Justia Civil Procedure Opinion Summaries

After losing millions of dollars because of delays and coordination failures in building a hospital, W.J. O’Neil Company sued its construction manager in state court. In subsequent arbitration, the architect and a design subcontractor (defendants) were added to the arbitration on indemnity claims. In the arbitration, O’Neil did not formally assert claims against those defendants, but O’Neil’s claims against its construction manager arose from the defendants’ defective and inadequate design of the hospital. O’Neil won the arbitration against its construction manager, but the construction manager did not establish its indemnity claims, so the defendants were not held liable. No party sought judicial confirmation or review of the arbitration award. O’Neil then sued the defendants in federal court. The district court dismissed, finding the claims barred by Michigan’s doctrine of res judicata. The Sixth Circuit reversed. An arbitration award cannot bar a claim that the arbitrator lacked authority to decide, and an arbitrator lacks authority to decide a claim that the parties did not agree to arbitrate. O’Neil did not agree to arbitrate the claims at issue. View "W.J. O'Neil Co. v. Shepley, Bulfinch, Richardson & Abbott, Inc." on Justia Law

After filing for bankruptcy, Houston Refining, L.P., suspended matching contributions to its employees' 401(k) plans. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, acting on behalf of itself and its local unions (collectively "Union"), filed a grievance under the then-current collective bargaining agreement seeking resumption of the matching contributions. Houston Refining refused to process the grievance, claiming that the suspension was not a grievable issue. Months later, the Union commenced an adversary proceeding in the bankruptcy court to compel Houston Refining to arbitrate the grievance under the CBA. Houston Refining agreed to submit the matter to arbitration. Following a two-day hearing, the arbitrator rendered an award in favor of the Union. Houston Refining filed suit in the district court seeking to vacate the arbitral award, and the Union counterclaimed to enforce the award. The district court found that because the Settlement Agreement evinced the parties’ clear agreement to have the arbitrator decide questions of arbitrability, its review of this issue would be deferential. On the merits, the district court upheld the arbitrator’s finding that Houston Refining violated portions of the CBA, but concluded that the arbitral award’s remedy was ambiguous in certain respects. The district court accordingly denied the company’s motion and granted the Union’s motion in part, but remanded to the arbitrator for clarification of the award’s monetary value, among other issues. Houston Refining appealed, arguing that the district court erred in deferring to the arbitrator’s determination of the grievance’s arbitrability. According to the company, because the parties never agreed in clear and unmistakable terms to give the issue of arbitrability to the arbitrator, the district court was obligated to decide the issue independently. The Fifth Circuit found after review of the matter that "the party contending that an arbitrator has authority to decide arbitrability 'bears the burden of demonstrating clearly and unmistakably that the parties agreed to have the arbitrator decide that threshold question.'" In this case, the Union did not meet its burden, and therefore the district court erred in failing to decide arbitrability “just as it would decide any other question that the parties did not submit to arbitration, namely, independently.” The Court reversed and remanded this case to the district court to decide arbitrability issues raised by this opinion, "independently" without deference to the arbitral decision.View "Houston Refining, L.P. v. United Steel, Paper & Forestry, et al" on Justia Law

UHC hired Haworth as a part-time physician in 2005. After UHC terminated her employment in 2010, she sued for retaliation and wrongful termination. UHC successfully moved to compel arbitration under a provision in Haworth’s employment contract. UHC’s counsel recommended to Haworth’s counsel, Smith, that they select either Retired Judge Broadman or Retired Justice Dibiaso as the arbitrator, stating that he had used both several times, and asked Smith to let him know if he agreed to either one or if he proposed an alternative. Smith agreed to Broadman. After a hearing and briefing, Broadman issued judgment in UHC’s favor, finding that UHC terminated Haworth’s position due to its financial distress, the impracticality of employing part-time physicians, and personnel issues, and that she was an at-will employee. The court vacated the award (Code of Civil Procedure section 1285.20, on the ground that Broadman failed to comply with the mandatory disclosure requirements of sections 1281.9 and 1281.85 and that those obligations cannot be waived. The court of appeal remanded, noting that Haworth’s attorneys had actual knowledge of a ground for disqualification before the arbitration commenced and that the failure to disclose could be waived. View "United Health Ctrs. of San Joaquin v. Superior Ct." on Justia Law

Plaintiff filed suit against Defendants alleging fraud, defamation, abuse of process, breach of fiduciary duty, and other claims. Plaintiff also requested declaratory judgment, accounting, and injunctive relief. Pursuant to the parties’ prior agreement, which included an arbitration clause, the trial court granted Defendants’ motion to compel arbitration on all counts with the exception of claims involving defamation and abuse of process. Because Defendants appealed, the trial court refrained from ruling on Plaintiff’s request for injunctive relief. Consequently, Plaintiff petitioned the court of appeals, without success, for a writ of mandamus. The Supreme Court affirmed. Plaintiff also appealed the trial court’s order compelling arbitration. Plaintiff’s and Defendants’ appeals were consolidated. The court of appeals affirmed the entirety of the trial court’s order compelling arbitration. The Supreme Court affirmed in part and reversed in part, holding (1) the Court lacked jurisdiction to consider the merits of Plaintiff’s appeal because Plaintiff attempted to appeal from a non-final order; and (2) the court of appeals correctly determined that the abuse of process and defamation claims fell outside the agreement to arbitrate.View "Linden v. Griffin" on Justia Law

