Articles Posted in Arbitration & Mediation

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In 2009, Jacquelyn Jacks bought a manufactured home from CMH Homes, Inc., on an installment plan. The purchase was financed through CMH Homes under a manufactured home retail installment contract. The contract contained an arbitration agreement, which provides that all disputes arising from, or relating to, the contract would be resolved by binding arbitration. By its terms, the agreement also covered all co-signors and guarantors, and any occupants of the manufactured Home (as intended beneficiaries of the arbitration agreement. Jacks moved into the home with her husband and their children. Five years later, the Jacks family sued CMH Homes, CMH Manufacturing, and Vanderbilt Mortgage and Finance (not a party to this appeal). They claimed: (1) CMH negligently installed and repaired the manufactured home’s water system, which caused toxic mold to grow; (2) the manufactured home was unreasonably dangerous at the time it left the control of CMH; (3) the manufactured home was not fit for habitation. Jacks also sought to rescind her purchase of the manufactured home, along with her agreement to pay Vanderbilt Mortgage and Finance the indebtedness incurred to purchase the home. The CMH defendants removed the case from state to federal court and moved to compel arbitration and stay the court proceedings. The district court granted the motion to compel as to the claims of Jacks, but denied the motion as to the remaining plaintiffs who were not parties to the installment contract. Defendants had argued that Jacks’ husband and their children were likewise bound by the arbitration agreement, even though they never signed the contract. The district court held that “the single sentence in the Arbitration Agreement generically referencing ‘any occupants of the Manufactured Home (as intended beneficiaries of this Arbitration Agreement)’ was not sufficient to make the nonsignatory plaintiffs third party beneficiaries of the Arbitration Agreement and subject to being compelled to arbitration. The district court also rejected Defendants’ contention that the nonsignatory plaintiffs were “bound to arbitrate their claims” under “the doctrine of equitable estoppel.” Defendants timely appealed the district court’s partial denial of their motion to stay and to compel arbitration. The Tenth Circuit found no reversible error in the district court’s judgment and affirmed it. View "Jacks v. CMH Homes" on Justia Law

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LeGrand Belnap, M.D., was a surgeon at the Salt Lake Regional Medical Center (“SLRMC”). Dr. Belnap and SLRMC entered into a Management Services Agreement under which he would provide consulting services to help SLRMC develop a new surgical center. The Agreement contained an arbitration provision, including an agreement to arbitrate questions of arbitrability. SLRMC subsequently disciplined Dr. Belnap for alleged misconduct and then reversed course and vacated the discipline. As a result, Dr. Belnap brought various claims against SLRMC, its alleged parent company, and several of its individual employees. These Defendants moved to compel arbitration on the basis of the arbitration provision in the Agreement. The district court determined that most of the claims fell outside the scope of the Agreement, and granted in part and denied in part the motion. Defendants appealed the portions of the district court’s order denying their motion to stay litigation and to compel arbitration, arguing: (1) because the parties agreed to arbitrate arbitrability, the district court erred when it failed to submit all questions of arbitrability to an arbitrator; and (2) even if the parties did not agree to arbitrate arbitrability, the district court erred when it found that any of Dr. Belnap’s claims fell outside the scope of the Agreement, despite also finding that the Agreement’s dispute-resolution provision was broad. The Tenth Circuit found that by incorporating the JAMS Rules into the Agreement, Dr. Belnap and SLRMC evidenced a clear and unmistakable intent to delegate questions of arbitrability to an arbitrator. Nevertheless, the Tenth Circuit concluded the district court reached the right outcome regarding Dr. Belnap’s first claim against SLRMC (compelling that claim to arbitration) and upheld that portion of its order. The Court felt “constrained,” however, to reverse the order as to the remainder of the SLRMC claims. The Court remanded, instructing the court to compel all of Dr. Belnap’s claims against SLRMC to arbitration. With respect to Defendants wh did not sign the Agreement, the Court held they were not entitled to enforce the arbitration provision of the Agreement. Thus, the Court affirmed the district court’s order in this respect. View "Belnap v. Iasis Healthcare" on Justia Law

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Defendants-Appellants Ultegra Financial, its CEO Muhammad Howard, (collectively Ultegra Defendants) and Clive Funding, Inc., appealed a district court’s order denying their motion to compel arbitration. In 2013, Ragab entered into business relationship with the Ultegra Defendants. The parties had six agreements. The agreements contained conflicting arbitration provisions; the conflicts involved: (1) which rules would govern, (2) how the arbitrator would be selected, (3) the notice required to arbitrate, and (4) who would be entitled to attorneys’ fees and on what showing. In 2015, Ragab sued the Ultegra Defendants for misrepresentation and for violating several consumer credit repair statutes. The district court found that Ragab’s claims fell within the scope of all six agreements. The Ultegra Defendants moved to compel arbitration. The district court denied the motion to compel, concluding that there was no actual agreement to arbitrate as there was no meeting of the minds as to how claims that implicated the numerous agreements would be arbitrated. The Ultegra Defendants appealed that finding, and seeing no reversible error in the judgment, the Tenth Circuit affirmed. View "Ragab v. Howard" on Justia Law

