Justia Arbitration & Mediation Opinion Summaries

The case centers on an employee who brought multiple claims against her former employer, including several for violations of California’s Labor Code and a representative claim under the Private Attorneys General Act (PAGA). The employee had signed an arbitration agreement at the start of her employment. As a result, all non-PAGA claims were compelled to arbitration, while the PAGA claims (both individual and representative) were stayed. The arbitrator found in favor of the employer on all Labor Code violations, concluding that the alleged violations did not occur.Following the arbitration, the Superior Court of San Bernardino County confirmed the arbitrator’s award and granted judgment on the pleadings against the employee on her PAGA claim, ruling that the arbitration results established she was not an “aggrieved employee” under PAGA, and therefore lacked standing to pursue the PAGA claim. When the employee appealed, the California Court of Appeal, Fourth Appellate District, Division Two, affirmed the denial of her motion to vacate the arbitration award but reversed the judgment on the pleadings as to the PAGA claim, holding that the arbitration did not preclude her from pursuing PAGA penalties.Subsequently, the employer filed a renewed motion for judgment on the pleadings, arguing that subsequent appellate court decisions and the California Supreme Court’s decision in Adolph v. Uber Technologies, Inc., constituted an intervening change in the law, rendering the law of the case doctrine inapplicable. The trial court denied this motion, finding that its prior ruling remained law of the case. Reviewing this denial, the California Court of Appeal, Fourth Appellate District, Division Two, held that the law of the case doctrine properly applied because there had been no controlling intervening change in the law. The court denied the employer’s writ petition, confirming that the arbitrator’s findings on non-PAGA claims did not preclude judicial determination of the employee’s standing under PAGA. View "Prime Healthcare Management v. Super. Ct." on Justia Law

Several participants in a terminated employee stock ownership plan asserted claims under the Employee Retirement Income Security Act (ERISA) following the sale and dissolution of their plan. The plan, created by A360, Inc. in 2016, purchased all company stock and became its sole owner. In 2019, A360 and its trustee sold the plan’s shares to another entity, amending the plan at the same time to include an arbitration clause that required all claims to be resolved individually and prohibited representative, class, or group relief. The plan was terminated shortly thereafter, and the proceeds were distributed to participants. The plaintiffs alleged that the defendants undervalued the shares and breached fiduciary duties, seeking plan-wide monetary and equitable relief.The United States District Court for the Northern District of Georgia considered the defendants’ motion to compel arbitration based on the plan’s amended arbitration provisions. The district court determined that although the plan itself could assent to arbitration, the arbitration provision was unenforceable because it precluded plan-wide relief authorized by ERISA. The court found that the provision constituted a prospective waiver of statutory rights and concluded that, per the plan amendment’s own terms, the arbitration provision was not severable and thus entirely void.The United States Court of Appeals for the Eleventh Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Eleventh Circuit held that the arbitration provision was unenforceable under the effective vindication doctrine because it barred participants from seeking plan-wide relief for breaches of fiduciary duty, as provided by ERISA. The court joined other circuits in concluding that such provisions violate ERISA’s substantive rights and affirmed the district court’s invalidation of the arbitration procedure and denial of the motion to compel arbitration. View "Williams v. Shapiro" on Justia Law

