Justia Arbitration & Mediation Opinion Summaries

Plaintiffs Tommy Coleman and Jason Perkins, who worked as oil and gas pipeline inspectors for System One Holdings, LLC, were paid a flat daily rate without overtime compensation, even when working over forty hours a week. They filed a lawsuit claiming this violated the Fair Labor Standards Act (FLSA) and sought unpaid overtime on behalf of themselves and a putative class of similarly compensated inspectors.The United States District Court for the Western District of Pennsylvania reviewed the case. System One moved to dismiss and compel arbitration, arguing that the plaintiffs had signed arbitration agreements enforceable under the Federal Arbitration Act (FAA). The plaintiffs countered that they fell under the transportation workers' exemption to the FAA. The District Court, following the precedent set in Guidotti v. Legal Helpers Debt Resolution, L.L.C., ordered limited discovery into the arbitrability of the claims before deciding on the motion to compel arbitration. System One's motion for reconsideration of this order was denied.The United States Court of Appeals for the Third Circuit reviewed the case to determine if it had jurisdiction over the interlocutory appeal from the District Court's order. The Third Circuit held that it lacked appellate jurisdiction because the District Court's order did not formally deny the motion to compel arbitration but rather deferred its decision pending limited discovery. The court emphasized that the FAA permits appeals from specific types of orders, and the order in question did not fall within those categories. Consequently, the appeal was dismissed for lack of jurisdiction. View "Coleman v. System One Holdings LLC" on Justia Law

JES Farms Partnership sold crops through Indigo Ag's digital platform. In 2021, JES initiated arbitration against Indigo, alleging breach of a marketplace seller agreement and trade rule violations. Indigo counterclaimed, alleging JES breached the agreement and its addenda. JES then sought a federal court's declaratory judgment that Indigo’s counterclaims were not arbitrable and that some addenda were invalid. Indigo moved to compel arbitration based on the agreement's arbitration clause.The United States District Court for the District of South Dakota partially denied Indigo's motion. The court agreed that Indigo’s counterclaims were arbitrable but ruled that the enforceability of the addenda was not arbitrable under the marketplace seller agreement. The court found the arbitration clause "narrow" and concluded that disputes about the addenda's enforceability did not relate to crop transactions. Indigo appealed this decision.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo. The court determined that the arbitration clause in the marketplace seller agreement was broad, covering "any dispute" related to the agreement or transactions under it. The court found that the enforceability of the addenda was indeed a dispute "relating to crop transactions" and thus fell within the scope of the arbitration clause. Consequently, the Eighth Circuit reversed the district court's decision and directed it to grant Indigo’s motion to compel arbitration and address the case's status pending arbitration. View "JES Farms Partnership v. Indigo Ag Inc." on Justia Law

The case involves a dispute between the Boston Teachers Union, Local 66, American Federation of Teachers, AFL-CIO (the union), and the School Committee of Boston (the committee). The union alleged that the committee failed to hire eighteen "cluster" paraprofessional substitutes as required by their collective bargaining agreement. An arbitrator sustained the union's grievance in July 2020 and ordered the committee to comply with the hiring requirement. The committee did not seek to vacate or modify the award. Nineteen months later, the union sought judicial confirmation of the arbitration award, which the committee opposed, claiming substantial compliance.In the Superior Court, the union filed a complaint to confirm the arbitration award and moved for judgment on the pleadings. The committee responded with a motion to dismiss for failure to state a claim. The Superior Court judge granted the committee's motion to dismiss and denied the union's motion, reasoning that there was no statutory right to confirmation when no dispute was alleged.The Supreme Judicial Court of Massachusetts reviewed the case. The court held that under General Laws c. 150C, § 10, the Superior Court is required to confirm an arbitration award upon application by a party unless a timely motion to vacate or modify the award has been made. The court emphasized that the statute's language is clear and mandatory, stating that the Superior Court "shall" confirm the award if no such motion is pending. The court rejected the committee's argument that confirmation should be discretionary and noted that the purpose of § 10 is to enforce arbitration awards.The Supreme Judicial Court reversed the Superior Court's order, granting the committee's motion to dismiss and denying the union's motion for judgment on the pleadings. The court ordered that the arbitration award be confirmed. View "Boston Teachers Union, Local 66, American Federation of Teachers, AFL-CIO v. School Committee of Boston" on Justia Law

