Justia Arbitration & Mediation Opinion Summaries

An airline employee, who began working in 1996 and served as a union representative, was terminated in 2023 after allegedly violating both company policy and the terms of a Last Chance Agreement (LCA) he had previously entered into. The LCA was signed following an earlier incident in which he admitted to theft, and it stipulated that any further violation of company policy during its term would result in immediate termination. In October 2023, the employee entered a restricted area in violation of company policy, leading to his discharge.Following his termination, the employee filed a lawsuit in the United States District Court for the Northern District of Texas, alleging retaliatory termination under the Railway Labor Act (RLA) and asserting that his termination was motivated by anti-union animus due to his activities as a union representative. The airline moved to dismiss the complaint, arguing that the dispute was a “minor” one under the RLA, which meant it was subject to mandatory arbitration as outlined in the collective bargaining agreement (CBA), thus depriving the federal court of subject-matter jurisdiction. The district court agreed and granted the airline’s motion to dismiss under Rule 12(b)(1), finding that the dispute was minor and did not fall within any exceptions allowing for judicial intervention.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed whether the district court properly dismissed the case for lack of subject-matter jurisdiction. The Fifth Circuit affirmed the district court’s decision, holding that the dispute was a minor one under the RLA because it could be resolved by interpreting the LCA and CBA, and that none of the exceptions to exclusive arbitral jurisdiction applied. The court also found no sufficient evidence of anti-union animus to invoke an exception to arbitral exclusivity. View "Reardon v. American Airlines" on Justia Law

A former employee of a bank holding company, who participated in a company-sponsored retirement savings plan, brought suit alleging that the bank, the plan’s administrative committee, and a subsidiary breached their fiduciary duties under ERISA, resulting in financial loss to his plan distribution. After the employee’s separation and payout, the company amended the plan in early 2024 to add a retroactive arbitration clause that required all claims to proceed individually in arbitration, barred class or representative actions, and included a jury trial waiver and a provision that only individual relief could be awarded.The United States District Court for the Western District of Texas denied the defendants’ motion to compel arbitration, holding that the arbitration agreement was not valid under Texas law due to lack of consideration. The company appealed, arguing that the plan’s consent, not the individual participant’s, was sufficient to bind parties to arbitration for claims brought on behalf of the plan under 29 U.S.C. § 1132(a)(2), and that the arbitration clause was enforceable. The company also preemptively addressed potential objections under the effective vindication doctrine and claims that the arbitration provisions unlawfully limited statutory remedies.The United States Court of Appeals for the Fifth Circuit reversed the denial of arbitration as to the § 1132(a)(2) claim, holding that the plan’s consent through its unilateral amendment provision was sufficient to bind the participant to arbitration for plan-based claims, but affirmed the denial as to the participant’s individual claims because he had not consented. The court further held that the arbitration clause’s prohibition on representative actions and its limitation to individual relief violated the effective vindication doctrine, and voided the standard-of-review provision to the extent it applied to fiduciary-breach claims. The case was remanded for the district court to determine whether the offending arbitration provisions could be severed. View "Parrott v. International Bank" on Justia Law

A Singapore-based company that supplies offshore vessels entered into a charter agreement with a Mexico-based marine oil and gas company. The agreement allowed the Mexican company to charter a vessel for eighteen months, with provisions for termination if payments were not made and an obligation to redeliver the vessel at the end of the term. After the charter expired, the Singaporean company alleged that the Mexican company failed to pay required fees and did not return the vessel, leading to arbitration in Singapore. The arbitrator awarded the Singaporean company damages and ordered the vessel’s return, but the Mexican company did not comply. Meanwhile, an email revealed that the Mexican company was set to receive a large refund from a third party, to be sent to a U.S. bank account in the name of a related U.S. entity.The Singaporean company filed suit in the United States District Court for the Southern District of Texas, seeking to attach the funds in the U.S. account as security for the arbitration award under federal maritime law and, later, Texas state law. The district court initially granted the writ of garnishment, but after limited discovery, vacated the writ, finding no evidence that the Mexican company owned the funds in the U.S. account. The district court also denied the plaintiff’s request for leave to amend its complaint to assert an alter ego theory, which would have permitted attachment based on state law.On appeal, the United States Court of Appeals for the Fifth Circuit held that the district court abused its discretion by failing to consider relevant evidence and legal standards regarding ownership and control of the funds. The appellate court also determined that the district court erred in denying leave to amend without adequate explanation. The Fifth Circuit vacated the district court’s order and remanded the case, instructing the district court to allow the plaintiff to amend its complaint. View "CH Offshore v. Mexiship Ocean" on Justia Law

