Justia Arbitration & Mediation Opinion SummariesArticles Posted in Washington Supreme Court
Burgess v. Lithia Motors, Inc.
Evette Burgess and Lithia Motors, Inc. entered into arbitration to resolve an employment dispute. During arbitration proceedings, Burgess filed a motion with the court to terminate arbitration, alleging that Lithia and the arbitrator breached the arbitration agreement. The superior court denied Burgess’s motion, citing a lack of jurisdiction, and certified the matter for direct review, which the Washington Supreme Court granted. Under the FAA, the Supreme Court determined judicial review was limited to deciding gateway disputes, which concern enforceability of the arbitration clause, and addressing the award after arbitration. Therefore, the Supreme Court affirmed the superior court. View "Burgess v. Lithia Motors, Inc." on Justia Law
Burnett v. Pagliacci Pizza, Inc.
Pagliacci Pizza hired Steven Burnett as a delivery driver. Steven Burnett attended a mandatory new employee orientation at a local Pagliacci Pizza. During the orientation, Pagliacci gave Burnett multiple forms and told him to sign them so that he could start working. One of the forms that Burnett signed was a one-page “Employee Relationship Agreement” (ERA). The ERA mentioned nothing about arbitration of disputes. Pagliacci’s “Mandatory Arbitration Policy” (MAP) was printed in Pagliacci’s employee handbook, “Little Book of Answers,” a 23-page booklet in which Pagliacci’s MAP appeared on page 18. The MAP was not listed in the handbook’s table of contents, and page 18 fell within the “Mutual Fairness Benefits” section. Burnett was given a copy of Little Book of Answers during his orientation and told to read it at home. Consistent with that instruction, the ERA contained a section entitled “Rules and Policies.” Delivery drivers like Burnett filed a class action alleging wage and hour claims against Pagliacci Pizza. At issue on interlocutory review was whether the trial court sustainably denied the employer’s motion to compel arbitration. The Court of Appeals affirmed, determining that the mandatory arbitration policy contained in the employee handbook, which was provided to the named plaintiff after he signed the employment relationship agreement, was procedurally and substantively unconscionable and, thus, unenforceable. The Washington Supreme Court held that the MAP at issue in this case was indeed unenforceable because no arbitration agreement was formed when the employee signed the employment agreement when he had no notice of the arbitration provision contained in the employee handbook. The Court also held that in light of the noted circumstances, even if an arbitration contract existed, it was procedurally unconscionable and unenforceable. Furthermore, the Court held the same arbitration provision was substantively unconscionable because its one-sided terms and limitation provisions would bar any claim by the terminated employee here, an overly harsh result. Accordingly, the trial court’s order denying the employer’s motion to compel arbitration was affirmed and the matter remanded for further proceedings. View "Burnett v. Pagliacci Pizza, Inc." on Justia Law
Lee v. Evergreen Hosp. Med. Ctr.
Jeoung Lee filed a putative class action lawsuit against her former employer, King County Public Hospital District No. 2 d/b/a Evergreen Hospital Medical Center1 (Evergreen). Lee alleged Evergreen failed to give rest and meal breaks in accordance with Washington law. After nine months of litigation and the addition of a second named plaintiff, Evergreen moved to compel arbitration, alleging that the claims were covered under the collective bargaining agreement (CBA) between Evergreen and the Washington State Nurses Association (WSNA) that governs nurse employment. The trial court denied the motion to compel arbitration, and the Court of Appeals affirmed. The Washington Supreme Court affirmed the Court of Appeals on the ground that Evergreen waived the right to compel arbitration, and remanded to the superior court for further proceedings. Because it affirmed on the ground of waiver, the Supreme Court declined to reach the issue of whether the claims were statutory or contractual under the CBA. View "Lee v. Evergreen Hosp. Med. Ctr." on Justia Law
Bearden v. McGill
Plaintiff James Bearden sued Dolphus McGill after they were involved in a car accident. They went to mandatory arbitration, and the arbitrator awarded plaintiff Bearden $44,000.00 in damages. Bearden moved for statutory costs under RCW 4.84.010 as the prevailing party. The arbitrator, consistent with MAR 6.4(d), filed an amended award granting the fee request. The amended award granted $1,187.00 in costs to the plaintiff, amounting to a total award of $45,187.00. Defendant McGill requested a trial de novo. At trial, the jury awarded Bearden $42,500.00 in damages and $3,296.39 in RCW 4.84.010 costs for a total award of $45,796.39. Bearden moved for attorney fees under MAR 7.3, arguing that McGill had not improved his position at trial because the trial award of $45,796.39 exceeded the arbitral award of $45,187.00. The trial judge agreed and awarded Bearden $71,800.00 in attorney fees and costs incurred as a result of the trial. McGill appealed, arguing that the trial court erred by including trial costs in the MAR 7.3 comparison. The Court of Appeals vacated the award of attorney fees and costs to Bearden, holding that the proper comparison was between the common elements of the awards in both proceedings, including only "those costs and fees litigated before both the arbitrator and trial court." The Washington Supreme Court reaffirmed that the determination of whether a requesting party's position was improved should follow the reasoning of an ordinary person. Accordingly, the Court held that statutory costs should be included. The Court of Appeals was therefore reversed. View "Bearden v. McGill" on Justia Law
Futureselect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc.