The plaintiff, Jose Emilio Ronderos, applied for a job with USF Reddaway, Inc. and Yellow Corporation (collectively, "Reddaway") and was required to sign an arbitration agreement as part of the application process. Ronderos later filed employment-related claims against Reddaway, alleging age and disability discrimination, retaliation, and other violations under California law. Ronderos claimed that the arbitration agreement was procedurally and substantively unconscionable and therefore unenforceable.The United States District Court for the Central District of California denied Reddaway's motion to compel arbitration. The court found that the arbitration agreement was procedurally unconscionable because it was a contract of adhesion presented on a take-it-or-leave-it basis, involved significant oppression, and contained a substantively opaque cost-splitting provision. The court also found that the agreement was substantively unconscionable due to its one-sided filing provision and preliminary injunction carve-out, which unfairly favored Reddaway. The district court declined to sever the unconscionable provisions and enforce the remainder of the agreement.The United States Court of Appeals for the Ninth Circuit affirmed the district court's decision. The appellate court agreed that the arbitration agreement was both procedurally and substantively unconscionable. It held that the agreement involved significant oppression and some surprise, making it procedurally unconscionable. The court also found that the one-sided filing provision and preliminary injunction carve-out were substantively unconscionable. The Ninth Circuit concluded that the district court did not abuse its discretion by declining to sever the unconscionable provisions and affirmed the denial of Reddaway's motion to compel arbitration. View "Ronderos v. USF Reddaway, Inc." on Justia Law

Payam Mahram used Instacart to purchase groceries from a grocery store and later sued the store, alleging it had cheated him on price. The grocery store, not a party to the Instacart contract, moved to compel arbitration based on the arbitration agreement between Mahram and Instacart. The trial court denied the motion, and the grocery store appealed.The Los Angeles County Superior Court initially reviewed the case and denied the grocery store's motion to compel arbitration without providing a written explanation. The grocery store then appealed this decision to the California Court of Appeal, Second Appellate District.The California Court of Appeal affirmed the lower court's decision. The court held that while Mahram did agree to arbitration with Instacart by signing up for its service, the grocery store was not a third-party beneficiary of that agreement. The court determined that the trial court, rather than an arbitrator, was the proper authority to decide the threshold questions of arbitrability because the contract did not clearly indicate that Mahram had agreed to arbitrate with anyone other than Instacart. Additionally, the court found that the grocery store was not a third-party beneficiary of the Instacart-Mahram arbitration contract, as the contract's motivating purpose was not to benefit the grocery store. Consequently, the grocery store could not compel arbitration based on the Instacart agreement. The order denying the motion to compel arbitration was affirmed, and costs were awarded to the respondent. View "Mahram v. The Kroger Co." on Justia Law

The case involves a dispute over the enforceability of a noncompetition provision in an operating agreement following the partial sale of a business interest. Robert and Stephen Samuelian co-founded Life Generations Healthcare, LLC, and later sold a portion of their interest in the company. The new operating agreement included a noncompetition clause that the Samuelians later challenged in arbitration. The arbitrator found the provision invalid per se under California Business and Professions Code section 16600, which generally voids contracts restraining lawful professions, trades, or businesses.The Superior Court of Orange County reviewed the arbitrator's decision de novo and confirmed the award, agreeing that the noncompetition provision was invalid per se. The court also found that the Samuelians did not owe fiduciary duties to the company as minority members in a manager-managed LLC. The company and individual defendants appealed, arguing that the arbitrator applied the wrong legal standard and that the reasonableness standard should apply instead.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case and concluded that the arbitrator had indeed applied the wrong standard. The court held that noncompetition agreements arising from the partial sale of a business interest should be evaluated under the reasonableness standard, not the per se standard. The court reasoned that partial sales differ significantly from the sale of an entire business interest, as the seller remains an owner and may still have some control over the company. Therefore, such noncompetition provisions must be scrutinized for their procompetitive benefits.The Court of Appeal reversed the trial court's judgment confirming the arbitration award and directed the trial court to enter an order denying the Samuelians' petition to confirm the award and granting the company's motion to vacate the entire award, including the portion awarding attorney fees and costs. View "Samuelian v. Life Generations Healthcare, LLC" on Justia Law

Two employees, Tanika Parker and Andrew Farrier, participated in 401(k) plans managed by subsidiaries of Tenneco Inc. The plans were amended to include mandatory individual arbitration provisions, which required participants to arbitrate disputes individually and barred representative, class, or collective actions. Parker and Farrier alleged that the fiduciaries of their plans breached their fiduciary duties under ERISA by failing to prudently manage the plans, resulting in higher costs and reduced retirement savings. They sought plan-wide remedies, including restitution of losses and disgorgement of profits.The United States District Court for the Eastern District of Michigan denied the fiduciaries' motion to compel individual arbitration. The court found that the arbitration provisions limited participants' substantive rights under ERISA by eliminating their ability to bring representative actions and seek plan-wide remedies, which are guaranteed by ERISA.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The Sixth Circuit held that the individual arbitration provisions were unenforceable because they acted as a prospective waiver of the participants' statutory rights and remedies under ERISA. The court emphasized that ERISA allows participants to sue on behalf of a plan and obtain plan-wide relief, and the arbitration provisions' restrictions on representative actions and plan-wide remedies violated these statutory rights. Consequently, the arbitration provisions were invalid, and the district court's judgment was affirmed. View "Parker v. Tenneco, Inc." on Justia Law

