Justia Arbitration & Mediation Opinion Summaries

This appeal stemmed from five putative class actions filed against Wells Fargo and its predecessor, Wachovia Bank. At issue was whether Wells Fargo's waiver of its right to compel arbitration of the named plaintiffs' claims should be extended to preclude Wells Fargo from compelling arbitration of the unnamed putative class members' claims. The court concluded that because a class including the unnamed putative class members had not been certified, Article III's jurisdictional limitations precluded the district court from entertaining Wells Fargo's conditional motions to dismiss those members' claims as subject to arbitration; contrary to the position they take in this appeal, the named plaintiffs lack Article III standing to seek the court's affirmance of the district court's provision holding that if a class is certified, Wells Fargo will be estopped to assert its contractual rights to arbitration; and, therefore, the court vacated and remanded for further proceedings. View "Spears-Haymond v. Wells Fargo Bank" on Justia Law

Plaintiff, appointed the receiver of six hedge funds that were part of a Ponzi scheme orchestrated by Arthur Nadel, attempted to recover alleged "false profits" in connection with Nadel's fraudulent scheme. Herbert Schneiderman, now deceased, was among the investors who became subject to one of plaintiff's "clawback" suits. Schneiderman's estate moved to compel arbitration and the district court granted the motion. The arbitrator then granted summary judgment to the estate and denied plaintiff's motion for reconsideration. Plaintiff's motion to vacate the arbitrator's decision was denied. The court concluded that clawback actions are not categorically exempt from the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq.; the district court did not err in determining that the parties formed a contract and that questions as to its validity were for the arbitrator to decide; the district court did not err in sending all claims to arbitration; and the arbitrator did not so exceed or imperfectly use his powers that the district court erred in declining to vacate the award. Accordingly, the court affirmed the judgment. View "Wiand v. Schneiderman" on Justia Law

Plaintiffs, former employees of Pacific Bell, took early retirement, with the option to take a pension or a lump sum payment. All chose the lump sum, persuaded to do so by Kearney, with whom each plaintiff had significant interaction, having first learned of her from presentations made at the Pacific Bell premises. All became clients of Kearney, in connection with which they signed some documents, by which Kearney came to manage and invest their retirement proceeds, in some cases for years. Dissatisfied, plaintiffs sued Kearney and AIG Financial Advisors, the successor to the company where Kearney originally worked. AIGFA filed a petition to compel arbitration, supported in part by a declaration of Kearney. Without holding an evidentiary hearing, the trial court granted the petition. That arbitration occurred, with the arbitrators ultimately issuing an award rejecting plaintiffs’ claims. After judgment was entered on the award, plaintiffs appealed. The court of appeal reversed and remanded for an evidentiary hearing. View "Ashburn v. AIG Fin. Advisors, Inc." on Justia Law

BNSF filed suit against Alstom, seeking declaratory relief based on a Maintenance Agreement between the parties. The district court compelled arbitration based on an arbitration agreement in the Agreement. On appeal, Alstom challenged the district court's decision partially vacating the arbitration panel's final award in Alstom's favor. The court found that BNSF failed to show that the arbitration panel could not have been interpreting the Agreement when it concluded that Illinois law imposes a limitation on the right to terminate "without cause" based on the covenant of good faith and fair dealing. Further, errors in interpreting a contract is not grounds for setting aside an arbitrator's award. In this case, the arbitrators arguably interpreted the Agreement in reaching their award and in calculating Alstom's remedy. The court vacated the district court's decision and remanded for further proceedings, with instructions to reinstate the arbitration panel's final award. View "BNSF Railway v. Alstom Transportation" on Justia Law

