Justia Arbitration & Mediation Opinion SummariesArticles Posted in U.S. 6th Circuit Court of Appeals
Knall Beverage, Inc. v. Teamsters Local Union No. 293 Pension Plan
The employers were formerly contributing members of the Teamsters Local Union No. 293 Pension Plan. In 2007-2008 each employer reached an agreement with the Plan to terminate its membership. They were required to pay, and have paid, “withdrawal liability” reflecting each employer’s share of unfunded, vested pension benefits under the Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381–1461. Under the Act, if the plan is terminated altogether by a “mass withdrawal” of the remaining members within three years, the earlier withdrawing members may be subject to additional “reallocation liability.” Disputes about the amount of such reallocation liability are subject to mandatory arbitration. The employers claim that a 2009 mass withdrawal was expedited to occur within the three-year period in order that they would be subject to reallocation liability. The Plan trustees sought more than $12 million in additional funds from the employers. The district court dismissed their suit for failure to complete arbitration. The Sixth Circuit affirmed. The Act requires that the claim of “sham” mass withdrawal be arbitrated. View "Knall Beverage, Inc. v. Teamsters Local Union No. 293 Pension Plan" on Justia Law
Reed Elsevier, Inc. v. Crockett
Crockett’s former law firm subscribed to a LexisNexis legal research plan that allowed unlimited access to certain databases for a flat fee. Subscribers could access other databases for an additional fee. According to Crockett, LexisNexis indicated that a warning sign would display before a subscriber used a database outside the plan. Years after subscribing, Crockett complained that his firm was being charged additional fees without any warning that it was using a database outside the Plan. LexisNexis insisted on payment of the additional fees. The firm dissolved. Crockett’s new firm entered into a LexisNexis subscription agreement, materially identical to the earlier plan; it contains an arbitration clause. Crockett filed an arbitration demand against LexisNexis on behalf of two putative classes. One class comprised law firms that were charged additional fees. The other comprised clients onto whom such fees were passed. The demand sought damages of more than $500 million. LexisNexis sought a federal court declaration that the agreement did not authorize class arbitration. The district court granted LexisNexis summary judgment. The Sixth Circuit affirmed. “The idea that the arbitration agreement … reflects the intent of anyone but LexisNexis is the purest legal fiction,” but the one-sided adhesive nature of the clause and the absence of a class-action right do not render it unenforceable. The court observed that Westlaw’s contract lacks any arbitration clause.View "Reed Elsevier, Inc. v. Crockett" on Justia Law
Tillman v. Macy’s Inc.
Tillman filed suit pro se, alleging that Macy’s discriminated against her on the basis of race in violation of Title VII when it terminated her employment in 2009. Macy’s filed a motion to compel arbitration, based on a claimed agreement between the parties to participate in a dispute-resolution program called Solutions. The Solutions process had four steps, the last of which is binding arbitration. After the May’s store at which she had worked since 2001 was acquired by Macy’s, Tillman received a document describing the Solutions process and noting that employees were automatically “covered” by arbitration by virtue of continuing employment, but could opt out of binding arbitration. Tillman’s packet was mailed and was not returned as undeliverable. Tillman stated that she did not receive it. In 2006, Tillman attended a mandatory video describing the Solutions Program. Tillman does not deny receiving a brochure distributed at the meeting. In 2007, Macy’s sent another brochure that stated that she had the entire Solutions program, specifically including Step 4 Arbitration. Tillman stated that she did not receive this mailing. Macy’s sent another Election Form and brochure. Tillman did not return the form; again claiming that she did not receive it. The district court denied Macy’s motion. The Sixth Circuit reversed. Macy’s provided sufficient notice of its offer to enter into an arbitration agreement, and Tillman accepted by continuing her employment and not returning either opt-out form. Arbitration should be required, notwithstanding the absence of an employee-signed agreement. View "Tillman v. Macy's Inc." on Justia Law
Thomas Kinkade Co. v. White
The Whites were dealers of Kinkade’s artwork. The parties agreed to arbitrate disputes in accordance with the Commercial Arbitration Rules of the American Arbitration Association. In 2002, they commenced arbitration in which Kinkade claimed that the Whites had not paid hundreds of thousands of dollars, and the Whites counterclaimed that they had been fraudulently induced to enter the agreements. Kinkade chose Ansell as its arbitrator; the Whites chose Morganroth. Together Ansell and Morganroth chose Kowalsky as the neutral who would chair the panel. The arbitration dragged on; in 2006, Kinkade discovered that the Whites’ counsel, Ejbeh, had surreptitiously sent a live feed of the hearing to a hotel room. Ejbeh’s replacement departed after being convicted of tax fraud. The Whites did not comply with discovery requests, but after closing arguments and over objections, the panel requested that the Whites supply additional briefs. The Whites and their associates then began showering Kowalsky’s law firm with business. Kinkade objected, to no avail. A series of arbitration irregularities followed, all favoring the Whites. Kowalsky entered a $1.4 million award in the Whites’ favor. The district court vacated the award on grounds of Kowalsky’s “evident partiality.” The Sixth Circuit affirmed. View "Thomas Kinkade Co. v. White" on Justia Law
Paul v. Kaiser Found. Health Plan of OH
Paul brought state law claims for disability discrimination and retaliation against her former employer after her 12-year employment as a CT Technologist came to an end following a work-related injury. The employer removed the action to federal court on the basis of complete preemption under the Labor Management Relations Act, contending plaintiff’s claims implicated rights under the collective bargaining agreement, which included a mandatory arbitration requirement. The district court denied remand to state court and dismissed for failure to submit to mandatory arbitration. The Sixth Circuit vacated. Although plaintiff’s claim of unlawful discrimination in the terms and conditions of employment by refusing to reasonably accommodate her disability implicates an employment relationship created and defined by the Collective Bargaining Agreement, the employer did not demonstrate that resolution of the claim is so “inextricably intertwined” with interpretation of CBA terms as to trigger complete preemption. View "Paul v. Kaiser Found. Health Plan of OH" on Justia Law
Emswiler v. CSX Transp. Inc.
