Jeffrey McPhaul of Locke Lord LLP offers his take on recent decisions and non-decisions impacting the question of arbitral class actions in the employment arena in this article available on JD Supra. Mr. McPhaul advises that “employers should be cognizant of who (the court or arbitrator) is tasked with deciding the enforceability of the class action waiver in an arbitration agreement. If this ruling is left to an arbitrator, the employer’s ability to appeal an adverse determination may be quite limited.”

Pennsylvania federal court has compelled a former employee to arbitrate claims against her former employer pursuant to an agreement requiring arbitration, rejecting her contention that, under Pennsylvania substantive law, she was relieved of the obligation to arbitrate because her complaint also named as a defendant a related company that was not subject to the arbitration requirement. In Hou v. Voya Insurance and Annuity Company, plaintiff argued that requiring her to pursue claims out arising out of the same events in both an arbitral and judicial forum was contrary to Pennsylvania precedent refusing to enforce arbitration requirements when a plaintiff has claims against multiple defendants, certain of which are not subject to arbitration.

Noting that plaintiff’s claims in the instant matter arose under federal law, the court held that “it is Federal law, not Pennsylvania law, that applies to this case.” Applying the ederal Arbitration Act, the court held that arbitration was required as to the claims against the former employer, while the claims against the related company would be litigated in the court.

Those wrestling with questions regarding the arbitrability of class actions will find helpful this article by Gilbert Samberg of Mintz published in The National Law Review. Mr. Samberg uses the U.S. Supreme Court’s recent denial of certiorari in Jock v. Sterling Jewelers, Inc., 2019 U.S. App. LEXIS 34205 (2d Cir. Nov. 18, 2019), cert. den., No. 19-1382, 2020 U.S. LEXIS 4133 (Oct. 5, 2020) to discuss in an especially clear fashion the legal landscape surrounding arbitral class actions, in particular the issue of whether, and under what circumstances, “non-appearing putative class members, who were not parties to the operative arbitration agreement, bound by that arbitrator’s decision regarding class arbitrability.”

Those interested in the world of NFL player agents may enjoy reading the federal court decision in France v. Bernstein denying a motion to vacate an arbitration award rejecting a claim that agent #2 poached Detroit Lions wide receiver Kenny Golladay as a client.

David Reif has the following interesting post in his October 30, 2020 “ADR Highlights”:

“When the defendant in De Pompo v. IRINOX N.A., Inc., 2020 U.S. Dist. LEXIS 199455 (S.D. Fla.) (Oct. 27, 2020) refused to pay a share of the initial arbitration fee, the AAA closed the case and declined to administer any future employment matters involving IRINOX.  Defendant moved that the court, which had previously stayed the litigation pending arbitration, appoint an arbitrator. Plaintiff countered that the litigation should be dismissed, alleging that the defendant’s failure to pay the fee was merely “gamesmanship.”  Judge Bloom analyzes whether the choice of the AAA as a forum is integral to the parties’ agreement or “merely an ancillary logistical concern.”  Distinguishing two Eleventh Circuit precedents holding that the unavailability of a tribal forum invalidated an agreement to arbitrate, the Court severs the forum selection provision and appoints an arbitrator itself.  The case is a great source for citations from the Eleventh Circuit and the U.S. District Courts in Florida on the issue of a failed forum selection.”

In Borror Property Management, LLC v. Oro Karric North, LLC, the Sixth Circuit reversed a lower court decision that a property owner’s correspondence that it intended to litigate a dispute with its property management company unless the property manager indicated a preference to arbitrate in accordance with the parties’ agreement. The property manager beat the owner to the draw, and filed suit. When the owner moved to compel arbitration, the property manager objected, and persuaded the lower court that the owner’s pre-litigation statement expressing a preference or litigation constituted a waiver of its contractual arbitration right.

The Sixth Circuit reversed, explaining as follows:

“It is the rare federal complaint that is not preceded by an exchange of letters between the parties. Sometimes the letters identify common ground, more often they eschew it. Sometimes they are conciliatory, more often they are accusatory. Either way, their purpose is to help frame the parties’ dispute, posturing it either for settlement or litigation. But those correspondence are not equivalent to formal litigation. They are neither pleadings nor representations in court. And free of those burdens, parties often posture their claims with loose rhetorical flair better utilized outside the courtroom.

