Justia Arbitration & Mediation Opinion Summaries

Parties involved in arbitration proceedings abroad sought discovery in the U.S. under 28 U.S.C. 1782(a), which authorizes a district court to order the production of evidence “for use in a proceeding in a foreign or international tribunal.” One case, a contract dispute between private parties, was proceeding under the Arbitration Rules of the German Institution of Arbitration and involves a private dispute-resolution organization. The second case is proceeding against Lithuania before an ad hoc arbitration panel, in accordance with the Arbitration Rules of the U.N. Commission on International Trade Law.The Supreme Court held that the parties are not entitled to discovery. Only a governmental or intergovernmental adjudicative body constitutes a “foreign or international tribunal” under 28 U.S.C. 1782; the bodies at issue do not qualify. While a “tribunal” need not be a formal “court,” attached to the modifiers “foreign or international,” the phrase is best understood to refer to an adjudicative body that exercises governmental authority. The animating purpose of section 1782 is comity: Permitting federal courts to assist foreign and international governmental bodies promotes respect for foreign governments and encourages reciprocal assistance. Extending section 1782 to include private bodies would be in significant tension with the Federal Arbitration Act, which governs domestic arbitration; section 1782 permits much broader discovery than the FAA.The Court acknowledged that the arbitration panel involving Lithuania presents a harder question. The option to arbitrate is contained in an international treaty rather than a private contract but the two nations involved did not intend that an ad hoc panel exercise governmental authority. View "ZF Automotive U. S., Inc. v. Luxshare, Ltd." on Justia Law

Plaintiff, a Russian citizen who resides in Russia, filed a civil RICO suit against Defendant Russian citizen who resides in California, and eleven other defendants. After securing a foreign arbitration award against Defendant. Plaintiff obtained a judgment from a United States district court confirming the award and giving Plaintiff the rights to execute that judgment in California and to pursue discovery. Plaintiff alleged that Defendants engaged in illegal activity, in violation of RICO, to thwart the execution of that California judgment.   Consistent with the Second and Third Circuits, but disagreeing with the Seventh Circuit’s residency-based test for domestic injuries involving intangible property, the court held that the alleged injuries to a judgment obtained by Plaintiff from a United States district court in California were domestic injuries to property such that Plaintiff had statutory standing under RICO. The court concluded that, for purposes of standing under RICO, the California judgment existed as property in California because the rights that it provided to Plaintiff existed only in California. In addition, much of the conduct underlying the alleged injury occurred in or was targeted at California. View "VITALY SMAGIN V. COMPAGNIE MONEGASQUE DE BANQUE" on Justia Law

Rusco Operating, L.L.C. and Planning Thru Completion, L.L.C. are two companies that offer an online application (“app”) that connects oil field workers looking for work with oil-and-gas operators looking for workers. The companies seek to intervene here because some app-using workers have opted-in as plaintiffs alleging claims for unpaid overtime, under the Fair Labor Standards Act, against an operator that used the app to hire them. The app companies’ asserted interests in the litigation related to arbitration agreements between them and the workers, their belief that a win by the workers would destroy their business model, and a demand for indemnity allegedly made by Defendant operator for liability it might incur as to Plaintiffs’ claims. The district court found these interests insufficient to justify intervention and denied leave   The Fifth Circuit reversed, concluding that the arbitration agreements at issue give rise to sufficient interest in this action to support the app companies’ intervention. The court explained that Appellants  have shown adequate interest in the subject of this lawsuit by virtue of their contracts with the parties, and “disposing of the action may as a practical matter impair or impede the [Intervenors’] ability to protect [their] interest.” Fed. R. Civ. Pro. 24(a)(2). By contrast, no other party in this action will adequately represent the Intervenors’ interest. They should therefore be allowed to intervene of right. View "Field v. Rusco Operating" on Justia Law

The Ninth Circuit reversed the district court’s grant of summary judgment to federal defendants in a Freedom of Information Act (“FOIA”) action brought by Inter-Cooperative Exchange (“ICE”), a cooperative of fishers who harvest and deliver crab off the coast of Alaska, seeking the government’s communications concerning the government’s decision not to factor Alaska’s minimum wage increase into the arbitration system that sets the price of crab.   The North Pacific Fishery Management Council manages fisheries off the coast of Alaska. In 2005, the National Marine Fisheries Service (“NMFS”) implemented a program recommended by the Council to allocate crab resources among harvesters, processors, and coastal communities. Alaska increased the minimum wage, which raised the question of whether costs should be considered under the arbitration system. The Council reviewed the matter at a 2017 meeting where an Assistant Regional Administrator of NMFS and a voting member of the Council, introduced an unsuccessful motion to include costs for consideration in the arbitration system.   The court held that on the facts here, the three search terms were not reasonably calculated to uncover all documents relevant to ICE’s request. ICE contended that the government’s choice of search terms was unduly narrow and not reasonably calculated to uncover all documents relevant to its FOIA request. The court held that the government’s choice of search terms was overly narrow. View "INTER-COOPERATIVE EXCHANGE V. USDOC" on Justia Law

CCC and Tractable use algorithms and data generated by repair centers to provide estimates of the cost to repair damaged vehicles. Tractable dispatched its employee to obtain a license for CCC’s software. Using a false name, the employee purported to represent “JA,” a small, independent appraiser. CCC issued a license. The contract forbids assignment of the license without consent and represents that JA is acting on its own behalf, not as an agent for any third party, and forbids disassembly of the software or its incorporation into any other product. Tractable disassembled the software and incorporated some features into its own product. In CCC’s subsequent suit, Tractable moved for arbitration under the agreement between CCC and JA., arguing that “JA” is a name that Tractable uses for itself. The Seventh Circuit affirmed the denial of the motion. Tractable is not a party to the agreement. CCC could not have discovered that Tractable uses the name “JA.” Contractual meaning reflects words and signs exchanged between the negotiators, not unilateral, confidential beliefs. If a misrepresentation as to the character or essential terms of a proposed contract induces conduct that appears to be a manifestation of assent by one who neither knows nor has reasonable opportunity to know of the character or essential terms of the proposed contract, his conduct is not effective as a manifestation of assent.. The identity of CCC’s trading partner was a vital element of the deal. View "CCC Intelligent Solutions Inc. v. Tractable Inc." on Justia Law

