ARBITRATION-WAIVER OF STATUTORY RIGHTS-PUBLIC POLICY
Williams v. Medley Opportunity Fund, 2020 U.S. App. LEXIS 21718 (3rd Cir. July 14, 2020) Shwartz, C.J. Williams obtained a loan from an Indian tribe at a high interest rate. They sued. The arbitration agreement had to be under tribal law. Such limitation constitutes a prospective waiver of statutory rights. This violates public policy and is therefore unenforceable. Prospective rights waiver is always non-waivable.
The prospective waiver of statutory rights renders the entire arbitration agreement (delegation clause included) unenforceable because the prohibited waiver here is not severable. “Pennsylvania courts have held that if an essential term of a contract is deemed illegal, it renders the entire contract unenforceable” and cannot be severed. Spinetti v. Serv. Corp. Int’l, 324 F.3d 212, 214 (3d Cir. 2003) (emphasis omitted); see also Stewart v. GGNSC-Canonsburg, L.P., 9 A.3d 215, 219 (Pa. Super. Ct. 2010) (holding an arbitration agreement unenforceable when the invalid term was essential). In short, the arbitration agreement’s clear reference to the exclusive application of tribal law is intertwined with the arbitration process and is central to it. As the Court of Appeals for the Fourth Circuit twice held, statements in a loan agreement that only tribal law applied in arbitration, and that federal law did not apply to the tribe, showed that “one of the animating purposes of the arbitration agreement was to ensure that [the tribe] and its allies could engage in lending and collection practices free from the strictures of any federal law.” Hayes, 811 F.3d at 676; see also Dillon, 856 F.3d at 336.
The arbitration agreement here repeatedly states that only tribal law claims can be brought in arbitration. Were we to remove the invocations of tribal law in the arbitration agreement, we would “impermissibl[y] rewrit[e]” the contract. MacDonald, 883 F.3d at 231; accord Dillon, 856 F.3d at 336 (“[A borrower’s] consent to application of federal law would defeat the purpose of the arbitration agreement in its entirety.”). Because tribal law provisions are “integral to the entire arbitration agreement,” they “cannot be severed.” MacDonald, 883 F.3d at 232. As a result, “the entire arbitration agreement, including the delegation clause, is unenforceable.” Id.; see also Gingras, 922 F.3d at 128 (same).
Kohlman v. Grane Healthcare Co., 2020 Pa. Super. LEXIS 104 (February 10, 2020) Musmanno, J. In this case, the defendant agreed that plaintiff had a right to arbitrate the wrongful death claim. Decedent signed the arbitration agreement when she was alive, and thereafter died. The court pointed out, however, that plaintiff’s decedent was entitled to discovery and development of the record on unconscionability. Defendants do not dispute that plaintiff is entitled to a trial on wrongful death nothwithstanding the arbitration agreement, but of course are asserting arbitration for the survival action.
ARBITRATION-FEDERAL ARBITRATION ACT-UBER DRIVERS
Singh v. Uber Techs. Inc., 2019 U.S. App. LEXIS 27412 (September 11, 2019) GREENAWAY, JR., C.J.
Arbitration agreements are essentially contracts that predetermine that a dispute between parties will be decided by an arbitrator, rather than in court. In response to judicial hostility toward these types of contracts Congress passed the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16. The FAA places certain arbitration agreements on equal footing with all other contracts by requiring courts to enforce such agreements according to their terms. Section 2 provides that the FAA covers “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce,” id. § 2, but a provision in § 1 sets an outer limit, providing that “nothing” in the FAA “shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” id. § 1 (“§ 1”). This outer limit sets the stage for the case before us.
Jaswinder Singh brought this putative class action in the Superior Court of New Jersey, Monmouth County, on behalf of himself, and other similarly situated New Jersey Uber drivers. He alleged that Uber Technologies, Inc. (“Uber”) misclassified them as independent contractors as opposed to employees, which resulted in their being deprived of overtime compensation, and having to incur business expenses for the benefit of Uber. Uber removed the case to federal court in the District of New Jersey. It then moved for the District Court to dismiss the case and compel Singh to have it decided by an arbitrator, on the basis of an agreement to arbitrate. Singh opposed the motion to compel arbitration on numerous grounds, one of which was that the District Court did not have the authority to compel arbitration under the FAA. He argued that, to the extent that he had an agreement with Uber, it fell within the ambit of the residual clause—the “any other class of workers” portion—of § 1. In the least, Singh asked that he be given the opportunity for discovery on the essential § 1 residual clause inquiry, which is whether the class of workers to which Singh belongs is “engaged in foreign or interstate commerce.” Id.
