Justia Arbitration & Mediation Opinion Summaries

The case involves a dispute over the enforceability of a noncompetition provision in an operating agreement following the partial sale of a business interest. Robert and Stephen Samuelian co-founded Life Generations Healthcare, LLC, and later sold a portion of their interest in the company. The new operating agreement included a noncompetition clause that the Samuelians later challenged in arbitration. The arbitrator found the provision invalid per se under California Business and Professions Code section 16600, which generally voids contracts restraining lawful professions, trades, or businesses.The Superior Court of Orange County reviewed the arbitrator's decision de novo and confirmed the award, agreeing that the noncompetition provision was invalid per se. The court also found that the Samuelians did not owe fiduciary duties to the company as minority members in a manager-managed LLC. The company and individual defendants appealed, arguing that the arbitrator applied the wrong legal standard and that the reasonableness standard should apply instead.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case and concluded that the arbitrator had indeed applied the wrong standard. The court held that noncompetition agreements arising from the partial sale of a business interest should be evaluated under the reasonableness standard, not the per se standard. The court reasoned that partial sales differ significantly from the sale of an entire business interest, as the seller remains an owner and may still have some control over the company. Therefore, such noncompetition provisions must be scrutinized for their procompetitive benefits.The Court of Appeal reversed the trial court's judgment confirming the arbitration award and directed the trial court to enter an order denying the Samuelians' petition to confirm the award and granting the company's motion to vacate the entire award, including the portion awarding attorney fees and costs. View "Samuelian v. Life Generations Healthcare, LLC" on Justia Law

Two employees, Tanika Parker and Andrew Farrier, participated in 401(k) plans managed by subsidiaries of Tenneco Inc. The plans were amended to include mandatory individual arbitration provisions, which required participants to arbitrate disputes individually and barred representative, class, or collective actions. Parker and Farrier alleged that the fiduciaries of their plans breached their fiduciary duties under ERISA by failing to prudently manage the plans, resulting in higher costs and reduced retirement savings. They sought plan-wide remedies, including restitution of losses and disgorgement of profits.The United States District Court for the Eastern District of Michigan denied the fiduciaries' motion to compel individual arbitration. The court found that the arbitration provisions limited participants' substantive rights under ERISA by eliminating their ability to bring representative actions and seek plan-wide remedies, which are guaranteed by ERISA.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The Sixth Circuit held that the individual arbitration provisions were unenforceable because they acted as a prospective waiver of the participants' statutory rights and remedies under ERISA. The court emphasized that ERISA allows participants to sue on behalf of a plan and obtain plan-wide relief, and the arbitration provisions' restrictions on representative actions and plan-wide remedies violated these statutory rights. Consequently, the arbitration provisions were invalid, and the district court's judgment was affirmed. View "Parker v. Tenneco, Inc." on Justia Law

John Smith, an employee of Sysco Indianapolis, LLC, did not receive a monthly benefit check he expected. His labor union, Teamsters Local 135, filed a grievance on his behalf, alleging that Sysco violated their 2018 collective bargaining agreement (CBA) by not providing a $500 Supplemental Early Retirement Benefit (SERB) to certain retirees and employees. Sysco participated in the initial grievance process but refused to proceed to arbitration, arguing that the grievance was not arbitrable under the CBA. Sysco then sought a declaratory judgment from the district court, while the Union counterclaimed for a declaration that the grievance was arbitrable.The United States District Court for the Southern District of Indiana sided with Sysco, finding that the monthly benefit was governed by terms outside the CBA and that the parties' bargaining history indicated they did not intend for the benefit to be arbitrable. The court granted Sysco's motion for summary judgment and denied the Union's counterclaims.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo and reached a different conclusion. The appellate court found that Sysco failed to present the "most forceful evidence" required to exclude the monthly benefit from the arbitration provision in the CBA. The court noted that the grievance fell within the scope of the arbitration clause on its face and that the CBA did not explicitly exclude the SERB from arbitration. The court also found that the parties' bargaining history did not clearly demonstrate an intent to exclude the benefit from arbitration. Consequently, the Seventh Circuit reversed the district court's judgment, holding that the grievance must be sent to arbitration. View "Sysco Indianapolis LLC v. Teamsters Local 135" on Justia Law

