Justia Arbitration & Mediation Opinion Summaries

When she was hired by Kindercare, Westmoreland signed a “Mutual Arbitration Agreement Regarding Wages and Hours,” including a “Waiver of Class and Collective Claims” and a “Savings Clause & Conformity Clause,” stating that if the Waiver of Class and Collective Claims is found to be unenforceable, the agreement is invalid and any claim brought on a class, collective, or representative action basis must be filed in court. Kindercare terminated Westmoreland. She filed suit asserting violations of the Labor Code, on an individual and class action basis. Kindercare successfully moved to compel arbitration of Westmoreland’s individual non-PAGA (Private Attorneys General Act) claims, and to stay her PAGA claim. The court of appeal concluded that the unenforceable PAGA waiver was not severable and rendered the entire agreement unenforceable. The California Supreme Court and the U.S. Supreme Court rejected Kindercare’s petitions for review. Kindercare filed a “Renewed Motion to Compel Arbitration of Non-PAGA Claims and Stay PAGA Claims Based on New Law” citing a July 2021 California decision, “Western Bagel.”The court of appeal affirmed, noting that an order denying a renewed motion is not appealable but exercising its discretion to hear the matter as a petition for writ of mandate. Western Bagel is not “new law” that justifies a different decision. As a consequence of Kindercare’s drafting decisions, the agreement is invalid by operation of the unambiguous “Savings Clause and Conformity Clause.” Kindercare must litigate all of Westmoreland’s claims in court. View "Westmoreland v. Kindercare Education LLC" on Justia Law

Plaintiff signed an online arbitration agreement before starting work at a car dealership. He had to sign if he wanted a job: the car dealership presented it as a take-it-or-leave-it mandatory condition. Plaintiff signed the arbitration contract, and the dealership hired him. The employment relationship turned out to be unsuccessful: Plaintiff sued the dealership for firing him. The dealership moved to compel arbitration. The trial court ruled the arbitration contract was unconscionable.   The Second Appellate District reversed. The court held that Plaintiff suffered no substantive unconscionability, which is indispensable to the unconscionability defense. The court held that, to some extent, the contract-at-issue seems to be a common form, at least for some car dealerships. Second, all four agreements containing the arbitration clauses extended for more than a page of print. Third, the font size and functional readability of the contracts here did not seem to trouble Plaintiff.   Further, the court explained that Plaintiff argues this language implies to laypeople that it bars filing a charge with the Department of Fair Employment and Housing or the Equal Employment Opportunity Commission. The court found that Plaintiff’s argument fails on two counts. As Plaintiff himself notes, there is clear language to the contrary: “I understand and agree that nothing in this agreement shall be construed so as to preclude me from filing any administrative charge with, or from participating in any investigation of a charge conducted by, any government agency such as the Department of Fair Employment and Housing and/or the Equal Employment Opportunity Commission.” More fundamentally, arguments about prolix legalese go to procedural and not substantive unconscionability. View "Basith v. Lithia Motors, Inc." on Justia Law

Plaintiff signed an arbitration agreement with Empire Nissan, Inc. Nissan fired Fuentes, she sued, and Nissan moved to compel arbitration. The trial court found the arbitration agreement unconscionable and denied the motion.   The Second Appellate District reversed and directed the trial court to compel arbitration, holding that this contract lacks substantive unconscionability. The court explained that Plaintiff must show both procedural and substantive unconscionability to establish the defense. These two elements need not be present to the same degree. Rather we evaluate them on a sliding scale. The more substantively oppressive the contract terms, the less evidence of procedural unconscionability is required to conclude that the contract is unenforceable. Conversely, the more deceptive or coercive the bargaining tactics employed, the less substantive unfairness is required. The court explained that tiny and unreadable print indeed is a problem, but is a problem of procedural unconscionability. Accordingly, the court explained that it cannot double count it as a problem of substantive unconscionability. View "Fuentes v. Empire Nissan, Inc." on Justia Law

