Justia Arbitration & Mediation Opinion Summaries

Elkhorn is a farm labor contractor for a California-based vegetable grower. As part of Elkhorn’s orientation for incoming employees, Martinez-Gonzalez signed employment paperwork that included arbitration agreements. The district court held that the arbitration agreements resulted from undue influence and economic duress and were invalid and unenforceable.The Ninth Circuit reversed and remanded for determination of whether Martinez-Gonzalez’s allegation of federal and state labor and wage law violations fell within the scope of the arbitration agreements. Under California law, the doctrine of economic duress did not render the arbitration agreements unenforceable because Elkhorn did not commit a wrongful act and reasonable alternatives were available to Martinez-Gonzalez. Martinez-Gonzalez made the journey from Mexico to California, where he was dependent on Elkhorn housing and had already started work but, while “not ideal,” those circumstances did not constitute a “wrongful act” under California law. No one at Elkhorn told Martinez-Gonzalez that refusing to sign the agreements was a cause for termination. It was clearly erroneous for the district court to conclude that MartinezGonzalez lacked a reasonable alternative. The timing and place of the orientation did not show that Martinez-Gonzalez’s will was overborne; the lack of time to consult with attorneys or read the agreements did not improperly induce his signatures. Elkhorn’s representatives’ instructions to sign the agreements quickly were not insistent demands. View "Martinez-Gonzalez v. Elkhorn Packing Co. LLC" on Justia Law

Plaintiffs obtained short-term, high-interest loans from lenders owned by the Tribes. The standard loan contracts contained an agreement to arbitrate any dispute arising under the contract and a delegation provision requiring an arbitrator—not a court—to decide “any issue concerning the validity, enforceability, or scope of [the loan] agreement or [arbitration agreement].” The contracts stated that they were governed by tribal law and that an arbitrator must apply tribal law. Plaintiffs filed class-action RICO complaints against the Tribal Lenders. The district court denied the defendants’ motion to compel arbitration, reasoning that the arbitration agreement as a whole in each contract was unenforceable because it prospectively waived plaintiffs’ right to pursue federal statutory claims by requiring arbitrators to apply tribal law.The Ninth Circuit reversed. Rather than asking first whether the arbitration agreement was enforceable as a whole, the court must consider first the enforceability of the delegation provision specifically. The delegation provision was enforceable because it did not preclude plaintiffs from arguing to an arbitrator that the arbitration agreement was unenforceable under the prospective-waiver doctrine. The general enforceability issue must, therefore, be decided by an arbitrator. The choice-of-law provisions were not to the contrary because they did not prevent plaintiffs from pursuing their prospective-waiver enforcement challenge in arbitration. View "Brice v. Plain Green, LLC" on Justia Law

California Governor Gavin Newsom signed into law California Assembly Bill 51, which was enacted with the purpose of ensuring that individuals are not retaliated against for refusing to consent to the waiver of rights and procedures established in the California Fair Employment and Housing Act and the Labor Code and to ensure that any contract relating to those rights and procedures be entered into as a matter of voluntary consent, not coercion.The Ninth Circuit reversed in part the district court's conclusion that AB 51 is preempted by the Federal Arbitration Act (FAA). The panel held that California Labor Code 432.6 neither conflicts with the language of section 2 of the FAA nor creates a contract defense by which executed arbitration agreements may be invalidated or not enforced. Furthermore, section 432.6 does not make invalid or unenforceable any agreement to arbitrate, even if such agreement is consummated in violation of the statute; section 432.6 applied only in the absence of an agreement to arbitrate and expressly provided for the validity and enforceability of agreements to arbitrate; and because the district court erred in concluding that section 432.6(a)–(c) were preempted by the FAA, it necessarily abused its discretion in granting plaintiffs a preliminary injunction.However, the panel agreed that the civil and criminal penalties associated with AB 51 stood as an obstacle to the purposes of the FAA and were therefore preempted. The panel held that Government Code 12953 and Labor Code 433 are preempted to the extent that they apply to executed arbitration agreements covered by the FAA. Accordingly, the panel affirmed the district court's determination that the civil and criminal penalties associated with AB 51 were preempted; vacated the district court's preliminary injunction enjoining AB 51's enforcement; and remanded for further proceedings. View "Chamber of Commerce of the United States v. Bonta" on Justia Law