A collection of Dutch and Luxembourgish energy companies invested in solar power projects in Spain, relying on promised economic subsidies. Following the 2008 financial crisis, Spain withdrew these subsidies, prompting the companies to challenge Spain's actions through arbitration under the Energy Charter Treaty (ECT). The companies prevailed in arbitration, securing multi-million-euro awards. However, the European Union (EU) argued that the ECT's arbitration provision does not apply to disputes between EU Member States, rendering the awards invalid under EU law.The United States District Court for the District of Columbia reviewed the cases. In NextEra Energy Global Holdings B.V. v. Kingdom of Spain and 9REN Holding S.A.R.L. v. Kingdom of Spain, the court held it had jurisdiction under the Foreign Sovereign Immunities Act (FSIA) arbitration exception and denied Spain's motion to dismiss. The court also granted anti-anti-suit injunctions to prevent Spain from seeking anti-suit relief in foreign courts. Conversely, in Blasket Renewable Investments LLC v. Kingdom of Spain, the district court deemed Spain immune under the FSIA and denied the companies' requested injunction.The United States Court of Appeals for the District of Columbia Circuit reviewed the cases. The court held that the district courts have jurisdiction under the FSIA’s arbitration exception to confirm the arbitration awards against Spain. However, it found that the district court in NextEra and 9REN abused its discretion by enjoining Spain from pursuing anti-suit relief in Dutch and Luxembourgish courts. The court emphasized that anti-suit injunctions against a foreign sovereign raise significant comity concerns and that the domestic interests identified were insufficient to justify such extraordinary relief. Consequently, the court affirmed in part and reversed in part in NextEra, reversed in 9REN and Blasket, and remanded for further proceedings. View "Turenne v. State" on Justia Law

A collection of Dutch and Luxembourgish energy companies invested in solar power projects in Spain, relying on promised economic subsidies. Following the 2008 financial crisis, Spain withdrew these subsidies, prompting the companies to challenge Spain's actions through arbitration under the Energy Charter Treaty (ECT). The companies won multi-million-euro awards in arbitration. However, the European Union argued that the ECT's arbitration provision does not apply to disputes between EU Member States, rendering the awards invalid under EU law. The companies sought to enforce the awards in the United States, invoking the ICSID Convention and the New York Convention.The United States District Court for the District of Columbia reviewed the cases. In NextEra Energy Global Holdings B.V. v. Kingdom of Spain and 9REN Holding S.A.R.L. v. Kingdom of Spain, the court held it had jurisdiction under the Foreign Sovereign Immunities Act (FSIA) arbitration exception and denied Spain's motion to dismiss. The court also granted anti-anti-suit injunctions to prevent Spain from seeking anti-suit relief in foreign courts. Conversely, in Blasket Renewable Investments LLC v. Kingdom of Spain, the district court found Spain immune under the FSIA and dismissed the case, denying the requested injunction as moot.The United States Court of Appeals for the District of Columbia Circuit reviewed the cases. The court held that the district courts have jurisdiction under the FSIA’s arbitration exception to confirm the arbitration awards against Spain. However, it found that the district court in NextEra and 9REN abused its discretion by enjoining Spain from pursuing anti-suit relief in Dutch and Luxembourgish courts. The appellate court affirmed in part and reversed in part in NextEra, reversed in 9REN and Blasket, and remanded for further proceedings. View "NextEra Energy Global Holdings B.V. v. Kingdom of Spain" on Justia Law

William Lyons opened a Home Equity Line of Credit (HELOC) account with National City Bank in 2005, which was later acquired by PNC Bank. PNC withdrew funds from Lyons' deposit accounts to offset outstanding HELOC payments without prior notification. Lyons contested these withdrawals, claiming they were unauthorized. PNC responded, asserting their right to make the withdrawals. Lyons then sued for economic and statutory damages, as well as emotional distress.The case was initially heard in the United States District Court for the District of Maryland. PNC moved to compel arbitration on the Truth in Lending Act (TILA) claim, which the district court partially granted. Both parties appealed, and the United States Court of Appeals for the Fourth Circuit held that the Dodd-Frank Act prohibits arbitration of claims related to residential mortgage loans. The case was remanded to the district court, which ruled in favor of PNC on both the TILA and Real Estate Settlement Practices Act (RESPA) claims. The district court held that TILA’s offset provision does not apply to HELOCs and that the CFPB had the authority to exempt HELOCs from RESPA’s requirements.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court held that TILA’s offset provision does apply to HELOCs, reversing the district court’s decision on the TILA claim. The court found that the term "credit card plan" includes HELOCs when accessed via a credit card. However, the court affirmed the district court’s decision on the RESPA claim, agreeing that the CFPB has the authority to exempt HELOCs from RESPA’s definition of “federally related mortgage loans.” The case was reversed and remanded in part and affirmed in part. View "Lyons v. PNC Bank, N.A." on Justia Law

