Justia Arbitration & Mediation Opinion Summaries

In 1989, the Plaintiffs opened Money Market Investment Accounts (MMIAs) with FNB. FNB guaranteed that the MMIAs’ annual rate of interest would “never fall below 6.5%.” The original contract did not limit an account holder’s right to enforce the agreement in court but stated: Changes in the terms of this agreement may be made by the financial institution from time to time and shall become effective upon the earlier of (a) the expiration of a thirty-day period of posting of such changes in the financial institution, or (b) the making or delivery of notice thereof to the depositor by the notice in the depositor’s monthly statement for one month.In 1997, FNB merged with BankFirst. In 2001, BankFirst merged with BB&T, which sent a Bank Services Agreement (BSA) to each account holder, which included an arbitration provision. A 2004 BSA amendment added a class action waiver. A 2017 Amendment made massive changes to the BSA, including an extensive arbitration provision and stating that continued use of the account after receiving notice constituted acceptance of the changes. The Plaintiffs maintained their accounts. In 2018, the Plaintiffs were notified that the annual percentage rate applicable to their accounts would drop from 6.5% to 1.05%.The Sixth Circuit reversed the dismissal of the Plaintiffs' breach of contract suit. Because there was no mutual assent, the 2001 BSA and its subsequent amendments are invalid to the extent that they materially changed the terms of the original agreement. BB&T gave the Plaintiffs no choice other than to acquiesce or to close their high-yield savings accounts. BB&T did not act reasonably when it added the arbitration provision years after the Plaintiffs’ accounts were established, thus violating the implied covenant of good faith and fair dealing. View "Sevier County Schools Federal Credit Union v. Branch Banking & Trust Co." on Justia Law

Swiger accepted a $1200 loan from online lender Plain Green, an entity owned by and organized under the laws of the Chippewa Cree Tribe of the Rocky Boy’s Reservation, Montana. She describes Rees as the “mastermind” behind a "rent-a-tribe" scheme, alleging that he and his company used Plain Green's tribal sovereign immunity as a front to shield them from state and federal law. When Swiger signed the loan contract, she affirmed that Plain Green enjoys “immun[ity] from suit in any court,” and that the loan “shall be governed by the laws of the tribe,” not the laws of any state. She agreed to binding arbitration under tribal law, subject to review only in tribal court. The provision covers “any issue concerning the validity, enforceability, or scope of this Agreement or this Agreement to Arbitrate.” Seven months after accepting the loan, Swiger alleged that she repaid $1170.54 but still owed $1922.37.Swiger sued, citing Michigan and federal law, including the Racketeer Influenced and Corrupt Organizations Act and consumer protection laws. The district court concluded that the enforceability of the arbitration agreement “has already been litigated, and decided against Rees, in a similar case commenced in Vermont.” The Sixth Circuit reversed and remanded with instructions to stay the case pending arbitration. Swiger’s arbitration agreement includes an unchallenged provision delegating the question of arbitrability to an arbitrator. The district court exceeded its authority when it found the agreement unenforceable View "Swiger v. Rosette" on Justia Law

Dorsa, a Miraca executive, learned of a purported scheme to defraud the government. Dorsa filed a qui tam action, alleging violations of the False Claims Act (FCA). Dorsa was fired and added a claim for FCA retaliation, 31 U.S.C. 3730(h). The government intervened. Dorsa and the government dismissed the qui tam claims. Miraca unsuccessfully moved to dismiss the retaliation claim because Dorsa had agreed to binding arbitration in his employment agreement. The court found that the arbitration clause did not cover Dorsa’s claim, which did not "have any connection with, an employment agreement."The Sixth Circuit dismissed an appeal for lack of jurisdiction. There was no final order and the narrow provision of the Federal Arbitration Act (FAA, 9 U.S.C. 16) that authorizes immediate appeals of certain interlocutory orders does not apply. Miraca filed its motion to dismiss without asking the court for a stay or an order compelling arbitration. The FAA provides that “[a]n appeal may be taken from an order” either “refusing a stay of any action,” or “denying a petition ... to order arbitration.” Even if the denial of the motion to dismiss had the same impact as refusing to stay the action or denying a petition to order arbitration, there is no test for appealability that hinges on the practical effect of a court’s order. View "Dorsa v. Miraca Life Sciences, Inc." on Justia Law

Hale, employed by Morgan Stanley since 1984, was disciplined on several occasions between 2013 and 2016. Hale initiated an arbitration action and requested damages for his claims of negligence, defamation, breach of fiduciary duty, and intentional infliction of emotional distress. Following a four-day hearing, the arbitrator issued an award denying all of Hale’s claims. Hale filed suit, requesting that the arbitration award be vacated pursuant to the Federal Arbitration Act, 9 U.S.C. 1. The district court dismissed, holding that it lacked diversity and federal question jurisdiction over the suit.The Sixth Circuit reversed and remanded. There is complete diversity of citizenship between the disputing parties as required by 28 U.S.C. 1332(a) and the amount in controversy is met because Hale requested a damages award of $14.75 million in his complaint (filed as a motion to vacate). In actions where a party seeks to vacate a $0 arbitration award pursuant to section 10 of the FAA, courts should look to the complaint, including the amount sought in the underlying arbitration, for purposes of assessing whether the jurisdictional amount in controversy requirement has been met. View "Hale v. Morgan Stanley Smith Barney LLC" on Justia Law

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

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

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

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

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 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