Justia Arbitration & Mediation Opinion Summaries

After losing millions of dollars because of delays and coordination failures in building a hospital, W.J. O’Neil Company sued its construction manager in state court. In subsequent arbitration, the architect and a design subcontractor (defendants) were added to the arbitration on indemnity claims. In the arbitration, O’Neil did not formally assert claims against those defendants, but O’Neil’s claims against its construction manager arose from the defendants’ defective and inadequate design of the hospital. O’Neil won the arbitration against its construction manager, but the construction manager did not establish its indemnity claims, so the defendants were not held liable. No party sought judicial confirmation or review of the arbitration award. O’Neil then sued the defendants in federal court. The district court dismissed, finding the claims barred by Michigan’s doctrine of res judicata. The Sixth Circuit reversed. An arbitration award cannot bar a claim that the arbitrator lacked authority to decide, and an arbitrator lacks authority to decide a claim that the parties did not agree to arbitrate. O’Neil did not agree to arbitrate the claims at issue. View "W.J. O'Neil Co. v. Shepley, Bulfinch, Richardson & Abbott, Inc." on Justia Law

Kroger appealed the trial court's order denying its motion to compel arbitration of plaintiff's employment discrimination action. The trial court concluded that Kroger failed to meet its burden to prove the existence of an arbitration agreement. The court concluded that the arbitration clause in the employment application, standing alone, was sufficient to establish that the parties agreed to arbitrate their employment-related disputes, and that plaintiff's claims against Kroger fell within the ambit of the arbitration agreement. However, Kroger failed to establish that the parties agreed to govern their arbitration by procedures different from those prescribed in the California Arbitration Act (CAA), Section 1280 et seq., and, therefore, the arbitration is to be governed by the CAA rather than the procedures set forth in the employer's Arbitration Policy. Accordingly, the court reversed the judgment of the trial court. View "Cruise v. Kroger Co." on Justia Law

Petitioners entered into a written agreement with Bastian Homes and Lion Enterprises, Inc. (collectively, “Bastian Homes”) for the construction of a new home. The agreement contained an arbitration clause. After a water leak allegedly substantially damaged major portions of the partially-constructed home, Petitioners sued Bastian Homes. Bastian Homes filed a motion to dismiss the complaint, arguing that the arbitration clause in the construction contract required the matter to be submitted to arbitration. Petitioners opposed the motion to dismiss, contending that the arbitration clause in this case was not bargained for and was therefore invalid. The circuit court granted the motion to dismiss. The Supreme Court affirmed in part and reversed in part, holding (1) because the construction contract was properly formed and supported by sufficient consideration, there was no requirement that the arbitration clause be independently “bargained for”; and (2) because the circuit court decided the arbitration clause not unconscionable without the issue being fairly argued by the parties and without any factual development, this issue needed to be remanded for further development of the record.View "Kirby v. Lion Enters., Inc." on Justia Law

After filing for bankruptcy, Houston Refining, L.P., suspended matching contributions to its employees' 401(k) plans. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, acting on behalf of itself and its local unions (collectively "Union"), filed a grievance under the then-current collective bargaining agreement seeking resumption of the matching contributions. Houston Refining refused to process the grievance, claiming that the suspension was not a grievable issue. Months later, the Union commenced an adversary proceeding in the bankruptcy court to compel Houston Refining to arbitrate the grievance under the CBA. Houston Refining agreed to submit the matter to arbitration. Following a two-day hearing, the arbitrator rendered an award in favor of the Union. Houston Refining filed suit in the district court seeking to vacate the arbitral award, and the Union counterclaimed to enforce the award. The district court found that because the Settlement Agreement evinced the parties’ clear agreement to have the arbitrator decide questions of arbitrability, its review of this issue would be deferential. On the merits, the district court upheld the arbitrator’s finding that Houston Refining violated portions of the CBA, but concluded that the arbitral award’s remedy was ambiguous in certain respects. The district court accordingly denied the company’s motion and granted the Union’s motion in part, but remanded to the arbitrator for clarification of the award’s monetary value, among other issues. Houston Refining appealed, arguing that the district court erred in deferring to the arbitrator’s determination of the grievance’s arbitrability. According to the company, because the parties never agreed in clear and unmistakable terms to give the issue of arbitrability to the arbitrator, the district court was obligated to decide the issue independently. The Fifth Circuit found after review of the matter that "the party contending that an arbitrator has authority to decide arbitrability 'bears the burden of demonstrating clearly and unmistakably that the parties agreed to have the arbitrator decide that threshold question.'" In this case, the Union did not meet its burden, and therefore the district court erred in failing to decide arbitrability “just as it would decide any other question that the parties did not submit to arbitration, namely, independently.” The Court reversed and remanded this case to the district court to decide arbitrability issues raised by this opinion, "independently" without deference to the arbitral decision. View "Houston Refining, L.P. v. United Steel, Paper & Forestry, et al" on Justia Law

