Justia Arbitration & Mediation Opinion Summaries

In this case, a private insurance company, TIG Insurance Company, sought to enforce two judgments against the Republic of Argentina. The dispute centers on whether Argentina, as the successor to a state-owned Argentine company, Caja Nacional de Ahorro y Seguro, is liable under reinsurance contracts that Caja entered into with TIG in 1979. TIG alleged that Caja failed to pay as promised under these contracts, leading to arbitral awards and subsequent judgments in TIG's favor.The United States District Court for the District of Columbia initially ruled in favor of Argentina, finding that Argentina's property was immune from execution under the Foreign Sovereign Immunities Act (FSIA) because it was not used for commercial activity at the time the writ would issue. The court also held that the Illinois district court lacked jurisdiction over Argentina for the 2018 judgment and that TIG needed to amend the 2001 judgment in Illinois to name Argentina before seeking enforcement in D.C. TIG appealed these decisions.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and concluded that two FSIA exceptions—the arbitration and waiver exceptions—might apply. The court held that an agreement could be "made by" a sovereign if it legally binds that sovereign to arbitrate, even if the sovereign was not an original signatory. The court also found that implied waiver does not require evidence of subjective intent but can be based on objective actions, such as agreeing to arbitration or a choice-of-law clause. The court vacated the district court's decisions and remanded for further analysis and factfinding on these issues.The appellate court affirmed the denial of TIG's request for jurisdictional discovery and precluded TIG from advancing an alter ego theory or arguing that Argentina failed to raise its immunity in a responsive pleading. The case was remanded for further proceedings consistent with the appellate court's instructions. View "TIG Insurance Company v. Republic of Argentina" on Justia Law

In a dispute between the Republic of Djibouti and Doraleh Container Terminal (Doraleh), Doraleh secured a $474 million arbitral award against Djibouti. Djibouti then nationalized a majority interest in Doraleh and appointed a provisional administrator, Chantal Tadoral, to manage the company. Quinn Emanuel, a law firm, sought to enforce the arbitral award in the U.S. District Court for the District of Columbia, claiming to represent Doraleh. However, Tadoral stated she did not authorize the filing, and Djibouti requested the case be dismissed.The District Court for the District of Columbia entered judgment for Doraleh, holding that Quinn Emanuel’s authority was irrelevant or, alternatively, that Djibouti had forfeited the issue by not raising it during arbitration. Djibouti appealed, arguing that the district court erred by not determining whether Quinn Emanuel had the authority to represent Doraleh.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and disagreed with the district court. The appellate court held that Quinn Emanuel’s authority is relevant and that the issue of a lawyer’s authority can be challenged at any point in litigation. The court found that Djibouti presented substantial evidence questioning Quinn Emanuel’s authority, which required the district court to determine whether the law firm had the authority to file the suit. Consequently, the appellate court vacated the judgment and remanded the case to the district court to determine Quinn Emanuel’s authority to represent Doraleh. View "Doraleh Container Terminal SA v. Republic of Djibouti" on Justia Law

Peter Quach filed a lawsuit against California Commerce Club (Commerce Club) after being terminated from his job at the casino where he had worked for nearly 30 years. Quach's complaint included claims of wrongful termination, age discrimination, retaliation, and harassment, and he demanded a jury trial. Commerce Club had previously provided Quach with a signed arbitration agreement from 2015, which mandated binding arbitration for employment-related disputes. Instead of moving to compel arbitration, Commerce Club answered the complaint and engaged in extensive discovery, including propounding interrogatories and taking Quach’s deposition.The Los Angeles County Superior Court denied Commerce Club’s motion to compel arbitration, finding that Commerce Club had waived its right to arbitrate by engaging in litigation for 13 months. The court noted that Commerce Club had actively participated in discovery and requested a jury trial, actions inconsistent with an intent to arbitrate. Commerce Club appealed, and the Second Appellate District, Division One, reversed the trial court’s decision, holding that Quach had not shown sufficient prejudice from Commerce Club’s delay in seeking arbitration.The Supreme Court of California reviewed the case and abrogated the state’s arbitration-specific prejudice requirement, aligning with the U.S. Supreme Court’s decision in Morgan v. Sundance, Inc. The court held that under California law, as under federal law, courts should apply the same principles to determine waiver of the right to compel arbitration as they do for other contracts. The court concluded that Commerce Club had waived its right to compel arbitration by engaging in litigation conduct inconsistent with an intent to arbitrate. The judgment of the Court of Appeal was reversed, and the case was remanded for further proceedings consistent with this decision. View "Quach v. Cal. Commerce Club, Inc." on Justia Law