Plaintiff sought to represent a class of individuals, known as Amazon Flex drivers, claiming damages and injunctive relief for alleged privacy violations by Amazon.com, Inc. (“Amazon”). Plaintiff contended that Amazon monitored and wiretapped the drivers’ conversations when they communicated during off hours in closed Facebook groups. The district court denied Amazon’s motion to compel arbitration, holding that the dispute did not fall within the scope of the applicable arbitration clause in a 2016 Terms of Service Agreement (“2016 TOS”). Amazon appealed, arguing that the district court should have applied the broader arbitration clause in a 2019 Terms of Service Agreement (“2019 TOS”) and that even if the arbitration clause in the 2016 TOS applied, this dispute fell within its scope.   The Ninth Circuit affirmed the district court’s order denying Amazon’s motion to compel arbitration. Under California law and principles of contract law, the burden is on Amazon, as the party seeking arbitration, to show that it provided notice of a new TOS and that there was mutual assent to the contractual agreement to arbitrate. The panel held that there was no evidence that the email allegedly sent to drivers adequately notified drivers of the update. The district court, therefore, correctly held that the arbitration provision in the 2016 TOS still governed the parties’ relationship. The panel concluded that because Amazon’s alleged misconduct existed independently of the contract and therefore fell outside the scope of the arbitration provision in the 2016 TOS, the district court correctly denied Amazon’s motion to compel arbitration. View "DRICKEY JACKSON V. AMZN" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals reversing the orders of the trial court granting TotalEnergies E&P USA, Inc.'s motion to stay an American Arbitration Association (AAA) arbitration and denying MP Gulf of Mexico, LLC's motion to compel that arbitration, holding that the parties clearly and unmistakably delegated to the AAA arbitrator the decision of whether the parties' controversy must be resolved by arbitration.In this dispute arising over interests in a group of oil-and-gas leases Total E&P sought a declaration construing the parties' "Cost Sharing Agreement." On the same day, Total E&P initiated an arbitration proceeding asking the International Institute to determine the parties' rights under their "Chinook Operating Agreement." MP Gulf subsequently initiated the AAA arbitration proceeding. Total E&P filed a motion to stay the arbitration, which the trial court granted. The court of appeals reversed and compelled AAA arbitration. The Supreme Court affirmed, holding that the parties agreed to delegate the arbitrability issue to the arbitrator. View "TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC" on Justia Law

This case arose from a dispute between two Guatemalan companies, Corporación AIC, S.A., and Hidroeléctrica Santa Rita, S.A. Pursuant to a contract signed in March of 2012, Corporación AIC agreed to build a new hydroelectric power plant for Hidroeléctrica in Guatemala. Hidroeléctrica issued a force majeure notice that forced Corporación AIC to stop work on the project. Hidroeléctrica filed an arbitration proceeding in the International Court of Arbitration to recover advance payments it had made to Corporación AIC, and the latter counterclaimed for damages, costs, and other expenses. An arbitral panel ordered Corporación AIC to return some portion in advance payments but allowed it to keep what it had earned on the contract. Corporación AIC filed suit in federal court seeking to vacate the award.The Eleventh Circuit vacated the judgment in favor of Hidroeléctrica and remanded for the district court to consider Corporación AIC’s Section 10(a)(4) contention. The court held that the district court correctly followed Industrial Risk and Inversiones, which constituted binding precedent at the time and declined to address Corporación AIC’s argument that the arbitral award should be vacated because the panel exceeded its powers under 9 U.S.C. Section 10(a)(4). View "Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A." on Justia Law

Plaintiff Tutor Perini Building Corp. appealed from the district court’s order affirming an order of the United States Bankruptcy Court, which held that Plaintiff may not use 11 U.S.C. Section 365(b)(1)(A) to assert a “cure claim” against the Trustee for the Trustee’s assumption of an unexpired lease to which Plaintiff was neither a party nor a third-party beneficiary.   The Second Circuit affirmed. The court held that a creditor who seeks to assert a “cure claim” under Section 365(b)(1)(A) must have a contractual right to payment under the assumed executory contract or unexpired lease in question, and the court agreed that Plaintiff is not a third-party beneficiary of the assumed lease. The court explained that Tutor Perini’s expansive view of the priority rights conferred by 11 U.S.C. Section 365(b)(1)(A) is inconsistent with applicable principles of Bankruptcy Code interpretation, and its third-party beneficiary argument is inconsistent with controlling principles of New York contract law. View "In re: George Washington Bridge" on Justia Law

