Justia Arbitration & Mediation Opinion Summaries

Articles Posted in US Court of Appeals for the Ninth Circuit
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In a dispute between Voltage Pictures, LLC (Voltage) and Gussi S.A. de C.V. (Gussi SA) regarding their Distribution and License Agreement (DLA), the United States Court of Appeals for the Ninth Circuit affirmed the District Court for the Central District of California's decision to confirm an arbitral award in favor of Voltage. The court held that the district court had jurisdiction under Section 203 of Chapter 2 of the Federal Arbitration Act (FAA) and 28 U.S.C. § 1331, despite an incorrect initial assertion of diversity jurisdiction. The court also ruled that Federal procedural law, not California law, governed the service of Voltage's notice of motion to confirm the arbitral award. It held that Voltage had sufficiently served the notice by mailing the motion papers to Gussi SA's counsel. Lastly, the court held that the district court had not erred in refusing to extend comity to an alleged Mexican court order enjoining Voltage from seeking to confirm the award in the United States, as Gussi SA had not certified the genuineness of the purported Mexican court order or its translation. View "VOLTAGE PICTURES, LLC V. GUSSI, S.A. DE C.V." on Justia Law

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The Ninth Circuit Court of Appeals reversed a district court's approval of a class action settlement between Tinder and Lisa Kim, a user of the dating app, ruling that Kim was not an adequate class representative. This class action lawsuit against Tinder was over its former age-based pricing model. Kim had agreed to arbitration, unlike over 7,000 potential members of the class, creating a fundamental conflict of interest that violated Rule 23(a)(4). The court found that Kim had a strong interest in settling her claim as she had no chance of going to trial, unlike the other members. The court also noted that Kim failed to vigorously litigate the case on behalf of the class, with her approach to opposing Tinder’s motion to compel arbitration not suggesting vigor. The court remanded the case for consideration of Kim's individual action against Tinder. View "KIM V. TINDER, INC." on Justia Law

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Abraham Bielski, a user of cryptocurrency exchange Coinbase, brought a lawsuit alleging that Coinbase failed to investigate the unauthorized transfer of funds from his account. Coinbase attempted to compel arbitration based on an arbitration agreement in its User Agreement, which included a delegation provision stating that any dispute arising out of the agreement, including enforceability, should be decided by an arbitrator, not a court. Bielski argued that the delegation provision and arbitration agreement were unenforceable due to unconscionability. The United States Court of Appeals for the Ninth Circuit held that a party must specifically reference and challenge the delegation provision for a court to consider it, and that a party may use the same arguments to challenge both the delegation provision and the arbitration agreement, as long as they articulate why the argument invalidates each specific provision. The court also held that when evaluating whether a delegation provision is unconscionable under California law, a court must interpret the provision in the context of the entire agreement, which may require examining the underlying agreement. After analyzing the Coinbase delegation provision in context, the court determined that it was not unconscionable. The court reversed the district court’s order denying Coinbase’s motion to compel arbitration. View "BIELSKI V. COINBASE, INC." on Justia Law

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The district court appointed a receiver to claw back profits received by investors in a Ponzi scheme that was the subject of a Securities and Exchange Commission enforcement action. The receiver filed suit against certain investors, alleging fraudulent transfers from the receivership entities to the investors. The district court concluded that the receiver was bound by arbitration agreements signed by the receivership company, which was the instrument of the Ponzi scheme. The district court relied on Kirkland v. Rune.   The Ninth Circuit reversed the district court’s order denying a motion to compel arbitration. The panel held that EPD did not control because it addressed whether a bankruptcy trustee, not a receiver, was bound by an arbitration agreement. Unlike under bankruptcy law, there was no explicit statute here establishing that the receiver was acting on behalf of the receivership entity’s creditors. The panel held that a receiver acts on behalf of the receivership entity, not defrauded creditors, and thus can be bound by an agreement signed by that entity. But here, even applying that rule, it was unclear whether the receiver was bound by the agreements at issue. The panel remanded for the district court to consider whether the defendant investors met their burden of establishing that the fraudulent transfer claims arose out of agreements with the receivership entity, whether the investors were parties to the agreements and any other remaining arbitrability issues. View "GEOFF WINKLER V. THOMAS MCCLOSKEY, JR., ET AL" on Justia Law

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Plaintiff sued Defendant PeopleConnect, Inc., alleging that it violated his right of publicity by using his photo on its website, Classmates.com. PeopleConnect responded by seeking two forms of relief. First, it sought to compel Plaintiff to arbitrate his claims under section 4 of the Federal Arbitration Act (FAA). Second, it sought to dismiss Plaintiff’s complaint, arguing in relevant part that it was entitled to section 230 immunity under the Communications Decency Act. In a 26-page document labeled a single “order,” the district court denied both requests for relief. PeopleConnect filed an interlocutory appeal, attempting to challenge both denials by relying on the FAA as the basis for interlocutory appellate jurisdiction.   The Ninth Circuit dismissed in part, vacated in part, and remanded. The panel determined that it had jurisdiction to review the district court’s order denying the motion to compel arbitration. The panel held that two orders do not become one “order” for the purposes of § 16(a) solely by virtue of the fact that they appear in the same document. Notwithstanding its label as a single “order,” the document clearly contained multiple orders. Because Section 16(a) grants jurisdiction to review only an order denying a motion to compel arbitration, and because the district court’s denial of the motion to dismiss was not part of such an order, the panel lacked jurisdiction to review it. View "JOHN BOSHEARS V. PEOPLECONNECT, INC." on Justia Law

