Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

Articles Posted in Arbitration & Mediation
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Lim, formerly a TForce California delivery driver, alleged that TForce employs delivery drivers and misclassifies them as independent contractors in violation of California law. The drivers sign an Independent Contractor Operating Agreement, providing that the agreement is governed by the laws of Texas, that “any legal proceedings … shall be filed and/or maintained in Dallas, Texas,” that all disputes “arising under, out of, or relating to this Agreement … including any claims or disputes arising under any state or federal laws, statutes or regulations, … including the arbitrability of disputes … shall be fully resolved by arbitration," that any arbitration will be governed by the Commercial Arbitration Rules of the American Arbitration Association, that class actions are prohibited, and that the parties shall share the costs except in the case of substantial financial hardship--the prevailing party is entitled to recover its attorney’s fees and costs.The Ninth Circuit affirmed the denial of a motion to compel arbitration, referring to the Agreement as an adhesion contract. Based on the cost-splitting, fee-shifting, and Texas venue provisions, the district court correctly concluded the delegation clause, which requires the arbitrator to determine the gateway issue of arbitrability, the agreement was substantively unconscionable as to Lim. View "Lim v. TForce Logistics, LLC" on Justia Law

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In 1949, the government of Saudi Arabia transferred certain land in that country to an official named Khalid Abu Al-Waleed Al-Hood Al-Qarqani, who leased it to an affiliate of what later became Chevron. Five of Al-Qarqani's heirs now claim that Chevron owes them billions of dollars in rent. Plaintiffs contend that an arbitration clause contained in a separate 1933 agreement between Saudi Arabia and Chevron's predecessor, SOCAL, applies to their dispute. An Egyptian arbitral panel agreed and awarded plaintiffs $18 billion. Plaintiffs then petitioned for enforcement of the arbitral award, but the district court found that the parties had never agreed to arbitrate and therefore held that it lacked jurisdiction over the petition.The Ninth Circuit agreed with the Second Circuit, disagreeing with the Eleventh Circuit, that the absence of an agreement to arbitrate was a reason to deny enforcement on the merits, rather than to dismiss for lack of subject-matter jurisdiction. The panel held that so long as a party makes a non-frivolous claim that an arbitral award is covered by the New York Convention, the district court must assume subject-matter jurisdiction. In this case, the panel affirmed the district court's dismissal for lack of subject-matter jurisdiction as to Chevron USA because it was not named in the arbitral award and plaintiffs advanced no non-frivolous theory of enforcement. The court affirmed the district court's denial of the enforcement petition on the merits as to Chevron Corporation where there was no binding agreement to arbitrate between the parties. View "Al-Qarqani v. Chevron Corp." on Justia Law

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The Ninth Circuit affirmed the district court's order compelling arbitration in a putative class action brought by Massachusetts residents who have worked as Uber drivers, seeking a preliminary injunction prohibiting Uber from classifying drivers in Massachusetts as independent contractors, as well as an order directing Uber to classify its drivers as employees and comply with Massachusetts wage laws.The panel concluded that Uber drivers, as a nationwide class of workers, do not fall within the so-called "interstate commerce" exemption to mandatory arbitration under the Federal Arbitration Act (FAA). The panel explained that Uber drivers, even when crossing state lines or transporting passengers to airports, are merely conveying interstate passengers between their homes and their destination in the normal course of their independent local service. Therefore, interstate movement cannot be said to be a central part of the class members' job description. The panel found the analysis of the minority of district courts that have found to the contrary unpersuasive.The panel also concluded that plaintiffs' claims and requested injunctive relief are arbitrable by the terms of the arbitration agreement and plaintiffs' requested injunctive relief would have upended the status quo rather than maintained it. Therefore, the district court properly addressed the motion to compel arbitration first.Finally, the panel concluded that the injunctive relief requested, reclassification of drivers' status from "independent contractors" to "employees" is not a public injunctive relief that may be allowed to them to avoid arbitration. In this case, the relief sought by plaintiffs is overwhelmingly directed at plaintiffs and other rideshare drivers, and they would be the primary beneficiaries of access to overtime and minimum wage laws. View "Capriole v. Uber Technologies, Inc." on Justia Law

