Justia Civil Procedure Opinion Summaries

Richard Wade, the former president, CEO, and director of Vertical Computer Systems, Inc., was sued in April 2020 by the company's chief technical officer and several shareholders for breach of fiduciary duty and fraud. Wade's address was initially listed as "3717 Cole Avenue, Apt. 293, Dallas, Texas 75204." After a year, the claims against Wade were severed into a separate action, and the trial court ordered binding arbitration. Wade's attorney later filed a motion to withdraw, listing Wade's address as "3717 Cole Ave., Apt. 277, Dallas, Texas 75204." Notice of the trial was sent to this incorrect address.The trial court scheduled a bench trial for April 19, 2022, and Wade appeared pro se but did not present any evidence. The court ruled in favor of the plaintiffs, awarding them over $21 million. Wade filed a pro se notice of appeal, arguing that he did not receive proper notice of the trial. The Court of Appeals for the Fifth District of Texas affirmed the judgment.The Supreme Court of Texas reviewed the case and found that Wade did not receive proper notice of the trial setting, which violated his due process rights. The court noted that the notice was sent to an incorrect address and that Wade had informed the trial court of this issue. The court held that proceeding to trial without proper notice was reversible error and that Wade was entitled to a new trial. The court reversed the judgment of the Court of Appeals and remanded the case to the trial court for further proceedings. View "Wade v. Vertical Computer Systems, Inc." on Justia Law

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

Alison George sought to represent a class and obtain damages from Rushmore Service Center, LLC, based on a letter that identified Premier Bankcard, LLC as the “current/original creditor” instead of the actual credit card company. George alleged that this violated the Fair Debt Collection Practices Act (FDCPA) by failing to identify the creditor to whom the debt was owed and providing misleading information. She claimed that this would confuse the least sophisticated consumer about the legitimacy of the debt.The United States District Court for the District of New Jersey granted Rushmore’s motion to stay proceedings and compel individual arbitration. George lost in arbitration, where the arbitrator ruled in favor of Rushmore, finding that George was not misled because she admitted she did not read the letter. The District Court then declined to vacate the arbitration award, rejecting George’s arguments that the arbitrator disregarded evidence and law.The United States Court of Appeals for the Third Circuit reviewed the case and focused on whether George had standing to sue. The court concluded that George lacked standing from the outset because her complaint did not allege any specific adverse effects or confusion she personally experienced due to the letter. The court held that confusion alone is insufficient to establish a concrete injury under Article III. Consequently, the Third Circuit vacated the District Court’s orders and remanded with instructions to dismiss the case for lack of standing. The court declined to vacate the arbitration award itself, leaving its enforceability to be determined in a jurisdictionally correct proceeding. View "George v. Rushmore Service Center LLC" on Justia Law

A member of the United Mine Workers of America arbitrated a dispute against Consol Energy, Inc. and won. The Union then sued to confirm the arbitration award, while Consol and its subsidiaries counterclaimed to vacate the award. The Union argued that the subsidiaries could not unilaterally reduce health benefits promised to miners for life, even if they no longer mined coal. Consol, which served as the health-plan administrator, had sent a letter indicating potential changes to benefits after the agreement expired, prompting the arbitration.The United States District Court for the District of Columbia dismissed the Union’s claim for lack of standing, reasoning that the Union was not injured as Consol had not actually modified the benefits. The court also declined to vacate the arbitration award on the merits of the Subsidiaries’ counterclaim. Both parties appealed the decision.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court found that the Union’s claim did not fall under § 301(a) of the Labor Management Relations Act, which only authorizes suits for actual violations of contracts, not anticipated future violations. Consequently, the Union’s claim was dismissed for lack of subject-matter jurisdiction. Regarding the Subsidiaries’ counterclaim, the court determined that the Subsidiaries lacked standing as they were not named in the arbitration award and had not shown a concrete and imminent injury. The court vacated the district court’s orders on the Subsidiaries’ counterclaim and remanded it with instructions to dismiss for lack of standing.Thus, the appellate court affirmed the dismissal of the Union’s claim and vacated and remanded the Subsidiaries’ counterclaim for dismissal due to lack of standing. View "International Union, United Mine Workers of America v. Consol Energy Inc." on Justia Law