The Ninth Circuit reversed the district court's order denying Comcast's motion to compel arbitration under the Federal Arbitration Act of the claims asserted against it by a former cable subscriber. Plaintiff filed a putative class action challenging certain of Comcast's privacy and data-collection practices and seeking a variety of monetary and equitable remedies. The district court ultimately concluded that provisions of plaintiff's subscriber agreements were unenforceable under the McGill rule.The panel concluded that the district court misconstrued what counts as "public injunctive relief" for purposes of the McGill rule and that it therefore erred in concluding that the complaint here sought such relief. The panel explained that public injunctive relief within the meaning of McGill is limited to forward-looking injunctions that seek to prevent future violations of law for the benefit of the general public as a whole, as opposed to a particular class of persons, and that do so without the need to consider the individual claims of any non-party. Furthermore, such an injunction attempts to stop future violations of law that are aimed at the general public, and imposing or administering such an injunction does not require effectively fashioning individualized relief for nonparties. Because plaintiff's complaint did not seek such relief, the McGill rule is not implicated, and the arbitration agreement should have been enforced. View "Hodges v. Comcast Cable Communications, LLC" on Justia Law

Romero, a truck driver employed by Watkins, an interstate trucking business, made deliveries only to retail stores in California. To complete paperwork and training, Romero periodically logged in to an online portal that required a unique employee identification number and password. Romero’s unique user account completed a set of “Associate Acknowledgements,” through which he clicked “I Agree,” signifying that he read and agreed to the Arbitration Policy, a stand-alone agreement that purports to waive any right to bring or participate in a class action; it states that the agreement is “governed by the Federal Arbitration Act,” and purports to waive "any provision of the FAA which would otherwise exclude [the agreement] from its coverage.” However, if "this [agreement] and/or its Waiver Provisions are not subject to and governed by the FAA, then the laws of the State of Nevada . . . will be the applicable state law.” The Arbitration Policy was not a condition of employment. Romero did not opt-out. In August 2019, Watkins announced it would cease operations. Romero and other employees were laid off.Romero filed a putative class action under the California and federal WARN Acts, 29 U.S.C. 2101, which require advance notice to employees before being laid off. The district court granted a motion to compel arbitration. The NInth Circuit affirmed, while noting that the Federal FAA exemption of employment contracts for transportation workers applies and cannot be waived by private contract. View "Romero v. Watkins & Shepard Trucking, Inc." on Justia Law

Lim, formerly a TForce California delivery driver, alleged that TForce employs delivery drivers and misclassifies them as independent contractors in violation of California law. The drivers sign an Independent Contractor Operating Agreement, providing that the agreement is governed by the laws of Texas, that “any legal proceedings … shall be filed and/or maintained in Dallas, Texas,” that all disputes “arising under, out of, or relating to this Agreement … including any claims or disputes arising under any state or federal laws, statutes or regulations, … including the arbitrability of disputes … shall be fully resolved by arbitration," that any arbitration will be governed by the Commercial Arbitration Rules of the American Arbitration Association, that class actions are prohibited, and that the parties shall share the costs except in the case of substantial financial hardship--the prevailing party is entitled to recover its attorney’s fees and costs.The Ninth Circuit affirmed the denial of a motion to compel arbitration, referring to the Agreement as an adhesion contract. Based on the cost-splitting, fee-shifting, and Texas venue provisions, the district court correctly concluded the delegation clause, which requires the arbitrator to determine the gateway issue of arbitrability, the agreement was substantively unconscionable as to Lim. View "Lim v. TForce Logistics, LLC" on Justia Law

In 1949, the government of Saudi Arabia transferred certain land in that country to an official named Khalid Abu Al-Waleed Al-Hood Al-Qarqani, who leased it to an affiliate of what later became Chevron. Five of Al-Qarqani's heirs now claim that Chevron owes them billions of dollars in rent. Plaintiffs contend that an arbitration clause contained in a separate 1933 agreement between Saudi Arabia and Chevron's predecessor, SOCAL, applies to their dispute. An Egyptian arbitral panel agreed and awarded plaintiffs $18 billion. Plaintiffs then petitioned for enforcement of the arbitral award, but the district court found that the parties had never agreed to arbitrate and therefore held that it lacked jurisdiction over the petition.The Ninth Circuit agreed with the Second Circuit, disagreeing with the Eleventh Circuit, that the absence of an agreement to arbitrate was a reason to deny enforcement on the merits, rather than to dismiss for lack of subject-matter jurisdiction. The panel held that so long as a party makes a non-frivolous claim that an arbitral award is covered by the New York Convention, the district court must assume subject-matter jurisdiction. In this case, the panel affirmed the district court's dismissal for lack of subject-matter jurisdiction as to Chevron USA because it was not named in the arbitral award and plaintiffs advanced no non-frivolous theory of enforcement. The court affirmed the district court's denial of the enforcement petition on the merits as to Chevron Corporation where there was no binding agreement to arbitrate between the parties. View "Al-Qarqani v. Chevron Corp." on Justia Law

