Justia Arbitration & Mediation Opinion Summaries
Servotronics, Inc. v. Rolls-Royce PLC
An aircraft engine caught fire during testing in South Carolina. Rolls-Royce had manufactured and sold the engine to Boeing for incorporation into a 787 Dreamliner aircraft. Boeing demanded compensation from Rolls-Royce. In 2017, the companies settled for $12 million. Rolls-Royce then sought indemnification from Servotronics, the manufacturer of a valve. Under a long-term agreement between Rolls-Royce and Servotronics, any dispute not resolved through negotiation or mediation must be submitted to binding arbitration in England, under the rules of the Chartered Institute of Arbiters (CIArb). Rolls-Royce initiated arbitration with the CIArb. Servotronics filed an ex parte application in the Northern District of Illinois, seeking a subpoena compelling Boeing to produce documents for use in the London arbitration. The subpoena was issued, then quashed.The Seventh Circuit ruled in favor of Rolls-Royce. A district court may order a person within the district to give testimony or produce documents “for use in a proceeding in a foreign or international tribunal,” 28 U.S.C. 1782(a). Section 1782(a) does not authorize the district court to compel discovery for use in a private foreign arbitration. View "Servotronics, Inc. v. Rolls-Royce PLC" on Justia Law
Flanzman v. Jenny Craig, Inc.
Jenny Craig, Inc. hired Marilyn Flanzman to work as a weight maintenance counselor in 1991. In May 2011, Flanzman signed a document entitled “Arbitration Agreement” in connection with her employment. In February 2017, when the dispute that led to this appeal arose, Flanzman was eighty-two years old. Flanzman’s managers informed her that her hours would be reduced from thirty-five to nineteen hours per week. In April 2017, Flanzman’s managers further reduced her hours to approximately thirteen hours per week. In June 2017, they reduced her hours to three hours per week, at which point she left her employment. Flanzman brought suit, asserting claims for age discrimination, constructive discharge, discriminatory discharge, and harassment. Relying on the Agreement, defendants moved to dismiss the complaint and to compel arbitration. Defendants contended that California law governed the Agreement and that the Agreement was enforceable. The trial court granted the motion to dismiss and ordered the parties to arbitrate Flanzman’s claims. It held that California law governed the arbitration and that the proper forum was assumed to be California. Finding no reversible error, the New Jersey Supreme Court affirmed the trial court's judgment. View "Flanzman v. Jenny Craig, Inc." on Justia Law
Laver v. Credit Suisse Securities (USA), LLC
The Ninth Circuit affirmed the district court's dismissal of a putative class action against CSSU in favor of arbitration. After plaintiff filed suit alleging that he was owed deferred compensation, CSSU moved to dismiss based on an arbitration clause and general class waiver set forth in an Employee Dispute Resolution Program.The panel rejected plaintiff's argument that FINRA Rule 13204(a)(4) invalidates the Program's class waiver. Because the class waiver survives, the panel held that plaintiff relinquished his right to bring class claims in any forum, and because he is left with only individual claims, Rule 13204(a)(4)'s prohibition on enforcing arbitration agreements directed at putative or certified class claims has no application here. Therefore, the panel held that the district court correctly ordered the parties to arbitrate plaintiff's remaining individual claims, and aligned itself with the Second Circuit's decision in Cohen v. UBS Fin. Servs., Inc., 799 F.3d 174 (2d Cir. 2015). View "Laver v. Credit Suisse Securities (USA), LLC" on Justia Law
SEIU Local 121RN v. Los Robles Regional Medical Center
The Ninth Circuit reversed the district court's order on a motion to compel arbitration of a grievance in which the union asserted that the Hospital placed certain types of patients with nurses who did not have the appropriate training for those patients and that the Hospital was violating nurse-to-patient ratios established by state law. At issue in this appeal is whether the arbitrability of an issue is itself arbitrable, where the relevant agreement includes a broad arbitration clause but is otherwise silent on the question.In First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), the Supreme Court established that a court, not the arbitrator, must make the determination whether the arbitrability of an issue is itself arbitrable when the relevant agreement is silent on that question. In United Bhd. Of Carpenters & Joiners of Am., Local No. 1780 v. Desert Palace, Inc., 94 F.3d 1308 (9th Cir. 1996), this court stated that labor cases are different, and in those cases, an arbitrator should decide arbitrability as long as the agreement includes a broad arbitration clause.The panel held that the rationale in Desert Palace is clearly irreconcilable with the reasoning or theory of intervening higher authority in Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 300–01 (2010), where the Supreme Court expressly rejected the notion that labor arbitration disputes should be analyzed differently than commercial arbitration disputes. Therefore, the panel was not bound by Desert Palace and remanded to the district court to consider whether the union's grievance is arbitrable. View "SEIU Local 121RN v. Los Robles Regional Medical Center" on Justia Law
Gherardi v. Citigroup Global Markets, Inc.