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In a prior opinion, the Ninth CIrcuit held that SS Mumbai could not equitably estop SS Bangalore from avoiding arbitration. Mumbai, a non-signatory to a partnership deed that contained an arbitration provision, argued that, based on the arbitration provision, Indian law applied to the question of whether it could compel Bangalore to arbitrate.The Supreme Court vacated and remanded based on its holding that the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards does not conflict with the enforcement of arbitration agreements by non-signatories under domestic law equitable estoppel doctrines.On remand, the Ninth Circuit affirmed the district court’s order denying Mumbai’s motion to compel arbitration. While a nonsignatory can compel arbitration in a Convention case, the allegations, in this case, do not implicate the arbitration clause—a prerequisite for compelling arbitration under the equitable estoppel framework. The court declined to apply Indian law because whether Mumbai could enforce the partnership deed as a non-signatory was a threshold issue for which it did not look to the agreement itself. The deed’s arbitration provision applied to disputes “arising between the partners” and not also to third parties such as Mumbai. View "Setty v.. Shrinivas Sugandhallayah, LLP" on Justia Law

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Years after Starline and TMZ launched a joint venture to operate a celebrity bus tour together, TMZ terminated their agreement. TMZ and Starline brought their claims (and counterclaims) to arbitration, and the arbitrator ultimately issued the final award in favor of TMZ. After the Appeal Panel affirmed the majority of the arbitrator's award, Starline moved to vacate the award in district court, and TMZ petitioned to confirm the award. The district court denied Starline's motion and granted TMZ's petition. The Ninth Circuit subsequently issued Monster Energy Co. v. City Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019), interpreting the standard for "evident partiality" to warrant vacatur of an arbitration award under the Federal Arbitration Act (FAA).The Ninth Circuit concluded that the district court did not abuse its discretion in denying Starline's Federal Rule of Civil Procedure 59(e) motion on the grounds that the arbitrators did not exhibit evident partiality by failing to disclose JAMS's prior business dealings with TMZ or its counsel. The panel also concluded that the district court likewise did not err when it declined to vacate the arbitration award on the grounds that (1) the arbitrator did not produce a form indicating she had no conflicts with the Boies Schiller law firm, (2) the arbitrator improperly granted an anti-SLAPP motion, or (3) based on her interpretation of California partnership law.However, the panel concluded that the district court clearly erred in concluding that JAMS provided a disclosure in accordance with Monster Energy, where JAMS declined to make such disclosure and instead asserted that the arbitrators no longer had jurisdiction over the arbitration. Accordingly, the panel remanded this issue to the district court to consider in the first instance how the parties can obtain from JAMS the information required by Monster Energy. The panel affirmed in part, reversed in part, and remanded in part. View "EHM Productions, Inc. v. Starline Tours of Hollywood, Inc." on Justia Law

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The Ninth Circuit vacated the district court's order denying LMB's motion to compel arbitration under the Federal Arbitration Act (FAA) in an action brought by plaintiff under the Telephone Consumer Protection Act (TCPA). The panel concluded that, because the district court mistakenly issued a nonfinal order denying LMB’s motion to compel arbitration, while stating its intent to schedule a trial to resolve the factual issues, the panel has jurisdiction to consider this appeal under 9 U.S.C. 16.However, the panel held that, under 9 U.S.C. 4, once a district court concludes that there are genuine disputes of material fact as to whether the parties formed an arbitration agreement, the district court must proceed without delay to a trial on arbitrability and hold any motion to compel arbitration in abeyance until the factual issues have been resolved. In this case, LMB challenges the district court's determination that there are genuine disputes of material fact on arbitrability. Therefore, in order to further Congress's clear intent in the FAA to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible, the panel vacated the district court's erroneous denial of the motion to compel and remanded for the district court to proceed summarily to the trial on the question whether plaintiff is bound by the arbitration agreement. View "Hansen v. LMB Mortgage Services, Inc." on Justia Law