A former hourly employee brought a class action lawsuit against his former employer, a large wood products company, alleging various wage and hour violations under California law. The proposed classes included both employees who had signed arbitration agreements and those who had not. While some nonexempt employees had signed arbitration agreements requiring individual arbitration and waiving class actions, the named plaintiffs had not. The employer did not initially assert arbitration as a defense and, when ordered by the court to produce copies of signed arbitration agreements for putative class members, failed to do so for several years.During the course of discovery in the Superior Court of Shasta County, the employer repeatedly resisted requests to identify or produce arbitration agreements for employees who had signed them, leading to multiple discovery sanctions. The employer participated in extensive discovery and mediation involving employees who had signed arbitration agreements, without distinguishing them from other putative class members. Only after class certification did the employer finally produce thousands of signed arbitration agreements and immediately moved to compel arbitration for those employees. Plaintiffs opposed, arguing the employer had waived its right to arbitrate by years of litigation conduct inconsistent with an intent to arbitrate, and sought evidentiary and issue sanctions for delayed production.The California Court of Appeal, Third Appellate District, reviewed the case. Applying the California Supreme Court’s standard from Quach v. California Commerce Club, Inc., the appellate court held that the employer waived its right to compel arbitration by clear and convincing evidence. The employer’s prolonged failure to produce arbitration agreements and its conduct throughout litigation was inconsistent with an intention to enforce arbitration. The order denying the motion to compel arbitration was affirmed, and the appeal from the order granting evidentiary and issue sanctions was dismissed as nonappealable. View "Sierra Pacific Industries Wage and Hour Cases" on Justia Law

The dispute centers on insurance policies purchased by several Louisiana public entities, including the Town of Vinton, from a group of foreign and American insurers. The policies included an arbitration clause and a contract endorsement stating that each policy is a “separate contract” between the insured and each insurer. After alleged breaches, the insured entities sued all participating insurers in Louisiana state court. Subsequently, the insureds dismissed the foreign insurers with prejudice, leaving only American insurers as defendants.Following the dismissal of the foreign insurers, the remaining American insurers removed the cases to the United States District Court for the Western District of Louisiana. They sought to compel arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act. The district court denied these motions, holding that the contract endorsement created separate agreements between each insurer and the insured, and, since the foreign insurers were no longer parties, no agreement involved a non-American party. The court also rejected the American insurers’ equitable estoppel argument, finding it precluded by Louisiana law, which expressly bars arbitration clauses in insurance contracts covering property in the state.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s decision. The Fifth Circuit held that the Convention does not apply because no foreign party remains in any agreement to arbitrate. The court further concluded that Louisiana law prohibits enforcement of arbitration clauses in these insurance contracts and that equitable estoppel cannot override this prohibition. Lastly, the court determined that the delegation clause in the arbitration agreement could not be enforced because Louisiana law prevents the valid formation of an arbitration agreement in this context. View "Town of Vinton v. Indian Harbor" on Justia Law

Two neighbors in a residential community disagreed about a tree branch that obstructed one neighbor’s view. Jinshu Zhang, the owner seeking the view, used his homeowners association’s dispute resolution process, which included mediation and arbitration services provided by Charles Peterson, an independent mediator. When the association dismissed Zhang’s application, Zhang sued Peterson for breach of fiduciary duty, claiming Peterson was a director or officer of the association and thus owed him such a duty. However, Peterson was neither a director nor an officer, but an independent contractor. Zhang lost his lawsuit against Peterson following a nonsuit at trial, and did not appeal.After that case concluded, Peterson filed a malicious prosecution action against Zhang, alleging Zhang’s earlier suit was baseless and continued without probable cause once Zhang had evidence Peterson was not an officer or director. In response, Zhang filed a special motion to strike under California’s anti-SLAPP statute (Code of Civil Procedure section 425.16), seeking to dismiss Peterson’s malicious prosecution claim. The Superior Court of Los Angeles County denied Zhang’s anti-SLAPP motion, finding Peterson’s case had at least minimal merit based on evidence showing Zhang lacked probable cause and may have acted with malice in pursuing the prior suit.The California Court of Appeal, Second Appellate District, Division Eight, reviewed Zhang’s appeal. The court affirmed the denial of Zhang’s anti-SLAPP motion, holding that the denial of a discretionary sanctions motion in the underlying suit did not establish probable cause under the “interim adverse judgment rule,” and did not bar the malicious prosecution claim. The court concluded that Peterson’s evidence on lack of probable cause and malice was sufficient to allow his case to proceed, and remanded for further proceedings. View "Peterson v. Zhang" on Justia Law