Aramark, a company that self-funds employee health benefit plans governed by ERISA, contracted with Aetna to serve as third-party administrator for these plans. Under the agreement, Aetna was responsible for processing claims, managing provider networks, and handling various administrative tasks. Aramark alleged that Aetna breached its fiduciary duties by paying improper or fraudulent claims, retaining undisclosed fees, providing inadequate subrogation services, making post-adjudication adjustments detrimental to Aramark, and commingling plan assets.Aramark filed suit in the United States District Court for the Eastern District of Texas, asserting ERISA claims for breach of fiduciary duty and prohibited transactions. Aetna responded by seeking to compel arbitration in a Connecticut federal district court, relying on the arbitration clause in the parties’ Master Services Agreement (MSA), and moved to stay the Texas proceedings pending arbitration. The district court denied the stay, holding that the parties had not “clearly and unmistakably” delegated the threshold question of arbitrability to an arbitrator. The court found that the MSA's arbitration clause carved out disputes seeking equitable relief—such as Aramark’s ERISA claims—from arbitration and that these claims were equitable in nature.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s denial of a motion to stay litigation pending arbitration de novo. It held that the threshold issue of arbitrability was not clearly and unmistakably delegated to an arbitrator under the terms of the MSA, especially given the placement of the carve-out for equitable relief. The Fifth Circuit further held that Aramark’s ERISA claims constituted equitable, not legal, relief under Supreme Court and Fifth Circuit precedent. The Fifth Circuit affirmed the district court’s orders, finding no error or abuse of discretion. View "Aramark Services v. Aetna Life Insurance" on Justia Law

Several individuals who worked as waitstaff at a club operated by Benelux Corporation brought a lawsuit in 2024, alleging violations of the Fair Labor Standards Act. In 2020, Benelux had distributed an arbitration agreement to its employees. The agreement included two signature boxes—one for the employee and one for Benelux’s representative—and stated that by signing, both parties represented that they had read and understood the agreement and agreed to be bound by its terms. One employee, Cadena, signed both signature boxes, but Benelux’s general manager did not sign the agreement due to an oversight.After being sued, Benelux moved to compel arbitration based on the unsigned agreement. Cadena argued that the agreement was not enforceable because Benelux had not signed it, stating she did not intend to be bound unless Benelux also signed. The United States District Court for the Western District of Texas adopted the Magistrate Judge’s recommendation and denied Benelux’s motion to compel, finding that the agreement required signatures from both parties to be enforceable, and Benelux had not signed.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s decision de novo. Applying Texas contract law, the Fifth Circuit held that the language of the arbitration agreement clearly required signatures from both the employee and Benelux’s representative for the agreement to be enforceable. Because Benelux did not sign, there was no valid arbitration agreement between Benelux and Cadena. The court affirmed the district court’s judgment denying Benelux’s motion to compel arbitration. View "Mertens v. Benelux Corporation" on Justia Law