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Franklin, a nurse, was employed by a staffing agency, USSI, and had signed an Arbitration Agreement. USSI assigned Franklin to work at the Hospital. Franklin signed a Travel Nurse Assignment Contract that also includes an arbitration provision. The Hospital is not a signatory to either the Arbitration Agreement or the Assignment Contract. There is no contract between Franklin and the Hospital nor between the Hospital and USSI. The Hospital contracts with RightSourcing, which contracts with USSI to provide the contingent nursing staff. The Hospital retains supervision over the provision of clinical services. RightSourcing bills the Hospital and remits payment to USSI.Franklin brought a class and collective action against the Hospital, alleging violations of the Fair Labor Standards Act, the California Labor Code, and the California Business and Professions Code, alleging that the Hospital required Franklin to work during meal breaks and off the clock but failed to pay her for that work and failed to provide accurate itemized wage statements or reimburse travel expenses.The district court granted the Hospital’s motion to compel arbitration. The Ninth Circuit affirmed. The Hospital, a nonsignatory, could compel arbitration because Franklin’s claims were intimately founded in and intertwined with her contracts with USSI; under California law, she was equitably estopped from avoiding the arbitration provisions. View "Franklin v. Community Regional Medical Center, FKA" on Justia Law

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Stafford used his third-party insurance coverage to purchase prescription drugs from Rite Aid’s pharmacies. Rite Aid submits a claim for a prescription drug to an insurance company through a “pharmacy benefits manager” (PBM). The claim form that Rite Aid submits includes the “usual and customary” price of the relevant prescription drug.Stafford brought a class action, alleging that Rite Aid fraudulently inflated the reported prices of prescription drugs, which resulted in class members paying Rite Aid a higher co-payment for the drugs than they would have paid if Rite Aid had reported the correct price. After litigating several motions to dismiss, Rite Aid moved to compel arbitration. Although Rite Aid and Stafford had no contract between them containing an arbitration clause, Rite Aid did have such contracts with the PBMs who coordinated insurance reimbursements and co-payment calculations.The Ninth Circuit affirmed the denial of the motion to compel arbitration. Under California law, Stafford’s claims did not depend on Rite Aid’s contractual obligations to the PBMs. Consequently, equitable estoppel did not apply to bind Stafford to the arbitration agreements in those contracts. View "Stafford v. Rite Aid Corp." on Justia Law

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The Department of Labor brought an enforcement action against Larry Browne and his companies, alleging that Browne and his entities violated the Fair Labor Standards Act's (FLSA) minimum wage, overtime, record-keeping, and antiretaliation requirements by misclassifying delivery drivers as independent contractors rather than employees. The district court denied Browne's motion to compel arbitration pursuant to EEOC v. Waffle House, Inc., 534 U.S. 279 (2002).The Ninth Circuit concluded, in light of Waffle House, that a private arbitration agreement does not bind the Secretary of Labor when bringing a FLSA enforcement action that seeks relief on behalf of one party to the arbitration agreement against the other party to that agreement. In Waffle House, the Supreme Court ruled that the EEOC was not party to Waffle House's arbitration agreement, and it was not bound by the agreement because the FAA "does not require parties to arbitrate when they have not agreed to do so." The panel explained that this same reasoning dictates that the Secretary cannot be compelled to arbitrate this case. Here, as in Waffle House, the remedial statute at issue unambiguously authorizes the Secretary to obtain monetary relief on behalf of specific aggrieved employees. The panel explained that, like the EEOC in Waffle House, the Secretary is not party to the arbitration agreement between Browne and his entities and the delivery drivers. Therefore, the panel affirmed the district court's denial of the motion to compel arbitration. View "Walsh v. Arizona Logistics, Inc." on Justia Law

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The Ninth Circuit dismissed based on lack of appellate jurisdiction plaintiffs' appeal from the district court's order compelling arbitration of a putative class action alleging that LuLaRoe operated an illegal endless-chain pyramid scheme in violation of California and federal law.The panel held that Langere v. Verizon Wireless Services, LLC, 983 F.3d 1115 (9th Cir. 2020), was controlling under these circumstances. In this case, plaintiffs voluntarily dismissed their action with prejudice in an attempt to obtain an appealable final judgment following an order compelling arbitration. Furthermore, as in Langere, this tactic no longer creates appellate jurisdiction. The panel explained that, contrary to plaintiffs' contention, it is of no consequence that plaintiffs moved for a court order dismissing their action under Federal Rule of Civil Procedure 41(a)(2), while Langere unilaterally dismissed his action under Rule 41(a)(1). Finally, plaintiffs' contention that Langere is inapplicable because the panel has jurisdiction under 9 U.S.C. 16(a)(3) is without merit. View "Sperring v. LLR, Inc." on Justia Law