Justia Arbitration & Mediation Opinion Summaries

The Icee Company and J & J Snack Foods Corp. (collectively, Icee) appealed a trial court’s order denying their motion to compel arbitration of a dispute with a former employee. The employee, Taraun Collie, alleged a single cause of action against Icee under the Private Attorneys General Act of 2004 (PAGA). Collie alleged that he worked for Icee from November 2014 to August 2015. When he began his employment, he signed an arbitration agreement. In July 2016, Collie filed his PAGA complaint on behalf of himself and other aggrieved employees. Icee moved to compel arbitration of Collie’s “individual claim” in August 2018. It argued that the parties had agreed to bilateral arbitration only, so Collie had to arbitrate his PAGA cause of action on an individual basis—that is, he could not seek PAGA penalties on behalf of other Icee employees. And because Collie had agreed to arbitrate all claims or controversies with Icee, he had effectively waived his right to bring a PAGA action on behalf of other employees in any forum. The trial court denied Icee’s motion, concluding that the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles LLC, 59 Cal.4th 348 (2014), required that result. The Court of Appeal concluded that under Iskanian, an employee could not be compelled to arbitrate a PAGA cause of action on the basis of a predispute arbitration agreement, thereby affirming the trial court. View "Collie v. The Icee Co." on Justia Law

The First Circuit affirmed the district court's denial of Appellants' motion to compel arbitration in this putative class action, holding that the Federal Arbitration Act's (FAA) exemption for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce" encompasses the contracts of transportation workers who transport goods or people within the flow of interstate commerce.Plaintiff was a delivery driver for Amazon.com, Inc. and its subsidiary, Amazon Logistics, Inc. (collectively, Amazon) who collected packages for delivery in Massachusetts and did not cross state lines during the course of his deliveries. Plaintiff filed this putative class action asserting misclassification of Amazon's drivers contracted with through its smartphone application as independent contractors and violations of Massachusetts labor laws. Amazon moved to compel arbitration pursuant to the mandatory arbitration provision of Plaintiff's employment agreement with Amazon. The district court denied the motion in part, concluding that Plaintiff's agreement was exempt from the FAA and that the provision was unenforceable based on Massachusetts public policy. The First Circuit affirmed, holding (1) the FAA does not govern the enforceability of the dispute resolution section of the agreement; and (2) the district court rightly refused to compel arbitration pursuant to state law. View "Waithaka v. Amazon.com, Inc." on Justia Law

The Fifth Circuit affirmed the district court's order confirming a $622 million arbitration award. The parties are oil and gas companies incorporated in different countries, and the dispute arose from the Agreement for the Provision of Drilling Services (DSA). About two years into the DSA's term, Vantage and Petrobras executed the Third Novation and Amendment Agreement, which included an arbitration clause.As a preliminary matter, the court stated that it need not decide the issue of whether the appeal waiver was enforceable. On the merits, the court held that there was no public policy bar to confirmation of the arbitration award. In this case, the district court did not engage in inappropriate deference to the arbitrator's decision and the district court did not base its decision just on "mutual mistake." The court also held that Petrobras has not shown that the district court abused its discretion in denying the discovery motions. Finally, the court rejected Petrobras' motion to vacate the arbitration award. View "Vantage Deepwater Co. v. Petrobras America, Inc." on Justia Law

Saldana resigned from his position at Veeco and went to work for a competitor, Aixtron. Veeco initiated arbitration proceedings against Saldana under an arbitration clause in his employee confidentiality agreement, alleging breach of contract, breach of the duty of loyalty, and conversion, including alleged data theft. Aixtron was not a party to the arbitration. The arbitrator granted Veeco’s application for a pre-hearing discovery subpoena for Aixtron’s business records, including a demand that Aixtron produce any computers that Saldana had used for forensic examination by “an agreed-upon third-party neutral expert.” Over Aixtron’s objections, the arbitrator granted Veeco’s motion to compel. Aixtron sought judicial review; Veeco filed a separate petition to enforce the arbitrator’s discovery order, which the court granted.The court of appeal reversed, after first finding the order appealable. The arbitrator did not have the authority to issue a discovery subpoena to Aixtron in these circumstances under either the Federal Arbitration Act or the California Arbitration Act. Federal precedent indicates that there is no right to pre-hearing discovery under the FAA. There is no such right under Code of Civil Procedure section 1282.61 since the parties to the arbitration did not provide for full discovery rights in their arbitration agreement. View "Aixtron, Inc. v. Veeco Instruments Inc." on Justia Law

