Justia Arbitration & Mediation Opinion Summaries

Kentucky ruling that authority to bind a principal to arbitration must be explicitly stated in power of attorney violated the Federal Arbitration Act.When the patients moved into Kindred’s nursing home, their relatives used powers of attorney to complete necessary paperwork, including an agreement that any claims arising from the patient’s stay at Kindred would be resolved through binding arbitration. After the patients died, their estates filed suits alleging that Kindred’s substandard care had caused their deaths. The trial court denied Kindred’s motions to dismiss. The Kentucky Supreme Court affirmed, finding the arbitration agreements invalid because neither power of attorney specifically entitled the representative to enter into an arbitration agreement. Because the Kentucky Constitution declares the rights of access to the courts and trial by jury to be “sacred,” the court reasoned, an agent could deprive her principal of such rights only if expressly provided in the power of attorney. The U.S. Supreme Court reversed. The Kentucky Supreme Court’s clear-statement rule violates the Federal Arbitration Act, 9 U.S.C. 2, by singling out arbitration agreements for disfavored treatment. The Act preempts any state rule that discriminates on its face against arbitration or that covertly accomplishes the same objective by disfavoring contracts that have the defining features of arbitration agreements. The FAA is concerned with both the enforcement and initial validity of arbitration agreements. View "Kindred Nursing Centers, L. P. v. Clark" on Justia Law

In 2004, George and Thelma Nickola, were injured in a car accident. The driver of the other car was insured with a no-fault insurance policy provided the minimum liability coverage allowed by law: $20,000 per person, up to $40,000 per accident. The Nickolas’ (acting through their attorney) wrote to their insurer, defendant MIC General Insurance Company, explaining that the no-fault liability insurance policy was insufficient to cover the Nickolas' injuries. The letter also advised MIC that the Nickolas were claiming UIM benefits under their automobile policy. The Nickolas’ policy provided for UIM limits of $100,000 per person, up to $300,000 per accident, and they sought payment of UIM benefits in the amount of $160,000; $80,000 for each insured. An adjuster for defendant MIC denied the claim, asserting that the Nickolas could not establish a threshold injury for noneconomic tort recovery. The matter was ultimately ordered to arbitration, the outcome of which resulted in an award of $80,000 for George’s injuries and $33,000 for Thelma’s. The award specified that the amounts were “inclusive of interest, if any, as an element of damage from the date of injury to the date of suit, but not inclusive of other interest, fees or costs that may otherwise be allowable.” The trial court affirmed the arbitration awards but declined to award penalty interest under the UTPA, finding that penalty interest did not apply because the UIM claim was “reasonably in dispute” for purposes of MCL 500.2006(4). The Court of Appeals affirmed the trial court, holding that the “reasonably in dispute” language applied to plaintiff’s UIM claim because a UIM claim “essentially” places the insured in the shoes of a third-party claimant. The Michigan Supreme Court held that an insured making a claim under his or her own insurance policy for UIM benefits cannot be considered a “third party tort claimant” under MCL 500.2006(4). The Court reversed the Court of Appeals denying plaintiff penalty interest under the UTPA, and remanded this case back to the trial court for further proceedings. View "Estate of Nickola v MIC General Ins. Co." on Justia Law

Plaintiff filed suit against his former employer, GE, alleging claims of discrimination and retaliation. The district court granted GE's motion to compel arbitration and dismissed the case, only to reopen it later to withdraw its prior order compelling the arbitration. The Fifth Circuit held that the district court lacked subject matter jurisdiction to withdraw its order compelling arbitration and reopen the case due to a default in the arbitral process. Therefore, the Fifth Circuit vacated and remanded for further proceedings, noting that the district court's jurisdiction was limited to determining whether an agreement to arbitrate still existed and enforcing that agreement. View "Salas v. GE Oil & Gas" on Justia Law

The First Circuit answered two questions of first impression regarding the Federal Arbitration Act (FAA) by holding (1) in a case where a federal district court is confronted with a motion to compel arbitration under the FAA and the parties have delegated questions of arbitrability to the arbitrator, the applicability of the FAA is a threshold question for the court to determine before compelling arbitration under the FAA; and (2) a provision of the FAA that exempts contracts of employment of transportation workers from the FAA’s coverage applies to a transportation-worker agreement that purports to establish an independent-contractor relationship. Accordingly, the First Circuit affirmed the district court’s order denying the motion to compel arbitration and dismissed this appeal for lack of appellate jurisdiction. View "Oliveira v. New Prime, Inc." on Justia Law

Arbitration is a contractual agreement between parties. And only agreed-upon arbitrable disputes are subject to arbitration. On de novo review, the Mississippi Supreme Court found in this case a valid arbitration agreement, but the subject of the lessee’s premises-liability claim (a dispute that stemmed from a physical and sexual assault on the apartment complex premises) was not within the arbitration agreement’s scope, as it did not arise under or relate to her “occupancy and leasing of the [apartment].” Because the dispute was outside the agreement’s scope, the trial court erred by staying proceedings and ordering arbitration. View "Jane Doe v. Hallmark Partners, LP" on Justia Law