The District Court granted the motion over Singh’s objections. But it did not reach the engaged-in-interstate commerce inquiry. Instead, the Court ruled that Singh did not fall within the ambit of the residual clause of § 1 because that clause only extends to transportation workers who transport goods, not those who transport passengers. We disagree with this reading. Consistent with our longstanding precedent, we hold that the residual clause of § 1 may extend to a class of transportation workers who transport passengers, so long as they are engaged in interstate commerce or in work so closely related thereto as to be in practical effect part of it. We will therefore vacate the District Court’s order compelling arbitration. In addition, because neither the Complaint nor incorporated documents suffice to resolve the engaged-in-interstate-commerce inquiry, we will remand this and the remaining issues to the District Court for further proceedings consistent with this opinion.
TTSP Corp v. Rose Corp., 2019 Pa. Super 262 (August 27, 2019). This case says that the commercial accounting arbitration provision of a contract should have been respected and the case should have been sent to arbitration. The Court relies upon Section 7302 of the Act even though the provision does not contain the terms “arbitration” and “arbitrator”, the section does have language about an independent accounting firm agreed upon to determine a purchase price adjustment issue. The Court found that was the equivalent of arbitration.
Horace Davis v. 2507 Chestnut Street Operations, 2019 Pa. Super. Unpublished LEXIS 3541 (September 16, 2019) Ott, J. Superior Court upheld trial court in finding lack of capacity to enter into alternative dispute resolution agreement signed by decedent. Burden to avoid the agreement is to demonstrate by clear and convincing evidence that decedent lacked the capacity to understand the agreement. Irrelevant, therefore, as to whether authority was given to spouse. Several agreements had been signed by decedent. Appeal was taken by hospitals to the trial court overruling their preliminary objections to the medical malpractice complaint. To rebut presumption that a person understood what they were signing, a challenger must present evidence of mental incompetency which is clear, precise and convincing. The witness must be found credible, the facts to which they testify must be distinctly remembered and the details narrated exactly in due order. The testimony must be so clear, direct, weighty and convincing as to convince the finder of fact to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue. This, all according to the Supreme Court Estate of McGovern v. Commonwealth State Employees Retirement Board, 517 A.2d 523 (Pa. 1986). Trial court properly found that at the time the agreements were executed, decedent lacked the mental capacity to enter the agreement.
FEDERAL ARBITRATION ACT-CLASS ARBITRATION-AMBIGUITY
Lamps Plus, Inc., et al v. Varela, 2019 Supreme Court (April 24, 2019) Roberts, C.J.-The Federal Arbitration Act requires courts to enforce covered arbitration agreements according to their terms. See 9 U.S.C. §2. In Stolt-Nielsen, S.A. v. Animal Feeds Int’l Corp., 599 U.S. 662 (2010), we held that a court may not compel arbitration on a classwide basis when an agreement is “silent” on the availability of such arbitrations. Because class arbitration fundamentally changes the nature of the “traditional individualized arbitration” envisioned by the FAA, Epic Systems Corp. v. Lewis, 584 U.S. ___, ____ (2018) (slip op., at 8), “ a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so,” Stolt-Nielsen, 559 U.S., at 684 (emphasis in original). We now consider whether the FAA similarly bars an order requiring class arbitration when an agreement is not silent, but rather “ambiguous” about the availability of such arbitration. “[T]he first principle that underscores all of our arbitration decisions” is that “[a]rbitration is strictly a matter of consent.” Granite Rock Co. v. Teamsters, 561 U.S. 287, 299 (2010) (internal quotation marks omitted). We have emphasized that “foundational FAA principle” many times. Stolt-Nielsen, 559 U.S., at 684; see also, e.g., Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002); First Options, 514 U.S. at 934; Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S., at 52, 57 (1995); Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). Consent is essential under the FAA because arbitrators wield only the authority they are given. That is, they derive their “powers from the parties’ agreement to forgo the legal process and submit their disputes to private dispute resolution.” Stolt-Nielsen, 559 U.S. at 682. Parties may generally shape such agreements to their liking by specifying with whom they will arbitrate the issues subject to arbitration, the rules by which they will arbitrate, and the arbitrators who will resolve their disputes. Id., at 683-684. Whatever they settled on, the task for courts and arbitrators at bottom remains the same: “to give effect to the intent of the parties.” Id., at 684. Our opinion today is far from the watershed JUSTICE KAGAN claims it to be. Rather, it is consistent with a long line of cases holding that the FAA provides the default rule for resolving certain ambiguities in arbitration agreements. For example, we have repeatedly held that ambiguities about the scope of an arbitration agreement must be resolved in favor of arbitration. See, e.g., Mitsubishi Motors Corp., 473 U.S. at 626; Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). In those cases, we did not seek to resolve the ambiguity by asking who drafted the agreement. Instead, we held that the FAA itself provided the rule. As in those cases, the FAA provides the default rule for resolving ambiguity here. Courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis.
