Justia Arbitration & Mediation Opinion Summaries

An individual diagnosed with Alzheimer’s disease was admitted to a personal care facility in Kentucky after his spouse, who had been appointed his conservator by a Tennessee court, signed a mandatory arbitration agreement required for admission. The spouse did not specify her capacity when signing. The patient later suffered injuries and died, leading his spouse, as administratrix of his estate, to file suit alleging negligence, wrongful death, and other claims against the facility and its operators.The defendants moved to compel arbitration, arguing that the spouse had authority to sign the agreement under the Tennessee conservatorship order or, alternatively, under Kentucky’s Living Will Directive Act, which allows a spouse to make “health care decisions” for an incapacitated person. The Fayette Circuit Court denied the motion, finding that signing an arbitration agreement was not a health care decision under the Act and that the spouse lacked authority to bind the patient. The court did not rule on unconscionability. The Kentucky Court of Appeals affirmed, distinguishing prior cases involving powers of attorney and holding that the Act’s definition of “health care decision” did not include entering arbitration agreements.The Supreme Court of Kentucky reviewed whether a spouse may bind an incapacitated person to arbitration for facility admission under the Living Will Directive Act. The Court held that signing an arbitration agreement is not a “health care decision” as defined by Kentucky law, which limits such decisions to consenting to or withdrawing consent for medical procedures, treatments, or interventions. The Court affirmed the Court of Appeals’ decision, upholding the denial of the motion to compel arbitration, and remanded the case for further proceedings. View "LEXINGTON ALZHEIMER'S INVESTORS, LLC V. NORRIS" on Justia Law

An employee was hired by a company and, as a condition of employment, signed an agreement requiring all employment-related claims to be resolved through arbitration governed by the Federal Arbitration Act (FAA). The agreement specified that the employer would pay all arbitration costs except for certain fees. After the employee reported alleged workplace harassment and was subsequently terminated, he sued the employer in California Superior Court for retaliation and other violations. The employer moved to compel arbitration, which the court granted, and arbitration commenced. After about a year, the arbitrator issued invoices for fees, which the employer failed to pay within 30 days of receipt, as required by California Code of Civil Procedure section 1281.98. The employee then sought to withdraw from arbitration and proceed in court, arguing the employer’s late payment constituted a material breach under section 1281.98.The Superior Court denied the employee’s motion, reasoning that the arbitrator had set a new due date for payment and the employer paid within 30 days of that date. The California Court of Appeal reversed, holding that the statutory 30-day deadline applied from the original invoice date and that the employer’s late payment resulted in a material breach, allowing the employee to withdraw from arbitration. The Court of Appeal also held that section 1281.98 was not preempted by the FAA.The Supreme Court of California reviewed the case to determine whether section 1281.98 is preempted by the FAA. The court held that section 1281.98 is not preempted, but clarified that the statute does not abrogate longstanding contract principles allowing relief from forfeiture for non-willful, non-grossly negligent, or non-fraudulent breaches. The court reversed the Court of Appeal’s order lifting the stay and remanded for the trial court to determine whether the employer’s late payment was excusable and whether the employee suffered compensable harm. View "Hohenshelt v. Superior Court" on Justia Law

