Justia Arbitration & Mediation Opinion Summaries

The City and County of Butte-Silver Bow, Montana (BSB) hired Rhonda Staton as a police officer in 2001, promoting her to detective in 2008. Staton received two verbal reprimands in 2017 and 2018 for tardiness and refusal to investigate underage drinking, respectively. In 2019, Staton filed a hostile work environment complaint, which was not substantiated. In early 2020, Staton lost her department-issued taser, leading to a Fit for Duty Evaluation (FFDE) by Dr. George Watson, who found her unfit for duty. Staton was terminated in August 2020 based on this evaluation and her performance issues.The Butte Police Protective Association (BPPA) filed a grievance on Staton’s behalf, leading to arbitration. Arbitrator A. Ray McCoy found Watson’s FFDE unreliable and ruled that BSB had not established just cause for Staton’s termination. McCoy ordered Staton’s reinstatement, back pay, and an additional evaluation to determine rehabilitative strategies. BSB did not comply with the reinstatement or compensation but arranged for an Independent Medical Evaluation (IME) by Dr. William Patenaude, which did not provide a diagnosis or rehabilitative recommendations.BSB petitioned to vacate the arbitration award, arguing it was a manifest disregard of Montana law. The Second Judicial District Court denied the motion to vacate but remanded the matter to the arbitrator to reconcile the award with Staton’s inability to return to service. BSB appealed.The Supreme Court of the State of Montana reviewed the case and held that the arbitrator’s award did not violate Montana law or public policy. The court found that the District Court abused its discretion by remanding the matter, as it exceeded the permissible scope of review for arbitration awards. The Supreme Court reversed the District Court’s order and remanded with instructions to confirm the original arbitration award. View "Butte v Butte Police" on Justia Law

Edgar Gonzalez worked for Nowhere Santa Monica, one of ten related LLCs operating Erewhon markets in Los Angeles. As a condition of employment, Gonzalez signed an arbitration agreement with Nowhere Santa Monica. He later filed a lawsuit against all ten LLCs, alleging various Labor Code violations and claiming they were joint employers. The non-Santa Monica entities moved to compel arbitration based on the agreement with Nowhere Santa Monica, but Gonzalez opposed, arguing they were not parties to the agreement.The Superior Court of Los Angeles County granted the motion to compel arbitration for Nowhere Santa Monica but denied it for the other entities, finding no evidence that Gonzalez's claims against the non-signatory defendants were intertwined with the arbitration agreement. Gonzalez then dismissed his complaint against Nowhere Santa Monica, and the other entities appealed.The California Court of Appeal, Second Appellate District, Division One, reviewed the case. The court held that Gonzalez was equitably estopped from avoiding arbitration with the non-Santa Monica entities because his claims against them were intimately founded in and intertwined with the employment agreement with Nowhere Santa Monica. The court reasoned that Gonzalez's joint employment theory inherently linked his claims to the obligations under the employment agreement, which contained the arbitration clause. Therefore, the court reversed the lower court's order denying the motion to compel arbitration for the non-Santa Monica entities. View "Gonzalez v. Nowhere Beverly Hills LLC" on Justia Law

Stephnie Trujillo filed a complaint against her former employer, J-M Manufacturing Company (JMM), and four former coworkers, alleging unlawful sexual/gender discrimination, harassment, failure to prevent such acts, retaliation, and seeking injunctive relief. The parties negotiated and entered into a post-dispute stipulation for arbitration, which was approved by the trial court. Arbitration commenced, and JMM paid the arbitrator’s invoices timely for over a year. However, JMM paid one invoice late, leading Trujillo to file a motion to withdraw from arbitration under California Code of Civil Procedure section 1281.98, which the trial court granted.The Superior Court of Los Angeles County granted Trujillo’s motion to withdraw from arbitration, finding that JMM’s late payment constituted a material breach under section 1281.98, despite acknowledging that the delay did not prejudice Trujillo. The court lifted the stay on trial court proceedings, allowing the case to proceed in court.The California Court of Appeal, Second Appellate District, Division Eight, reviewed the case and reversed the trial court’s decision. The appellate court held that section 1281.98 did not apply because the parties had entered into a post-dispute stipulation to arbitrate, not a pre-dispute arbitration agreement. Additionally, JMM was not considered the “drafting party” as defined by section 1280, subdivision (e), since the stipulation was primarily drafted by Trujillo. The appellate court remanded the case with instructions to deny Trujillo’s motion to withdraw from arbitration and to reinstate the stay of trial court proceedings pending the completion of arbitration. View "Trujillo v. J-M Manufacturing Co., Inc." on Justia Law