ARBITRATION-NURSING HOME-AGENCY OR AUTHORITY TO SIGN
McIlwain v. Saber Healthcare Grp., Inc., LLC. 2019 Pa. Super. (April 22, 2019) Colins, J.-The UAGPPJA provides two ways that an out-of-state guardianship/conservatorship can be recognized in Pennsylvania. Section 5922 provides for a transfer of the jurisdiction of the guardianship from another state into Pennsylvania. Section 5931 provides for an out-of-state guardian/conservator to register its guardianship/conservatorship order in Pennsylvania. “The FAA… does not require parties to arbitration when they have not agreed to do so.” E.C.O.C. v. Waffle House, Inc., 534 U.S. 279, 293, 122 S. Ct. 754, 151 L. Ed. 2d 755 (2002) (citation omitted). “Despite national and state policies favoring arbitration, a party cannot be compelled to arbitrate in the absence of a valid agreement to do so under either Pennsylvania law or the [FAA].” Washburn v. Northern Health Facilities, Inc., 2015 Pa. Super. 168, 121 A.3d 1008, 1015-6 (Pa. Super. 2015) (citation omitted). “The [FAA] requires courts to place arbitration agreements on equal footing with all other contracts.” Kindred Nursing Centers Limited Partnership v. Clark, 137 S. Ct. 1421, 1424, 197 L. Ed. 2d 806 (2017) (citation omitted). “[T]he existence of an arbitration does not require the rubber stamping of all disputes as subject to arbitration.” Pisano v. Extendicare Homes, Inc., 2013 Pa. Super. 232, 77 A.3d 651, 661 (Pa. Super. 2013) (citation omitted). “This is especially true where holding otherwise would operate against principles of Pennsylvania contract law and the FAA.” Id. We find the trial court erred as a matter of law in determining that Mcllwain had the authority to sign the arbitration agreement on behalf of Franks. Absent an agency relationship, we hold that Mcllwain did not have authority to sign the arbitration agreement on behalf of Franks. We reverse the trial court’s order bifurcating the survival claims, and remand for further proceedings consistent with this opinion. The survival claims are to proceed in the trial court concurrent with the wrongful death and negligence claims.
ARBITRATION-LOAN AGREEMENT-ILLUSORY FORUM
McDonald v. Cashcall, Inc., No. 17-2161 (3rd Cir. February 27, 2018) Shwartz, C.J. This case involved class action with an arbitration agreement concerning loan agreements. The party’s agreement directs arbitration to an illusory forum. The forum selection clause is not severable. The entire agreement to arbitrate, including the delegation clause, is unenforceable and the court therefore will affirm no arbitration to take place in this case. The arbital forum provided for in a Loan Agreement is nonexistent.
ARBITRATION-HOME INSPECTION AGREEMENT
Home inspection agreement contained an arbitration clause. The lower court found it was not enforceable, but the Superior Court reversed and sent it back to the trial court with instructions. A PECO power pole fell over and started a fire, and a homeowner was burned. They filed a lawsuit against the inspection company, saying that the pole was rotted and no information about the rotting was given to the homeowners when they purchased the home. The parties entered into a valid agreement to arbitrate. The unconscionability argument rests on the assertion that the agreement was inconspicuous and difficult to read. However, the agreement contained a conspicuous statement on the top in bold letters advising the consumer to read the agreement carefully. The damage limitation may be stricken by the agreement or ignored by the mediator if it is improper. Bodily injury claims are within the scope of the agreement. The tort claims arise from the duties that the homeowners claim they were owned pursuant to the inspection agreement. The facts that support a tort action also support a breach of contract action. Therefore, the tort claims are subject to the arbitration clause contained in the agreement. Fellerman v. Peco Energy Co., 2017 Pa. Super. LEXIS 209 (March 30, 2017) Lazarus, J.