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Phillips 66 Company appealed the district court’s grant of summary judgment and order compelling arbitration in its dispute with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and its Local 13-857. The Union filed two grievances on behalf of employees of the Company and sought arbitration pursuant to the grievance procedure in the parties’ collective bargaining agreement (“CBA”). The Company refused to arbitrate. The Union sued and the district court issued an order compelling arbitration. The Company argued on appeal that the grievances were not arbitrable under the CBA. Finding no reversible error in the district court's order, the Tenth Circuit affirmed. View "United Steel, Paper & Forestry, Rubber Manufacturing, Energy, Allied Industrial & Svc. Workers Int'l Union v. Phillips 66 Co." on Justia Law

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Plaintiffs Andrew Alwert and Stanley Feldman brought putative class actions against Cox Communications, Inc. (Cox) claiming that Cox violated antitrust law by tying its premium cable service to rental of a set-top box. The district court granted Cox’s motions to compel arbitration, then certified the orders compelling arbitration for interlocutory appeal. The Tenth Circuit granted Plaintiffs permission to appeal. They argued that the arbitration order was improper because: (1) the dispute was not within the scope of the arbitration agreement; (2) Cox waived its right to invoke arbitration; and (3) Cox’s promise to arbitrate was illusory, so the arbitration agreement was unenforceable. Finding no reversible error, the Tenth Circuit affirmed, holding that the arbitration clause in Plaintiffs’ subscriber agreements with Cox covered the underlying litigation and that Cox did not waive its right to arbitration. The Court did not resolve Plaintiffs’ argument that Cox’s promises were illusory because the argument amounted to a challenge to the contract as a whole, which was a question to be decided in arbitration. View "Alwert v. Cox Enterprises" on Justia Law

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CEEG (Shanghai) Solar Science & Technology Co., Ltd. (“CEEG”), a Chinese company, agreed to sell solar energy products to LUMOS, LLC, a U.S. company. After receiving certain shipments, LUMOS filed a warranty claim alleging workmanship defects, and refused to remit the balance due. After two years of "fitful" negotiations, CEEG filed an arbitration proceeding pursuant to the parties’ agreements. Although the parties had communicated exclusively in English to that point, CEEG served LUMOS with a Chinese-language notice of the proceedings, and LUMOS did not immediately realize what the notice was. After the arbitration panel ruled in its favor, CEEG moved for the district court to confirm the award. LUMOS filed a motion to dismiss, arguing that the Chinese-language notice caused it to miss the deadline to participate in appointing the arbitration panel. The district court granted the motion, finding that the notice was not reasonably calculated to apprise LUMOS of the arbitration proceedings. The Tenth Circuit agreed and affirmed. View "CEEG (Shanghai) Solar Science v. Lumos" on Justia Law

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Plaintiff Archangel Diamond Corporation Liquidating Trust, as successor-in-interest to Archangel Diamond Corporation (collectively, “Archangel”), appealed dismissal of its civil case against defendant OAO Lukoil (“Lukoil”), in which it alleged claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), breach of contract, and commercial tort law. The district court dismissed the case for lack of personal jurisdiction over Lukoil and under the doctrine of forum non conveniens. Archangel Diamond Corporation was a Canadian company and bankrupt. The liquidating trust was located in Colorado. In 1993, Archangel entered into an agreement with State Enterprise Arkhangelgeology (“AGE”), a Russian state corporation, regarding a potential license to explore and develop diamond mining operations in the Archangelsk region of Russia. Archangel and AGE agreed that Archangel would provide additional funds and that the license would be transferred to their joint venture company. However, the license was never transferred and remained with AGE. In 1995, AGE was privatized and became Arkhangelskgeoldobycha (“AGD”), and the license was transferred to AGD. Diamonds worth an estimated $5 billion were discovered within the license region. In 1998, Lukoil acquired a controlling stake in AGD, eventually making AGD a wholly owned subsidiary of Lukoil. Pursuant to an agreement, arbitration took place in Stockholm, Sweden, to resolve the license transfer issue. When AGD failed to honor the agreement, Archangel reactivated the Stockholm arbitration, but the arbitrators this time concluded that they lacked jurisdiction to arbitrate the dispute even as to AGD. Archangel then sued AGD and Lukoil in Colorado state court. AGD and Lukoil removed the case to Colorado federal district court. The district court remanded the case, concluding that it lacked subject-matter jurisdiction because all of the claims were state law claims. The state trial court then dismissed the case against both AGD and Lukoil based on lack of personal jurisdiction and forum non conveniens. The Colorado Supreme Court affirmed the dismissal as to AGD, reversed as to Lukoil, and remanded (leaving Lukoil as the sole defendant). On remand, the Colorado Court of Appeals reversed the trial court’s previous dismissal on forum non conveniens grounds, which it had not addressed before, and remanded to the trial court for further proceedings. The trial court granted Lukoil and AGD's motion to hold an evidentiary hearing, and the parties engaged in jurisdictional discovery. In 2008 and early 2009, the case was informally stayed while the parties discussed settlement and conducted discovery. By June 2009, Archangel had fallen into bankruptcy due to the expense of the litigation. On Lukoil’s motion and over the objection of Archangel, the district court referred the matter to the bankruptcy court, concluding that the matter was related to Archangel’s bankruptcy proceedings. Lukoil then moved the bankruptcy court to abstain from hearing the matter, and the bankruptcy court concluded that it should abstain. The bankruptcy court remanded the case to the Colorado state trial court. The state trial court again dismissed the action. While these state-court appeals were still pending, Archangel filed this case before the Tenth Circuit Court of Appeals, maintaining that Lukoil had a wide variety of jurisdictional contacts with Colorado and the United States as a whole. Finding no reversible error in the district court's ruling dismissing the case on forum non conveniens grounds, the Tenth Circuit affirmed. View "Archangel Diamond v. OAO Lukoil" on Justia Law