Emswiler sued his employer, CSX, a railroad, and the Brotherhood of Locomotive Engineers and Trainmen after his seniority on the roster of train engineers was adjusted. Emswiler alleged breach of collective bargaining agreement, breach of duty of fair representation, and disability discrimination under Ohio law. The district court granted defendants summary judgment. The Sixth Circuit affirmed. The district court correctly determined it could not reach the merits of claims for breach of CBA and disability discrimination due to his failure to pursue arbitral mechanisms mandated by the Railway Labor Act, which governs disputes between management and labor in the railroad industry, 45 U.S.C. 151, 153. The RLA divides disputes into two categories: Major disputes concern the formation of collective bargaining agreements, whereas minor disputes deal with the interpretation of existing CBAs. This is a minor dispute. Emswiler’s claim for breach of duty of fair representation lacked merit. View "Emswiler v. CSX Transp. Inc." on Justia Law
Evanston Ins. Co. v. Cogswell Props., LLC
Cogswell purchased the vacant paper mill in a tax foreclosure sale for $70,000. The site has more than 20 buildings, covering 440,700 square feet. Evanston issued first-party property insurance with a building coverage limit of $1,000,000, subject to coinsurance at 80%. On the first day of coverage, 15,700 square feet (less than 4%) were damaged by fire. Evanston determined that actual cash value of the buildings at the time of loss was $10,223,384.80; under the coinsurance provision, Cogswell was required to carry insurance of $8,178,707.84. Cogswell carried only $1 million. Evanston determined that it was liable for 12.23% ($1 million/ $8,178,707.84); calculated cash value of loss at $342,836.46; and determined that it was liable for $36,918.27 ($342,836.46 times 12.23% less $5,000 deductible). An umpire, appointed under the contract determined actual cash value of $1,540,000.00 and damage at $736,384.89. Cogswell demanded $554,553.49, the net amount under the appraisal after application of the coinsurance provision and deductible. The district court vacated the appraisal and granted Evanston judgment on a second appraisal. The Sixth Circuit affirmed. The provision calling for appointment of an umpire is not governed by the Federal Arbitration Act, 9 U.S.C. 1, which would require deference; the parties agreed to the process under Michigan law.View "Evanston Ins. Co. v. Cogswell Props., LLC" on Justia Law
Johnson Assocs. Corp. v. HL Operating Corp.
Plaintiffs sought damages for breach of contract and unjust enrichment. Hartmann counterclaimed for breach of contract. The parties unsuccessfully exchanged multiple settlement offers. Three days before an agreed-upon discovery deadline, Hartmann notified plaintiffs that it intended to exercise its right to arbitrate as provided by their contract. When plaintiffs failed to respond, Hartmann filed a motion to compel arbitration. Plaintiffs served discovery responses on Hartmann in accordance with the agreed deadline and continued to seek discovery from Hartmann while the motion was pending. When Hartmann served discovery responses, it stipulated that it was not waiving its right to arbitrate. The court held that Hartmann had waived its right to compel arbitration by obtaining an extension of time within which to file an answer; asserting 10 affirmative defenses and a counterclaim; engaging in a judicial settlement conference and informal efforts to resolve the case; requesting adjustments of the Case Management Order; and serving discovery requests and that those actions prejudiced plaintiffs. The Sixth Circuit affirmed. Hartmann’s actions were completely inconsistent with any reliance on its right to arbitration and belated assertion of that right caused plaintiffs actual prejudice in the form of unnecessary delay and expense. View "Johnson Assocs. Corp. v. HL Operating Corp." on Justia Law
Savoie v. Martin
Tennessee law mandates mediation in certain contested divorce proceedings. Now-Judge Martin was appointed and performed mediation in plaintiff's divorce as part of his private legal practice. The divorce was granted, allowing wife to take the children to Japan during vacations but requiring her to live within 100 miles of husband. Husband believed that wife planned to abduct the children to her native Japan, petitioned to modify the parenting plan, and sought a restraining order. The hearing, initially assigned to another, was re-assigned to Judge Martin. The parties agreed to have Judge Martin hear the motion, despite the judge raising the issue. Judge Martin ruled in favor of wife, who subsequently took the children out of the U.S. with no apparent intent to return. Husband was awarded full custody; wife was charged with felony custodial interference. Husband filed suit against Martin as both judge and mediator; the law firm as his employer; and a court-ordered parental coordinator, under 42 U.S.C. 1983 and state law negligence and contract theories. The district court dismissed all claims. The Sixth Circuit affirmed.View "Savoie v. Martin" on Justia Law
TitanTire Corp.of Bryan v. United Steelworkers of Am,
Employee injured her wrist as a result of an equipment malfunction while performing her job and was sent to the hospital, where she was tested for drugs in accordance with a drug policy negotiated as part of a collective bargaining agreement. She tested positive for marijuana and was subsequently terminated. The parties submitted the dispute to arbitration pursuant to the CBA. The arbitrator sustained the Union's grievance, finding that employer lacked just cause to terminate a nine-year and otherwise satisfactory employee, who was not given adequate advance notice of the drug policy and the consequences. The district court ruled in favor of the Union. The Sixth Circuit affirmed. The outcome reached by the arbitrator was based on his interpretation of the relevant contractual language, which is all a court is asked to determine in conducting "exceedingly deferential," "very limited" review. View "TitanTire Corp.of Bryan v. United Steelworkers of Am," on Justia Law