Martin Brauner transmitted HPV to M.O. through sexual activity in Brauner’s GEICO-insured automobile. M.O. threatened to sue Brauner for negligence and demanded $1,000,000 from GEICO, which denied the claim and sought a federal court declaration that the policy did not cover M.O.’s injuries. Brauner and M.O. settled the threatened lawsuit, agreeing that M.O. would collect only from GEICO if an arbitrator found Brauner negligent. The arbitrator awarded M.O. $5,200,000, which M.O. sought to confirm in Missouri state court. The Supreme Court of Missouri vacated the confirmation and remanded the case to allow GEICO to intervene.The United States District Court for the District of Kansas initially handled the case but transferred it to the United States District Court for the Western District of Missouri due to lack of personal jurisdiction over M.O. The district court granted GEICO’s motion for summary judgment, ruling that the policy required bodily injury to arise out of the use of the automobile, and that sexual activity in an automobile did not constitute “use” under Kansas insurance law. Brauner and M.O. appealed.The United States Court of Appeals for the Eighth Circuit reviewed the grant of summary judgment de novo. The court affirmed the district court’s decision, holding that the insurance policy unambiguously required bodily injury to arise out of the ownership, maintenance, or use of the automobile. The court found that sexual activity in an automobile did not meet this requirement, as the automobile was merely the situs of the injury and not causally connected to the negligent act. Therefore, M.O.’s injuries were not covered under the policy. View "GEICO General Insurance Co. v. M.O." on Justia Law

In a dispute between the Republic of Djibouti and Doraleh Container Terminal (Doraleh), Doraleh secured a $474 million arbitral award against Djibouti. Djibouti then nationalized a majority interest in Doraleh and appointed a provisional administrator, Chantal Tadoral, to manage the company. Quinn Emanuel, a law firm, sought to enforce the arbitral award in the U.S. District Court for the District of Columbia, claiming to represent Doraleh. However, Tadoral stated she did not authorize the filing, and Djibouti requested the case be dismissed.The District Court for the District of Columbia entered judgment for Doraleh, holding that Quinn Emanuel’s authority was irrelevant or, alternatively, that Djibouti had forfeited the issue by not raising it during arbitration. Djibouti appealed, arguing that the district court erred by not determining whether Quinn Emanuel had the authority to represent Doraleh.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and disagreed with the district court. The appellate court held that Quinn Emanuel’s authority is relevant and that the issue of a lawyer’s authority can be challenged at any point in litigation. The court found that Djibouti presented substantial evidence questioning Quinn Emanuel’s authority, which required the district court to determine whether the law firm had the authority to file the suit. Consequently, the appellate court vacated the judgment and remanded the case to the district court to determine Quinn Emanuel’s authority to represent Doraleh. View "Doraleh Container Terminal SA v. Republic of Djibouti" on Justia Law

Peter Quach filed a lawsuit against California Commerce Club (Commerce Club) after being terminated from his job at the casino where he had worked for nearly 30 years. Quach's complaint included claims of wrongful termination, age discrimination, retaliation, and harassment, and he demanded a jury trial. Commerce Club had previously provided Quach with a signed arbitration agreement from 2015, which mandated binding arbitration for employment-related disputes. Instead of moving to compel arbitration, Commerce Club answered the complaint and engaged in extensive discovery, including propounding interrogatories and taking Quach’s deposition.The Los Angeles County Superior Court denied Commerce Club’s motion to compel arbitration, finding that Commerce Club had waived its right to arbitrate by engaging in litigation for 13 months. The court noted that Commerce Club had actively participated in discovery and requested a jury trial, actions inconsistent with an intent to arbitrate. Commerce Club appealed, and the Second Appellate District, Division One, reversed the trial court’s decision, holding that Quach had not shown sufficient prejudice from Commerce Club’s delay in seeking arbitration.The Supreme Court of California reviewed the case and abrogated the state’s arbitration-specific prejudice requirement, aligning with the U.S. Supreme Court’s decision in Morgan v. Sundance, Inc. The court held that under California law, as under federal law, courts should apply the same principles to determine waiver of the right to compel arbitration as they do for other contracts. The court concluded that Commerce Club had waived its right to compel arbitration by engaging in litigation conduct inconsistent with an intent to arbitrate. The judgment of the Court of Appeal was reversed, and the case was remanded for further proceedings consistent with this decision. View "Quach v. Cal. Commerce Club, Inc." on Justia Law

