Justia Arbitration & Mediation Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
Borror Property Management, LLC v. Oro Karric North, LLC
Oro contracted for Borror to manage Oro’s residential apartments. Each management contract stated: “If either party shall notify the other that any matter is to be determined by arbitration,” the parties would proceed to arbitration unless they first resolved the dispute. A dispute arose and resulted in Borror’s ceasing to manage Oro’s properties. Oro responded by letter asserting that Borror was in breach of the contracts and that Oro planned “to proceed directly to litigation in either state or federal court,” as the contracts “do not limit litigation exclusively to arbitration.” Nonetheless, Oro asked Borror to notify it within six days if Borror preferred arbitration. A week after receiving Oro’s letter, Borror filed a federal court complaint asserting its own breach of contract claims. Rather than filing an answer or another responsive pleading, Oro moved to compel arbitration.The district court held that Oro had waived its contractual right to arbitration through its pre-litigation conduct. Invoking its appeal rights under the Federal Arbitration Act, 9 U.S.C. 1, Oro timely appealed. The Sixth Circuit reversed. Correspondence is not equivalent to formal litigation; parties often posture their claims with “loose rhetorical flair.” Oro’s pre-trial “posturing” correspondence was neither inconsistent with its arbitration right nor prejudicial to Borror. View "Borror Property Management, LLC v. Oro Karric North, LLC" on Justia Law
Bay Shore Power Co. v. Oxbow Energy Solutions, LLC
In 1998, Bay and Oxbow entered into a limestone supply contract, agreeing to resolve any disputes according to specified “Dispute Resolution Procedures.” Oxbow began to provide lower quality limestone that posed a danger to Bay’s equipment. Bay agreed to pay—under protest—a price in excess of that permitted by the contract for adequate limestone. Negotiations and mediation failed. Bay filed a demand for arbitration. An arbitration panel unanimously held that Oxbow had breached the contract and awarded nearly $5 million in damages, costs, and interest. The panel did not award attorneys’ fees, concluding that the Dispute Procedures expressly deny it the jurisdiction to do so. The district court confirmed the award, agreeing that the contract did not permit the prevailing party to recover its attorneys’ fees.The Sixth Circuit reversed. The Procedure authorizing the allocation of costs states,“(but excluding attorneys’ fees which shall be borne by each party individually). The provision immediately following that grants the prevailing party a right to attorneys’ fees and another provision refers to attorneys’ fees. Those provisions can either be read together to permit the recovery of attorneys’ fees in court but not before an arbitration panel, or they are hopelessly contradictory and unenforceable. Bay presents a reasonable construction of the terms to harmonize them. View "Bay Shore Power Co. v. Oxbow Energy Solutions, LLC" on Justia Law
Blanton v. Domino’s Pizza Franchising LLC
Each Domino’s pizza franchise is an independently owned and managed business with a separate legal identity. Domino’s allegedly required its franchisees to agree not to solicit or hire employees from other franchises without the prior consent of their employer. Piersing began working at a Domino’s franchise in 2014. Four years later, Piersing sought a second job from a different Domino’s franchise. When he was hired by the second franchise, Piersing signed an arbitration agreement, which requires him to resolve employment-related issues by arbitration conducted according to the American Arbitration Association National Rules for the Resolution of Employment Disputes. Piersing was fired from the first franchise, which apparently thought that its franchise agreement required it to fire him in order to allow him to work at the second franchise. Months later, Piersing left the second franchise because of medical issues. Piersing filed a class action against Domino’s, alleging that the franchise agreement violated federal antitrust law and state law. Domino’s moved to compel arbitration under the Federal Arbitration Act, 9 U.S.C. 1. The plaintiffs argued that Domino’s could not enforce the arbitration agreements because only their franchises had signed the agreements. The Sixth Circuit affirmed that the question of who should resolve the dispute, an arbitrator or a court, should itself be resolved by an arbitrator. View "Blanton v. Domino's Pizza Franchising LLC" on Justia Law
Taylor v. Pilot Corp.