The Plaintiffs sued Payday Financial, Webb, an enrolled member of the Cheyenne River Sioux Tribe, and other entities associated with Webb, alleging violations of civil and criminal statutes related to loans that they had received from the defendants. The businesses maintain several websites that offer small, high-interest loans to customers. The entire transaction is completed online; a potential customer applies for, and agrees to, the loan terms from his computer. The district court dismissed for improper venue, finding that the loan agreements required that all disputes be resolved through arbitration conducted by the Cheyenne River Sioux Tribe on their Reservation in South Dakota. Following a limited remand, the district court concluded that, although the tribal law could be ascertained, the arbitral mechanism detailed in the agreement did not exist. The Seventh Circuit held that the action should not have been dismissed because the arbitral mechanism specified in the agreement is illusory. Rejecting an alternative argument that the loan documents require that any litigation be conducted by a tribal court on the Cheyenne River Sioux Tribe Reservation, the court stated that tribal courts have a unique, limited jurisdiction that does not extend generally to the regulation of nontribal members whose actions do not implicate the sovereignty of the tribe or the regulation of tribal lands. View "Jackson v. Payday Fin., LLC" on Justia Law

Employers that withdraw from underfunded multiemployer pension plans must pay their share of the shortfall. They can seek recalculation of the plans' assessment within 90 days, 29 U.S.C. 1399(b)(2)(A), and within another 60 days, may invoke a process that the Act calls arbitration, though it is neither contractual nor consensual. Central States Pension Fund concluded that US Foods has withdrawn in part and assessed liability in 2008 and in 2009. US Foods timely requested arbitration of the 2009 assessment, but did not timely seek arbitration of the 2008 assessment. In the Fund’s suit to collect the 2008 assessment, US Foods asked the court to order the arbitrator to calculate the amount due for 2008 and 2009 jointly. The court ruled that US Foods had missed the deadline for arbitral resolution of the 2008 assessment. US Foods appealed, relying on 9 U.S.C.16(a)(1)(B), which authorizes an interlocutory appeal from an order “denying a petition under section 4 of this title to order arbitration to proceed”. The Seventh Circuit dismissed for lack of jurisdiction. An order declining to interfere in the conduct of an arbitration is not an order “denying a petition under section 4 of this title to order arbitration to proceed” under section 16(a)(1)(B). View "Cent. States SE & SW Areas Pension Fund v. US Foods, Inc." on Justia Law

Nuance appealed the district court's order remanding this case back to the arbitration panel for clarification of the arbitration award concerning an alleged breach of a corporate merger agreement. The court dismissed the appeal based on lack of jurisdiction because a district court order remanding a case back to an arbitration panel for clarification is not a final order. View "Murchison Capital Partners, L.P., et al v. Nuance Communications, Inc." on Justia Law

The Randolph-Sheppard Act, 20 U.S.C. 107–107e, gives blind persons a priority in winning contracts to operate vending facilities on federal properties. Fort Campbell, Kentucky, operates a cafeteria for its soldiers. For about 20 years, Kentucky’s Office for the Blind (OFB) has helped blind vendors apply for and win the base’s contracts for various services. In 2012, the Army, the federal entity that operates Fort Campbell, published a solicitation, asking for bids to provide dining-facility-attendant services. Rather than doing so under the Act, as it had before, the Army issued this solicitation as a set aside for Small Business Administration Historically Underutilized Business Zones. OFB, representing its blind vendor, filed for arbitration under the Act, and, days later, filed suit, seeking to prevent the Army from awarding the contract. The district court held that it lacked jurisdiction to consider a request for a preliminary injunction. The Sixth Circuit vacated. OFB’s failure to seek and complete arbitration does not deprive the federal courts of jurisdiction. View "Commonwealth of Kentucky v. United States" on Justia Law

CEATS filed a patent infringement suit against airlines and ticket agencies. After the parties failed to reach a settlement during court ordered mediation, a jury found that CEATS’s patents were infringed, but invalid. The Federal Circuit affirmed the finding of invalidity. While its first appeal was pending, CEATS filed sought relief from the judgment under FRCP 60(b) based on an alleged relationship between the court-appointed mediator and the law firm representing most of the accused infringers. The alleged relationship was brought to light in the unrelated Karlseng litigation. The district court denied CEATS’s Rule 60(b) motion. The Federal Circuit affirmed, stating that it disagreed with the district court’s finding that the mediator had no duty to disclose his dealings with one of the firms involved in the litigation, but that the three “Liljeberg factors” did not establish that this case presents an “extraordinary circumstance” where relief from judgment is warranted View "CEATS, Inc. v. Cont'l Airlines, Inc." on Justia Law

Respondent filed suit in state court against multiple defendants alleging various construction defects in her home. Petitioners, a subset of defendants, filed a petition in federal court to compel respondent to arbitrate her claims against them based on an arbitration clause in the warranty. The court remanded to the district court with directions to dismiss the petition for want of subject matter jurisdiction because petitioners failed to join necessary and indispensable parties, some of which were non-diverse from resopndent, under Federal Rule of Civil Procedure 19. View "Home Buyers Warranty Corp. v. Hanna" on Justia Law