Before it was acquired by DirecTV, 180 Connect entered into an employment arbitration agreement with Marenco, which prohibited filing a class or collective action, or a representative or private attorney general action. After acquiring 180 Connect, DirecTV retained employees, including Marenco. Marenco later filed suit, alleging that DirecTV had issued debit cards in payment of wages to a putative class of employees. Plaintiffs who used their cards to withdraw cash at ATM machines were required to pay an activation fee and a cash withdrawal fee, resulting in DirecTV’s failure to pay plaintiffs’ full wages in violation of the Unfair Competition Law and Labor Code 212. DirecTV moved to compel arbitration of Marenco’s individual claims, and stay the class claims. Marenco argued that DirecTV lacked standing to enforce the agreement and that the agreement was unconscionable and unenforceable under California law. The U.S. Supreme Court then issued its 2011 decision, AT&T Mobility v. Concepcion, holding that the Federal Arbitration Act preempts the California rule of unconscionability. The trial court ordered arbitration of Marenco’s individual claims, holding that DirecTV had standing; the class action waiver is not unconscionable; and prohibition of representative actions does not violate the National Labor Relations Act (29 U.S.C. 157). The court of appeal affirmed. View "Marenco v. DirecTV, LLC" on Justia Law

When Ameriprise Financial fired Renard, a financial adviser, for violation of the franchise agreement between the two, Ameriprise claimed that Renard owed it $530,000 on loans made to help Renard build his franchise. Renard disagreed. Ameriprise initiated arbitration under the agreement, which provides that Minnesota law governs, except “all issues relating to arbitrability,” are “governed by the terms set forth in [the] agreement, and to the extent not inconsistent with this agreement, by the rules of arbitration of” the Financial Industry Regulatory Authority. Wisconsin arbitrators rejected Renard’s counterclaims and awarded Ameriprise most of what it sought. Renard filed suit to vacate the award. The court confirmed the award and required Renard to pay additional interest. The Seventh Circuit affirmed, rejecting Renard’s argument that Ameriprise’s counsel procured the award through fraud and that the arbitrators acted in manifest disregard of the Wisconsin Fair Dealership Law and Minnesota tort law. His showing was far short of the high standard needed to upset the outcome of an arbitral proceeding. The panel did not issue a written opinion, so it was not clear how it reached its conclusions, but nothing suggested that it strayed so far that the “manifest disregard” standard was triggered. View "Renard v. Ameriprise Fin. Servs., Inc." on Justia Law

Harold Stewart, a sergeant in Camden County's Fire Police Department, while operating a Camden County vehicle, was involved in a motor vehicle accident with plaintiff Joseph Vanderslice. Plaintiff filed a complaint against defendants Camden County, the Camden County Fire Police Department, and Stewart, alleging personal injuries sustained as a result of the accident. The case was referred to mandatory, non-binding arbitration, as required by our court rules. An arbitration panel determined that defendants were 100% liable for plaintiff s injuries, and awarded $145,970 for noneconomic damages and lost wages. The next day, defendants submitted the required demand forms to the Camden County Arbitration Administrator. Attached to defendants demand was a payment voucher that gave the recipient the right to draw upon Camden County s account with the State Treasury. The Arbitration Administrator signed the voucher and sent it to the State Treasurer for payment. The Treasurer issued a check thirty days after the arbitration award was filed. Thirty-two days after the award, the Arbitration Administrator received the check. However, because the Arbitration Administrator concluded that the check was not received within thirty days of the arbitration award as required by Rule4:21A-6(b)(1), the clerk did not file the demand or deposit the check. Although Rule1:5-6(c)(1)(A) required the clerk to notify defendants of their error, neither the clerk nor the Arbitration Administrator informed defendants of their nonconforming payment. Rather, defendants were alerted that the demand had not been filed when plaintiff moved to confirm the arbitration award and enter judgment. Defendants opposed the motion and asked the trial court to permit a late filing. Concluding that defendants had substantially complied with the court rules, the court permitted the late filing and rejected plaintiff s motion to confirm the award and enter judgment. The case proceeded to trial and the jury returned a verdict of no cause of action in favor of defendants. Plaintiff appealed, arguing that the trial court should not have permitted defendants late filing, and that the arbitration award should have been confirmed and judgment entered for plaintiff. In an unpublished decision, the Appellate Division determined that defendants demand was filed too late, reversed the trial court, and remanded the matter for entry of an order confirming the arbitration award and entering judgment in plaintiff's favor. Upon review, the Supreme Court concluded defendants demand was not filed out of time. The Appellate Division's judgment was reversed and the jury's verdict was reinstated. Because the Court found that defendants notice was timely, it did not reach the issue of the standard for expanding the thirty-day time limit under Rule4:21A-6(b)(1). View "Vanderslice v. Stewart" on Justia Law