UHC hired Haworth as a part-time physician in 2005. After UHC terminated her employment in 2010, she sued for retaliation and wrongful termination. UHC successfully moved to compel arbitration under a provision in Haworth’s employment contract. UHC’s counsel recommended to Haworth’s counsel, Smith, that they select either Retired Judge Broadman or Retired Justice Dibiaso as the arbitrator, stating that he had used both several times, and asked Smith to let him know if he agreed to either one or if he proposed an alternative. Smith agreed to Broadman. After a hearing and briefing, Broadman issued judgment in UHC’s favor, finding that UHC terminated Haworth’s position due to its financial distress, the impracticality of employing part-time physicians, and personnel issues, and that she was an at-will employee. The court vacated the award (Code of Civil Procedure section 1285.20, on the ground that Broadman failed to comply with the mandatory disclosure requirements of sections 1281.9 and 1281.85 and that those obligations cannot be waived. The court of appeal remanded, noting that Haworth’s attorneys had actual knowledge of a ground for disqualification before the arbitration commenced and that the failure to disclose could be waived. View "United Health Ctrs. of San Joaquin v. Superior Ct." on Justia Law

Bayview Loan Servicing, LLC filed a complaint seeking a judgment of foreclosure against John and Cheryl Bartlett, alleging that the Bartletts had defaulted on a note secured by a mortgage on their home. After Bayview failed to appear at three mediation sessions, the district court dismissed Bayview’s complaint with prejudice, concluding that dismissal was the only appropriate sanction in light of Bayview’s pattern of disruptive behavior. The Supreme Court affirmed, holding that the district court did not abuse its discretion in dismissing Bayview’s action with prejudice, as the district court understood the gravity of the sanction it was imposing, did not improperly rely on the Bartletts’ motions to dismiss, and correctly weighed the applicable facts in making its decision.View "Bayview Loan Servicing, LLC v. Bartlett" on Justia Law

The Plaintiffs sued Payday Financial, Webb, an enrolled member of the Cheyenne River Sioux Tribe, and other entities associated with Webb, alleging violations of civil and criminal statutes related to loans that they had received from the defendants. The businesses maintain several websites that offer small, high-interest loans to customers. The entire transaction is completed online; a potential customer applies for, and agrees to, the loan terms from his computer. The district court dismissed for improper venue, finding that the loan agreements required that all disputes be resolved through arbitration conducted by the Cheyenne River Sioux Tribe on their Reservation in South Dakota. Following a limited remand, the district court concluded that, although the tribal law could be ascertained, the arbitral mechanism detailed in the agreement did not exist. The Seventh Circuit held that the action should not have been dismissed because the arbitral mechanism specified in the agreement is illusory. Rejecting an alternative argument that the loan documents require that any litigation be conducted by a tribal court on the Cheyenne River Sioux Tribe Reservation, the court stated that tribal courts have a unique, limited jurisdiction that does not extend generally to the regulation of nontribal members whose actions do not implicate the sovereignty of the tribe or the regulation of tribal lands. View "Jackson v. Payday Fin., LLC" on Justia Law

Paul Kennamer and Dorothy Kennamer appeal an order entered by the Marshall Circuit Court compelling them to arbitrate their claims against Ford Motor Credit Company LLC and Ray Pearman Lincoln, Inc. (the dealership). The Kennamers had problems with the used car they purchased and stopped making payments on the loan they obtained through Ford Credit and the dealership. After review of the retail-installment contract at the center of this controversy, the Supreme Court affirmed the circuit court's decision insofar as it granted the dealership's motion to compel arbitration and reversed insofar as it granted Ford Credit's motion to compel arbitration. View "Kennamer v. Ford Motor Credit Company LLC" on Justia Law

As a condition of her employment, Employee signed an agreement to arbitrate claims with Employer. Employee later filed a complaint with the Iowa Civil Rights Commission (ICRC), alleging that Employer had discriminated against her because of her pregnancy. The ICRC subsequently filed a statement of charges with the Iowa Department of Inspections and Appeals (DIA). Employer filed a motion to dismiss the ICRC’s charges or, in the alternative, compel arbitration. The DIA denied Employer’s motion on the ground that ICRC was not a party to the arbitration agreement and, consequently, not bound by it. On judicial review, the district court remanded instructions for the ICRC to dismiss the matter pending arbitration by the parties, concluding that the Federal Arbitration Act (FAA) preempted state law. The Supreme Court reversed, holding the FAA did not require arbitration of this proceeding because it was brought by an entity that was not bound to arbitrate under generally applicable principles of contract law, where the ICRC was not a party to the agreement and its interest was not derivative of Employee’s. View "Rent-A-Center, Inc. v. Iowa Civil Rights Comm’n" on Justia Law

Plaintiff, a member of a union, filed a complaint against Defendant, her former employer, alleging that during her employment she was subjected to a hostile work environment on account of her race and color and that she was wrongfully terminated. Defendant filed a motion to stay proceedings, arguing that the proper forum for resolution of Plaintiff’s claims was binding arbitration as required by the collective bargaining agreement (CBA) between the union and Defendant. A hearing justice granted Defendant’s motion to stay and ordered that the matter be resolved through arbitration. Plaintiff appealed, arguing that the hearing justice’s decision was in error because the CBA’s arbitration provision did not preclude her from asserting her statutorily created rights under the Rhode Island Civil Rights Act (RICRA) and Rhode Island Fair Employment Practices Act (FEPA) in a judicial forum. The Supreme Court vacated the order of the superior court, holding that the CBA’s general arbitration provision, which contained no specific reference to the state anti-discrimination statutes at issue, did not constitute a clear and unmistakable waiver of Plaintiff’s right to a judicial forum in which to litigate her claims arising under the RICRA and the FEPA. Remanded.View "Weeks v. 735 Putnam Pike Operations, LLC" on Justia Law