Justia Arbitration & Mediation Opinion Summaries

Plaintiffs, representing a putative class, filed an antitrust lawsuit against Grubhub Inc., Postmates Inc., and Uber Technologies, Inc. (collectively, "Defendants"). The plaintiffs alleged that the defendants violated Section 1 of the Sherman Antitrust Act and its state analogues by entering into no-price competition clauses (NPCCs) with restaurants, which prevented the restaurants from offering lower prices through other channels. The plaintiffs claimed that these NPCCs led to artificially high prices for restaurant meals. The class included customers who purchased takeout or delivery directly from restaurants subject to NPCCs, customers who dined in at such restaurants, and customers who used non-defendant platforms to purchase from these restaurants.The United States District Court for the Southern District of New York denied the defendants' motion to compel arbitration. The court held that the scope of the arbitration clauses was an issue for the court to decide and that the clauses did not apply to the plaintiffs' claims as they lacked a nexus to the defendants' Terms of Use. The court also found that the plaintiffs had not agreed to Grubhub's Terms of Use.The United States Court of Appeals for the Second Circuit reviewed the case. The court affirmed the district court's decision in part, ruling that the question of arbitrability for the plaintiffs' claims against Grubhub is for the court to decide and that Grubhub's arbitration clause does not apply to the plaintiffs' antitrust claims. However, the court reversed the district court's decision in part, finding that Grubhub had established an agreement to arbitrate with the plaintiffs and that the threshold question for the plaintiffs' claims against Uber and Postmates is for the arbitrator to decide. The case was remanded for further proceedings consistent with this opinion. View "Davitashvili v. Grubhub" on Justia Law

Plaintiffs owned property adjacent to an unpaved road where the Town of Lodi determined that low-hanging branches and dead or dying trees posed a hazard. In 2010, the Town hired a tree service company to cut or remove fifty-five trees on plaintiffs' land, believing the trees were within the right of way. Plaintiffs disagreed and sought treble damages under RPAPL 861 (1). The parties agreed to binding arbitration, and the arbitrator awarded plaintiffs damages, including treble the "stumpage value" of the trees.The Supreme Court confirmed the arbitrator's award, and a divided Appellate Division affirmed. The Appellate Division majority held that treble damages under RPAPL 861 were not punitive but intended to capture elusive compensatory damages. The dissenting justices argued that the treble damages were punitive and could not be awarded against the Town. The Town appealed to the Court of Appeals.The New York Court of Appeals reviewed the case and held that treble damages under RPAPL 861 are punitive in nature. The Court reasoned that the statute's "good faith" provision, which reduces damages from treble to single if the defendant acted in good faith, indicates a punitive intent. The Court also noted that the legislative history and structure of the statute support the conclusion that treble damages are meant to punish and deter wrongful conduct. Consequently, the Court reversed the Appellate Division's order insofar as appealed from, with costs, and granted the petition to vacate the award in part. View "Matter of Rosbaugh v Town of Lodi" on Justia Law

Tiffany Johnson and Tracy Crider, Maryland residents, obtained credit card accounts from Continental Finance Company, LLC and Continental Purchasing, LLC. They filed separate class-action lawsuits in Maryland state court, alleging that Continental violated Maryland usury laws by charging excessive interest rates through a "rent-a-bank" scheme. They sought statutory damages and declaratory judgments to void their loans. Continental removed the cases to the District of Maryland and moved to compel arbitration based on a cardholder agreement containing an arbitration provision.The District of Maryland consolidated the cases and denied Continental's motions to compel arbitration. The court held that it was responsible for determining whether the arbitration agreement was illusory, not the arbitrator. It also found that the choice-of-law provisions in the agreements could not be applied before establishing the existence of a valid contract. Finally, the court concluded that the arbitration agreement was illusory under Maryland law due to a "change-in-terms" clause allowing Continental to unilaterally alter any term at its sole discretion.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The Fourth Circuit agreed that the court, not the arbitrator, should determine the contract's formation. It also concurred that the choice-of-law provisions could not be enforced before establishing a valid contract. Finally, the court held that the arbitration agreement was illusory under Maryland law because the change-in-terms clause allowed Continental to escape its contractual obligations, rendering the agreement non-binding. The judgment of the district court was affirmed. View "Johnson v. Continental Finance Co., LLC" on Justia Law