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Celeste Grynberg, individually and as trustee on behalf of the Rachel Susan Trust, Stephen Mark Trust, and Miriam Zela Trust, and Jack J. Grynberg, petitioned the federal district court to vacate an arbitration award that had been entered against them and in favor of Kinder Morgan Energy Partners, L.P. (“KMEP”) and Kinder Morgan CO2 Company, L.P. (“KMCO2”). The Grynbergs invoked the court’s diversity jurisdiction. When they filed the action, the Grynbergs were citizens of Colorado, KMEP was a Delaware master limited partnership, and KMCO2 was a Texas limited partnership with one partner, KMEP. The district court dismissed the action for lack of jurisdiction. It concluded that under "Carden v. Arkoma Associates," (494 U.S. 185, 195 (1990)), KMEP’s citizenship was the citizenship of all its unitholders, and because KMEP had at least one Colorado unitholder, its citizenship was not completely diverse from the Grynbergs’. The Grynbergs appealed, arguing the district court improperly applied "Carden." Finding no reversible error, the Tenth Circuit affirmed. View "Grynberg v. Kinder Morgan Energy" on Justia Law

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Pre-Paid Legal Services, Inc., d.b.a. LegalShield, sued its former employee Todd Cahill, claiming Cahill had breached his contract, unlawfully misappropriated Pre-Paid’s trade secrets, and tortiously interfered with contract and business relations. Cahill removed the case from state to federal court based on diversity jurisdiction, and moved to stay the district court proceedings under the Federal Arbitration Act (“FAA”) so the parties could pursue arbitration. Thereafter the district court stayed litigation pending arbitration. Cahill failed to pay his share of the arbitration fees, and the arbitrators terminated arbitration proceedings. Pre-Paid moved the district court to lift the stay and resume with litigation. The court granted the motion, adopting a magistrate judge’s report and recommendation. Finding that the district court did not err in lifting the stay under 9 U.S.C. Section 3 of the FAA because the arbitration "ha[d] been had in accordance with the terms of the agreement” and Cahill was “in default in proceeding with such arbitration," the Tenth Circuit affirmed the district court's ruling. View "Pre-Paid Legal Services v. Cahill" on Justia Law

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In 2009, the Public Service Company of Colorado entered into a collective-bargaining agreement with the International Brotherhood of Electrical Workers Local #111, a union that represented some of the Company’s employees. About two years later, the Company unilaterally modified its retired workers’ healthcare benefits by increasing their copayment obligations for prescription drugs. The Union claimed that the Company had violated the collective-bargaining agreement by doing so and demanded arbitration. The Company refused to arbitrate, and the Union sued and asked the district court to stay the case and compel arbitration. When the district court denied that motion, the Union filed an interlocutory appeal. The issues this case presented for the Tenth Circuit's review were: (1) whether the Tenth Circuit ha jurisdiction to hear the appeal; and (2) whether the district court should have sent the case to arbitration. The Court concluded that appellate jurisdiction existed under the Federal Arbitration Act, and that the district court properly denied compelling arbitration because the collective-bargaining agreement’s arbitration provision was not susceptible to an interpretation that covers disputes over retired workers’ healthcare benefits. The Court therefore affirmed the district court’s order and remanded the case back to the district court for further proceedings. View "IBEW Local #111 v. Public Service Co." on Justia Law