Justia Arbitration & Mediation Opinion Summaries

Articles Posted in US Court of Appeals for the Third Circuit
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R&C, run by two employees, entered an agreement to haul equipment for American Wind. The agreement’s arbitration clause provides: any claim, dispute or controversy including, but not limited to the interpretation of any federal statutory or regulatory provisions purported to be encompassed by this Agreement; or the enforcement of any statutory rights emanating or relating to this Agreement shall be resolved on an individual basis (and not as part of a class action) exclusively between Contractor and Carrier by final and binding arbitration.R&C alleges that American Wind failed to make agreed-upon detention payments, resulting in a cash shortfall, forcing R&C to sell its trucks. R&C continued to haul equipment for American Wind but on behalf of the trucks’ new owner. R&C filed suit, alleging breach of contract and contending that the arbitration clause was unenforceable because R&C is a transportation worker operating under a contract of employment, exempt from the Federal Arbitration Act (FAA). R&C also argued that the arbitration provision was unconscionable. After R&C refused to arbitrate, the case was dismissed for failure to prosecute. The Third Circuit affirmed, noting that R&C had not sought interlocutory review of the order compelling arbitration, as permitted by the FAA. The interlocutory order was not part of the final order, so the court concluded it lacked jurisdiction to review it. View "R & C Oilfield Services LLC v. American Wind Transport Group, LLC" on Justia Law

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Bernstein and France are certified agents, registered with the NFL Players Association to represent NFL players in contract negotiations. Bernstein also owns Clarity, which represents professional athletes in matters such as marketing and endorsement contracts. Golladay signed a standard representation agreement with Bernstein in 2016, before Golladay’s rookie season with the Detroit Lions, and signed a separate agreement with Clarity for representation in endorsement and marketing deals. In January 2019, Golladay terminated both agreements. three days after participating in an autograph-signing event that Bernstein had played no role in arranging. Golladay immediately signed with France.Bernstein believed France was behind the signing event and filed a grievance against France pursuant to the NFLPA dispute resolution provisions. The matter went to arbitration. In pre-hearing discovery, France denied possessing any documents pertaining to the event and denied any involvement in the event. France’s lies were not uncovered until after the arbitration was decided in his favor.The Third Circuit reversed the district court’s confirmation of the arbitration award because France’s fraud procured it. The Federal Arbitration Act, 9 U.S.C. 10, permits an award to be vacated under narrow circumstances, including “where an award was procured by corruption, fraud, or undue means.” France’s fraud was not discoverable through reasonable diligence and was material to the case. View "France v. Bernstein" on Justia Law

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The Third Circuit vacated in part the order of the district court denying OptumRX's (Optum) motion to compel arbitration in the underlying action alleging breaches of contract and breaches of duties of good faith and fair dealing and violations of certain state statutes, holding that the district court erroneously applied the incorrect standard in ruling on Optum's motion.More than 400 pharmacies brought suit against Optum, a pharmacy benefits manager responsible for administering prescription drug programs on behalf of health-insurance plans. Optum moved to compel arbitration based on arbitration agreements found in various contracts covering the majority of the pharmacies. The district court denied the motion in full, concluding that compelling the pharmacies to proceed with arbitration would be procedurally unconscionable. The Sixth Circuit vacated the judgment in part, holding that the district court erred by not adhering to Guidotti v. Legal Helpers Debt Resolution, LLC, 716 F.3d 764 (3d Cir. 2013). View "Robert D. Mabe, Inc v. OptumRX" on Justia Law

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Plaintiff, an emergency medical resident, began working for Crozer Chester Medical Center (“CCMC”). Plaintiff signed an at-will employment agreement with CMCC and an agreement to arbitrate with Prospect Health Access Network (“Prospect”), a company that employs professionals working at hospitals. After Plaintiff was involved in a dispute with a supervisor at CMCC, who also was an employee of Prospect, Plaintiff was terminated. Plaintiff filed a discrimination complaint with the Pennsylvania Human Relations Commission and the Equal Employment Opportunity Commission against CMCC. CMCC moved to compel arbitration.The district court denied CMCC's motion to compel arbitration and CMCC appealed.On appeal the Third Circuit affirmed, finding that Plaintiff's agreement to arbitrate any disputes between herself and Prospect did not extend to disputes involving CMCC. View "Dina Abdurahman v. Prospect CCMC LLC" on Justia Law