A dispute arose from the design and installation of cabinetry in a luxury home in Charleston, South Carolina. Design Gaps, Inc., owned by David and Eva Glover, had a longstanding business relationship with Shelter, LLC, a general contractor operated by Ryan and Jenny Butler. After being dissatisfied with Design Gaps’ performance, the homeowners, Dr. Jason and Kacie Highsmith, and Shelter terminated their contract with Design Gaps and hired Distinctive Design & Construction LLC, owned by Bryan and Wendy Reiss, to complete the work. The Highsmiths and Shelter initiated arbitration against Design Gaps, which led to the arbitrator ruling in favor of the homeowners and Shelter on their claims, and against Design Gaps on its counterclaims, including those for copyright infringement, tortious interference, and unfair trade practices.After the arbitration, Design Gaps sought to vacate the arbitration award in the United States District Court for the District of South Carolina, but the court instead confirmed the award. Concurrently, Design Gaps filed a separate federal lawsuit against several parties, including some who were not part of the arbitration. The defendants moved to dismiss, arguing that res judicata and collateral estoppel barred the new claims, or alternatively, that the claims failed on other grounds such as the statute of limitations and laches. The district court agreed, dismissing most claims based on preclusion or other legal bars, and granted summary judgment on the remaining claims.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s decisions. The court held that res judicata and collateral estoppel applied to bar most of Design Gaps’ claims, even against parties not directly involved in the arbitration but in privity with those who were. For the remaining claims, the court found they were properly dismissed on grounds such as the statute of limitations, waiver, or laches. The Fourth Circuit affirmed the district court’s judgment in full. View "Design Gaps, Inc. v. Distinctive Design & Construction LLC" on Justia Law

Two financial advisors entered into two agreements as part of a business transaction: an operating agreement establishing them as members of a wealth management firm and a purchase-and-sale contract under which one advisor would gradually buy out the other's ownership interest. The operating agreement contained a noncompete clause and provisions for mediation and arbitration. After the buyout concluded, the selling advisor remained employed with the company and could only be terminated for cause. In January 2024, he was terminated for cause and immediately began working at a competing firm within the restricted radius specified in the noncompete provision.Following his termination, the company and the buying advisor filed suit in the Circuit Court of Forrest County, alleging breach of contract and seeking, among other relief, a temporary restraining order and preliminary injunction to enforce the noncompete clause. The trial court granted the injunction and denied the selling advisor’s motions to dissolve the restraining order, to deny the injunction, and to compel mediation and/or arbitration. The trial court found that the noncompete clause remained binding and that the parties had not shown a clear intent to compel mediation or arbitration for this dispute, given specific contractual language.On appeal, the Supreme Court of Mississippi reviewed whether the noncompete provision was enforceable, whether the trial court erred in issuing the preliminary injunction, and whether the denial of the motion to compel mediation/arbitration was proper. The Court held that the noncompete provision was binding based on the evidence at the preliminary injunction stage, that the trial court did not err in granting the preliminary injunction, and that the mediation/arbitration provisions were not clearly applicable to this dispute. The Supreme Court of Mississippi affirmed the trial court’s order in all respects. View "Wiggins v. Southern Securities Group, LLC" on Justia Law

A consumer purchased a used vehicle from a dealership, with the transaction documented in two contracts: a purchase order and a retail installment sale contract (RISC). The purchase order included an arbitration provision for disputes arising from the purchase or financing of the vehicle, while the RISC detailed the financing terms but did not include an arbitration clause. The RISC contained an assignment clause by which the dealership assigned its interest in "this contract" (the RISC) to a third-party lender, and defined the agreement between the buyer and the assignee as consisting "only" of the RISC and any addenda. The consumer later filed a class action against the lender, alleging improper fees under Maryland law.The Circuit Court for Baltimore City found for the lender, ruling that the purchase order and RISC should be read together as one contract for the purposes of the transaction, and that the arbitration agreement was enforceable against the consumer. The court granted the lender’s motion to compel arbitration. On appeal, the Appellate Court of Maryland affirmed, holding that the consumer was bound by the arbitration provision and that the assignee lender could enforce it, even though the consumer did not receive or sign a separate arbitration agreement.The Supreme Court of Maryland reviewed the case, focusing on contract interpretation and the scope of the assignment. The court held that, even if the purchase order’s arbitration provision was binding between the consumer and the dealer, it was not within the scope of the assignment to the lender. The RISC’s assignment language made clear that only the RISC and its addenda, not the purchase order or its arbitration clause, were assigned to the lender. As a result, the Supreme Court of Maryland reversed the judgment of the Appellate Court and remanded the case for further proceedings. View "Lyles v. Santander Consumer USA" on Justia Law

