ARBITRATION-WHO IS BOUND-SURETY

September 15th, 2022 by Rieders Travis in Arbitration

East Steel Constructors, Inc. v. Int'l Fid. Ins. Co., 2022 Pa. Super. LEXIS 367 (Pa. Super. September 1, 2022) (Stabile, J.)  The Superior Court decides whether a surety, who had notice of and an opportunity to participate in arbitration proceedings against its principal, is bound by an arbitration award rendered against the principal, and the court also decided that the surety, however, is not subject to bad faith statute.  IFIC, as surety, was bound by the arbitration award but not subject to bad faith action under § 8731.  Therefore, the court affirmed in part, reversed in part, vacated in part and remanded.  Penn State entered into a contract with Lonadi for construction work on the campus.  IFIC issued a payment bond in connection with the project.  The court examined the contract and the definitions, and there was obviously a payment dispute.  This was followed by a demand for arbitration by Eastern.  Eastern contacted and notified IFIC of the arbitration, but IFIC declined to participate.  Tinney, Lonadi’s reenforcing steel supplier who also had not been paid by Lonadi, filed a civil complaint against IFIC in the Court of Common Pleas.  Tinney…

ARBITRATION-PARTNERSHIPS

August 22nd, 2022 by Rieders Travis in Arbitration

MBC Dev., LP v. Miller, 2022 Pa. Super. LEXIS 350 (August 12, 2022) (Colins, J.)  This case involved an arbitration agreement in connection with a limited partnership.  The court found that the arbitration agreement must be respected.  Reference to the court as an adjudicator in the statute does not require that only a court can make such an adjudication or prohibit arbitration of the claim or issue.  Here, Sections 8692 and 8694 of the Limited Partnership Act do not state that courts have exclusive jurisdiction over proceedings concerning the effect of a special litigation committee determination on a derivative claim.  Rather, they simply refer to the “court” as the adjudicator of the effect of a special litigation committee determination where the action is brought in a court and refer to “court review” without any suggestion of intent to bar other adjudicators from addressing the issue.  There is no limitation in jurisdiction in the Limited Partnership Act.  The partnership arbitration clause then is valid.  However, as to the individuals not parties to the partnership agreement, they are not bound by arbitration.  They also are not third party beneficiaries of the agreement…

ARBITRATION-UNCONSCIONABILITY-PHARMACIES

August 22nd, 2022 by Rieders Travis in Arbitration

Robert D. Mabe, Inc. v. OptumRX, 2022 U.S. App. LEXIS 21547 (3rd Cir. August 4, 2022) (Smith, C.J.)  Over 400 pharmacies joined forces in a lawsuit against OptumRX (Optum), a pharmacy benefits manager, alleging breaches of contract and breaches of duties of good faith and fair dealing, together with violations of certain state statutes. Pointing to arbitration agreements found in various contracts covering almost all of those pharmacies, Optum moved to compel arbitration. The pharmacies opposed the motion, arguing that compelling arbitration would be unconscionable. The District Court agreed with the pharmacies, and Optum timely appealed. We conclude that the District Court erred by applying the wrong standard in ruling on Optum's motion. Per Guidotti v. Legal Helpers Debt Resolution, LLC, 716 F.3d 764 (3d Cir. 2013), the District Court—after concluding the pharmacies brought forth sufficient facts to place the arbitration agreements in question—should have allowed discovery limited to the question of arbitrability and then provided Optum an opportunity to renew its motion. It did neither. We will therefore vacate in part the District Court's order denying Optum's motion to compel arbitration and remand with instructions. Without providing for discovery…

ARBITRATION-FRAUD

August 22nd, 2022 by Rieders Travis in Arbitration

France v. Bernstein, 2022 U.S. App. LEXIS 21945 (3rd Cir. August 9, 2022) (Jordan, C.J.)  Courts will disturb an arbitration award only in limited circumstances, but those circumstances do occasionally arise. Under the Federal Arbitration Act ("FAA"), a court may, for example, vacate an award that was procured by fraud, and fraud is exactly what Jason Bernstein says was perpetrated by Todd France in the arbitration underlying this suit. Like something out of the film Jerry Maguire, these two sports agents fought over Bernstein's claim that France improperly organized a money-making event for a football player who was then one of Bernstein's clients, all in an effort to induce that player to fire Bernstein and hire France. The matter went to arbitration, and, in pre-hearing discovery, France denied possessing any documents pertaining to the event. He flatly denied having any involvement in the event at all. The end of this tale hasn't been told yet, but this much is now clear: France lied to Bernstein and the arbitrator, though his lies were not uncovered until after the arbitration was decided in his favor. Because the arbitration award was procured by…

ARBITRATION-EMPLOYMENT AGREEMENT

August 15th, 2022 by Rieders Travis in Arbitration

Abdurahman v. Prospect CCMC LLC, 2022 U.S. App. LEXIS 20823 (3rd Cir. July 28, 2022) (Matey, C.J.)  A company cannot benefit by an employment arbitration agreement based upon agency principles and equitable estoppel.  Arbitration can only be asserted by the company with whom the employee signed the agreement.  Pennsylvania laws apply to the threshold questions.  A non-signatory may not embrace some contractual terms while denying others, such as an arbitration clause.  There is nothing in the contract at issue to estop the plaintiff from repudiating.  A sibling corporate relationship without more cannot establish the “obviously close nexus” necessary to invoke estoppel.  There are two contracts with two sets of signatories, and both can be performed without conflict or inequity.  The claim against the one party, further, is outside the arbitration agreement.