Several companies incorporated in Cyprus and the Isle of Man, who were shareholders of OAO Yukos Oil Company, alleged that the Russian Federation unlawfully expropriated Yukos’s assets between 2003 and 2004. The shareholders initiated arbitration proceedings under the Energy Charter Treaty, which Russia had signed but not ratified, claiming that Russia’s actions violated the Treaty’s protections against expropriation. The arbitral tribunal in The Hague found in favor of the shareholders, awarding them over $50 billion in damages. Russia contested the tribunal’s jurisdiction, arguing that it was not bound to arbitrate under the Treaty because provisional application of the arbitration clause was inconsistent with Russian law, and that the shareholders were not proper investors under the Treaty.After the tribunal’s decision, Russia sought to set aside the awards in Dutch courts. The Dutch Supreme Court ultimately upheld the tribunal’s jurisdiction and the awards, finding that Russia was provisionally bound by the Treaty’s arbitration clause and that the shareholders qualified as investors. Meanwhile, the shareholders sought to enforce the arbitral awards in the United States District Court for the District of Columbia. Russia moved to dismiss, asserting sovereign immunity under the Foreign Sovereign Immunities Act (FSIA) and arguing that the arbitration exception did not apply because there was no valid arbitration agreement. The district court denied Russia’s motion, holding that it had jurisdiction under the FSIA’s arbitration exception, and deferred to the arbitral tribunal’s determination that an arbitration agreement existed.On appeal, the United States Court of Appeals for the District of Columbia Circuit held that the existence of an arbitration agreement is a jurisdictional fact under the FSIA that must be independently determined by the district court, rather than deferred to the arbitral tribunal. The court vacated the district court’s judgment and remanded for independent consideration of whether the FSIA’s arbitration exception applies, including whether the Dutch courts’ judgments should have preclusive effect. View "Hulley Enterprises Ltd. v. Russian Federation" on Justia Law

Robert Platt, an employee of Sodexo, Inc., sued his employer, claiming that a monthly tobacco surcharge on his employee health insurance premiums violated the Employee Retirement Income Security Act (ERISA). Platt brought claims on behalf of himself and other plan participants to recover losses under ERISA § 502(a)(1)(B) and § 502(a)(3), and a breach of fiduciary duty claim on behalf of the employer-sponsored health insurance plan (the Plan) for losses under ERISA § 502(a)(2). Sodexo sought to compel arbitration based on an arbitration provision it unilaterally added to the Plan after Platt joined.The United States District Court for the Central District of California denied Sodexo’s motion to compel arbitration, holding that there was no enforceable arbitration agreement because Sodexo unilaterally modified the Plan to add the arbitration provision without Platt’s consent. The court found that Platt did not agree to arbitrate his claims.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court agreed that an employer cannot create a valid arbitration agreement by unilaterally modifying an ERISA-governed plan to add an arbitration provision without obtaining consent from the relevant party. The court held that Platt is the relevant consenting party for claims under ERISA § 502(a)(1)(B) and § 502(a)(3) and that he did not consent to arbitration because he did not receive sufficient notice of the arbitration provision. However, the court held that the Plan is the relevant consenting party for the breach of fiduciary duty claim under ERISA § 502(a)(2) and that the Plan consented to arbitration.The Ninth Circuit affirmed the district court’s denial of Sodexo’s motion to compel arbitration for Platt’s claims under ERISA § 502(a)(1)(B) and § 502(a)(3). It reversed in part the district court’s denial of the motion to compel arbitration for the breach of fiduciary duty claim under ERISA § 502(a)(2) and remanded for the district court to consider Platt’s unconscionability defenses and the severability of the representative action waiver and any other arbitration clauses found unconscionable. View "PLATT V. SODEXO, S.A." on Justia Law

Darrell J. Austin, Jr. filed a lawsuit against Experian Information Solutions, Inc., alleging violations of the Fair Credit Reporting Act (FCRA). Austin claimed that Experian reported inaccurate and derogatory information about his credit history, even after he had disputed the inaccuracies. He had enrolled in CreditWorks, a free online credit-monitoring service offered by an Experian affiliate, to understand why his credit applications were being denied despite the discharge of much of his debt through bankruptcy.The United States District Court for the Eastern District of Virginia denied Experian’s motion to compel arbitration and excluded the declaration of David Williams, an Experian affiliate employee, which was submitted to support the motion. The court found that Williams lacked personal knowledge and relied on hearsay documents. Additionally, the court concluded that the CreditWorks enrollment page was deceptive and did not provide sufficient notice to Austin that he was agreeing to arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the case and reversed the district court’s decision. The appellate court found that the district court erred in excluding the Williams declaration, as Williams had adequately demonstrated personal knowledge of the enrollment process and the terms of use. The court also determined that the CreditWorks enrollment page provided clear and conspicuous notice of the terms of use, including the arbitration agreement, and that Austin had manifested assent to those terms by creating an account.The Fourth Circuit held that Experian had met its burden to establish the existence of a binding arbitration agreement and remanded the case for further proceedings consistent with its opinion. View "Austin v. Experian Information Solutions, Inc." on Justia Law

