Justia Arbitration & Mediation Opinion Summaries

In this case involving an agreement to arbitrate, the Supreme Court reiterated the elements of equitable estoppel required for an outside party not contemplated by the agreement to enforce an arbitration clause against a signatory and reversed the trial court's determination that a third party could compel arbitration, holding that none of the traditional elements of equitable estoppel were satisfied.Jane Doe's legal guardian (Guardian) arranged for Jane to live at Carmel Senior Living (CSL) and initialed an arbitration agreement. Guardian later filed a complaint against CSL; its management company, Spectrum; and one of its employees, claiming that the employee had sexually abused Jane and that CSL and Spectrum (together, CSL) were vicariously liable. Guardian later amended the complaint to add Certiphi Screening, the company CSL had hired to run background checks on new employees. The defendants demanded arbitration. The trial court granted the motions to compel arbitration, concluding that the agreement covered CSL and that equitable estoppel mandated arbitration of Guardian's claims against Certiphi. The Supreme Court reversed in part, holding that Certiphi did not meet the requirements of equitable estoppel. View "Doe v. Carmel Operator, LLC" on Justia Law

Daniel and Indiana Cabatit entered into a solar power lease agreement (the agreement) with Sunnova Energy Corporation. After a solar power system was installed on the Cabatits’ residence, the Cabatits sued Sunnova, alleging damage to their roof. Sunnova moved to compel arbitration based on an arbitration clause in the agreement, but the trial court found the arbitration clause unconscionable and denied the motion. On appeal, Sunnova contended: (1) the arbitration clause required the Cabatits to submit to an arbitrator the question whether the clause was enforceable; (2) the trial court erred in finding the arbitration clause unconscionable, and (3) despite the trial court’s conclusion to the contrary, the rule announced in McGill v. Citibank, N.A. 2 Cal.5th 945 (2017), did not apply to the circumstances of this case. The Court of Appeal determined: (1) Sunnova did not raise at trial the issue of whether the arbitration clause was itself had to be decided by an arbitration, thus not addressed on appeal; (2) the arbitration clause was procedurally and substantively unconscionable and therefore unenforceable, and (3) the Court did not consider whether the McGill rule applied here because general considerations of unconscionability, independent of the McGill rule, supported the trial court’s determination. Thus, the Court affirmed the trial court's denial of Sunnova's motion to compel arbitration. View "Cabatit v. Sunnova Energy Corporation" on Justia Law

On remand from the Supreme Court in light of GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637 (2020), the Ninth Circuit affirmed the district court's order denying defendant's motions to compel arbitration and to grant a stay pending arbitration.Rather than apply the law of India, the panel applied federal common law to the issue of whether defendant, a non-signatory to the partnership deed containing an arbitration provision, could compel plaintiffs to arbitrate. The panel applied Letizia v. Prudential Bache Securities, Inc., 802 F.2d 1185 (9th Cir. 1986), which remains good law, and concluded that federal law applied because the case involved federal claims and turned on the court's federal question jurisdiction. The panel held that equitable estoppel precludes a party from claiming the benefits of a contract while simultaneously attempting to avoid the burdens that contract imposes. In this case, the district court did not abuse its discretion in rejecting SS Mumbai's argument that SS Bangalore should be equitably estopped from avoiding arbitration. View "Setty v. Shrinivas Sugandhalaya LLP" on Justia Law

The Health Care Authority for Baptist Health, an affiliate of UAB Health System ("HCA"), and The Health Care Authority for Baptist Health, an affiliate of UAB Health System d/b/a Prattville Baptist Hospital (collectively, "the HCA entities"), appealed a circuit court order denying their motion to compel arbitration in an action brought by Leonidas Dickson, II. In 2015, Dickson sustained injuries as a result of an automobile accident. Following the accident, Dickson was taken to Prattville Baptist Hospital ("PBH"), where he was treated and discharged. Dickson was partially covered by a health-insurance policy issued by Blue Cross and Blue Shield of Alabama, Inc. ("BCBS"). PBH was a party to a "Preferred Outpatient Facility Contract" ("the provider agreement") with BCBS, under which the medical care rendered to Dickson in the emergency department at PBH was reimbursable. In 2017, Dickson filed a complaint to challenge a reimbursement that PBH had received in exchange for Dickson's medical treatment. Dickson's complaint also sought to certify a class of people who were insured by BCBS and who had received care at any hospital operated by HCA's predecessor, Baptist Health, Inc. ("BHI"). After the HCA entities' motion to dismiss was denied, the HCA entities filed an answer to the lawsuit, but the answer did not raise arbitration as a defense. After a year of extensive discovery (including class certification and class-related discovery), the HCA entities moved to compel arbitration on grounds that Dickson's health-insurance policy with BCBS required all claims related to the policy to be arbitrated and that the provider agreement also provided for arbitration, contingent upon the arbitration requirements of the BCBS policy. The trial court denied the motion to compel without providing a reason for the denial. After a request for reconsideration was also denied, the HCA entities appealed. The Alabama Supreme Court concluded the HCA entities waived their right to arbitration, thus affirming the trial court order. View "The Health Care Authority for Baptist Health v. Dickson" on Justia Law