ARBITRATION-EMPLOYMENT-ATTORNEY

July 25th, 2022 by Rieders Travis in Arbitration

Fineman v. Perr, 2022 Pa. Super. LEXIS 290 (June 30, 2022) (Stabile, J.)  This case deals with arbitration on the former attorney employee and when the breach of an agreement is subject to arbitration with respect to the employment period.  The court affirmed the trial court’s order insofar as it denied application to compel arbitration of breach of employment agreement cause of action.  However, the Superior Court reversed the order insofar as it stayed the arbitrable claims pending the outcome of the court action on the breach of employment agreement claim.  Rather, the court must compel immediate arbitration of the claims that can be arbitrated, stay the judicial action as to the claim subject to arbitration, subject to whether the cause of action on the breach of employment agreement claim is severable from the arbitration claims and proceed as explained above, making a severability determination.  We remand for that reason.

ARBITRATION-SKILLED NURSING HOME

July 25th, 2022 by Rieders Travis in Arbitration

Kohlman v. Grane Healthcare, 2022 Pa. Super. LEXIS 296 (July 5, 2022) (Colins, J.)  Highland Park appealed from order of Court of Common Pleas of Allegheny County overruling their POs that sought to compel arbitration of claims asserted against them by Kohlman, administratrix of the estate of Vincent.  The Superior Court affirmed.  The decedent signed a number of documents, including the arbitration agreement.  The court said that decedent’s medical records showed she was receiving Oxycodone and Xanax from the day she was admitted through February 1st.  The court went through all of the evidence.  The record shows that arbitration provisions were omitted or not fully and accurately stated in the oral information given to decedent which was the only information decedent had when she decided to sign the arbitration agreement.  Because decedent was not fully orally advised of this information and was denied the ability to obtain assistance from a family member or other person not employed by Highland Park who could read the arbitration agreement, the process by which decedent’s signature was obtained denied her a meaningful choice and therefore was procedurally unconscionable.  On the issue of substantive unconscionability,…

ARBITRATION-FEDERAL ARBITRATION ACT PREEMPTION

June 28th, 2022 by Rieders Travis in Arbitration

Viking River Cruises, Inc. v. Moriana, 2022 U.S. LEXIS 2940 (June 15, 2022) (Alito, J.) We granted certiorari in this case to decide whether the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq., preempts a rule of California law that invalidates contractual waivers of the right to assert representative claims under California’s Labor Code Private Attorneys General Act of 2004. Cal. Lab. Code Ann. §2698 et seq. (West 2022). Petitioner Viking River Cruises, Inc. (Viking), is a company that offers ocean and river cruises around the world. When respondent Angie Moriana was hired by Viking as a sales representative, she executed an agreement to arbitrate any dispute arising out of her employment. The agreement contained a “Class Action Waiver” providing that in any arbitral proceeding, the parties could not bring any dispute as a class, collective, or representative PAGA action. It also contained a severability clause specifying that if the waiver was found invalid, any class, collective, representative, or PAGA action would presumptively be litigated in court. But under that severability clause, if any “portion” of the waiver remained valid, it would be “enforced in arbitration.” A…

ARBITRATION-DISCOVERY

June 28th, 2022 by Rieders Travis in Arbitration

ZF Auto. US, Inc. v. Luxshare, Ltd., 2022 U.S. LEXIS 2861 (S. Ct. June 13, 2022) (Barrett, J.)  Congress has long allowed federal courts to assist foreign or international adjudicative bodies in evidence gathering. The current statute, 28 U. S. C. §1782, permits district courts to order testimony or the production of evidence “for use in a proceeding in a foreign or international tribunal.” These consolidated cases require us to decide whether private adjudicatory bodies count as “foreign or international tribunals.” They do not. Both cases before us involve a party seeking discovery in the United States for use in arbitration proceedings abroad. In both, the party seeking discovery invoked §1782, which permits a district court to order the production of certain evidence “for use in a proceeding in a foreign or international tribunal.” And in both, the party resisting discovery argued that the arbitral panel at issue did not qualify as a “foreign or international tribunal” under the statute. We begin with the question whether the phrase “foreign or international tribunal” in §1782 includes private adjudicative bodies or only governmental or intergovernmental bodies. If the former, all agree that…

ARBITRATION-FEDERAL ARBITRATION ACT-AIR CARGO BAGGAGE HANDLERS

June 10th, 2022 by Rieders Travis in Arbitration

Southwest Airlines Co. v. Saxon, 2022 U.S. LEXIS 2815 (June 6, 2022) (Thomas, J.)  JUSTICE THOMAS delivered the opinion of the Court. Latrice Saxon works for Southwest Airlines as a ramp supervisor. Her work frequently requires her to load and unload baggage, airmail, and commercial cargo on and off airplanes that travel across the country. The question presented is whether, under §1 of the Federal Arbitration Act, she belongs to a “class of workers engaged in foreign or interstate commerce” that is exempted from the Act’s coverage. We hold that she does. Southwest sought to enforce its arbitration agreement with Saxon under the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq., and moved to dismiss the lawsuit. In response, Saxon invoked §1 of the FAA, which exempts from the statute’s ambit “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Saxon argued that ramp supervisors, like seamen and railroad employees, were an exempt “class of workers engaged in foreign or interstate commerce.” Ibid. In this case, we must decide whether Saxon falls within a “class of workers…