Loretta Marshall applied for a nursing job with Tidelands Health using their online application process. After failing a mandatory physical agility test, she was denied employment. Marshall then sued Tidelands, alleging that the physical agility test constituted prohibited discrimination. Tidelands moved to compel arbitration, arguing that Marshall had agreed to arbitration through the online application process. The district court denied the motion, concluding that Tidelands had not shown the existence of an agreement to arbitrate.The United States District Court for the District of South Carolina reviewed the case. Initially, Tidelands argued that Marshall's 2016 arbitration agreement covered her 2020 application. The magistrate judge found that the 2016 agreement did not apply to future applications. Tidelands then argued that Marshall agreed to arbitration in 2020, but the magistrate judge found that Marshall was not required to scroll through the arbitration agreement in 2020 and was not on reasonable notice of the agreement. The district court agreed with the magistrate judge and denied Tidelands' motion to compel arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court held that Tidelands failed to show that Marshall had reasonable notice of an offer to arbitrate in 2020. The court noted that Marshall was not required to scroll through the arbitration agreement and that the arbitration notice at the top of the webpage did not provide the actual terms of an agreement. Additionally, the court found that Marshall did not manifest her assent to the arbitration agreement by clicking the "submit" button, as it did not clearly indicate agreement to arbitration. The Fourth Circuit affirmed the district court's judgment, concluding that no arbitration agreement was formed in 2020. View "Marshall v. Georgetown Memorial Hospital" on Justia Law

Alison George sought to represent a class and obtain damages from Rushmore Service Center, LLC, based on a letter that identified Premier Bankcard, LLC as the “current/original creditor” instead of the actual credit card company. George alleged that this violated the Fair Debt Collection Practices Act (FDCPA) by failing to identify the creditor to whom the debt was owed and providing misleading information. She claimed that this would confuse the least sophisticated consumer about the legitimacy of the debt.The United States District Court for the District of New Jersey granted Rushmore’s motion to stay proceedings and compel individual arbitration. George lost in arbitration, where the arbitrator ruled in favor of Rushmore, finding that George was not misled because she admitted she did not read the letter. The District Court then declined to vacate the arbitration award, rejecting George’s arguments that the arbitrator disregarded evidence and law.The United States Court of Appeals for the Third Circuit reviewed the case and focused on whether George had standing to sue. The court concluded that George lacked standing from the outset because her complaint did not allege any specific adverse effects or confusion she personally experienced due to the letter. The court held that confusion alone is insufficient to establish a concrete injury under Article III. Consequently, the Third Circuit vacated the District Court’s orders and remanded with instructions to dismiss the case for lack of standing. The court declined to vacate the arbitration award itself, leaving its enforceability to be determined in a jurisdictionally correct proceeding. View "George v. Rushmore Service Center LLC" on Justia Law

In this case, the plaintiff, Patricia Olivieri, alleged that her employer, Stifel, Nicolaus & Company, Incorporated, and her manager, Neil Isler, subjected her to sexual harassment and a hostile work environment. Olivieri claimed that Isler sexually assaulted and harassed her, and that after she reported his behavior, she faced retaliation and continued harassment from Stifel and other defendants. Olivieri's allegations included inappropriate comments, physical contact, and retaliatory actions such as changes in her job responsibilities and work environment.The United States District Court for the Eastern District of New York initially granted the defendants' motion to compel arbitration based on an arbitration agreement in Olivieri's employment contract. However, after the enactment of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), Olivieri moved for reconsideration. The district court vacated its earlier decision, concluding that Olivieri's claims accrued after the EFAA's effective date, making her arbitration agreement voidable under the new law.The United States Court of Appeals for the Second Circuit reviewed the district court's decision. The appellate court agreed with the lower court, applying the continuing violation doctrine to determine that Olivieri's hostile work environment claims accrued after the EFAA's effective date of March 3, 2022. The court held that the EFAA applied to Olivieri's claims, rendering her arbitration agreement invalid and unenforceable. Consequently, the Second Circuit affirmed the district court's order denying the motion to compel arbitration. View "Olivieri v. Stifel, Nicolaus & Company, Inc." on Justia Law

In 2001, China and Nigeria signed a bilateral investment treaty to encourage investment between the two countries, agreeing to treat each other's investors fairly and protect their investments. Zhongshan Fucheng Industrial Investment, a Chinese company, invested in Nigeria by participating in a joint venture with Ogun State to develop a free-trade zone. After years of development and significant investment, Ogun State abruptly terminated its relationship with Zhongshan, and Nigerian federal authorities expelled the company's executives. Zhongshan initiated arbitration proceedings, and an arbitrator found that Nigeria had breached its obligations under the treaty, awarding Zhongshan over $55 million in damages.The United States District Court for the District of Columbia held that it had jurisdiction over the case, finding that the Foreign Sovereign Immunities Act’s (FSIA) arbitration exception applied because the award was governed by the New York Convention, an international arbitration treaty. Nigeria appealed, arguing that it was immune from suit under the FSIA.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the FSIA’s arbitration exception applied because the arbitration award arose from a legal relationship considered commercial, governed by the New York Convention. The court found that Nigeria had an arbitration agreement with Zhongshan, an arbitration award was issued, and the award was governed by the New York Convention. The court rejected Nigeria's argument that the New York Convention only applies to private acts, holding that the treaty covers arbitral awards arising from sovereign acts when a state consents to arbitration. Thus, the court affirmed the district court's jurisdiction and the enforceability of the arbitration award. View "Zhongshan Fucheng Industrial Investment Co. Ltd v. Federal Republic of Nigeria" on Justia Law