ARBITRATION-INTENT TO BE BOUND-WEBSITE
ARBITRATION-WRONGFUL DEATH AND SURVIVAL
Burkett v. St. Francis Country House, 133 A.3d 22 (Pa. Super. 2016). We are constrained to find that the trial court did not abuse its discretion in denying St. Francis’s motion to compel arbitration. Until the Supreme Court of Pennsylvania rules on the bifurcation question, the court finds itself to be bound by the decision in Taylor. St. Francis was sued by Roy J. Burkett, Jr., Administrator of the Estate of Nannie Burkett, Deceased, and in his own right as son. The lower court looked at the question as to whether the arbitration agreement signed by the administrator should be enforced. Based upon Taylor v. Extendicare Health Facilities, Inc., 113 A.3d 317 (Pa. Super. 2015), alloc. granted, 122 A.3d 1036 (2015), which controls this matter, the trial court order denying arbitration was affirmed. Arbitration will not be permitted. Arbitration agreements are to be strictly construed and should not be extended by implication. Burkett, as administrator of the estate and in his own right, was a non-intended third party. He was not bound by the Arbitration Clause to arbitrate either the wrongful death or the survival action. In spite of the distinctions recognized between wrongful death and survival claims, the Taylor panel concluded that the two claims were to be litigated together. The court suggested that it is inapposite to Pennsylvania law which has permitted bifurcation on the two actions. Taylor based its decision on the fact that pursuant to Rule 213, the wrongful death and survival action should be consolidated for trial.
Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, 809 F.3d 746 (3rd Cir. 2016). In Opalinski v. Robert Half International Inc., 761 F.3d 326 (3d Cir. 2014), cert. denied, ___ U.S. ___, 135 S.Ct. 1530, 191 L.Ed.2d 558 (2015), we held that the availability of class arbitration constitutes a “question of arbitrability” to be decided by the courts–and not the arbitrators–unless the parties’ arbitration agreement “clearly and unmistakably” provides otherwise, id. at 329, 335-36.
The oil and gas leases in this case state that where there is a disagreement the matter should be decided by AAA Arbitration. Based on the language of the leases themselves and the various AAA rules in the existing law, the Third Circuit concluded that the leases do not clearly and unmistakably delegate the question of class arbitrability to the arbitrators. Accordingly, the lower court was affirmed. The lower court had granted summary judgment to the company finding that the court was tasked to interpret the arbitration agreement and denied royalty holders motion for reconsideration.
ARBITRATION-POWER OF ATTORNEY-MANOR CARE
Wisler v. Manor Care of Lancaster, PA, LLC, 124 A.3d 317 (Pa. Super. 2015). Manor Care contends that the trial court erred in refusing to compel arbitration of executor’s claims arising out of decedent’s stay at a Manor Care Nursing Home. Trial court properly found the arbitration agreement invalid, ruling that the power of attorney for decedent lacked the authority to enter into such an agreement. A party can be compelled to arbitrate even if he or she did not sign the agreement if the common law principles of agency and contract support an obligation on his or her part. Express authority exists where the principal deliberately and specifically grants authority to the agent as to certain matters. Certainly that did not happen here. If valid, durable power of attorney constitutes a grant of express authority per its terms. There was nothing in this agreement for power of attorney which included arbitration. There was no apparent authority either. There is no power by estoppel. There was no intentional spoliation or adverse inference as a matter of evidence because the power of attorney was missing. Adverse inferences are not evidence. Our decision should encourage parties seeking an agreement to arbitrate to ascertain the source of an agent’s authority before allowing the agent to sign an arbitration agreement on a principal’s behalf.
DIRECTV, Inc. v. Imburgia, 136 S.Ct. 463 (2015). The Federal Arbitration Act states that a “written provision” in a contract providing for “settle[ment] by arbitration” of “a controversy … arising out of” that “contract … shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” … We here consider a California court’s refusal to enforce an arbitration provision in a contract. In our view, that decision does not rest “upon such grounds as exist … for the revocation of any contract,” and we consequently set that judgment aside. Hence, the California Court of Appeal must “enforc[e]” the arbitration agreement. 9 U.S.C. § 2. The judgment of the California Court of Appeal is reversed, and the case is remanded for further proceedings not inconsistent with this option.