Bluebird Property Rentals, LLC, a Montana limited liability company, and its sole member, Alaina Garcia, received a $450,000 loan from World Business Lenders, LLC (WBL) and its subsidiaries in December 2020. The loan, secured by real property in Gallatin County, had an annual percentage rate of approximately 85% and required weekly payments. Bluebird signed several agreements, including a Business Promissory Note and Security Agreement, which listed Axos Bank as the lender, although Bluebird had no prior dealings with Axos. After falling behind on payments, Bluebird sold the collateral property in a distress sale and paid off the loan in October 2022, having paid a total of $945,990.39.Bluebird sued WBL, alleging that WBL engaged in a "rent-a-bank" scheme to evade Montana's usury laws, claiming that Axos Bank was merely a front and that WBL was the true lender. Bluebird sought a declaration that Montana law applied and sought double the interest paid above the maximum allowable rate under Montana law. WBL filed a motion to dismiss and compel arbitration based on the agreements' arbitration and choice-of-law provisions.The Eighteenth Judicial District Court denied WBL's motion, ruling that Montana law must be applied to determine the enforceability of the arbitration and choice-of-law provisions. The court treated WBL's motion as a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction and found that the validity of the arbitration clause was for the court to decide, not an arbitrator.The Supreme Court of the State of Montana affirmed the District Court's decision, holding that the general rule that courts determine arbitrability was not overcome by the facts of this case. The court found no clear and unmistakable evidence that the parties agreed to arbitrate arbitrability, despite WBL's arguments regarding the incorporation of AAA rules. The court did not address the merits of the enforceability of the arbitration agreement or the choice-of-law provision. View "Bluebird v. World Business Lenders" on Justia Law

In July 2020, the plaintiff used Uber's app to request a ride. Upon being dropped off in the middle of a roadway, she was struck by another vehicle and sustained injuries. She filed a personal injury lawsuit against Uber in November 2020, serving the complaint via the New York Secretary of State. Uber did not respond within the required 30 days, allegedly due to mail processing delays caused by the COVID-19 pandemic.In January 2021, Uber updated its terms of use, including an arbitration agreement, and notified users via email. The plaintiff received and opened this email. When she next logged into the Uber app, she was presented with a pop-up screen requiring her to agree to the updated terms to continue using the service. She checked a box and clicked "Confirm," thereby agreeing to the terms, which included a clause delegating the authority to resolve disputes about the agreement's applicability and enforceability to an arbitrator.The plaintiff moved for a default judgment in March 2021, and Uber responded by asserting that she had agreed to arbitrate her claims. Uber then sent a Notice of Intent to Arbitrate. The plaintiff moved to stay Uber's arbitration demand, arguing that the arbitration agreement was unconscionable and violated ethical rules. Uber cross-moved to compel arbitration.The Supreme Court granted Uber's motion to compel arbitration, finding that the plaintiff was on inquiry notice of the arbitration agreement and had assented to it. The Appellate Division affirmed, stating that the plaintiff's challenges to the agreement's validity must be decided by an arbitrator due to the delegation provision.The New York Court of Appeals affirmed the Appellate Division's decision, holding that the clickwrap process used by Uber resulted in a valid agreement to arbitrate. The court also held that the delegation provision was valid and that the plaintiff's challenges to the arbitration agreement's enforceability should be resolved by an arbitrator. The court found no abuse of discretion in the lower court's decision not to sanction Uber for the alleged ethical violation. View "Wu v. Uber Tech., Inc." on Justia Law

National Casualty Company and Nationwide Mutual Insurance Company entered into reinsurance agreements with Continental Insurance Company, which included arbitration clauses. A billing dispute arose, leading Continental to demand arbitration. National Casualty and Nationwide filed a lawsuit in federal court, claiming that prior arbitral awards resolved the billing dispute and precluded new arbitration. They appealed the district court's order compelling arbitration under the Federal Arbitration Act.The United States District Court for the Northern District of Illinois granted Continental's motion to compel arbitration and dismissed the action. National Casualty and Nationwide argued that the prior arbitral awards precluded the new arbitration proceeding, but the district court ruled that the arbitration clauses required the dispute to be arbitrated.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's decision, holding that the preclusive effect of prior arbitral awards is an issue for the arbitrator to decide, not the federal court. The court relied on its precedent, which aligns with Supreme Court rulings, stating that procedural questions arising from an arbitrable dispute are for the arbitrator to resolve. The court also rejected Continental's motion to vacate the district court's dismissal order and stay the action pending arbitration, as it was not properly before the court and lacked merit. The court concluded that the district court correctly compelled arbitration and dismissed the case. View "National Casualty Co. v. Continental Insurance Co." on Justia Law

Angelo Brock, an independent distributor for Flowers Baking Co. of Denver, LLC, filed a class-action lawsuit alleging wage and hour violations under the Fair Labor Standards Act and Colorado labor law. Brock claimed that Flowers misclassified its delivery drivers as independent contractors to avoid paying proper wages. Flowers moved to compel arbitration based on an Arbitration Agreement within the Distributor Agreement between Brock and Flowers. The district court denied the motion, leading to this appeal.The United States District Court for the District of Colorado found that Brock fell within the "transportation workers exemption" under § 1 of the Federal Arbitration Act (FAA), which exempts certain transportation workers from arbitration. The court concluded that Brock's class of workers, who deliver Flowers goods intrastate, are engaged in interstate commerce because they play a direct and necessary role in the flow of goods across state lines. The court also determined that the Arbitration Agreement did not allow for arbitration under Colorado law, as it was inconsistent with the FAA.The United States Court of Appeals for the Tenth Circuit affirmed the district court's decision. The Tenth Circuit agreed that Brock's class of workers is engaged in interstate commerce, as their intrastate deliveries are part of a continuous interstate journey of goods. The court found that Flowers retains significant control over Brock's operations, indicating that the goods' delivery to retail stores is the final leg of an interstate route. The court declined to review Flowers's argument that the Distributor Agreement is not a contract of employment, as it was not raised in the lower court. Additionally, the court determined it lacked jurisdiction to review the district court's denial of arbitration under Colorado law. View "Brock v. Flowers Foods" on Justia Law