“Yet today, one party seeks to raise the stakes for this familiar practice. Although the
parties agree that their underlying contract affords each of them the opportunity to invoke
arbitration, Plaintiff believes Defendants waived that right through their pre-trial ‘posturing’ correspondence. The district court agreed and denied Defendants’ motion to compel arbitration. Because Defendants’ pre-trial communications were neither inconsistent with its arbitration right nor prejudicial to Plaintiff, they did not waive that right.…

“…Oro did not expressly waive its arbitration rights. Nothing in Oro’s letter expressly
disavowed its right to arbitration. Yes, the letter did indicate Oro was planning to litigate. But plans can change. And generally speaking, pre-filing threats are not laden with legal
implications, for the reasons already described. Even where they might be, Oro’s abstruse
posturing statement is not the kind that should be read as forever relinquishing its arbitration rights. That, coupled with federal policy favoring arbitration when ambiguity exists, confirms that a waiver did not occur here.“

Noting that “[f]ew decisions have considered when a plaintiff waives his right to arbitrate through litigation conduct,” John Lewis of Baker & Hostetler has this article in Lexology, discussing the Fifth Circuit’s decision in Sabatelli v. Baylor Scott & White Health.

Even the name of the case–Transcontinental Gas Pipe Line Co LLC v. Permanent Easement For 2.59 Acres, Temporary Easements For 5.45 Acres And Temporary Access Easement For 2.12 Acres In Pine Grove Township, Schuylkill County, Pa, Tax Parcel Number 21-04-0016.000 361, Chapel Drive, Pine Grove, Pine Grove Township, Schuylkill County Pa.–tells the reader that this Third Circuit opinion is not your everyday decision.

The case started normally enough. Having received authorization to construct a natural gas pipeline, plaintiff Transco brought a condemnation action to obtain a right of way over property owned by Ryan Regec. Mr. Regec, appearing pro se, vigorously resisted. “Initially, he filed in the District Court applications for relief that, in the main, questioned the premise of virtually every aspect of the proceedings. … Regec argued that the presiding District Judge was not properly appointed, that Transco’s attorneys lack contractual authority to prosecute the case on behalf of Transco, that discovery requests directed at Regec were improper as a rule, and that federal district courts in general are not valid tribunals.”

The lower court denied this “plethora of futile motions.” Undaunted, Mr. Regec submitted “a new crop of filings,” including “a document titled ‘Bond,’ in which he questioned the legitimacy of currently circulated money.”

But what does this have to do with arbitration? you ask. Allow the Third Circuit to explain:

“[O]ne of the [Regec’s] filings … included a copy of a ‘foreign final judgment via arbitration award’ (the arbitration award)… apparently issued by a Bakersfield, California organization called the ‘Healing My People Arbitration Association.’ The arbitration award, featuring both a style and legal philosophy strikingly similar to Regec’s myriad filings in the District Court, describes an alleged breach by Transco of a ‘contract’ it entered into with Regec via ‘tacit acquiescence.’ The arbitrator—Robert Presley, the self-described ‘Director’ of the Healing My People Arbitration Association—awarded Regec approximately fifty-five million dollars. Transco did not participate in the arbitration. Arbitrator Presley mailed a copy of the arbitration award, not to Transco’s counsel of record in this case, but to Transco’s office in Texas.”

Unsurprisingly, the lower court granted Transco’s motion to vacate the “award” and, even less surprisingly, the Third Circuit affirmed, playing it straighter than perhaps the circumstances warranted. As the court held, “there is no discernable agreement between the parties to arbitrate the dispute described by Regec. And without an arbitration agreement, Arbitrator Presley was without power to act.”

The appellate opinion providing parting words: “We commend the District Court on its able and patient sifting through Regec’s numerous filings, the bulk of which consisted of nothing more than a patchwork of legal precepts that were not germane to the issues of the day.”

Benjamin Stearns of Carlton Fields has authored this article, available in JD Supra, discussing a decision by a Ohio federal court in Allen v. Horter Investment Management, LLC. Although the parties agreed that arbitration of a consumer claim was appropriate, “they could not agree whether the arbitration should be conducted individually or as one consolidated arbitration.”

A Pennsylvania appellate panel has denied a boarding school’s request to arbitrate claims arising from the skiing death of a student who joined the school’s ski team in furtherance of a requirement that she participate in an organized sport. As the court explained, the complaint alleged that “any student who wanted to try out for the team needed to have the ability to ski nearly any trail on any mountain under any condition. Decedent did not satisfy those requirements.” The court denied the school’s attempt to invocation of arbitration under an enrollment contract provision, when the arbitration request came a year into the litigation and after the school had received certain adverse court rulings. The court’s opinion can be found here.