Shemran, Inc. (Shemran) appealed the denial of its motion to compel arbitration of a Labor Code Private Attorneys General Act of 2004 (PAGA) action brought by a former employee, Blaine Nickson. The motion was based on Nickson’s agreement to arbitrate all individual claims arising from his employment. At the time of the trial court’s ruling, a predispute agreement to arbitrate PAGA claims was unenforceable under Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). But during the pendency of this appeal, the United States Supreme Court decided Viking River Cruises, Inc. v. Moriana, 142 S.Ct. 1906 (2022), holding that the Federal Arbitration Act (FAA) preempted Iskanian in part. The issue before the California Court of Appeal was whether the trial court’s ruling survived Viking River. To this, the Court held it did not: Nickson’s individual PAGA claims are arbitrable. Further, the Court held Nickson's nonindividual PAGA claims should not be dismissed, and remained pending at the superior court. The Court left management of the remainder of the litigation during the pendency of arbitration "to the trial court's sound discretion." View "Nickson v. Shemran, Inc." on Justia Law

Betty Smith brought a negligence and wrongful death lawsuit against Belhaven Senior Care, LLC (Belhaven), a nursing home facility in which her mother Mary Hayes had resided shortly before Hayes’s death. Belhaven sought to compel arbitration, citing the arbitration provision in the nursing home admissions agreement Smith signed when admitting her mother. The trial judge denied arbitration, finding that Smith lacked the legal authority to bind her mother to the agreement. Belhaven appealed. The nursing home’s primary argument on appeal was that under the Health-Care Decisions Act (“the Act”), Smith acted as a statutory healthcare surrogate. So in signing the nursing home admission agreement, Smith had authority to waive arbitration on her mother’s behalf. In addition, Belhaven puts forth arguments of direct-benefit estoppel and third-party beneficiary status. The Mississippi Supreme Court affirmed, finding that while Hayes did suffer from some form of dementia, when admitted to the nursing home, she was neither evaluated by a physician nor was she determined to lack capacity. Indeed, her “Admission Physician Orders” were signed by a nurse practitioner. It was not until eleven days later that a physician evaluated Hayes. "And even then, the physician did not deem she lacked capacity. In fact, Belhaven puts forth no evidence that—at any time during her stay of more than a year at Belhaven—any physician ever determined Hayes lacked capacity." The Court determined Belhaven failed to prove the strict requirements of the surrogacy statute to rebut this presumption. Furthermore, the Court found Belhaven’s direct-benefit estoppel and third-party beneficiary arguments were lacking: because Belhaven contends that Hayes was incapacitated, she could not knowingly seek or obtain benefits from the agreement. "Nor does Smith’s largely negligence-based lawsuit seek to enforce the contract’s terms or require determination by reference to the contract. So Smith is not estopped from pursuing these claims." View "Belhaven Senior Care, LLC, et al. v. Smith, et al." on Justia Law

In 2013, New Balance entered into a Distribution Agreement with PSG to distribute its products in Peru. The Agreement contained an arbitration clause, which New Balance invoked in 2018. Also joined as respondents in this arbitration were Ribadeneira, PSG’s controlling owner, and Superdeporte, another business entity owned by Ribadeneira in Peru. The arbitrator issued two awards, which imposed liability on PSG and Superdeporte for breach of the Distribution Agreement, and on PSG, Superdeporte, and Ribadeneira for tortious interference. The arbitrator rejected three counterclaims brought against New Balance. Finding that the arbitrator had improperly exercised jurisdiction over nonsignatories Ribadeneira and Superdeporte, the district court vacated the awards.The First Circuit reversed. Theories of assumption and equitable estoppel apply to support arbitral jurisdiction over Ribadeneira and Superdeporte. Superdeporte was PSG's successor-in-interest and assumed PSG's obligation to arbitrate under the Distribution Agreement. Ribadeneira is estopped from denying that the Agreement's arbitration clause is enforceable, just as he is estopped from asserting his nonsignatory status to avoid the obligation to arbitrate under that clause. The tortious interference claims were "related to or arising out of" the Agreement. View "Ribadeneira v. New Balance Athletics, Inc." on Justia Law