In 2020, several residents at a skilled nursing facility died from coronavirus infections. Family members of the deceased sued the facility and its alleged alter egos, asserting claims including elder abuse, negligence, and wrongful death. The defendants moved to compel arbitration based on agreements signed by family members rather than the decedents. The trial court denied the motion, finding no evidence that the family members had authority to sign on behalf of the decedents, and that the agreements did not bind the family members in their individual capacities. For one agreement where a family member had power of attorney, the court exercised its discretion to deny arbitration to avoid conflicting results.The Shasta County Superior Court denied the motion to compel arbitration. It found that the defendants did not provide evidence that the family members had authority to sign the arbitration agreements on behalf of the decedents. Additionally, the court ruled that the agreements did not bind the family members in their individual capacities. For the agreement involving a power of attorney, the court denied arbitration to prevent conflicting rulings between court and arbitration proceedings.The California Court of Appeal, Third Appellate District, reviewed the case. It affirmed the lower court's decision, holding that the defendants failed to establish that the family members were authorized agents of the decedents. The court also found that the family members did not sign the agreements in their individual capacities, and thus were not bound by them. Furthermore, the court upheld the trial court's discretion to deny arbitration for the claim involving a power of attorney to avoid conflicting rulings. The order denying the motion to compel arbitration was affirmed. View "Hearden v. Windsor Redding Care Center" on Justia Law

Danny Lopez, an airline fuel technician, filed a wage-and-hour lawsuit under California law against his employer, Menzies Aviation (USA), Inc. Lopez alleged that Menzies violated state requirements for meal periods, rest periods, overtime wages, minimum wages, and other employment conditions. Menzies sought to compel arbitration based on an arbitration agreement Lopez signed as part of his employment.The United States District Court for the Central District of California denied Menzies' motion to compel arbitration. The court found that Lopez, as a transportation worker engaged in foreign or interstate commerce, was exempt from the Federal Arbitration Act (FAA) under 9 U.S.C. § 1. The court reasoned that Lopez’s role in fueling airplanes used in interstate and foreign commerce was integral to the transportation process, thus qualifying him for the exemption.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court’s decision. The Ninth Circuit held that a fuel technician who places fuel in planes used for foreign and interstate commerce is a transportation worker engaged in commerce. The court emphasized that such a worker plays a direct and necessary role in the free flow of goods across borders. The court clarified that there is no requirement for the worker to have hands-on contact with goods or be directly involved in their transportation to fall within the FAA exemption. Consequently, the Ninth Circuit concluded that Lopez was exempt from the arbitration requirements of the FAA and affirmed the district court’s denial of Menzies' motion to compel arbitration. View "LOPEZ V. AIRCRAFT SERVICE INTERNATIONAL, INC." on Justia Law

Webuild S.P.A., an Italian investment company, formed a consortium with other companies to work on the Panama Canal expansion project. After the project's completion, Webuild initiated an arbitration against Panama under the ICSID, alleging that Panama breached its obligations under a bilateral investment treaty by providing incomplete information and making unfair financial demands. Webuild sought discovery from WSP USA, which had acquired the project's engineering consultant, Parsons Brinkerhoff.The United States District Court for the Southern District of New York initially granted Webuild's ex parte application for discovery under 28 U.S.C. § 1782. However, following the Supreme Court's decision in ZF Automotive US, Inc. v. Luxshare, Ltd., which limited § 1782 to governmental or intergovernmental tribunals, the district court vacated its order and quashed the subpoena. The court concluded that the ICSID arbitration tribunal did not qualify as a governmental or intergovernmental entity under § 1782.The United States Court of Appeals for the Second Circuit reviewed the district court's decision de novo. The appellate court affirmed the lower court's ruling, agreeing that the ICSID tribunal did not exercise governmental authority as required by § 1782. The court noted that the tribunal was formed specifically for the arbitration, funded by the parties, and its members had no official governmental affiliation. Thus, the ICSID tribunal did not meet the criteria established by the Supreme Court in ZF Automotive for a "foreign or international tribunal" under § 1782. View "Webuild v. WSP USA Inc." on Justia Law

Petitioners opened brokerage accounts with Stifel, Nicolaus & Company, managed by Coleman Devlin. Dissatisfied with Devlin's performance, they filed for arbitration with the Financial Industry Regulatory Authority (FINRA), alleging negligence, breach of contract, breach of fiduciary duty, negligent supervision, and violations of state and federal securities laws. After nearly two years of hearings, the arbitration panel ruled in favor of Stifel and Devlin without providing a detailed explanation, as the parties did not request an "explained decision."Petitioners moved to vacate the arbitration award in the United States District Court for the District of Maryland, arguing that the arbitration panel manifestly disregarded the law, including federal securities law. The district court denied the motion, stating that the petitioners failed to meet the high standard required to prove manifest disregard of the law. The court noted that the petitioners were essentially rearguing their case from the arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court noted that the Supreme Court's decision in Badgerow v. Walters requires an independent jurisdictional basis beyond the Federal Arbitration Act (FAA) itself for federal courts to have jurisdiction over petitions to vacate arbitration awards. Since the petitioners did not provide such a basis, the Fourth Circuit vacated the district court's judgment and remanded the case with instructions to dismiss the petition for lack of jurisdiction. The court emphasized that claims of manifest disregard of federal law do not confer federal-question jurisdiction. View "Friedler v. Stifel, Nicolaus, & Company, Inc." on Justia Law