SUNZ Insurance Company (“SUNZ”) appealed from the denial of its motion to dismiss or, in the alternative, to compel arbitration of the crossclaims filed in a complex insurance dispute. SUNZ argued the district court lacked subject matter jurisdiction over the crossclaims between non-diverse parties in the underlying interpleader action and otherwise erred by denying arbitration.   The Eighth Circuit reversed and remanded the district court’s denial of Defendant’s motion to compel arbitration of the crossclaims. The court explained arbitration agreements are generally favored under federal law. Further, a court may not rule on the potential merits of the underlying claim that is assigned by contract to an arbitrator, even if it appears to be frivolous.Here, the Program Agreement sets forth the terms and conditions of the Policy and contains the disputed statements pertaining to collateral, costs, and fees. The Policy cannot be read without the Program Agreement, which explicitly controls the administration of the Policy and only becomes binding and enforceable after its execution. While the other party’s crossclaim alleges that SUNZ breached the Policy, it is the Program Agreement that drives the question of liability. And, under the Program Agreement, both parties agreed to submit to arbitration any disagreement regarding its terms. This is a challenge to the contract’s validity that, under Buckeye, shall be considered by an arbitrator, not a court. Thus, the district court erred when it denied SUNZ’s alternative motion to compel arbitration. View "SUNZ Insurance Company v. Butler American Holdings Inc." on Justia Law

Saxon, a Southwest Airlines ramp supervisor, frequently loads and unloads cargo alongside the ramp agents. Alleging that Southwest was failing to pay proper overtime wages to ramp supervisors, Saxon brought a putative class action under the Fair Labor Standards Act. Saxon’s employment contract required her to arbitrate wage disputes individually; she claimed that ramp supervisors were a “class of workers engaged in foreign or interstate commerce,” exempt from the Federal Arbitration Act, 9 U.S.C. 1.The Supreme Court affirmed the Seventh Circuit, holding that the act of loading cargo onto a vehicle to be transported interstate is itself commerce according to the “ordinary, contemporary, common meaning” of the word. By referring to “workers” rather than “employees,” the FAA directs attention to “the performance of work” and the word “engaged” similarly emphasizes the actual work that class members typically carry out. Saxon is a member of a “class of workers” based on what she frequently does, physically loading and unloading cargo on and off airplanes, and not on what Southwest does generally. Exempted workers must at least play a direct and “necessary role in the free flow of goods” across borders. Cargo loaders exhibit this central feature of a transportation worker. View "Southwest Airlines Co. v. Saxon" on Justia Law

After a construction project fell through, Plaintiff sued Defendant. Defendant filed a motion to compel arbitration. At issue in this case is whether the party who signed the contract on behalf of Plaintiff had authority to do so. The district court concluded they did not and the Eighth Circuit affirmed.The Eighth Circuit found that the signing party neither had actual or apparent authority to sign the contract containing the arbitration agreement. Apparent authority is created by the conduct of the principal, not of the agent. View "GP3 II, LLC v. Litong Capital, LLC" on Justia Law

The Supreme Court reversed the order of the district court denying SR Construction, Inc.'s motion to compel arbitration because its master subcontract agreement (MSA) with Peek Brothers Construction, Inc. constituted a valid arbitration provision that applied to the parties' underlying dispute, holding that the dispute was arbitrable.On appeal, SR argued that the district court erred in holding that the underlying dispute fell outside the bounds of the parties' arbitration agreement.The Supreme Court agreed and reversed, holding (1) as applied, the MSA provision was broad, and an attendant presumption of arbitrability applied; and (2) Peek's dispute was presumptively arbitrable under the parties' agreement. View "SR Construction, Inc. v. Peek Brothers Construction, Inc." on Justia Law

Plaintiff, sued her former employer, alleging a variety of employment law violations. Defendant moved to dismiss her suit and to compel arbitration. Defendant supported the motion by presenting an arbitration agreement bearing what appeared to be the worker’s electronic signature. In a sworn declaration, however, the worker categorically and specifically denied that the signature was hers. She also pointed to other circumstantial evidence as to its inauthenticity. The district court concluded that the worker’s evidence was insufficient to create a triable issue of fact, and so granted the restaurant’s motion.   The Second Circuit vacated the district court’s grant of Defendant’s motion to dismiss and to compel arbitration. The court held that the district court erred when it disregarded Plaintiff’s sworn declaration as “nothing more than a de facto extension of [her] pleadings.”The court explained that it resolves agreement-formation questions by applying the law of the state at issue. Here, under New York law, when moving to compel arbitration, “[t]he party seeking . . . arbitration bears an initial burden of demonstrating that an agreement to arbitrate was made.” As such, the burden shifted to Plaintiff, who needed to counter with at least “some evidence . . . to substantiate [her] denial” that an agreement had been made. Here, Plaintiff’s detailed accounting, under oath, is “some evidence” that she did not agree to arbitration. Thus, there is a triable issue of fact as to whether she ever received, or became aware of, Defendant’s arbitration agreements, regardless of whether she ultimately signed them. View "Barrows v. Brinker Restaurant Corporation" on Justia Law