FutureSelect Portfolio Management Inc. sought to challenge a 2011 Superior Court order granting KPMG LLP's motion to compel arbitration. Lead plaintiff FutureSelect was headquartered in Washington state, and managed a number of investment funds. The second named defendant, Tremont Partners Inc., was headquartered in New York and served as the general partner to the Rye Funds, whose status as feeder funds to Bernard L. Madoff Investment Securities LLC (BMIS) was at the heart of this dispute. Tremont allegedly offered FutureSelect a valuable opportunity to invest with BMIS, and made assurances regarding its oversight and understanding of BMIS's operation. Relying on these assurances and the audit opinions of the accounting firm hired by Tremont, FutureSelect decided to invest in the Rye Funds in 1998. Between 1998 and late 2008, when BMIS's Ponzi scheme finally came to light, FutureSelect continued investing additional funds in the Rye Funds allegedly based on the representations it regularly received from Tremont and its auditors. In all, FutureSelect invested $195 million with Tremont. FutureSelect argued that the Court of Appeals erred by dismissing its appeal as untimely because either the relevant law changed after 2011 in the Washington Supreme Court’s decision in Hill V. Garda CL Northwest, Inc., 308 P.3d 635 (2013), the 2016 appeal followed entry of a final judgment against another defendant, or discretionary review was appropriate. Because none of these rationales provided a basis for FutureSelect's untimely appeal, the Washington Court upheld the Court of Appeals' order of dismissal. View "Futureselect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc." on Justia Law
Gandee v. LDL Freedom Enters., Inc.
The issue before the Supreme Court in this case involved the enforceability of a binding arbitration clause included within a debt adjustment contract. The trial court denied the defendant's motion to compel arbitration, ruling that the motion was untimely and that the binding arbitration clause was unconscionable. Upon review of the trial court record and the clause at issue, the Supreme Court affirmed the trial court's holding that the clause was unconscionable, which then required the Court to decide whether this conclusion as to the validity of the binding arbitration clause is preempted by the Federal Arbitration Act (FAA). Finding no preemption, the Court affirmed. View "Gandee v. LDL Freedom Enters., Inc." on Justia Law
Niccum v. Enquist
The Supreme Court granted Respondent Ryan Enquist's petition to review a decision of the Court of Appeals in which that court affirmed the trial court's award of costs and reasonable attorney's fees to Petitioner Jeffery Niccum at a trial de novo following mandatory arbitration. The Court of Appeals held that the trial court properly subtracted statutory costs and attorney fees from Niccum's offer of compromise before determining that Enquist failed to improve his position for purposes of MAR 7.3. Upon review, the Court determined the appellate court's conclusion was in error, and reversed. View "Niccum v. Enquist" on Justia Law
Elcon Constr., Inc. v. E. Wash. Univ.
At issue in this case was a claim for damages relating to a drilling contract Petitioner Elcon Construction and Respondent Eastern Washington University. Elcon alleged tort and contract claims. The contract claims were resolved by arbitration. In dismissing the tort claims, the trial court applied the independent duty rule formerly known as the "economic loss rule," which the Court of Appeals similarly applied in affirming. Upon review, the Supreme Court concluded the trial court and Court of Appeals misapplied the independent duty doctrine to bar Elcon's tort claims in this case. The Court found Elcon's claims failed factually. Viewing the facts and reasonable inferences in the light most favorable to Elcon, no genuine issues of material fact existed with respect to Elcon's fraud in the inducement or tortious interference claims. The Court affirmed on different grounds reached by the trial and appeals courts. View "Elcon Constr., Inc. v. E. Wash. Univ." on Justia Law
Williams v. Tilaye
This issue before the Supreme Court in this case involved two different statutory schemes awarding attorney fees. One scheme, RCW 7.06.050-.060, discourages frivolous appeals from mandatory arbitration. The other scheme, RCW 4.84.250-.300, encourages parties to settle before going to court in cases where the amount in controversy is $10,000 or less by allowing a plaintiff to recover attorney fees if the plaintiff makes an offer of settlement at least 10 days before the initial trial, the offer is rejected, and the plaintiff recovers more than was offered. The question before the Court was whether the second scheme may be invoked for the first time 10 days before a trial de novo, rather than 10 days before the arbitration hearing, by a plaintiff that appealed an arbitration decision. After success at the trial de novo, Plaintiffs Patrick Williams and Andrea Harris applied for and received prevailing party attorney fees under RCW 4.84.250. Plaintiffs argued that although they offered to settle for under $10,000 after the mandatory arbitration, RCW 4.84.250-.300 allowed them to recover attorney fees as long as they made their offers 10 days before the trial de novo. The Supreme Court disagreed. The Court affirmed the Court of Appeals and held that RCW 4.84.250-.300 applies only to a plaintiff that seeks recovery of $10,000 or less and makes an offer of settlement 10 days before the initial hearing whether it is a trial or an arbitration. View "Williams v. Tilaye" on Justia Law