Justia Arbitration & Mediation Opinion Summaries

Advantage Veterans Services of Walterboro, LLC (“AVSW”) and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International, Local 7898 (the “Union”) dispute the legitimacy of an arbitration award, which stemmed from the discharge of a union-represented employee. The appeal centers on the provisions of the parties’ collective bargaining agreement (the “CBA”). The CBA contains a number of provisions that govern the relationship between AVSW, the Union and the Union’s members who work at AVSW.   The Fourth Circuit reversed the district court’s order affirming the arbitration award and vacated the underlying award. The court explained that its deferential standard for determining whether an arbitrator erred substantively is rooted in the contractual nature of arbitration. If the parties agree to resolve disputes by arbitration, the court defers to the determinations made in the process the parties agreed to. Here, however, the CBA limits the arbitrator’s power. It requires that the arbitrator make the reasonable basis determination. And it premises the legitimacy of any arbitration award on the arbitrator’s compliance with that directive. It even provides that any award that is contrary to the CBA in any way—which includes that directive—“shall be deemed not to draw its essence from the [CBA] and shall be vacated.” The court explained that given this language, it would be paradoxical to use a highly deferential standard of review, which, once again, is rooted in principles of contract, to look past the arbitrator’s failure to follow contractually agreed-upon procedural rules for the arbitration. View "Advantage Veterans Services of Walterboro LLC v. United Steel Paper and Forestry Rubber" on Justia Law

Hicks Unlimited, Inc. contracted to rent uniforms for its employees from UniFirst Corporation. The contract contained an arbitration provision stating all disputes between them would be decided by binding arbitration to be conducted "pursuant to the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association [AAA] and shall be governed by the Federal Arbitration Act [FAA]." A dispute arose; UniFirst moved to compel arbitration. Hicks contended the arbitration agreement was unenforceable because it did not comply with the notice requirements of South Carolina's Arbitration Act (SCAA). The circuit court denied the motion to compel arbitration, ruling the contract did not implicate interstate commerce and, therefore, the FAA did not apply. The circuit court further ruled the arbitration provision was not enforceable because it did not meet the SCAA's notice requirements. UniFirst appealed. The court of appeals reversed, holding arbitration should have been compelled because the contract involved interstate commerce and, therefore, the FAA preempted the SCAA. The South Carolina Supreme Court found that because the contract between Hicks and UniFirst did not involve interstate commerce in fact, the order of the circuit court denying UniFirst's motion to compel arbitration was affirmed, and the court of appeals' opinion was reversed. View "Hicks Unlimited v. UniFirst" on Justia Law

Plaintiff National Nurses Organizing Committee, Missouri & Kansas/National Nurses United filed a grievance and sought arbitration under the grievance procedure set forth in the parties’ collective bargaining agreement (“CBA”). Defendant Midwest Division MMC, LLC refused to arbitrate. Although Plaintiff and Defendant agreed to arbitrate disputes under many provisions of their CBA, the Tenth Circuit Court of Appeal found "with positive assurance" the parties did not intend to arbitrate disagreements related to staffing plans. And, at its core, the dispute between Plaintiff and Defendant was about a staffing plan. The Court applied the presumption of arbitrability “only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand.” The Court found parties did not consent to arbitrate the kind of dispute Plaintiff’s grievance asserted and affirmed the grant of summary judgment in favor of Defendant. View "National Nurses Organizing v. Midwest Division MMC" on Justia Law

The United States (“the Government”) initiated a civil forfeiture suit in federal district court against a $380 million arbitration award fund, the majority of which is held in the United Kingdom. The fund belongs to PetroSaudi Oil Services (Venezuela) Ltd. (“PetroSaudi”), a private oil company incorporated in Barbados. PetroSaudi won the award in an arbitration proceeding against Petróleos de Venezuela, S.A. (“PDVSA”), a Venezuelan state energy company. The portion of the fund held in the United Kingdom (“the fund”) is held in an account controlled by the High Court of England and Wales (“the High Court”). The Government seeks forfeiture of the fund on the ground that it derives from proceeds of an illegal scheme to steal one billion dollars from the Malaysian sovereign wealth fund 1Malaysia Development Berhad (“1MDB”). PetroSaudi challenged two orders entered by the district court.   The Ninth Circuit affirmed the district court’s interlocutory orders. The panel held that PetroSaudi’s appeal from the district court’s protective order under 18 U.S.C. Section 983 fell within this exception. Accordingly, the court had jurisdiction to consider the appeals of the two orders. The panel concluded that the sovereign immunity of the United Kingdom, as codified in the FSIA, did not protect the arbitration award fund from the two orders issued by the district court. The panel held that because the district court had in rem jurisdiction over the fund, it did not need in personam jurisdiction over PetroSaudi to issue an order preserving the fund. View "USA V. PETROSAUDI OIL SERV. (VENEZUELA) LTD., ET AL" 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 arbitration before the American Arbitration Association (AAA) and denying MP Gulf of Mexico, LLC's motion to compel that arbitration, holding that the parties' contracts required them to resolve their controversies through arbitration.In the underlying dispute involving oil and gas leases Total E&P filed this suit seeking a declaratory construing the parties' cost sharing agreement. Thereafter, MP Gulf initiated an arbitration proceeding asserting that Total E&P breached the agreement. At issue was whether the parties clearly and unmistakably delegated arbitrability issues to the arbitrator by agreeing to arbitrate their controversies in accordance with the AAA Commercial Rules. The trial court granted Total E&P's motion to stay the AAA arbitration and denied MP Gulf's motion to compel that arbitration. The court of appeals reversed and compelled AAA arbitration. The Supreme Court reversed, holding that the parties clearly and unmistakably delegated to the AAA arbitrator the decision of whether the parties' controversy must be resolved by arbitration. View "TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC" on Justia Law

