evidentiary hearing and recommended Ramirez's reinstatement with full back pay and benefits. However, the City Manager reviewed the arbitrator's findings and upheld the termination, citing Ramirez's poor judgment, dishonesty, and conduct that embarrassed the department.Ramirez petitioned the Superior Court of Riverside County for a writ of mandate, arguing that the City Manager should have deferred to the arbitrator's findings on the weight and credibility of the evidence. The superior court denied the petition, finding that the MOU clearly vested the final decision-making authority in the City Manager and that the City Manager's findings were supported by sufficient evidence.The Court of Appeal, Fourth Appellate District, Division One, State of California, affirmed the superior court's judgment. The court held that the MOU's language and framework did not require the City Manager to defer to the arbitrator's findings on relevancy, weight, and credibility of the evidence. The court also found that the administrative appeal procedure provided Ramirez with due process, as it included notice, an opportunity to respond, and a meaningful hearing before an independent arbitrator, with the City Manager conducting a thorough review before making the final decision. View "Ramirez v. City of Indio" on Justia Law