After plaintiff won a substantial arbitration award against his former employer, the employer sought vacatur in federal court. The district court agreed with the employer, Citi, that plaintiff had been an at-will employee and thus the arbitrators exceeded their powers by finding that he had been wrongfully terminated.The Eleventh Circuit reversed the district court's vacatur of the arbitration award, holding that plaintiff and Citi agreed to arbitrate all disputes about plaintiff's employment. The court stated that, under the Federal Arbitration Act, the merits of plaintiff's dispute were committed to the arbitrators and Citi does not get to start over in federal court because it identifies a possible legal error in arbitration. Therefore, the district court erred by substituting its own legal judgment for that of the arbitrators. View "Gherardi v. Citigroup Global Markets, Inc." on Justia Law
Fedor v. United Healthcare
Plaintiff-appellant Dana Fedor appealed a district court’s order compelling her to arbitrate employment-related claims she brought against her former employer, UnitedHealthcare, Inc. (UHC), and United Healthcare Services, Inc. Fedor argued the district court impermissibly compelled arbitration before first finding that she and UHC had indeed formed the arbitration agreement underlying the district court’s decision. To this, the Tenth Circuit agreed, concluding that the issue of whether an arbitration agreement was formed in the first instance had to be determined by the court, even where there has been a failure to specifically challenge provisions within the agreement delegating certain decisions to an arbitrator. Judgment was vacated and the matter remanded for further proceedings. View "Fedor v. United Healthcare" on Justia Law
Mejia v. DACM Inc.
In May 2017, plaintiff Joseph Mejia bought a used motorcycle from Defendant DACM, Inc. (Del Amo) for $5,500. Mejia paid $500 cash and financed the remainder of the purchase price with a WebBank-issued Yamaha credit card he obtained through the dealership purchasing the motorcycle. In applying for the credit card, Mejia signed a credit application acknowledging he had received and read WebBank’s Yamaha Credit Card Account Customer Agreement (the credit card agreement), which contained an arbitration provision. Sometime after his purchase, Mejia filed a complaint against Del Amo on behalf of himself and other similarly situated consumers alleging Del Amo “has violated and continues to violate” the Rees-Levering Automobile Sales Finance Act by failing to provide its customers with a single document setting forth all the financing terms for motor vehicle purchases made with a conditional sale contract. The trial court denied Del Amo’s petition to compel arbitration, finding the arbitration provision was unenforceable under McGill v. Citibank, N.A., 2 Cal.5th 945 (2017) because it barred the customer from pursuing “in any forum” his claim for a public injunction to stop Del Amo’s allegedly illegal practices. Del Amo contended the trial court erred in ruling the arbitration provision was unenforceable under McGill, arguing: (1) McGill did not apply because, due to a choice-of-law provision in the contract, Utah law rather than California law governed the dispute; (2) if California law applied, the arbitration provision “does not run afoul of McGill” because Mejia did not seek a public injunction; (3) the arbitration clause was not unenforceable under McGill because the provision did not prevent a plaintiff from seeking public injunctive relief in all fora; and (4) if the arbitration provision was unenforceable under McGill, the Federal Arbitration Act (FAA) preempted McGill and required enforcement of the clause. The Court of Appeal found no merit to any of Del Amo's contentions and affirmed the district court's order. View "Mejia v. DACM Inc." on Justia Law
Badgerow v. Walters
After a panel of arbitrators issued an arbitration award dismissing all of plaintiff's claims against Ameriprise and three of its franchise advisors, plaintiff then filed a petition in Louisiana state court to vacate that arbitration award, as to certain defendant parties. Defendants removed to state court; plaintiff moved to remand; and the district court held that it did have subject-matter jurisdiction over the petition to vacate and thus denied remand. The district court ruled on the removed petition to vacate, denying plaintiff's claims with prejudice. At issue in this appeal is the jurisdiction of the federal court over the petition to vacate.The Fifth Circuit affirmed and held that, applying the look-through analysis, the district court correctly found that the federal claim against Ameriprise in the FINRA arbitration proceeding meant that there was federal subject-matter jurisdiction over the removed petition to vacate the FINRA arbitration dismissal award. Therefore, the district court correctly denied plaintiff's motion to remand the action to vacate to Louisiana state court. View "Badgerow v. Walters" on Justia Law
OOGC America, LLC v. Chesapeake Exploration, LLC
OOGC filed suit to vacate two arbitration awards favoring Chesapeake on the basis of an arbitrator's failure to disclose connections with certain non-parties. The Fifth Circuit vacated the district court's decision to vacate the awards and remanded with instructions to confirm the arbitration awards within thirty days of the issuance of the mandate. The court held that the district court erred by vacating the arbitration awards for "evident partiality" under 9 U.S.C. 10(a)(2). Furthermore, resolving all doubts or uncertainties in favor of upholding the awards, the court held that OOGC has not shown an adequate basis for vacatur under 9 U.S.C. 10(a)(4) and rejected OOGC's argument that the arbitrator exceeded his powers here.The court affirmed the district court's denial of the arbitrator's motion to intervene because the district court was without jurisdiction to rule upon the intervention motion once the plaintiff had filed his notice of appeal. Because the court vacated the district court's decision, the court denied the arbitrator's motion to intervene as moot. View "OOGC America, LLC v. Chesapeake Exploration, LLC" on Justia Law
MZM Construction Co. Inc. v. NJ Building Laborers Statewide BenefitsFunds
In a dispute concerning a construction company’s liability for contributions to the Benefits Fund, the Fund unilaterally scheduled arbitration. The company sought to enjoin arbitration, alleging fraud in the execution of the agreement it signed. The district court concluded that the court had the primary power to decide whether fraud in the execution vitiated the formation or existence of the contract containing the arbitration provision. The court enjoined arbitration pending resolution of factual issues that bear upon that claim.The Third Circuit affirmed. Under the Federal Arbitration Act (FAA), 9 U.S.C. 4, questions about the “making of the agreement to arbitrate” are for the courts to decide unless the parties have clearly and unmistakably referred those issues to arbitration in a written contract whose formation is not in issue. Here, the formation of the contract containing the relevant arbitration provision is at issue. View "MZM Construction Co. Inc. v. NJ Building Laborers Statewide BenefitsFunds" on Justia Law