Plaintiff City of Portsmouth, New Hampshire Police Commission/Police Department (the City) appealed a superior court's denial of the City’s request to modify, correct, or vacate an arbitrator’s award of backpay to Aaron Goodwin, a police officer who was previously employed by the City and who was a member of defendant Portsmouth Ranking Officers Association, NEPBA, Local 220 (the Union). The arbitration arose from a grievance filed by the Union challenging Goodwin’s termination. The arbitrator found that the City wrongfully terminated Goodwin and awarded him approximately twenty-six months of backpay. The superior court confirmed the arbitrator’s termination decision and backpay award. On appeal, the City argued the arbitrator committed plain mistake because she failed to correctly apply the after-acquired-evidence doctrine in determining the amount of the backpay award. Because the New Hampshire Supreme Court agreed with the City that the arbitrator committed a plain mistake of law in reaching the backpay award, it reversed in part, vacated the superior court’s confirmation of the arbitrator’s award, and remanded. View "City of Portsmouth Police Commission/Department v. Portsmouth Ranking Officers Association, NEPBA, Local 220" on Justia Law

Empire Indemnity Insurance Company issued an insurance policy (the “Policy”) to Positano Place at Naples I Condominium Association, Inc., for coverage of five buildings that Positano owns in Naples, Florida. Following Hurricane Irma, Positano filed a first-party claim for property insurance benefits under the Policy, claiming that Hurricane Irma damaged its property and that the damage was covered by the Policy. Empire determined that there was coverage to only three of the five buildings covered by the Policy but disagreed as to the amount of the loss. Positano sought to invoke appraisal based on the Policy’s appraisal provision. Positano then sued Empire in Florida state court, and Empire removed the case to federal court based on diversity jurisdiction. Positano moved to compel appraisal and to stay the case pending the resolution of the appraisal proceedings, which Empire opposed. The magistrate judge issued a report recommending that the district court grant Positano’s motion, and, over Empire’s objection, the district court ordered the parties to appraisal and stayed the proceedings pending appraisal. Empire timely appealed the district court’s order.   The Eleventh Circuit dismissed the appeal for lack of appellate jurisdiction. The court concluded that the district court’s order compelling appraisal and staying the proceedings pending appraisal is an interlocutory order that is not immediately appealable under 28 U.S.C. Section 1292(a)(1). The court also concluded that the order compelling appraisal and staying the action pending appraisal is not immediately appealable under the Federal Arbitration Act (“FAA”). View "Positano Place at Naples I Condominium Association, Inc. v. Empire Indemnity Insurance Company" on Justia Law

Plaintiff was employed from April 2018 to August 2019 by Defendant EmployBridge, LLC, which does business in California as Select Staffing. In March 2018, as part of her employment application, Plaintiff electronically signed an arbitration agreement. The arbitration agreement (1) states it “is governed by the Federal Arbitration Act,” and (2) contains a broad agreement to arbitrate claims. Plaintiff sued EmployBridge Holding Company, a Delaware corporation, solely to recover civil penalties under PAGA for Labor Code violations suffered by her or by other employees. The trial court determined that the agreement to arbitrate specifically excluded PAGA claims. This appeal challenges the denial of a motion to compel arbitration of claims to recover civil penalties.   The Fifth Appellate District affirmed the order denying the motion to compel arbitration. The court concluded that the trial court correctly interpreted the agreement’s carve-out provision stating that “claims under PAGA … are not arbitrable under this Agreement.” This provision is not ambiguous. It is not objectively reasonable to interpret the phrase “claims under PAGA” to include some PAGA claims while excluding others. Thus, the carve-out provision excludes all the PAGA claims from the agreement to arbitrate. View "Duran v. EmployBridge Holding Co." on Justia Law

The Supreme Court reversed the judgment of the circuit court finding that Ford Motor Credit Company, LLC failed to meet its evidentiary burden to show the existence of an arbitration agreement in this case surrounding a dispute over the unpaid balance on an automobile loan, holding that the circuit court erred.Ford Credit sued Ronald Miller for the alleged balance due on a loan. Miller asserted a class action counterclaim for unlawful debt collection practices, in response to which Ford Credit filed a motion to compel arbitration. The circuit court denied the motion, concluding that Ford Credit failed to provide evidence that an arbitration agreement existed. The Supreme Court reversed and remanded the case, holding that the existence of an arbitration agreement between the parties had been established. View "Ford Motor Credit Co. v. Miller" on Justia Law

The Supreme Court reversed the decision of the court of appeals reversed the judgment of the district court denying Hennepin Healthcare System, Inc.'s motion to vacate an arbitration award in favor of AFSCME Minnesota Council 5, holding that the court of appeals erroneously substituted its own judgment for that of the arbitrator.Hennepin Healthcare and AFSCME, which represented two bargaining units of Hennepin Healthcare employees, arbitrated a dispute regarding Hennepin Healthcare's use of temporary staffing agency workers. The arbitrator issued an award in favor of AFSCME. The district court confirmed the award. The court of appeals reversed, concluding that because the arbitration award did not draw its essence from the collective bargaining agreement it must be vacated. The Supreme Court reversed, holding that Hennepin Healthcare failed to meet its burden to demonstrate that the arbitrator clearly exceeded the powers granted to him in the CBA because the award failed the essence test. View "Hennepin Healthcare System, Inc. v. AFSCME Minnesota Council 5, Union" on Justia Law