The Fourth Circuit affirmed the district court's order denying BMO Harris's renewed motion to compel arbitration. Plaintiff filed suit against BMO Harris, alleging that BMO Harris violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.1961 et seq., when BMO Harris used its role within a network of financial institutions to conduct and participate in the collection of unlawful payday loans. BMO Harris sought to enforce an arbitration agreement for the loan, which was entered into by plaintiff and the lender, Great Plains. The Fourth Circuit affirmed the denial of BMO Harris's motion to enforce the arbitration agreement in light of Hayes v. Delbert. In Hayes, the Fourth Circuit applied the prospective waiver doctrine and held that the entire arbitration provision at issue was unenforceable. The choice of law provisions in this case were indistinguishable in substance from the related provisions in the agreement in Hayes. These choice of law provisions were not severable from the broader arbitration agreement and rendered the entire arbitration agreement unenforceable. View "Dillon v. BMO Harris Bank, N.A." on Justia Law

The Eighth Circuit affirmed the district court's decision to uphold an arbitration award reinstating an employee to his job as a security officer at Entergy's nuclear power plant. The employee has chronic folliculitis, and Entergy thought this would keep him from shaving often enough to properly wear a full-face gas mask in the event of a chemical attack. The arbitrator ordered reinstatement because Entergy never fit-tested the employee with facial hair before concluding that it disqualified him from the position. The Eighth Circuit held that the arbitrator's order requiring that the employee be reinstated with backpay and subject to an acceptable respirator or a reasonable accommodation was not against public policy nor exceeded the arbitrator's authority. In this case, the arbitrator did not stray outside his authority to interpret and apply the contract, and the award was within the range of possibilities Entergy bargained for. View "Entergy Operations v. United Government Security Officers" on Justia Law

Respondent, who owned a ranch, sued Petitioner, which produced natural gas on the ranch, for underpayment of royalties and underproduction of its lease. The parties resolved their dispute with two agreements that contained an arbitration provision. Respondent later sued Petitioner for environmental contamination and improper disposal of hazardous materials on the ranch. Before arbitration commenced, Respondent asked the Railroad Commission (RRC) to investigate contamination of the ranch by Petitioner. Meanwhile, an arbitration panel awarded Respondent $15 million for actual damages and $500,000 for exemplary damages. At issue on appeal was whether the RRC had exclusive or primary jurisdiction over Respondent’s claims, precluding the arbitration, and whether the arbitration award should be vacated for the evident partiality of a neutral arbitrator or because the arbitrators exceeded their powers. The Supreme Court answered in the negative, holding (1) because Respondent’s claims were inherently judicial, the doctrine of primary jurisdiction did not apply, and vacatur was not warranted for failure to abate the arbitration hearing; and (2) the arbitrators did not exceed their authority. View "Forest Oil Corp. v. El Rucio Land & Cattle Co." on Justia Law

RT Import Inc. filed a complaint against Jesus and Mila Torres seeking damages for merchandise allegedly misdelivered by WFS to the Torreses, which was then converted by the Torreses. RT Import and the Torreses agreed to resolve their dispute through binding arbitration. The arbitrator found that the Torreses committed the intentional tort of conversion and awarded RT Import damages. The arbitrator also found that the Torreses were responsible for arbitration fees and costs. The circuit court granted RT Import’s motion to confirm the final award and awarded RT Import $106,711.62 in damages and $8,355.49 for arbitration attorney’s fees and costs. The Intermediate Court of Appeals (ICA) affirmed the circuit court’s confirmation of the final arbitration award and judgment. The Supreme Court vacated the circuit court’s judgment as to $4,738.74 of the $8,355.49 for RT’s arbitration attorney’s fees and costs and otherwise affirmed, holding that the circuit court erred by including in the judgment confirming the arbitration award $4,738.74 directly billed by RT Import to the Torreses, which was not a part of the final award. Remanded. View "RT Import, Inc. v. Torres" on Justia Law

General Mills terminated employees and offered them benefits in exchange for releasing all Age Discrimination in Employment Act (ADEA), 29 U.S.C. 626(f)(1), claims and arbitrating release-related disputes. Plaintiffs, 33 employees who signed releases, subsequently filed suit seeking a declaratory judgment that the releases were not "knowing and voluntary." Plaintiffs also raised collective and individual ADEA claims. The district court denied General Mills' motion to compel arbitration. The court rejected plaintiffs' claim that the agreement to arbitrate applies only to claims "relating to" the release of claims, and their substantive ADEA claims are not related to the release of claims. Rather, the court found that the agreements' "relating to" sentence showed the parties' intent to arbitrate both disputes about the release and substantive ADEA claims. Therefore, the ADEA claims were covered by the agreements. The court explained that, absent a contrary congressional command, General Mills can compel employees who signed the agreements to arbitrate their ADEA claims. In this case, the court concluded that no "contrary congressional command" overrides the Federal Arbitration Act's (FAA), 9 U.S.C. 1 et seq., mandate to enforce the parties' agreement to arbitrate substantive ADEA claims. Accordingly, the court reversed and remanded for further proceedings. View "McLeod v. General Mills, Inc." on Justia Law