The Ninth Circuit affirmed the district court's order compelling arbitration in a putative class action brought by Massachusetts residents who have worked as Uber drivers, seeking a preliminary injunction prohibiting Uber from classifying drivers in Massachusetts as independent contractors, as well as an order directing Uber to classify its drivers as employees and comply with Massachusetts wage laws.The panel concluded that Uber drivers, as a nationwide class of workers, do not fall within the so-called "interstate commerce" exemption to mandatory arbitration under the Federal Arbitration Act (FAA). The panel explained that Uber drivers, even when crossing state lines or transporting passengers to airports, are merely conveying interstate passengers between their homes and their destination in the normal course of their independent local service. Therefore, interstate movement cannot be said to be a central part of the class members' job description. The panel found the analysis of the minority of district courts that have found to the contrary unpersuasive.The panel also concluded that plaintiffs' claims and requested injunctive relief are arbitrable by the terms of the arbitration agreement and plaintiffs' requested injunctive relief would have upended the status quo rather than maintained it. Therefore, the district court properly addressed the motion to compel arbitration first.Finally, the panel concluded that the injunctive relief requested, reclassification of drivers' status from "independent contractors" to "employees" is not a public injunctive relief that may be allowed to them to avoid arbitration. In this case, the relief sought by plaintiffs is overwhelmingly directed at plaintiffs and other rideshare drivers, and they would be the primary beneficiaries of access to overtime and minimum wage laws. View "Capriole v. Uber Technologies, Inc." on Justia Law

In a prior opinion, the Ninth CIrcuit held that SS Mumbai could not equitably estop SS Bangalore from avoiding arbitration. Mumbai, a non-signatory to a partnership deed that contained an arbitration provision, argued that, based on the arbitration provision, Indian law applied to the question of whether it could compel Bangalore to arbitrate.The Supreme Court vacated and remanded based on its holding that the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards does not conflict with the enforcement of arbitration agreements by non-signatories under domestic law equitable estoppel doctrines.On remand, the Ninth Circuit affirmed the district court’s order denying Mumbai’s motion to compel arbitration. While a nonsignatory can compel arbitration in a Convention case, the allegations, in this case, do not implicate the arbitration clause—a prerequisite for compelling arbitration under the equitable estoppel framework. The court declined to apply Indian law because whether Mumbai could enforce the partnership deed as a non-signatory was a threshold issue for which it did not look to the agreement itself. The deed’s arbitration provision applied to disputes “arising between the partners” and not also to third parties such as Mumbai. View "Setty v.. Shrinivas Sugandhallayah, LLP" on Justia Law

Years after Starline and TMZ launched a joint venture to operate a celebrity bus tour together, TMZ terminated their agreement. TMZ and Starline brought their claims (and counterclaims) to arbitration, and the arbitrator ultimately issued the final award in favor of TMZ. After the Appeal Panel affirmed the majority of the arbitrator's award, Starline moved to vacate the award in district court, and TMZ petitioned to confirm the award. The district court denied Starline's motion and granted TMZ's petition. The Ninth Circuit subsequently issued Monster Energy Co. v. City Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019), interpreting the standard for "evident partiality" to warrant vacatur of an arbitration award under the Federal Arbitration Act (FAA).The Ninth Circuit concluded that the district court did not abuse its discretion in denying Starline's Federal Rule of Civil Procedure 59(e) motion on the grounds that the arbitrators did not exhibit evident partiality by failing to disclose JAMS's prior business dealings with TMZ or its counsel. The panel also concluded that the district court likewise did not err when it declined to vacate the arbitration award on the grounds that (1) the arbitrator did not produce a form indicating she had no conflicts with the Boies Schiller law firm, (2) the arbitrator improperly granted an anti-SLAPP motion, or (3) based on her interpretation of California partnership law.However, the panel concluded that the district court clearly erred in concluding that JAMS provided a disclosure in accordance with Monster Energy, where JAMS declined to make such disclosure and instead asserted that the arbitrators no longer had jurisdiction over the arbitration. Accordingly, the panel remanded this issue to the district court to consider in the first instance how the parties can obtain from JAMS the information required by Monster Energy. The panel affirmed in part, reversed in part, and remanded in part. View "EHM Productions, Inc. v. Starline Tours of Hollywood, Inc." on Justia Law