The Union sought confirmation of an arbitration award under the Federal Arbitration Act, 9 U.S.C. 9. Section 9 provides that a district court “must grant” a confirmation order for an award upon application where the award has not been “vacated, modified, or corrected” under the Act. UPS, the loser in arbitration, opposed confirmation and filed a cross-motion to dismiss, arguing that the district court did not have subject-matter jurisdiction because there was no case or controversy as required by Article III of the Constitution, given that UPS agreed to abide by the award and corrected any subsequent violations.The Third Circuit reversed. The district court had subject matter jurisdiction to confirm the award even in the absence of a new dispute about it. The confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court. Confirmation is the process through which a party to arbitration completes the award process under the Act, as the award becomes a final and enforceable judgment, 9 U.S.C. 13. The Act not only authorizes but mandates, that district courts confirm arbitration awards by converting them into enforceable judgments through a summary proceeding. View "Teamsters Local 177 v. United Parcel Service" on Justia Law

The plaintiffs obtained payday loans from AWL, an online entity owned by the Otoe-Missouria Tribe of Indians. The loan agreement stated that the loan was governed by tribal law and that the borrowers consented to the application of tribal law. The plaintiffs filed a purported class action, asserting that AWL charged unlawfully high interest rates, in violation of federal and Pennsylvania law, including the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961-1968. The defendants moved to compel arbitration. The district court denied their motion, holding that the loan agreements, which provided that only tribal law would apply in arbitration, stripped the plaintiffs of their right to assert statutory claims and were therefore unenforceable. The Third Circuit affirmed. Because AWL permits borrowers to raise disputes in arbitration only under tribal law, and such a limitation constitutes a prospective waiver of statutory rights, its arbitration agreement violates public policy and is therefore unenforceable. View "Williams v. Medley Opportunity Fund II, LP" on Justia Law

The First Circuit vacated the decision of the district court granting the World Boxing Organization's (WBO) motion to compel arbitration of Austin Trout's claim under the Muhammad Ali Boxing Reform Act (MABRA), 15 U.S.C. 6309(d), and claims under Puerto Rico law for breach of contract, fraud, and negligence, holding that the arbitrator-selection provision set forth in the WBO Appeal Regulations is invalid.Trout, a professional boxer residing in New Mexico, sued the WBO, which is based in Puerto Rico, challenging the WBO's decision to remove him from its rankings for a certain weight class. The WBO moved to compel arbitration pursuant to a clause in the WBO Championship Regulations and the Federal Arbitration Act. The district court granted the motion and dismissed the claims without prejudice. The First Circuit vacated the district court's decision, holding (1) the arbitrator-selection provision that the Appeal Regulations sets forth, which grants the WBO exclusive control over the appointment of the arbitrators who will decide Trout's claims, is so unreasonable and unjust as to be unconscionable under Puerto Rico contract law; and (2) the case is remanded for the district court to determine whether the arbitrator-selection provision is severable from the remainder of the arbitration agreement. View "Trout v. Organizacion Mundial de Boxeo, Inc." on Justia Law

This appeal stemmed from a collective bargaining agreement (CBA) dispute between the parties where an arbitrator resolved the dispute in favor of the union. The Eighth Circuit held that because the arbitrator was arguably construing or applying the contract and acting within the scope of his authority, there is no basis for vacating the arbitrator's finding that Exide violated the CBA.The court also held that the district court correctly determined that it did not have jurisdiction over Exide's claim that the arbitrator's decision that unilaterally changing Family Medical Leave Act leave administrators was a material, substantial and significant change in the employees' terms and conditions of employment in violation of Section 8 of the National Labor Relations Act. Rather, Congress has empowered the NLRB to resolve unfair-labor-practice claims in the first instance. Furthermore, the cases cited by the parties do not expand the court's original jurisdiction. View "Exide Technologies v. International Brotherhood of Electrical Workers" on Justia Law