Doctors Scott Sullivan and Frank DellaCroce, along with their associated business entities, entered into a turnkey agreement with Stewart Feldman and his associated entities to pool their risks through certain insurance arrangements. The agreement included an arbitration provision. The doctors later alleged that Feldman and his entities misled them about the insurance arrangements and failed to wind down the insurance entities upon request, leading to multiple arbitration proceedings.The United States District Court for the Southern District of Texas was involved in compelling and managing these arbitrations. The court initially allowed multiple arbitrations to proceed simultaneously and later confirmed four arbitration awards, despite their inconsistencies. The district court also issued a stay order to prevent further arbitrations until the existing ones were resolved.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the Glasser, Baker, and Kutcher arbitration awards, finding no grounds under the Federal Arbitration Act to vacate them. The court also affirmed in part the Jones arbitration award but reversed it in part concerning defendant Jeff Carlson, who was not bound by the arbitration agreement. The court vacated and remanded the district court’s order staying further arbitrations, allowing the parties to resolve the inconsistencies among the awards through additional arbitration if they choose. View "Sullivan v. Feldman" on Justia Law

In 2020 and 2021, Rohan Dhruva and Joshua Stern, residents of California, created accounts and subscribed to CuriosityStream, an online streaming service. They later discovered that CuriosityStream was sharing their event data and other identifiers with Meta, which they claimed violated the federal Video Privacy Protection Act and California state law. Consequently, they filed a putative class action lawsuit in Maryland, where CuriosityStream is headquartered.The United States District Court for the District of Maryland denied CuriosityStream's motion to compel arbitration. The court acknowledged that the website provided adequate notice of the Terms of Use through a conspicuous hyperlink but concluded that users were not given clear notice that clicking the "Sign up now" button constituted agreement to the Terms of Use. CuriosityStream's motion for reconsideration was also denied.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court concluded that Dhruva and Stern had reasonable notice that registering for the streaming service would constitute assent to the website’s Terms of Use, which included an arbitration clause. The court held that the design and content of the website provided sufficient notice of the terms and that Dhruva and Stern manifested their assent by registering with the website. Consequently, the Fourth Circuit reversed the district court's order denying the motion to compel arbitration and remanded the case for further proceedings. View "Dhruva v. CuriosityStream, Inc." on Justia Law

The plaintiff, New England Property Services Group, LLC, filed a claim under a homeowners’ insurance policy for wind damage to a property in Greenville, Rhode Island. The insurance company, Vermont Mutual Insurance Company, provided an estimate for the loss, which the plaintiff disputed. The plaintiff invoked the appraisal process outlined in the insurance agreement. Each party appointed an appraiser, but they could not agree on an umpire, so the Superior Court appointed one. The appraisal concluded with an award signed by the plaintiff’s appraiser and the umpire, but not the defendant’s appraiser.The plaintiff filed a petition in the Superior Court to confirm the appraisal award under Rhode Island’s Arbitration Act. The defendant filed a cross-petition to vacate the award, arguing that the plaintiff’s appraiser was ineligible due to a financial interest in the award. The Superior Court granted the defendant’s cross-petition to vacate the award and denied the plaintiff’s petition to confirm it. The plaintiff did not appeal this order but instead filed a motion to reconsider, arguing that the appraisal process was not arbitration because the insurance contract did not require appraisers to be disinterested. The Superior Court denied this motion.The Rhode Island Supreme Court reviewed the case and affirmed the Superior Court’s order. The Court held that the appraisal process was akin to arbitration, despite the absence of the word “disinterested” in the insurance contract. The Court noted that the plaintiff had initially sought to confirm the award under the Arbitration Act and only challenged the nature of the proceedings after the award was vacated. The Court concluded that the Superior Court had subject-matter jurisdiction and that the appraisal clause in the insurance policy constituted arbitration under the Arbitration Act. View "New England Property Services Group, LLC v. Vermont Mutual Insurance Company" on Justia Law

The Berkeley County School District filed a lawsuit against several defendants, including HUB International Ltd. and HUB International Midwest Ltd., alleging claims related to insurance policies and services provided. HUB sought to compel arbitration based on brokerage service agreements (BSAs) from 2002, 2003, 2005, 2006, 2009, and 2011. The district court denied the motion, and HUB appealed. The appellate court reversed and remanded for a trial to resolve factual disputes about the agreements. After a bench trial, the district court again denied the motion, finding no meeting of the minds for the 2006, 2009, and 2011 BSAs and precluding consideration of the 2002 and 2003 BSAs. HUB appealed again, and the appellate court vacated the judgment regarding the 2002 and 2003 BSAs.On remand, the district court found the 2002 and 2003 BSAs valid and enforceable but denied HUB's motion to compel arbitration, deciding that the dispute did not fall within the scope of those agreements. HUB appealed this decision.The United States Court of Appeals for the Fourth Circuit reviewed the case and determined that the district court erred by deciding the arbitrability of the dispute itself. The appellate court held that the arbitration provisions in the 2002 and 2003 BSAs, which incorporate the American Arbitration Association (AAA) commercial rules, clearly delegate arbitrability questions to the arbitrator. Therefore, the district court should have compelled arbitration to resolve whether the claims fall within the scope of the arbitration agreements.The Fourth Circuit reversed the district court's judgment and remanded the case with instructions to compel arbitration of the threshold arbitrability question in accordance with the parties' agreement. View "Berkeley County School District v. HUB International Limited" on Justia Law