The dispute centers on insurance policies purchased by several Louisiana public entities, including the Town of Vinton, from a group of foreign and American insurers. The policies included an arbitration clause and a contract endorsement stating that each policy is a “separate contract” between the insured and each insurer. After alleged breaches, the insured entities sued all participating insurers in Louisiana state court. Subsequently, the insureds dismissed the foreign insurers with prejudice, leaving only American insurers as defendants.Following the dismissal of the foreign insurers, the remaining American insurers removed the cases to the United States District Court for the Western District of Louisiana. They sought to compel arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act. The district court denied these motions, holding that the contract endorsement created separate agreements between each insurer and the insured, and, since the foreign insurers were no longer parties, no agreement involved a non-American party. The court also rejected the American insurers’ equitable estoppel argument, finding it precluded by Louisiana law, which expressly bars arbitration clauses in insurance contracts covering property in the state.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s decision. The Fifth Circuit held that the Convention does not apply because no foreign party remains in any agreement to arbitrate. The court further concluded that Louisiana law prohibits enforcement of arbitration clauses in these insurance contracts and that equitable estoppel cannot override this prohibition. Lastly, the court determined that the delegation clause in the arbitration agreement could not be enforced because Louisiana law prevents the valid formation of an arbitration agreement in this context. View "Town of Vinton v. Indian Harbor" on Justia Law

Mark Stanford, an incapacitated resident of a Mississippi nursing facility, suffered severe burns after starting a fire in his room. The Mississippi State Department of Health determined that the nursing center failed to adequately supervise Stanford and maintain a safe environment, citing the facility for violating federal regulations regarding the safety and supervision of residents. Stanford, through his conservator, brought a lawsuit alleging negligence and medical malpractice against the nursing facility and related entities.Brandon Nursing and Rehabilitation Center moved to compel arbitration based on an agreement signed in 2017 by Stanford’s brother, Russell Phillips, who acted as Stanford’s health surrogate during his admission. Stanford opposed arbitration, arguing that the agreement was invalid because Phillips lacked authority under Mississippi’s Uniform Health-Care Decisions Act to bind Stanford, since Stanford’s adult son—a higher-priority family member under the statute—was reasonably available and willing to serve as surrogate. The United States District Court for the Southern District of Mississippi held that Phillips was not a proper surrogate under the statute and denied the motion to compel arbitration.Reviewing the case, the United States Court of Appeals for the Fifth Circuit applied de novo review to both the denial of arbitration and interpretation of state law. The Fifth Circuit determined that the key issue was whether, under Mississippi’s Uniform Health-Care Decisions Act, a health care provider must ensure that no higher-priority family member is “reasonably available” before accepting decisions from a lower-priority family member acting as surrogate. Noting the statutory ambiguity and lack of controlling Mississippi precedents, the Fifth Circuit did not resolve the merits but instead certified this question of state law to the Mississippi Supreme Court for authoritative interpretation. View "Stanford v. Brandon Nursing" on Justia Law

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

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

Emergency air medical providers challenged award determinations made under the No Surprises Act (NSA). The NSA, enacted in 2022, protects patients from surprise bills for emergency services from out-of-network providers by creating an Independent Dispute Resolution (IDR) process for billing disputes between providers and insurers. Guardian Flight transported a patient in Nebraska, and a dispute arose with Aetna over the service value. Similarly, Guardian Flight and its affiliates provided emergency services to patients insured by Kaiser, leading to disputes over payment amounts. Both disputes were submitted to Medical Evaluators of Texas (MET) as the IDR entity, which sided with the insurers.The United States District Court for the Southern District of Texas consolidated the cases. The court dismissed Guardian Flight’s claims against Aetna and Kaiser, ruling that the providers failed to plead sufficient facts to trigger vacatur of the awards. However, the court denied MET’s motion to dismiss based on arbitral immunity, leading to MET’s cross-appeal.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the NSA does not provide a general private right of action to challenge IDR awards, incorporating Federal Arbitration Act (FAA) provisions that allow courts to vacate awards only for specific reasons. The court affirmed the district court’s dismissal of the providers’ claims against Aetna and Kaiser, finding that the providers did not allege facts sufficient to show that the awards were procured by fraud or undue means under the FAA.Additionally, the Fifth Circuit addressed MET’s claim of arbitral immunity. The court concluded that MET, functioning as a neutral arbiter in the IDR process, is entitled to the same immunity from suit typically enjoyed by arbitrators. Consequently, the court reversed the district court’s judgment on this point and remanded with instructions to dismiss the providers’ claims against MET. View "Guardian Flight, L.L.C. v. Aetna Health, Inc." on Justia Law