Julian Rodriguez, a former employee of Lawrence Equipment, Inc., filed a lawsuit alleging various wage-and-hour violations under the California Labor Code. Rodriguez claimed that Lawrence failed to pay for all hours worked, including overtime, did not provide adequate meal and rest breaks, issued inaccurate wage statements, and did not pay all due wages upon termination. He also sought civil penalties under the Private Attorneys General Act (PAGA). Rodriguez had signed an arbitration agreement with Lawrence, which led to the arbitration of his non-PAGA claims.The Superior Court of Los Angeles County ordered arbitration for Rodriguez’s wage-and-hour claims and stayed the PAGA claim. The arbitrator ruled in favor of Lawrence, finding that Rodriguez failed to prove any of the alleged Labor Code violations. The trial court confirmed the arbitration award and entered judgment for Lawrence. Subsequently, Lawrence moved for judgment on the pleadings, arguing that the arbitration award precluded Rodriguez from pursuing his PAGA claim due to lack of standing as an aggrieved employee. The trial court granted this motion and dismissed the PAGA claim.The California Court of Appeal, Second Appellate District, reviewed the case. The court held that the arbitration award, which found no Labor Code violations, precluded Rodriguez from establishing standing under PAGA. The court applied the doctrine of issue preclusion, determining that the issues litigated in arbitration were identical to those required to establish PAGA standing. Since Rodriguez could not prove any Labor Code violations, he lacked standing to pursue the PAGA claim. The court affirmed the trial court’s judgment of dismissal. View "Rodriguez v. Lawrence Equipment, Inc." on Justia Law

In 2017, CNU of Alabama, LLC, and Shakeena Cox entered into a loan agreement allowing Cox to take cash advances. Cox took three advances totaling $1,250 but later defaulted. CNU assigned its rights to UHG I LLC, which then sued Cox in Mobile District Court. Cox argued the agreement, including an arbitration provision, was void under the Alabama Small Loan Act. The district court agreed and ruled in Cox's favor.UHG appealed to the Mobile Circuit Court, where Cox filed a counterclaim on behalf of herself and a class, adding CNU as a party and seeking injunctive relief and damages. Both companies moved to compel arbitration based on the agreement's arbitration provision. The circuit court denied the motions, holding that the agreement and arbitration provision were void under the Small Loan Act, the arbitration provision was unconscionable, and UHG had waived its right to arbitrate by appealing the district court's decision. UHG and CNU appealed.The Supreme Court of Alabama reversed the circuit court's decision denying the motions to compel arbitration for Cox's counterclaim, holding that the arbitration provision was valid and enforceable. The court determined that challenges to the agreement's validity, including claims of voidness and unconscionability, were for an arbitrator to decide. However, the court affirmed the circuit court's decision that UHG waived its right to arbitrate its initial collection claim by pursuing it in court. The case was remanded for further proceedings consistent with these findings. View "CNU of Alabama, LLC v. Cox" on Justia Law

In February 2013, the decedent was admitted to Elmcrest Care Center, suffering from Parkinson’s disease, dysphagia, and dementia. On August 4, 2017, he was found nonresponsive and later died in the hospital. The Estate of Jose de Jesus Ortiz, represented by Ericka Ortiz, filed a civil action against Elmcrest and its staff for elder abuse, neglect, negligence, willful misconduct, and fraud, alleging that their failure to provide necessary care led to his death. The trial court compelled arbitration based on an agreement signed upon the decedent’s admission.The arbitrator issued a First Interim Award on March 30, 2022, finding that the Estate did not meet its burden of proof on any claims. The award allowed for further submissions to address any omitted issues. The Estate requested an amendment, arguing the arbitrator had omitted damages for pre-death loss of dignity. The arbitrator issued a Second Interim Award on May 26, 2022, awarding $100,000 in damages for pre-death pain and suffering. Respondents moved to vacate this award, arguing the First Interim Award was final. The arbitrator denied the motion, stating the First Interim Award was not final and had omitted a necessary issue.The trial court initially denied the Estate’s petition to vacate the First Interim Award, ruling it was not final. However, it later vacated the Final Award and confirmed the First Interim Award, finding the First Interim Award had resolved all necessary issues. The Estate appealed.The California Court of Appeal, Second Appellate District, reversed the trial court’s order, holding that the First Interim Award was not final as it expressly reserved jurisdiction for further proceedings. The court directed the trial court to confirm the Final Award issued on September 30, 2022, which included the damages for pre-death pain and suffering. View "Ortiz v. Elmcrest Care Center, LLC" on Justia Law