The Supreme Court reversed the determination of the trial court that Jane Doe could compel her legal guardian (Guardian) to arbitrate her claims against it and affirmed the trial court's order compelling Guardian to arbitrate as to the remaining defendants, holding that this Court declines to adopt any alternative theories to the doctrine of equitable estoppel.After Jane had been living at Carmel Senior Living (CSL) for a few months, Guardian filed a complaint against CSL, CSL's management company and one of its employees, and Certiphi Screening, the company CSL had hired to run background checks on new employees, alleging that Jane had been sexually abused. The trial court granted CSL's and Certiphi's motions to compel arbitration under the arbitration agreement in the residency contract, determining that the agreement covered CSL under and agency theory and that equitable estoppel mandated arbitration of Guardian's claims against Certiphi. The Supreme Court reversed in part, holding (1) Certiphi was not one of the third-party beneficiaries provided for in the arbitration agreement and could not meet the requirements of equitable estoppel; and (2) this Court declines to endorse any alternative equitable estoppel theories. View "Doe v. Carmel Operator, LLC" on Justia Law

In this appeal arising from a long-running dispute between the Republic of Moldova and a Ukrainian energy provider called Energoalliance, a company called Stileks—which owns the right to Energoalliance's arbitration award—seeks to recover the arbitration award. Principally at issue is whether the district court correctly confirmed the arbitration award which, with interest, now exceeds $58 million.The DC Circuit upheld the confirmation of the award. The court rejected Moldova's claims that the district court lacked jurisdiction under the Foreign Sovereign Immunities Act, and that, even if the district court had jurisdiction, it was error to confirm the arbitral award during the pendency of certain foreign proceedings. The court concluded that the district court did not abuse its discretion in awarding prejudgment interest to appropriately compensate Stileks for the time value of money. However, the court remanded for the district court to consider whether Moldova had a settled expectation that an adverse judgment would be denominated in Moldovan lei rather than U.S. dollars. View "LLC SPC Stileks v. Republic of Moldova" on Justia Law

Kathleen Melaas appealed a district court order granting a motion to compel arbitration and dismissing her complaint against Diamond Resorts U.S. Collection Development, LLC. She alleged Diamond Resorts offered vacation and timeshare packages, she attended a sales meeting with a Diamond Resorts representative, the sales meeting lasted approximately five hours, and she asked to leave the meeting on at least one occasion and Diamond Resorts refused to allow her to leave. She claimed Diamond Resorts knew she was a diabetic and experienced fatigue and confusion, Diamond Resorts knew she was a vulnerable adult subject to a durable power of attorney for financial management, and Diamond Resorts would not allow her to leave the sales meeting until she signed the timeshare agreement. Melaas asserted she lacked the capacity to enter into the agreement, Diamond Resorts used high-pressure and abusive sales tactics and knowledge of her medical condition to unduly influence and coerce her into signing the agreement, and any consent was obtained by duress and menace. After a hearing, the district court granted Diamond Resorts’ motion to compel arbitration and dismissed Melaas’ complaint. The North Dakota Supreme Court found that the forum selection clause in section 17 of the contract was not part of the arbitration agreement. The forum selection clause stated, “This Agreement is governed by Nevada law without regard to Nevada’s choice of law rules. You must bring any legal action in Clark County, Nevada.” When the term “Agreement” was used in the contract, the Court found it referred to the entire contract and not the arbitration agreement. To the extent Diamond Resorts argued the action should have been brought in Nevada, it was a venue issue and not a jurisdictional issue, and the right could be waived. The issue of improper venue was waived if it was omitted from a motion to dismiss or if it was not made by motion or included in the responsive pleading. On remand, if any of the parties argue the case must be dismissed under the forum selection clause, the district court must first determine whether a contract exists. If the court determines a contract exists, it could then consider the forum selection clause issue, including whether the issue was waived. The order compelling arbitration and dismissing Melaas' complaint was reversed, and the matter remanded for further proceedings. View "Melaas v. Diamond Resorts U.S. Collection Development" on Justia Law

