Articles Posted in U.S. Court of Appeals for the Ninth Circuit

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After Renee Tillman filed suit against her law firm, arbitration proceeded for a time until Tillman ran out of funds. The arbitration was then terminated and now the parties disagree about what should now happen to Tillman’s federal court case against the firm. The court concluded that Tillman's case “has been had in accordance with the terms of the agreement,” so it is no longer appropriate to stay the proceedings below; the district court appropriately excused Tillman’s failure to pay for arbitration on the grounds of financial incapacity; and, under these circumstances, the court held that the FAA does not require dismissal of Tillman’s case. Rather, Tillman's case should go forward in federal court and thus the court remanded with instructions on how to proceed. View "Tillman v. Rheingold firm" on Justia Law

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Pow! Mobile (the Company), not a party here, is a mobile content provider that marketed a “reverse auction” game called “Bid and Win.” Both Mobile Messenger and m-Qube (defendants) are “billing aggregators” who serve as financial intermediaries between customers and content providers. Plaintiff filed a class action alleging that defendants have engaged in a scheme “that causes Washington consumers to become unknowingly and unwittingly subscribed to premium text message services.” The district court held that defendants are not intended third-party beneficiaries entitled to enforce the arbitration clause at issue and denied defendants' motion to compel arbitration. The court concluded that the Terms and Conditions in this case create a direct obligation from the subscriber to the Company’s suppliers. The signatory to the Terms and Conditions agrees to waive all claims against the Company’s suppliers. Therefore, the Company’s suppliers are intended third-party beneficiaries of the Terms and Conditions. Thus, if defendants are suppliers of the Company, they may enforce the arbitration clause. The court remanded for the district court to make determinations in the first instance regarding assent to the Terms and Conditions, and whether defendants are Pow! Mobile’s suppliers. View "Geier v. m-Qube Inc." on Justia Law

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Drywall entered into a labor agreement with the Union according to which Drywall assigned to a contractors' association authority to bargain on its behalf. After Drywall attempted to terminate the agreement, it discovered that the Union and association had executed a Memorandum of Understanding extending the term of the agreement. An arbitrator held that Drywall was bound by the Memorandum.The district court vacated the arbitration award and held that the arbitrator’s interpretation of the parties’ agreement was not “plausible” and was, moreover, contrary to public policy. The court held that the district court's decision exceeded its narrow authority to determine whether the arbitrator’s award was based on the parties’ contract and whether it violated an “explicit, well-defined, and dominant public policy,” and therefore the court reversed the district court's decision. View "SWRCC v. Drywall Dynamics" on Justia Law

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ItalFlavors filed suit against Caffe Vergnano, blaming the failure of an Italian cafe venture on Caffe Vergnano's failure to offer support. The parties had entered into an agreement, the Commercial Contract, which appears to be a franchise agreement setting forth the rights and responsibilities of the parties. The second agreement is the Hold Harmless Agreement. Caffe Vergnano filed a petition to compel arbitration and the district granted the petition. The court concluded that the declaration in the Hold Harmless Agreement signed contemporaneously with the Commercial Contract proves that the latter was a mere sham to help Hector Rabellino obtain a visa. Therefore, the court concluded that the Commercial Contract was not a contract and is thus unenforceable. Because the court found that the document the parties described as the Commercial Contract was a sham, the arbitration clause is no more enforceable than any other provision in that document. Accordingly, the court reversed the judgment. View "Casa del Caffe Vergnano v. ItalFlavors, LLC" on Justia Law

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Uthe filed suit against defendants, alleging a conspiracy to unlawfully take over one of Uthe’s overseas subsidiaries. In its original federal court action, Uthe brought claims for, inter alia, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961–68, against both defendants and foreign defendants. A Singapore arbitration resulted in an award against the foreign defendants. Afterwards, Uthe reinstated the present action against defendants requesting relief under RICO's treble damages provision. The district court subsequently granted summary judgment in favor of defendants, holding that an award of additional damages under RICO would violate the "one satisfaction" rule. The court held, however, that Uthe is entitled to seek treble damages under RICO against defendants because the arbitral award did not constitute full satisfaction of Uthe's pre-existing RICO claim. Accordingly, the court reversed and remanded for further proceedings. View "UTHE Tech. Corp. v. Aetrium, Inc." on Justia Law