A labor dispute arose between the City of Cleveland and the Ohio Patrolmen’s Benevolent Association (the union representing dispatch supervisors) over overtime scheduling. The dispute was submitted to arbitration, where the arbitrator denied the union's grievance. The union then sought to vacate the arbitration award by filing an application in the Cuyahoga County Common Pleas Court, serving the city but not the attorneys who represented the city in the arbitration.The Common Pleas Court initially denied the city's motion to dismiss the union's application, but later reversed its decision after the Eighth District Court of Appeals ruled in a different case that failure to serve the adverse party's counsel deprived the court of jurisdiction. Consequently, the Common Pleas Court dismissed the union's application and confirmed the arbitration award in favor of the city. The Eighth District affirmed this decision, citing two defects: the union's application was in the form of a pleading rather than a motion, and it failed to serve the city's arbitration counsel.The Supreme Court of Ohio reviewed the case and held that under R.C. 2711.13, a party seeking to vacate an arbitration award must serve either the adverse party or its counsel, not necessarily both. However, the court also held that the union's application did not meet the statutory requirements because it was filed as a pleading (a complaint) rather than a motion. The court emphasized that a motion must state with particularity the grounds for the requested order, which the union's filing failed to do. Thus, the Supreme Court of Ohio reversed the Eighth District's decision regarding the service requirement but affirmed the decision that the union's application did not meet the statutory form requirements, leaving the arbitration award in favor of the city intact. View "Ohio Patrolmen's Benevolent Assn. v. Cleveland" on Justia Law

A former employee sued her employer, Charter Communications, Inc., alleging discrimination, harassment, and retaliation under the Fair Employment and Housing Act (FEHA), as well as wrongful discharge. Charter moved to compel arbitration based on an agreement the employee had signed during the onboarding process. The employee opposed, arguing the arbitration agreement was procedurally and substantively unconscionable.The Los Angeles County Superior Court found the agreement to be a contract of adhesion and substantively unconscionable due to provisions that shortened the time for filing claims, allowed Charter to recover attorney fees contrary to FEHA, and imposed an interim fee award for compelling arbitration. The court refused to enforce the agreement, finding it permeated with unconscionability. The Second Appellate District, Division Four, affirmed, identifying additional unconscionable provisions and disagreeing with another appellate decision regarding interim fee awards.The Supreme Court of California reviewed the case and agreed that certain provisions of the arbitration agreement were substantively unconscionable, including the lack of mutuality in covered and excluded claims, the shortened limitations period for filing claims, and the potential for an unlawful award of attorney fees. The court clarified that the discovery limitations were not unconscionable, as the arbitrator had the authority to order additional discovery if necessary.The Supreme Court held that the agreement's unconscionable provisions could potentially be severed, and the matter was remanded for further consideration of whether the unconscionable provisions could be severed to enforce the remainder of the agreement. The court also concluded that the Court of Appeal’s decision did not violate the Federal Arbitration Act. View "Ramirez v. Charter Communications, Inc." on Justia Law

Dr. John Insall, an orthopedic surgeon, developed and patented knee replacement devices, which he licensed to Zimmer Biomet Holdings, Inc. In return, Zimmer agreed to pay royalties to Insall, and later to his estate after his death. When Insall’s last patent expired in 2018, Zimmer ceased royalty payments, claiming the obligation had ended. The dispute was submitted to arbitration, where the Estate prevailed. Zimmer then sought to vacate the arbitration award in district court, arguing that continuing royalty payments violated public policy. The district court confirmed the arbitration award.The United States District Court for the Northern District of Illinois reviewed the case. Zimmer argued that the arbitration award should be vacated based on public policy grounds, citing Supreme Court decisions in Brulotte v. Thys Co. and Kimble v. Marvel Entertainment, LLC, which prohibit collecting royalties on expired patents. The district court rejected Zimmer’s argument and confirmed the arbitration award, leading to Zimmer’s appeal.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court emphasized the limited scope of judicial review over arbitration awards under the Federal Arbitration Act (FAA). The court found that the arbitration panel had correctly interpreted the 1998 amendments to the agreement, which untethered the royalty payments from the patents themselves, making them based on the marketing and branding of the NexGen Knee products. Consequently, the court held that the arbitration award did not violate public policy as outlined in Brulotte and Kimble. The Seventh Circuit affirmed the district court’s decision and confirmed the arbitration award in favor of Insall’s Estate. View "Zimmer Biomet Holdings, Inc. v. Insall" on Justia Law