The Supreme Judicial Court held that this action against Uber Technologies, Inc. and Easier, LLC (collectively, Uber) was not arbitrable because there was no enforceable agreement between Uber and Plaintiffs.Plaintiffs brought this action under Mass. Gen. Laws ch. 272, 98A claiming that three Uber drivers refused to provide one plaintiff with rides because he was blind and accompanied by a guide dog. Citing a provision in Uber's cellular telephone application, which Plaintiffs had used to register with Uber, Uber moved to compel arbitration. The judge granted the motion. The arbitrator ruled in favor of Uber on all claims. Thereafter, the United States Court of Appeals for the First Circuit held in Cullinane v. Uber Technologies, Inc., 893 F.3d 53 (1st Cir. 2018) that Uber's registration process did not create a contract. Thereafter, the judge reversed his decision granting the motion to compel arbitration, concluding that there was no enforceable contract requiring arbitration. The Supreme Judicial Court remanded the case, holding (1) Uber's terms and conditions did not constitute a contract with Plaintiffs; and (2) therefore, Uber could not enforce the terms and conditions against Plaintiffs, including the arbitration agreement. View "Kauders v. Uber Technologies, Inc." on Justia Law

The Court of Appeal affirmed an order denying defendant's motion to compel arbitration, holding that there was sufficient evidence to support the trial court's finding that defendant waived its right to arbitrate. The court rejected defendant's contention that it was reasonable to wait until it located the executed arbitration agreements before filing its motion, particularly in light of its concession that at the outset of the litigation, it was not only aware of its policy requiring arbitration, but had located checklists that demonstrated both plaintiffs had received a copy of the arbitration agreement. Furthermore, substantial evidence supported a finding that the length of defendant's delay prior to filing its motion to compel arbitration and for a stay was unreasonable.The court also held that defendant acted in a manner inconsistent with its right to arbitrate. The court explained that, although defendant initially asserted arbitration as an affirmative defense, it subsequently represented in two status conference statements that it did not intend to arbitrate. The court explained that defendant's conduct related to classwide issues was inconsistent with its claimed right to arbitrate individual claims and strongly supported the trial court's finding that defendant acted in a manner inconsistent with its right to arbitrate. The court also concluded that substantial evidence supported the trial court's conclusion that defendant continued to act in a manner inconsistent with arbitration even after it located the arbitration agreements in June 2018. Finally, substantial evidence supported the trial court's finding of prejudice where defendant's delay impaired plaintiffs' ability to realize the benefits and efficiencies of arbitration. View "Garcia v. Haralambos Beverage Co." on Justia Law

Daylight, an expedited less-than-truckload carrier, contracts with independent truck drivers. Daylight’s California drivers only provided services within California. The plaintiffs each entered into an “Independent Contractor Service Agreement” before beginning to drive for Daylight and regularly signed materially identical contract extensions while driving for Daylight. All of those Agreements contained an identical arbitration provision. The plaintiffs filed a putative class action, requesting relief from Daylight’s “unlawful misclassification of former and current Daylight delivery drivers as ‘Independent Contractors,’ ” and alleging violations of Labor Code and wage order provisions, and the law against unfair competition.The court of appeal affirmed the denial of Daylight’s motion to compel arbitration, applying California law and finding the agreement procedurally and substantively unconscionable, and that severance of the unconscionable terms is not possible. Daylight was in a superior bargaining position and presented the contracts on a take it or leave it basis. The Agreement’s 120-day limitations period is substantially shorter than the statutory limits. The Agreement permits Daylight to seek a provisional judicial remedy but precludes plaintiffs from equivalent access and requires that the parties split the cost of arbitration, a cost greater than litigation filing fees. Because Daylight had waived its argument, the court did not address preemption under the Federal Arbitration Act, which“provides a limited exemption from FAA coverage to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce (9 U.S.C. 1). View "Ali v. Daylight Transport, LLC" on Justia Law