“It’s now easier for alleged joint employers to compel arbitration”

JD Supra has published this article by Philip Bruce of McAfee & Taft, discussing the Tenth Circuit’s decision in Reeves v. Enterprise Products Partners, Inc., in which the court held that an arbitration agreement between a staffing agency and its employee served to preclude the employee from bringing judicial claims against the third party company to which he was assigned to work. As the article explains, staffing companies inclusion of arbitration provisions with class action waivers, made it “increasingly difficult for plaintiffs to file to class action lawsuits. To get around this, more plaintiffs were suing the companies that used the staffing agencies and did not have arbitration agreements with the workers, arguing that they were either a direct employer or joint employer.” The Tenth Circuit’s decision, according to the article, will substantially restrict, if not completely foreclose, this litigation tactic.

“Commercial Leases, Arbitration, and Attorney Fee Awards”

Kevin Brodehl and Zachary Young of Patton Sullivan Brodehl have this article, available in JD Supra, discussing the California Court of Appeal’s decision in California Union Square L.P. v. Saks & Company LLC, where the court was called upon to construe a lease agreement’s interplay between an arbitration provision calling for the parties to assume their respective attorneys’ fees in the arbitration and a general lease provision entitling the prevailing party in an “action or proceeding to enforce this Lease or any provision hereof” to recover its attorneys’ fees. The victorious party in the arbitration claimed it was entitled to recover the legal fees it incurred in the litigation proceedings to vacate an initial arbitration award and confirm the second arbitration award. The court disagreed. Both the article and the court’s opinion provide valuable insight to those drafting commercial agreements to ensure harmonization of attorneys’ fees provisions.

Safeguarding The Confidentiality Of An Arbitration Award

I recently had the opportunity to exchange thoughts with fellow arbitrator Dave Reif about a topic that attorneys and clients erroneously take for granted–that the resolution of a business dispute through arbitration will remain confidential. I share with you our conversation, hoping that you find it of interest.

“Scientology Arbitration and the First Amendment: Some Questions About Bixler v. Superior Court”

For those with interest or experience with religious arbitration, there is a recent noteworthy decision issued by the California Court of Appeal. The opinion in Bixler v. Superior Court for the State of California is available here. A very interesting article by Eugene Volokh discussing the appellate court’s refusal to compel arbitration of claims brought by ex-church members, and how the decision comports (or doesn’t) with existing precedent is available here.

“The Skinny on Arbitrability of Judicial Dissolution Claims”

Peter Mahler of Farrell Fritz has authored this article, available at JD Supra, providing an insightful overview of the arbitrability of claims for the judicial dissolution of business entities. As Mahler notes, insofar as business entity dissolution is a creature of statute, the question of whether, and how, parties can implement or facilitate the process via arbitration is neither always clear nor consistent from one state to another.

Subsidiary Cannot Invoke Arbitration Based On Agreement Between Subsidiary’s Employee And Parent Company

The Ninth Circuit recently reversed the trial court’s decision that the issue of arbitrability of an employee’s putative class action claims was for the arbitrator to decide. In Ahlstron v. DHI Mortgage Company, the plaintiff employee had entered into an arbitration agreement with his employer’s parent company. The arbitration agreement on its face did not purport to make its provisions applicable to the subsidiary employer.

However, because the arbitration provision purported to delegate to the arbitrator “exclusive authority to resolve any dispute relating the formation, enforceability, applicability, or interpretation” of the arbitration agreement, the lower court determined that it was for the arbitrator, not the court, to determine whether the plaintiff’s claims were arbitrable.

On appeal, the Ninth Circuit reversed, holding that, contract language notwithstanding, “parties cannot delegate issues of formation to the arbitrator.” Thus, the court was required to determine whether an agreement to arbitrate existed between the employer and his employer, i.e. whether the subsidiary could invoke the arbitration rights provided by the parent company’s agreement with the employee. On this issue, which frankly provides the most important takeaway for employers, the court found that a parent-subsidiary relationship was insufficient to create a binding agreement between the employee and the subsidiary. Looking at the language of the agreement, the Ninth Circuit found nothing to suggest the contracting parties intended for the agreement with the parent to include the subsidiary. Consequently, the court held that the arbitration agreement, “as drafted, describes and governs [an employment] relationship between [the employee] and [the parent] that does not exist, and thus does not constitute a properly formed agreement to arbitrate.”