John Smith, an employee of Sysco Indianapolis, LLC, did not receive a monthly benefit check he expected. His labor union, Teamsters Local 135, filed a grievance on his behalf, alleging that Sysco violated their 2018 collective bargaining agreement (CBA) by not providing a $500 Supplemental Early Retirement Benefit (SERB) to certain retirees and employees. Sysco participated in the initial grievance process but refused to proceed to arbitration, arguing that the grievance was not arbitrable under the CBA. Sysco then sought a declaratory judgment from the district court, while the Union counterclaimed for a declaration that the grievance was arbitrable.The United States District Court for the Southern District of Indiana sided with Sysco, finding that the monthly benefit was governed by terms outside the CBA and that the parties' bargaining history indicated they did not intend for the benefit to be arbitrable. The court granted Sysco's motion for summary judgment and denied the Union's counterclaims.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo and reached a different conclusion. The appellate court found that Sysco failed to present the "most forceful evidence" required to exclude the monthly benefit from the arbitration provision in the CBA. The court noted that the grievance fell within the scope of the arbitration clause on its face and that the CBA did not explicitly exclude the SERB from arbitration. The court also found that the parties' bargaining history did not clearly demonstrate an intent to exclude the benefit from arbitration. Consequently, the Seventh Circuit reversed the district court's judgment, holding that the grievance must be sent to arbitration. View "Sysco Indianapolis LLC v. Teamsters Local 135" on Justia Law

A collection of Dutch and Luxembourgish energy companies invested in solar power projects in Spain, relying on promised economic subsidies. Following the 2008 financial crisis, Spain withdrew these subsidies, prompting the companies to challenge Spain's actions through arbitration under the Energy Charter Treaty (ECT). The companies prevailed in arbitration, securing multi-million-euro awards. However, the European Union (EU) argued that the ECT's arbitration provision does not apply to disputes between EU Member States, rendering the awards invalid under EU law.The United States District Court for the District of Columbia reviewed the cases. In NextEra Energy Global Holdings B.V. v. Kingdom of Spain and 9REN Holding S.A.R.L. v. Kingdom of Spain, the court held it had jurisdiction under the Foreign Sovereign Immunities Act (FSIA) arbitration exception and denied Spain's motion to dismiss. The court also granted anti-anti-suit injunctions to prevent Spain from seeking anti-suit relief in foreign courts. Conversely, in Blasket Renewable Investments LLC v. Kingdom of Spain, the district court deemed Spain immune under the FSIA and denied the companies' requested injunction.The United States Court of Appeals for the District of Columbia Circuit reviewed the cases. The court held that the district courts have jurisdiction under the FSIA’s arbitration exception to confirm the arbitration awards against Spain. However, it found that the district court in NextEra and 9REN abused its discretion by enjoining Spain from pursuing anti-suit relief in Dutch and Luxembourgish courts. The court emphasized that anti-suit injunctions against a foreign sovereign raise significant comity concerns and that the domestic interests identified were insufficient to justify such extraordinary relief. Consequently, the court affirmed in part and reversed in part in NextEra, reversed in 9REN and Blasket, and remanded for further proceedings. View "Turenne v. State" on Justia Law

A collection of Dutch and Luxembourgish energy companies invested in solar power projects in Spain, relying on promised economic subsidies. Following the 2008 financial crisis, Spain withdrew these subsidies, prompting the companies to challenge Spain's actions through arbitration under the Energy Charter Treaty (ECT). The companies won multi-million-euro awards in arbitration. However, the European Union argued that the ECT's arbitration provision does not apply to disputes between EU Member States, rendering the awards invalid under EU law. The companies sought to enforce the awards in the United States, invoking the ICSID Convention and the New York Convention.The United States District Court for the District of Columbia reviewed the cases. In NextEra Energy Global Holdings B.V. v. Kingdom of Spain and 9REN Holding S.A.R.L. v. Kingdom of Spain, the court held it had jurisdiction under the Foreign Sovereign Immunities Act (FSIA) arbitration exception and denied Spain's motion to dismiss. The court also granted anti-anti-suit injunctions to prevent Spain from seeking anti-suit relief in foreign courts. Conversely, in Blasket Renewable Investments LLC v. Kingdom of Spain, the district court found Spain immune under the FSIA and dismissed the case, denying the requested injunction as moot.The United States Court of Appeals for the District of Columbia Circuit reviewed the cases. The court held that the district courts have jurisdiction under the FSIA’s arbitration exception to confirm the arbitration awards against Spain. However, it found that the district court in NextEra and 9REN abused its discretion by enjoining Spain from pursuing anti-suit relief in Dutch and Luxembourgish courts. The appellate court affirmed in part and reversed in part in NextEra, reversed in 9REN and Blasket, and remanded for further proceedings. View "NextEra Energy Global Holdings B.V. v. Kingdom of Spain" on Justia Law