A “collective action” under the Fair Labor Standards Act, 29 U.S.C. 216(b), alleged that Pilot, a nationwide chain of travel centers, alleged overtime violations. Pilot asserted that the claims are covered by an arbitration agreement. The district court granted conditional certification to 5,145 current and former employees as opt-in Plaintiffs. The Sixth Circuit dismissed an appeal from the denial of a motion to reconsider.Plaintiffs moved to compel the production of the opt-in Plaintiffs' employment dates. The parties reached a partial settlement, covering 1,209 opt-in Plaintiffs who had not signed an arbitration agreement. Pilot moved to compel the remaining Plaintiffs to arbitrate. Before the court ruled, Plaintiffs urged the court to grant its pending motion to produce employment dates, contending that several Plaintiffs were not employees on the date Pilot claimed they signed agreements. The court ordered Pilot to produce the dates. Pilot filed an unsuccessful motion to reconsider, arguing that whether Pilot must turn over those dates was a matter for arbitration. Pilot appealed. The district court, impeded in ruling on Pilot’s motion to compel arbitration because the employment dates had not been produced but unable to compel Pilot to produce the dates, denied, without prejudice, all outstanding motions.The Sixth Circuit dismissed an appeal for lack of jurisdiction. The district court has not yet denied a petition under the Federal Arbitration Act, 9 U.S.C. 16(a)(1)(B) Until the threshold issue of contract formation is decided, there is no need to address the scope of the district court’s authority. View "Taylor v. Pilot Corp." on Justia Law
VIP, Inc. v. KYB Corp.
Plaintiffs purchase KYB shock absorbers from KAC through “buying groups.” There is no arbitration provision in the buying group agreements nor in the invoices reflecting specific purchases between the plaintiffs and KAC. Beginning in 2016, the buying group agreements provided that the individual plaintiffs agreed to accept a rebate from KAC in exchange for servicing consumer warranty issues. The agreement requires the plaintiffs, in exchange for that allowance, to honor the terms of the KYB limited warranty, which mandates arbitration in accordance with American Arbitration Association Commercial Rule 7(1), which delegates to the arbitrator the power to determine his jurisdiction. The plaintiffs filed a putative class action, alleging anticompetitive activities in the auto parts industry. The defendants move to dismiss, citing the Federal Arbitration Act, 9 U.S.C. 1.The Sixth Circuit affirmed the denial of the motion. Before referring a dispute to arbitration, the court must determine whether a valid arbitration agreement exists; if a valid agreement exists and delegates the arbitrability issue to the arbitrator, the court may not decide arbitrability. In this case, the parties did not form an agreement to arbitrate. The warranty’s arbitration provision applies only to original retail purchasers, a group that does not include the plaintiffs. View "VIP, Inc. v. KYB Corp." on Justia Law
Zeon Chemicals, L.P. v. United Food & Commercial Workers
Zeon fired Jenkins on the ground that he violated the company’s attendance policy. Jenkins had missed work because of a 30-day jail sentence based on a felony conviction. The company had refused to suspend him for 30 days, something his 22 years of service made him eligible for, because it did not want to send the message that employees could commit crimes without consequences and nd it declined to let him use vacation days for the time because other employees had already scheduled their days for the relevant weeks. Consistent with the collective bargaining agreement, the local union took Jenkins’ discharge to arbitration. The arbitrator reinstated Jenkins. In a suit under the Labor Management Relations Act, 29 U.S.C. 185(c), the district court vacated the award on the ground that the arbitrator misread the agreement and exceeded his authority in doing so. The Sixth Circuit reversed, noting the deferential standard for arbitration awards. Although the arbitrator’s merits analysis “has some eyesores,” it does not defeat the conclusion that he arguably construed the contract. View "Zeon Chemicals, L.P. v. United Food & Commercial Workers" on Justia Law
Solo v. United Parcel Service Co.