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Under "loyalty contracts," Physician Buying Groups (PBGs) members are entitled to discounts if they buy a large enough percentage of their vaccines from Merck. The loyalty contracts include an arbitration provision. Membership contracts between PBGs and medical practices give medical practices discounts on Merck vaccines for enrolling in PBGs. PBGs contract with both Merck and medical practices and are middlemen but PBGs never possess the vaccines. Medical practices buy their vaccines directly from Merck, receiving discounts for belonging to a PBG. The Pediatricians, members of PBGs that contracted with Merck, never signed contracts containing an arbitration clause.The Pediatricians filed federal suits alleging Merck’s vaccine bundling program was anticompetitive. Merck moved to compel arbitration. On remand, following discovery, the district court again denied Merck’s motion and granted the Pediatricians summary judgment, reasoning that the Pediatricians were not bound under an agency theory. The Third Circuit reversed. The PBG membership contract made the PBG a “non-exclusive agent to arrange for the purchase of goods and services,” and the PBG acted on this authority by executing the loyalty contract with Merck that included the arbitration clause. The Pediatricians simultaneously demonstrated intent to create an agency relationship and exercised control over the scope of the PBG’s agency by contract. View "In re: Rotavirus Vaccines Antitrust Litigation v." on Justia Law

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The Unions represent PG employees. Each union's collective bargaining agreement (CBA) with PG required PG to provide health insurance to union employees. A separate provision governed dispute resolution with a grievance procedure that culminated in binding arbitration. The CBAs had durational clauses and expired in March 2017; the arbitration provisions had no separate durational clauses. Two months before their expiration, PG sent letters to the unions, stating that upon expiration, "all contractual obligations of the current agreement shall expire. [PG] will continue to observe all established wages, hours and terms and conditions of employment as required by law, except those recognized by law as strictly contractual, after the Agreement expires. With respect to arbitration, the Company will decide its obligation to arbitrate grievances on a case-by-case basis." While negotiating new CBAs, the parties operated under certain terms of the expired agreements. The unions claim that in 2019, PG violated the expired CBAs by failing to provide certain health-insurance benefits. The unions filed grievances under the dispute-resolution provisions. PG refused to arbitrate, stating that the grievance involved occurrences that arose after the contract expired. The Unions argued implied-in-fact contracts had been formed.The district court granted PG summary judgment. The Third Circuit affirmed, overruling its own precedent. As a matter of contract law, the arbitration provisions here, because they do not have their own durational clauses, expired with the CBAs. View "Pittsburgh Mailers Union Local Union 22 v. PG Publishing Co., Inc." on Justia Law

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PG sought to vacate a labor arbitration award. In many labor disputes, both the Labor Management Relations Act (LMRA), 29 U.S.C. 185(a), and the Federal Arbitration Act (FAA), 9 U.S.C. 10, provide means for seeking vacatur or confirmation of arbitration awards. The statutes employ distinct procedural vehicles, require litigants to meet different legal standards, and prescribe separate limitations periods. PG argued that even if it filed its complaint outside of the applicable limitations period for an LMRA action, it filed within the FAA’s 90-day limitations period for motions to vacate an arbitration award.The Third Circuit affirmed the dismissal of PG’s action as untimely. Although a party may bring both an LMRA action and an FAA motion challenging or confirming certain labor arbitration awards, PG did not proceed by motion as required by the FAA, and so did not properly invoke that statute. PG’s LMRA Section 301 action was untimely. The court clarified the procedures for seeking to vacate or confirm an arbitration award under the LMRA and under the FAA. View "PG Publishing Co v. Newspaper Guild of Pittsburgh" on Justia Law