Brian Trematore Plumbing & Heating, Inc. (Trematore) entered into a collective bargaining agreement (CBA) with Sheet Metal Workers Local Union 25 (Local 25) for a project at High-Tech High School in Secaucus, New Jersey. The CBA, initially formed under § 8(f) of the National Labor Relations Act (NLRA), was later converted to a § 9(a) agreement when Local 25 demonstrated majority status. The CBA included an evergreen clause, automatically renewing unless terminated with notice, and a non-repudiation clause. Trematore ceased employing Local 25 members in September 2018 and later subcontracted work to non-union workers, leading to grievances and an unfair labor practice charge by Local 25.The United States District Court for the District of New Jersey denied Trematore's motion for judgment and granted Local 25's cross-motion, holding that the CBA remained in effect due to the evergreen provision and non-repudiation clause. The court found that Trematore could not repudiate the CBA under the one-employee unit rule and that the grievance regarding subcontracting was arbitrable.The United States Court of Appeals for the Third Circuit affirmed the District Court's judgment. The appellate court held that Trematore was bound by the CBA through its evergreen provision and non-repudiation clause, making its attempted repudiation ineffective. The court also held that the grievance concerning subcontracting was arbitrable, as it fell within the scope of the arbitration clause in the CBA. The court concluded that the CBA remained in effect and that Trematore was not entitled to injunctive relief. View "Brian Trematore Plumbing & Heating Co. v. Sheet Metal Workers Local Union 25" on Justia Law

In January 2015, Paula Appleton was severely injured in a car accident when a pickup truck struck her vehicle from behind. Appleton filed an insurance claim against the driver, whose policy was administered by AIG Claims, Inc. Over four years, Appleton and AIG exchanged settlement offers and attended three mediations but failed to reach a settlement. In March 2019, a Massachusetts state court jury awarded Appleton $7.5 million in damages. Appleton then sued AIG and National Union Fire Insurance Company in federal court, alleging they failed to conduct a reasonable investigation and did not extend a prompt and fair settlement offer as required by Massachusetts law.The United States District Court for the District of Massachusetts granted summary judgment in favor of the defendants. The court concluded that the defendants conducted a reasonable investigation and that their duty to extend a prompt and fair settlement offer was not triggered because the value of Appleton's damages never became clear.The United States Court of Appeals for the First Circuit reviewed the case. The court determined that a reasonable jury could find that Appleton's damages became clear in early 2018 and that the defendants failed to extend a prompt and fair settlement offer afterward. Consequently, the court vacated the district court's summary judgment ruling in part and remanded for trial on Appleton's settlement claim. However, the court affirmed the district court's grant of summary judgment on Appleton's claim that the defendants failed to conduct a reasonable investigation. View "Appleton v. National Union Fire Insurance Co." on Justia Law

