Bankruptcy Filing Does Not Abrogate Contractual Arbitration Provision

In HCB Enterprises, LLC v. Dickey’s Barbecue Restaurants, Inc., a restaurant franchisee, having filed for bankruptcy under Chapter 11, filed a plan that purported to reject the arbitration clauses in agreements with a creditor. The court rejected the debtor’s attempt to avoid arbitrating disputes, holding that, under recent Supreme Court precedent, a rejection of contract under the bankruptcy code “breaches a contract but does not rescind it. And that means all the rights that would ordinarily survive a contract breach . . . remain in place.” Thus, the court determined it was required to stay the case and compel arbitration.

50% Company Owner Subject To Company’s Arbitration Agreement

The U.S. District Court in Maryland has held that a 50% shareholder of a company that provided pickup and delivery services to Fed Ex is subject to the arbitration provision that the company executed with Fed Ex. In Sui v. FedEx Ground Package System, Inc., the court found determinative that the plaintiff’s claims were based on the company’s agreement with FedEx. As the court explained, “[t]he pleadings indicate that this is a breach of contract action based on the ISP agreement. Therefore, the court finds that Sui is equitably estopped to avoid the arbitration clause because his claims are based on the ISP agreement.”

Non-Brokerage Customer Seeks To Arbitrate Claims Based Upon Broker’s Offering Materials

UBS Says Investor in “Called” ETNs Can’t Arbitrate Loss.” Vicky Ge Huang provides this article at AdvisorHub, which begins “UBS Financial Services has asked a Texas court to enjoin an investor from pursuing his securities fraud arbitration claim tied to UBS leveraged exchange-traded notes because he is not a UBS customer.”

Plaintiffs’ Counsel Contemplating 9100 Individual Arbitration Claims In lieu Of Class Action

“Latest mass arbitration wrinkle: Plaintiffs’ lawyers want court permission to contact DirecTV customers.” Alison Frankel of Reuters has an article that begins, “One of the big disincentives for plaintiffs’ lawyers contemplating mass consumer arbitration has always been the cost of finding clients. It’s an economics thing. You don’t want to spend a lot of money to attract and vet claims worth only a few hundred bucks. But when you already have names and contact information for 9,100 prospective claimants – straight from the prospective defendant, no less – that’s a whole different story.”

Court Holds Employment Application Requires Arbitration

“California Brewery Worker Must Arbitrate Background Check Claims.” Jacklyn Wille of Bloomberg Law reports on this decision by the U.S. District Court (California) in Dominguez v. Stone Brewing Co., which begins with the observation that “California craft brewery Stone Brewing Co. successfully maneuvered a proposed class action challenging its employment applications and background checks into individual arbitration, after a ruling by a federal judge…”

Arbitration Pre-Emption Battle Takes Shape

“WeWork Executive Wants Fast Appeal of N.Y.-Based Arbitration Ban.” Patrick Dorrian has this article in Bloomberg Law, which describes the legal issue as follows: “Ayesha Whyte wants the Southern District of New York to certify for interlocutory review for the Second Circuit the question of whether the Federal Arbitration Act preempts New York Civil Practice Law and Rules § 7515, which prohibits mandatory arbitration of job discrimination and harassment claims.”

Court Erred In Ignoring An Arbitration Award That Entered Prior To The Court Deciding Similar Issues

The New York Appellate Division determined that timing is everything, in reversing an Administrative Law Judge’s decision that ignored a contrary decision of a labor arbitration. In the Matter of the Claim of Matthew Bruce, the ALJ refused a collective request of the parties to adjourn a hearing addressing the claimant’s discharge, pending the issuance of an arbitrator’s decision. Following the conclusion of the judicial hearing, but prior to the issuance of the judge’s order, the arbitrator issued a decision finding that the discharge of the employee was appropriate. The judge failed to take judicial notice of the arbitration award, and thereafter ruled contrary to the arbitrator.

On appeal, the judge’s decision was reversed, with the Appellate Division remanding so that the evidence and circumstances of the arbitration award could be considered by the ALJ.

Mediation Settlement Enforceable, Even Though One Party Refused To Sign An Agreement Required By The Settlement

In Miller v. Miller, the Georgia Court of Appeals affirmed a lower court’s determination that a binding settlement agreement was reached at a mediation, even though one of the parties refused to sign a Purchase Agreement that was contemplated by the settlement. According to the court, “[t]he parties entered into a mutual binding agreement [at the mediation]. Thereafter, the drafting of documents necessary to effectuate the settlement agreement may have been a condition of the performance but it was not an act necessary to acceptance of the offer to settle.”

When Are Arbitrators’ Changes To An Award OK?

So, how does a court determine whether an arbitrator has attempted to modify an arbitration award in violation of statutory prescriptions on such action? More specifically, as a California court posits the issue in Lonky v. Patel, “[w]here… an arbitrator issues a series of rulings during an arbitration proceeding, how does a court determine which of those rulings constitutes an ‘award’?”

Courts Reach Different Results Re Agreements To Arbitrate

An Alabama federal court, in Carusone v. Nintendo of America, stayed a putative class action alleging a defect in a joystick controller, holding that the clickwrap agreement accepted by the plaintiff contained an enforceable arbitration provision. The court noted that the End-User License Agreement provided for a purchaser to opt-out of the agreement’s arbitration requirement by providing written notice with 30 days of purchase, an opportunity which, unsurprisingly, the plaintiff failed to pursue.

Meanwhile, on the other coast, a California federal court has denied without prejudice a defendant’s motion to compel arbitration of claimed violations of California’s consumer protection and lending and credit services laws. In Belyea v. Greensky, Inc., 20-cv-01693-JSC, the court rejected a lender’s argument that a borrower, by utilizing a loan facility to pay for certain home repairs had, by her conduct and the posting of the arbitration provisions on the lender’s website, had evidenced her acceptance of the arbitration requirement, leaving open the possibility of reconsidering the issue once certain discovery occurs.