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SHI, owned by Vik, borrowed funds from Deutsche Bank (Bank). SHI entered a limited partnership (LP) agreement with Devon and invested $25 million, Bank issued margin calls. SHI claimed that it lacked funds to satisfy the calls. Bank sued SHI in England and Wales and received a $235,646,345 judgment, which SHI has not satisfied. SHI transferred the Devon Interest to CPR (allegedly related to Vik's father). SHI paid Devon millions of dollars for the transfer. Devon made fund distributions to the limited partners but had difficulties transmitting proceeds to CPR. CPR initiated arbitration to compel Devon to release the Proceeds. The arbitrator denied Bank’s request to intervene. Devon raised counterclaims, seeking a declaration whether the assignment to CPR was enforceable.Meanwhile, Bank sued CPR, SHI, and Devon in Delaware, alleging a conspiracy to commit fraud. The arbitrator denied Devon’s motion to stay proceedings. Devon then refused to participate in the arbitration. The arbitrator awarded CPR the proceeds, plus prejudgment interest, CPR petitioned to confirm the arbitration award; in the Eastern District of Pennsylvania, Devon attempted to interplead Deutsche Bank. Bank answered and sought to set aside the purported transfer of the Devon Interest to CPR, to declare SHI and CPR alter egos, and to find Devon, CPR, and SHI liable for fraud and conspiracy. The Third Circuit affirmed orders confirming the arbitration award, striking the interpleader complaint, and dismissing all third parties and claims and Devon’s counterclaim. View "CPR Management SA v. Devon Park Bioventures LP" on Justia Law

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In 1972, P&A signed a collective bargaining agreement (CBA) with Local 15024. In the early 1980s, according to P&A, Local 825 pressured P&A to employ them instead. P&A created Utility Systems to hire Local 825 workers. Utility signed a CBA with Local 825. In 2016-2018, Utility subcontracted a number of construction projects to P&A, which used its workers from Local 15024 on those jobs. Local 825 brought grievances against Utility. P&A feared that if Local 825’s arbitrator ruled that Utility’s subcontractors must use Local 825 workers, that might force P&A to violate its CBA with Local 15024. P&A and Utility filed suit, requesting an order compelling joint arbitration with both employers and both unions. The district court held that it could enforce joint arbitration under the Labor Management Relations Act, 29 U.S.C. 185(a), but that it would be inappropriate here because there was an insufficient risk that P&A and Utility would face conflicting arbitration awards simultaneously granting the same jobs to both unions. It also determined that P&A and Utility could not be deemed a single or joint employer.The Seventh Circuit affirmed. Joint arbitration is available under the Act as a general matter, either before or after the bipartite arbitration award at issue has become final, but the employers here which are two at least nominally separate companies, cannot invoke that general rule. View "P&A Construction Inc v. International Union of Operating Engineers" on Justia Law

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The Arbitration Board, in its Merits Award, held that Verizon violated a Collective Bargaining Agreement (CBA) with its Union by contracting with common carriers to deliver FiOS TV set-top boxes to “existing customers” for self-installation, work that used to be performed exclusively by Union Service Technicians. Months later, the Board, in creating a “remedy,” expanded the scope of the violation to include deliveries to both existing and new customers and also the accompanying self-installations.The Third Circuit affirmed the district court in vacating the Remedy Award to the extent that it awards damages for work that falls beyond the outer bounds of the Merits Award--the delivery of boxes to existing customers. The deference given to arbitration awards is almost unparalleled, but not absolute. An arbitrator’s powers are limited by the parties’ agreement, which is made against a background of default legal rules. Under these default rules, an arbitrator who has decided an issue is prohibited from revising that decision without the consent of the parties. He can decide other issues submitted by the parties, correct clerical errors, and clarify his initial decision— but nothing more. The Board improperly awarded punitive damages, which are not permitted under the CBA. View "Verizon Pennsylvania LLC v. Communications Workers of America" on Justia Law