An Employee was terminated for engaging in outside employment in violation of company policy during his absence on approved medical leave. The Employee sued, arguing that the Employer violated his right to reinstatement under the Moore-Brown-Roberti Family Rights Act (CFRA) and the federal Family and Medical Leave Act. The trial court granted the Employer’s motion to compel arbitration. The arbitrator relied on the federal “honest belief” defense and rejected Plaintiff’s contentions. The Court of Appeals vacated the award in the Employer’s favor, concluding that the arbitrator violated Plaintiff’s right to reinstatement under the CFRA when he applied the honest belief defense to Plaintiff’s claim. The Supreme Court reversed, holding that, although the arbitrator may have committed error in adopting the honest belief defense, any error did not deprive the Employee of an unwaivable statutory right because the arbitrator relied on the substantial evidence that the Employee violated his Employer’s written policy prohibiting outside employment while he was on medical leave. View "Richey v. Autonation, Inc." on Justia Law

Property owner Crescent City Property Partners, L.L.C., and a builder, Greystar Development and Construction, LP, entered into a contract in March, 2002 for the construction of a mixed-use development in Lafayette. Alleging defects in the builder's performance, and pursuant to the arbitration clause in the construction contract, Crescent filed an arbitration claim against Greystar in 2008, also naming as a defendant Greystar's surety, American Manufacturers Mutual Insurance Company. In response, Greystar filed a third party demand against various subcontractors. The Supreme Court granted writs in consolidated cases to consider whether the court of appeal correctly vacated the arbitration award, which had been confirmed by the district court. The court of appeal vacated the award on the basis the arbitration panel, in applying a statute of peremption incorrectly, disturbed a vested right of the plaintiff and, thus, the panel violated the plaintiff's due process rights. The court of appeal found the arbitration panel's interpretation of the law placed an impossible burden on the plaintiff, a burden the panel deemed fundamentally unfair, thereby requiring vacatur of the arbitration panel's award. After its review, the Supreme Court found that the court of appeal essentially misinterpreted the laws concerning arbitration, and, thus, erred in failing to limit its review to the factors mandating vacatur articulated in La. Rev. Stat. 9:4210. In reversing the court of appeal's decision, the Court reiterated well-settled law that otherwise fairly and honestly obtained arbitration awards may not be overturned merely for errors of fact or law. View "Crescent Property Partners, LLC v. American Manufacturers Mutual Insurance Co." on Justia Law

Based on an agreement, an oilfield operator was authorized to charge certain costs against revenues prior to paying the oilfield owners. After a dispute arose, an auditor examined the oilfield operator's costs charged to the oilfield owners and found approximately $1 million as being unsubstantiated and, therefore, impermissibly charged to the owners by the operator. The arbitrator reached a different conclusion regarding what charges were permissible and awarded the owners approximately $1.6 million. Satisfied with the arbitrator's decision, the oilfield brought an action in the district court to confirm the award. The oilfield operator, however, moved to vacate the award. The operator argued that the arbitrator improperly considered certain employment documents and that the arbitration was limited in scope by the auditor's findings of the unsubstantiated charges. The district court confirmed the award and denied the operator's motion. The court of appeal affirmed, with one judge dissenting. The issue this case presented for the Supreme Court's review as whether an accountant, serving as an arbitrator, exceeded his arbitral authority. Finding that the arbitrator acted pursuant to the authority lawfully and contractually vested in him by the parties, the Supreme Court affirmed. View "Mack Energy Co. v. Expert Oil & Gas, LLC" on Justia Law