An employee at a nuclear power plant operated by a subsidiary corporation left active work due to a medical condition but remained employed while on short-term disability. After the employee transitioned to long-term disability, the employer terminated his employment. The union, representing the plant’s workers, filed a grievance on the employee’s behalf, arguing that the collective bargaining agreement (CBA) required continued employment and benefits. The union initiated arbitration against the employer but mistakenly named the employer’s parent company as the respondent. Despite the error, counsel for the correct employer participated in the arbitration, and all parties consistently identified the subsidiary as the actual employer during the proceedings.After the arbitrator issued an award in favor of the union—ordering reinstatement and benefits for the employee—the employer did not comply. Instead, the parent and subsidiary together filed suit in the United States District Court for the Western District of Michigan, seeking to vacate the award due to the mistaken caption. The union counterclaimed for confirmation of the award. The district court ruled for the union, finding extensive evidence that the subsidiary had engaged in and intended to be bound by the arbitration, and that the erroneous caption was merely a procedural defect to which the employer had waived any objection by participating fully and not raising a timely challenge.The United States Court of Appeals for the Sixth Circuit affirmed the district court’s judgment. The Sixth Circuit held that when an arbitration demand and award misname the party against whom the award is meant to be entered, but there is no ambiguity about the real party, a federal court may enforce the award. The court further held that any objection to the misnomer was waived by the employer’s participation and failure to object, and that the error was a curable misnomer not warranting vacatur or modification of the award. View "Holtec International Corp. v. Michigan State Utility Workers Council" on Justia Law

A 2018 data breach at Barracuda Networks exposed protected health information of patients of Zoll Services LLC, a subsidiary of Zoll Medical Corporation. Zoll had contracted with Fusion LLC for data security services, and Fusion in turn relied on Barracuda’s technology. The agreements between these companies included certain liability and indemnification provisions, as well as a right for Barracuda to audit Fusion’s customer contracts. After the breach, Zoll settled a class action brought by its customers whose data was compromised.Following these events, Zoll initiated arbitration against Fusion and filed suit against Barracuda in the U.S. District Court for the District of Massachusetts. Fusion intervened and asserted additional claims against Barracuda. The district court dismissed most claims but allowed Zoll’s equitable indemnification claim and Fusion’s breach of contract and breach of the covenant of good faith and fair dealing claims to proceed. After arbitration and settlements, Axis Insurance Company, as assignee and subrogee of Zoll and Fusion, was substituted as plaintiff. Barracuda moved for summary judgment on the remaining claims, which the district court granted.On appeal, the United States Court of Appeals for the First Circuit reviewed the district court’s summary judgment rulings de novo. The appellate court held that Axis failed to present evidence of a relationship between Zoll and Barracuda that would support derivative or vicarious liability necessary for equitable indemnification under Massachusetts law. The court found that Fusion did not meet a condition precedent in its contract with Barracuda, and Barracuda had not waived or was estopped from asserting that condition. Further, Axis could not show that Barracuda breached the covenant of good faith and fair dealing, as no relevant contractual right existed. The First Circuit affirmed the district court’s grant of summary judgment in favor of Barracuda on all claims. View "Axis Insurance Company v. Barracuda Networks, Inc." on Justia Law