Plaintiffs purchased liability insurance for packages shipped through UPS before December 30, 2013. The price of that insurance was set by a contract that stated that there is no additional charge for the first $100 of coverage whether or not a shipper purchases additional declared value coverage. When Plaintiffs shipped their packages, they were charged $0.85 for each hundred-dollar increment, including the first. Plaintiffs sued UPS on behalf of a proposed class. UPS argued that the controlling phrase was “total value declared” and that “total” value necessarily includes the first $100. In moving for dismissal, UPS stated that it “reserves its right to move to compel arbitration and does not by this motion in any way waive this contractual right.” UPS referenced an arbitration clause found in an amended contract that became effective December 30, 2013, after the shipments at issue were mailed. The Sixth Circuit reversed the dismissal of the suit, relying on the complaint’s allegations that UPS routinely credits customers who complain about the overcharge and “acknowledges the validity of Solo’s reading of the contractual provision.” On remand, UPS raised the obligation to arbitrate as its first affirmative defense. After discovery, UPS moved to compel arbitration. The district court denied the motion on the basis of waiver. The Sixth Circuit affirmed. The Amended UPS Agreement did not retroactively apply to the transactions at issue and, in any event, UPS waived its right to arbitrate. View "Solo v. United Parcel Service Co." on Justia Law
Local 1982, International Longshoremen v. Midwest Terminals of Toledo
A collective bargaining agreement between Local 1982 and Midwest consisted of a Master Agreement (MA), formed between the parties’ affiliated regional employer group and the union, and a Local Agreement. The union filed a grievance for Midwest's failure to establish and contribute to benefit trust plans under MA Section 5.5A. Midwest responded that it considered the grievance procedurally invalid. The Union escalated the grievance to Step Two under the MA, referral to a Joint Grievance Committee comprised of an employer representative and a union representative. Midwest refused to participate; the hearing went forward without Midwest. The Committee determined that Midwest had failed to comply with Section 5.5A. Midwest did not appeal the unfavorable award, which became final. The union filed suit to enforce it. The Sixth Circuit directed the district court to enforce the award. The parties returned to court over ambiguities in the award's content.The Sixth Circuit affirmed a remand to the Committee, rejecting Midwest’s argument that it complied with the award by negotiating about terms of the trust agreement. After the remand but before clarification of the award, the composition of the two-person Committee changed. The new Committee deadlocked. Local 1982 sought to escalate the grievance to Step 3 with an expanded grievance committee. The Sixth Circuit agreed. The award did not lose its effect simply because the original Committee cannot agree on clarification of its contents. Grievance procedure Step Three specifies that if a grievance “is not satisfactorily settled or adjusted in Step 2, it shall be referred to an Expanded Joint Grievance Committee.” View "Local 1982, International Longshoremen v. Midwest Terminals of Toledo" on Justia Law
McGee v. Armstrong
Plaintiff, a management employee of the Summit County Board of Developmental Disabilities, worked under renewable one-year agreements that contained broad arbitration provisions. When Plaintiff joined the Ohio Army National Guard in 2008, his contract provided for “military leave in accordance with Board Policy.” Thereafter, there were several disputes about his entitlement military leave at full pay. Plaintiff refused to sign a proposed 2011–12 contract. Plaintiff filed his first complaint in 2011. In April 2012, shortly after returning from military leave, the Board delivered to Plaintiff a pre-disciplinary hearing notice. The Board subsequently notified Plaintiff of his termination. Plaintiff filed another complaint, alleging wrongful termination of employment, breaches of the employment contract, and discrimination and retaliation based on his military status. The district court granted Defendants’ motion to compel arbitration, excluding two breach of contract claims. An arbitrator determined that all of the claims identified as possibly subject to arbitration were arbitrable, and granted the Defendants summary judgment. The court granted Defendants summary judgment regarding Plaintiff’s breach of contract claims. The Sixth Circuit affirmed. The contract provided that the arbitrators could decide questions of arbitrability and, under Ohio law, the arbitrators did not exceed their powers by entering a decision on Defendants’ motion for summary judgment. Plaintiff failed to show a breach of his contract with respect to military leave. View "McGee v. Armstrong" on Justia Law
In re Application to Obtain Discovery for Use in Foreign Proceedings
In its 28 U.S.C. 1782(a) discovery application, ALJ sought a subpoena for documents from FedEx and deposition testimony of a FedEx corporate representative. ALJ alleged that FedEx Corp. was involved in contract negotiations and performance of two contracts between ALJ and FedEx International, a FedEx subsidiary. Each contract became the subject of commercial arbitration, one pending in Dubai, the other in Saudi Arabia. The arbitration in Saudi Arabia was dismissed. The district court denied ALJ’s application, holding that the phrase “foreign or international tribunal” in section 1782(a) did not encompass the arbitrations. The Sixth Circuit, reversed, noting that the Supreme Court provided guidance for interpretation of section 1782(a) in 2004. Considering the statutory text, the meaning of that text based on common definitions and usage of the language at issue, as well as the statutory context and history the court held that this provision permits discovery for use in the private commercial arbitration at issue. View "In re Application to Obtain Discovery for Use in Foreign Proceedings" on Justia Law