The parties’ arbitration agreement purported to waive class actions and any “other representative action” (the representative waiver). There was no dispute that this representative waiver was broad enough to cover a Labor Code Private Attorneys General Act of 2004 (PAGA) claim, and was thus invalid. The arbitration agreement went on to provide that the provision containing the class action and representative waiver was not modifiable nor severable. The arbitration agreement also contained a provision that if the representative waiver was found to be invalid, “the Agreement becomes null and void as to the employee(s) who are parties to that particular dispute,” the so-called "blow-up provision." Plaintiff Nichole Kec brought individual, class, and PAGA claims against defendants R.J. Reynolds Tobacco Company, Reynolds American Inc., and three individual employees at R.J. Reynolds Tobacco Company, alleging in essence, that she and others were misclassified as exempt employees, resulting in various violations of the Labor Code. R.J. Reynolds Tobacco Company and Reynolds American Inc., moved to compel arbitration of plaintiff’s individual claims except the PAGA claim. The court granted the motion. The court reasoned: (1) because defendants had not asked the court to rule on the enforceability of the representative waiver, it had not found the representative waiver invalid, and thus the blow-up provision had not been triggered; and (2) the blow-up provision could apply only to the attempted waiver of the PAGA claim, not to the arbitrability of plaintiff’s claims under the Labor Code. The Court of Appeal concluded defendants could not selectively enforce the arbitration agreement in a manner that defeated its goals. "Had the parties intended to permit defendants to proceed with arbitration notwithstanding an invalid waiver of representative claims, they would have simply made that provision severable, like every other term in the agreement. But that is not what they did. Instead, by specifically making section 5 not severable, the agreement evinces an intent not to allow defendants to selectively enforce the arbitration agreement." The Court issued a writ of mandate ordering the trial court to vacate its order granting arbitration, and to enter a new order denying the motion in its entirety. View "Kec v. Superior Court" on Justia Law

In 2005, U.S. Home Corporation entered into a contract to purchase two contiguous tracts of land, one of which was owned by West Pleasant-CPGT, Inc. Under the contract, West Pleasant and the other landowner were to gain certain approvals permitting development of the properties. Pursuant to the contract, U.S. Home paid advances to the landowners totaling over $1.5 million. As security for the advances, West Pleasant executed a mortgage and note on its property; the other landowner did not. When a contract dispute arose in 2006, U.S. Home sought to terminate the contract and get a return of its total advance. U.S. Home prevailed in arbitration and was awarded a judgment in the full amount of the advance, plus interest. The Appellate Division affirmed the judgment in 2009. When the judgment was not satisfied, U.S. Home commenced foreclosure actions against the properties. The foreclosure proceedings were stayed when West Pleasant and the other property owner filed for bankruptcy. In West Pleasant’s bankruptcy action, U.S. Home moved to dismiss and for relief from the automatic stay. West Pleasant and U.S. Home executed a Consent Order, in which West Pleasant dismissed its bankruptcy proceeding, waived a fair market valuation and its right to object to a sheriff’s sale of its property, and released U.S. Home from any claims in law or equity. U.S. Home never proceeded with any deficiency action against either landowner. Nonetheless, the landowners commenced the affirmative litigation that gave rise to this appeal, seeking a declaration that the arbitration award was fully satisfied, as well as compensation “in the amount of the excess fair market value of the properties obtained by defendant[] U.S. Home over the amount of its outstanding judgment.” The second property owner then assigned its rights to West Pleasant. After trial, the court valued the second property as worth almost $2.4 million and West Pleasant’s property as worth almost $2 million. The court ordered U.S. Home to pay the fair market value of the West Pleasant property, plus interest, and extinguished the arbitration award on the second property. On appeal, the Appellate Division determined that West Pleasant had waived its right to a fair market valuation on its property but that it was owed a fair market value credit for the second property. The Appellate Division remanded the matter to the trial court for recalculation of damages. The New Jersey Supreme Court reversed, finding use of fair market value credit by this debtor to obtain a money judgment against a creditor, in the absence of a deficiency claim threatened or pursued or any objection being raised at the time of the sheriff’s sales, was "inconsistent with sound foreclosure processes and, moreover, inequitable in the circumstances presented." The judgment of the Appellate Division was reversed and the matter remanded for further proceedings. View "West Pleasant-CPGT, Inc. v. U.S. Home Corporation" on Justia Law