“Strike While the Arbitration Award Is Hot: Three-Month Window to File Motion to Vacate Does Not Prevent Earlier Confirmation”

Valerie Sanders of Eversheds has this article in Lexology discussing the Eleventh Circuit’s interesting decision in McLaurin v. Terminix International Co. in which, as Ms. Sanders’ article notes, the court addressed the question of “what happens when a motion to confirm is filed early, before the three months to file a motion to vacate has run?” As the court held, while prudent practice suggests that a court should “issue an order that sets simultaneous deadlines for a losing party to file an opposition to the motion to confirm, if any, and to file a separate motion to vacate, modify, or correct, if any,” a party disappointed with an arbitration award is not always entitled to receive the three months provided by the FAA to move to vacate. Instead, if the victorious arbitration party promptly moves to confirm the award, the disappointed party’s timetable will be dictated by the deadline for responding to the confirmation motion. This creates a potential trap for the unwary.

“Russian Supreme Court says sanctioned persons may ignore arbitration clauses”

Igor Gorchakov and Andrey Panov of Allen & Overy have this article, available at JD Supra, discussing the Russian Supreme Court’s recent decision in Uraltransmash vs PESA, which, as the article notes, is “of great interest for every party doing business with Russian companies.” As the article explains, finding that “sanctioned persons are free to choose between litigating (or arbitrating) abroad and litigating in Russia,” the court concluded that “the very fact of introduction of sanctions against a Russian person is sufficient to conclude that there are obstacles to access to justice for such a person in a foreign state that introduced such sanctions.” As such, the applicable Russian statute entitles a sanctioned person to “choose whether to pursue the case in a foreign court or arbitration, or to opt for exclusive jurisdiction of the Russian courts.”

“Arbitration Claimants Ask for Court Order Compelling UberEats to Pay AAA Fees”

Last year, in the aftermath of George Floyd’s murder, Uber adopted what it intended to be a supportive measure by freeing black-owned restaurants of delivery charges. The policy received pushback, resulting in a reverse discrimination claim by the state of Arizona that Uber subsequently settled. Additionally, and more relevant to this site, attorneys filed with the American Arbitration Association more than 20,000 individual claims by food providers alleging that the claimants, whose fees were not waived, were victims of Uber’s discriminatory policy. The arbitration agreements between Uber and its provider-customers would require it to pay millions in administrative fees to AAA, which it allegedly has not done for the vast majority of the cases. Accordingly, having not been paid for its services, AAA has failed to administer the cases.

Claimants’ counsel have now filed in federal court in California an action against Uber to compel arbitration. The petition is available here, and this article, available through Law Street Media, discusses the legal issues in more detail.

“Boy Scouts bankruptcy judge ousts mediator, questioning ‘impartiality'”

In the world of ADR, questions of impartiality most often with respect to arbitration. Insofar as an arbitrator is entrusted with picking a winner in a contested proceeding, prior relationships with the parties and their counsel warrant careful scrutiny to ensure there is no explicit or inherent bias.

Mediator impartiality, while certainly important, generally does not raise the same level of concern. Acting as a facilitator, a mediator does not have the ability to adjudicate the dispute or to declare a prevailing party. Indeed, many argue that a mediator’s prior experience with counsel is often conducive to more productive settlement discussions.

However, there are circumstances where mediator neutrality is questioned. As discussed in this recent Reuters article, a federal bankruptcy judge “has removed one of the mediators tasked with overseeing confidential settlement talks between the Boy Scouts of America and groups of sex abuse survivors who say they were abused as children by troop leaders, saying his ability to remain impartial had come into question.”

According to the report, the mediator was wearing an additional hat, having been selected by the Boy Scouts to review specific claims raised by abuse claimants as part of the Boy Scouts’ reorganization plan.” According to the court, this dual role–serving to facilitate a mediated settlement while also opining on the merits of specific claims–required that he be removed.

Additional reporting is available here.