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Discover Bank seeks to compel Plaintiff to arbitrate her claims that Discover Bank unlawfully discriminated against her based on citizenship and immigration status when it denied her application for a consolidation loan for her student loan. Discover Bank argues that two arbitration agreements—one Plaintiff made in connection with the student loan and one she made in connection with the application for the consolidation loan—require arbitration here. The district court declined to compel arbitration, finding that neither agreement required arbitration.   The Ninth Circuit affirmed the district court’s order declining to compel Plaintiff to arbitrate. The panel held that Discover Bank was judicially estopped from arguing that Perez did not opt out of the Discover Bank agreement. The panel determined that Discover Bank’s past position clearly contradicted its current position that the opt-out would only apply to Plaintiff’s future discrimination claims, Discover Bank persuaded the court to accept its previous position, and Discover Bank would derive an unfair advantage absent estoppel. Citing Revitch v. DIRECTV, LLC, 977 F.3d 713 (9th Cir. 2020), the panel further held that Perez and Discover Bank never formed an agreement to arbitrate her discrimination claims involving her application for a consolidation loan via the Citibank agreement. View "ILIANA PEREZ, ET AL V. DISCOVER BANK" on Justia Law

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Defendant-Appellant TA Operating LLC (TA) appeals the district court’s denial of its motion to compel arbitration of employment-related claims brought by Plaintiff.   The Ninth Circuit vacated the district court’s order denying Defendant’s motion to compel arbitration. The panel held that the district court erred in finding that the arbitration agreement’s delegation clause was unenforceable because it was substantively unconscionable. The district court properly considered whether an “unrelated” jury waiver provision made the delegation clause unconscionable. Here, though, the jury waiver provision applied only if the Agreement were determined to be unenforceable. As such, it could not support the conclusion that an agreement to arbitrate enforceability (i.e., the delegation clause) was unenforceable. View "KENNETH HOLLEY-GALLEGLY V. TA OPERATING, LLC" on Justia Law

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This is a putative class action by three truck drivers against their employer, Domino’s Pizza. The court previously affirmed the district court’s denial of Domino’s motion to compel arbitration, holding that because the drivers were a “class of workers engaged in foreign or interstate commerce,” their claims were exempted from the Federal Arbitration Act (“FAA”) by 9 U.S.C. Section 1.   The Ninth Circuit affirmed the district court’s order denying Domino Pizza’s motion to compel arbitration in a putative class action brought by three Domino truck drivers, alleging violations of California labor law. The panel stated that its prior decision squarely rested upon its reading of Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020), which concerned Amazon delivery drivers. The panel found no clear conflict between Rittmann and Saxon and nothing in Saxon that undermined the panel’s prior reasoning that because the plaintiff drivers in this case, like the Amazon package delivery drivers in Rittmann, transport interstate goods for the last leg to their final destinations, they are engaged in interstate commerce under Section 1. View "EDMOND CARMONA, ET AL V. DOMINO'S PIZZA, LLC" on Justia Law

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The United States (“the Government”) initiated a civil forfeiture suit in federal district court against a $380 million arbitration award fund, the majority of which is held in the United Kingdom. The fund belongs to PetroSaudi Oil Services (Venezuela) Ltd. (“PetroSaudi”), a private oil company incorporated in Barbados. PetroSaudi won the award in an arbitration proceeding against Petróleos de Venezuela, S.A. (“PDVSA”), a Venezuelan state energy company. The portion of the fund held in the United Kingdom (“the fund”) is held in an account controlled by the High Court of England and Wales (“the High Court”). The Government seeks forfeiture of the fund on the ground that it derives from proceeds of an illegal scheme to steal one billion dollars from the Malaysian sovereign wealth fund 1Malaysia Development Berhad (“1MDB”). PetroSaudi challenged two orders entered by the district court.   The Ninth Circuit affirmed the district court’s interlocutory orders. The panel held that PetroSaudi’s appeal from the district court’s protective order under 18 U.S.C. Section 983 fell within this exception. Accordingly, the court had jurisdiction to consider the appeals of the two orders. The panel concluded that the sovereign immunity of the United Kingdom, as codified in the FSIA, did not protect the arbitration award fund from the two orders issued by the district court. The panel held that because the district court had in rem jurisdiction over the fund, it did not need in personam jurisdiction over PetroSaudi to issue an order preserving the fund. View "USA V. PETROSAUDI OIL SERV. (VENEZUELA) LTD., ET AL" on Justia Law

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Plaintiff sought to represent a class of individuals, known as Amazon Flex drivers, claiming damages and injunctive relief for alleged privacy violations by Amazon.com, Inc. (“Amazon”). Plaintiff contended that Amazon monitored and wiretapped the drivers’ conversations when they communicated during off hours in closed Facebook groups. The district court denied Amazon’s motion to compel arbitration, holding that the dispute did not fall within the scope of the applicable arbitration clause in a 2016 Terms of Service Agreement (“2016 TOS”). Amazon appealed, arguing that the district court should have applied the broader arbitration clause in a 2019 Terms of Service Agreement (“2019 TOS”) and that even if the arbitration clause in the 2016 TOS applied, this dispute fell within its scope.   The Ninth Circuit affirmed the district court’s order denying Amazon’s motion to compel arbitration. Under California law and principles of contract law, the burden is on Amazon, as the party seeking arbitration, to show that it provided notice of a new TOS and that there was mutual assent to the contractual agreement to arbitrate. The panel held that there was no evidence that the email allegedly sent to drivers adequately notified drivers of the update. The district court, therefore, correctly held that the arbitration provision in the 2016 TOS still governed the parties’ relationship. The panel concluded that because Amazon’s alleged misconduct existed independently of the contract and therefore fell outside the scope of the arbitration provision in the 2016 TOS, the district court correctly denied Amazon’s motion to compel arbitration. View "DRICKEY JACKSON V. AMZN" on Justia Law