Plaintiffs Tiffaney Whitt, on behalf of her minor children, and Jeremiah Parker, Whitt’s adult son, filed a lawsuit against Kearney School District and Durham School Services, L.P., due to racial harassment experienced by Parker and his siblings on a school bus operated by Durham. Plaintiffs alleged a 42 U.S.C. § 1981 claim against Durham, asserting they were third-party beneficiaries of the contract between Kearney and Durham, which required safe, harassment-free transportation.The United States District Court for the Western District of Missouri denied Durham’s motion to dismiss and motion for summary judgment, which challenged the validity of Plaintiffs’ § 1981 claim. Durham then filed a motion to compel arbitration based on an arbitration clause in its contract with Kearney. The district court denied this motion, concluding that Durham waived its right to enforce the arbitration clause by not raising it earlier in the litigation. Durham appealed this decision.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court’s judgment. The appellate court held that Durham knew of its right to arbitrate, as it possessed the contract containing the arbitration clause, and acted inconsistently with that right by engaging in extensive litigation and discovery before filing the motion to compel arbitration. The court also noted that the district court’s consideration of prejudice to Plaintiffs, although erroneous, did not affect the substantial rights of the parties. The appellate court rejected Durham’s argument that it could not have known to seek arbitration until the district court’s summary judgment ruling and found that Durham’s actions were inconsistent with preserving its right to arbitrate. The court also denied Plaintiffs’ request to adopt a process for certifying interlocutory appeals as frivolous and their request for costs under Fed. R. App. P. 38. View "Parker v. Durham School Services, L.P." on Justia Law

Piedmont Comprehensive Pain Management Group, LLC ("Piedmont") provides pain-management care and had a business arrangement with DocRx Dispensing, Inc. ("DRD") for billing and collection services. DRD collected payments from insurance companies for medications dispensed by Piedmont and kept a portion as compensation. In 2022, Piedmont sued DRD and other related entities and individuals, alleging breach of contract, unjust enrichment, and various tort-based claims, accusing them of improperly depriving Piedmont of funds owed for dispensing medications.The Mobile Circuit Court initially granted the defendants' motion to compel arbitration based on an April 2017 agreement between Piedmont and DRD, which included an arbitration clause. The court stayed the action pending arbitration. During arbitration, the defendants produced a later August 2017 agreement, which also contained an arbitration clause and was signed by both parties. Piedmont then requested the trial court to lift the stay, arguing that the defendants could not insist on arbitration while denying the existence of the April 2017 agreement. The trial court lifted the stay, and the defendants appealed.The Supreme Court of Alabama reviewed the case de novo. The court held that claims based on the August 2017 agreement, which was signed by both parties, must be arbitrated. The court also noted that the trial court's initial order compelling arbitration of claims based on the April 2017 agreement was a final judgment, and Piedmont's failure to appeal within the required time frame meant the trial court had no jurisdiction to set aside that order. Consequently, the Supreme Court of Alabama reversed the trial court's order lifting the stay and remanded the case for further proceedings consistent with its opinion. View "DocRx, Inc. v. Piedmont Comprehensive Pain Management Group, LLC" on Justia Law

Mark Lovil, the manager of R.K. Metals, LLC, signed a commercial lease with E&E, Co. Inc. in 2015 in his representative capacity. The lease did not include a personal guaranty or arbitration clause. R.K. Metals became delinquent in rent payments, leading E&E to require a new lease in 2018, which included both a personal guaranty and an arbitration clause. Lovil signed the new lease as president of R.K. Metals, but R.K. Metals claimed they were unaware of the new clauses until the final version was delivered.R.K. Metals filed a complaint in the Lee County Circuit Court in May 2020, seeking declaratory relief and asserting breach-of-contract claims. The circuit court found the lease enforceable and ordered arbitration. E&E sought to include Lovil personally in the arbitration, leading to a determination of his status as guarantor. The circuit court granted E&E’s Motion for Summary Judgment, finding Lovil personally liable as guarantor and a necessary party to arbitration.The Supreme Court of Mississippi reviewed the case de novo. The court held that Lovil’s signature on the lease, despite his corporate designation, bound him personally as guarantor due to the clear language of the guaranty clause. The court also found that Lovil, as personal guarantor, was bound by the arbitration clause. The court applied the doctrine of equitable estoppel, noting Lovil’s close legal relationship with R.K. Metals, and concluded that he must participate in arbitration.The Supreme Court of Mississippi affirmed the circuit court’s judgment, holding that Lovil is personally bound as guarantor and compelled to participate in arbitration. View "R.K. Metals, LLC v. E & E Co., Inc." on Justia Law