In the 1950s, Goodrich Corporation built a vinyl-manufacturing complex in Calvert City, Kentucky, and used unlined ponds for hazardous waste disposal. In 1988, the EPA declared the site a Superfund site. Goodrich sold the complex to Westlake Vinyls, Inc. in the 1990s, agreeing to cover future cleanup costs. In 2000, PolyOne Corporation (now Avient Corporation) assumed Goodrich’s responsibilities. Disputes arose over cleanup costs, leading to a 2007 settlement agreement that included arbitration provisions for future cost allocations.The United States District Court for the Western District of Kentucky previously reviewed the case. Avient had twice sought arbitration under the agreement, first in 2010 and again in 2017. In 2018, Avient challenged the arbitration provisions' validity, but the district court held that Avient had waived this argument by initiating arbitration. The court enforced the arbitration award, and Avient did not challenge this decision. In 2022, Westlake demanded arbitration, and Avient again claimed the arbitration provisions were invalid. The district court granted summary judgment to Westlake, holding that Avient’s challenge was waived and barred by res judicata and judicial estoppel.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s judgment but on different grounds. The court held that the settlement agreement’s provision for de novo judicial review of arbitration awards was invalid under the Federal Arbitration Act, as established in Hall Street Associates, L.L.C. v. Mattel, Inc. However, the court found that this invalid provision could be severed from the agreement without affecting the economic and legal substance of the transactions contemplated by the parties. Therefore, the arbitration provisions remained valid and enforceable. The court affirmed the district court’s judgment. View "Avient Corp. v. Westlake Vinyls, Inc." on Justia Law

Wheeling Power Company operates the Mitchell Plant, where employees are represented by Local 492 under a collective bargaining agreement. After a fire at another plant owned by the same parent company, employees from that plant were temporarily assigned to the Mitchell Plant. These employees were not covered by Local 492’s agreement, leading the union to file a grievance. The grievance was denied, and the union took the matter to arbitration. The arbitrator found that assigning work to non-union employees violated the agreement but left the remedy to be determined by the parties, retaining jurisdiction in case of an impasse.The United States District Court for the Northern District of West Virginia upheld the arbitrator’s liability award. Wheeling Power appealed, arguing that the arbitrator exceeded his authority and that the award was not final because the remedy had not been determined.The United States Court of Appeals for the Fourth Circuit reviewed the case and concluded that the complete arbitration rule applied, meaning the arbitrator’s decision was not final since he retained jurisdiction over the remedy. The court noted that the district court should have dismissed the case as premature. Despite Local 492 not raising this issue in the lower court, the appellate court chose to overlook the forfeiture to reinforce the complete arbitration rule’s importance and to avoid piecemeal litigation.The Fourth Circuit vacated the district court’s judgment and remanded the case with instructions to dismiss it without prejudice, allowing the parties to return to court once the arbitrator’s award becomes final. View "Wheeling Power Company - Mitchell Plant v. Local 492 Utility Workers Union of America" on Justia Law

Acorda Therapeutics, Inc. developed Ampyra®, a drug for multiple sclerosis, and had a licensing agreement with Alkermes PLC, which owned a patent for Ampyra’s active ingredient. The patent expired in July 2018, but Acorda continued to make royalty payments to Alkermes until July 2020, when it began making payments under protest. Acorda initiated arbitration in July 2020, seeking a declaration that the royalty provisions were unenforceable post-patent expiration and a refund of royalties paid since July 2018.The arbitration tribunal agreed that the royalty provisions were unenforceable but ruled that Acorda could only recoup payments made under formal protest. Acorda then petitioned the United States District Court for the Southern District of New York to confirm the tribunal’s rulings except for the denial of recoupment of unprotested payments. The district court rejected Acorda’s arguments, which were based on the tribunal’s alleged “manifest disregard” of federal patent law and a non-patent-law principle, and confirmed the award in full.Acorda appealed to the United States Court of Appeals for the Federal Circuit, seeking to reverse the district court’s denial of the 2018–2020 recoupment. The Federal Circuit concluded that it lacked jurisdiction over the appeal because Acorda’s petition did not necessarily raise a federal patent law issue. The court determined that the petition’s request for confirmation did not require a determination of federal patent law, and the request for modification presented alternative grounds, one of which did not involve patent law. Consequently, the Federal Circuit transferred the case to the United States Court of Appeals for the Second Circuit. View "Acorda Therapeutics, Inc. v. Alkermes PLC" on Justia Law