Webuild S.P.A., an Italian investment company, formed a consortium with other companies to work on the Panama Canal expansion project. After the project's completion, Webuild initiated an arbitration against Panama under the ICSID, alleging that Panama breached its obligations under a bilateral investment treaty by providing incomplete information and making unfair financial demands. Webuild sought discovery from WSP USA, which had acquired the project's engineering consultant, Parsons Brinkerhoff.The United States District Court for the Southern District of New York initially granted Webuild's ex parte application for discovery under 28 U.S.C. § 1782. However, following the Supreme Court's decision in ZF Automotive US, Inc. v. Luxshare, Ltd., which limited § 1782 to governmental or intergovernmental tribunals, the district court vacated its order and quashed the subpoena. The court concluded that the ICSID arbitration tribunal did not qualify as a governmental or intergovernmental entity under § 1782.The United States Court of Appeals for the Second Circuit reviewed the district court's decision de novo. The appellate court affirmed the lower court's ruling, agreeing that the ICSID tribunal did not exercise governmental authority as required by § 1782. The court noted that the tribunal was formed specifically for the arbitration, funded by the parties, and its members had no official governmental affiliation. Thus, the ICSID tribunal did not meet the criteria established by the Supreme Court in ZF Automotive for a "foreign or international tribunal" under § 1782. View "Webuild v. WSP USA Inc." on Justia Law

Petitioners opened brokerage accounts with Stifel, Nicolaus & Company, managed by Coleman Devlin. Dissatisfied with Devlin's performance, they filed for arbitration with the Financial Industry Regulatory Authority (FINRA), alleging negligence, breach of contract, breach of fiduciary duty, negligent supervision, and violations of state and federal securities laws. After nearly two years of hearings, the arbitration panel ruled in favor of Stifel and Devlin without providing a detailed explanation, as the parties did not request an "explained decision."Petitioners moved to vacate the arbitration award in the United States District Court for the District of Maryland, arguing that the arbitration panel manifestly disregarded the law, including federal securities law. The district court denied the motion, stating that the petitioners failed to meet the high standard required to prove manifest disregard of the law. The court noted that the petitioners were essentially rearguing their case from the arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court noted that the Supreme Court's decision in Badgerow v. Walters requires an independent jurisdictional basis beyond the Federal Arbitration Act (FAA) itself for federal courts to have jurisdiction over petitions to vacate arbitration awards. Since the petitioners did not provide such a basis, the Fourth Circuit vacated the district court's judgment and remanded the case with instructions to dismiss the petition for lack of jurisdiction. The court emphasized that claims of manifest disregard of federal law do not confer federal-question jurisdiction. View "Friedler v. Stifel, Nicolaus, & Company, Inc." on Justia Law

A labor dispute arose between the City of Cleveland and the Ohio Patrolmen’s Benevolent Association (the union representing dispatch supervisors) over overtime scheduling. The dispute was submitted to arbitration, where the arbitrator denied the union's grievance. The union then sought to vacate the arbitration award by filing an application in the Cuyahoga County Common Pleas Court, serving the city but not the attorneys who represented the city in the arbitration.The Common Pleas Court initially denied the city's motion to dismiss the union's application, but later reversed its decision after the Eighth District Court of Appeals ruled in a different case that failure to serve the adverse party's counsel deprived the court of jurisdiction. Consequently, the Common Pleas Court dismissed the union's application and confirmed the arbitration award in favor of the city. The Eighth District affirmed this decision, citing two defects: the union's application was in the form of a pleading rather than a motion, and it failed to serve the city's arbitration counsel.The Supreme Court of Ohio reviewed the case and held that under R.C. 2711.13, a party seeking to vacate an arbitration award must serve either the adverse party or its counsel, not necessarily both. However, the court also held that the union's application did not meet the statutory requirements because it was filed as a pleading (a complaint) rather than a motion. The court emphasized that a motion must state with particularity the grounds for the requested order, which the union's filing failed to do. Thus, the Supreme Court of Ohio reversed the Eighth District's decision regarding the service requirement but affirmed the decision that the union's application did not meet the statutory form requirements, leaving the arbitration award in favor of the city intact. View "Ohio Patrolmen's Benevolent Assn. v. Cleveland" on Justia Law