Justia Contracts Opinion Summaries

This case involves a group of plaintiffs who were minors at the time their guardians purchased and activated DNA test kits from Ancestry.com. The plaintiffs, through their guardians, provided their DNA samples to Ancestry.com for genetic testing and analysis. The plaintiffs later sued Ancestry.com, alleging that the company violated their privacy rights by disclosing their confidential genetic information to another business. Ancestry.com moved to compel arbitration based on a clause in its Terms & Conditions agreement, which the plaintiffs' guardians had agreed to when they purchased and activated the test kits.The United States Court of Appeals for the Seventh Circuit, applying Illinois law, held that the plaintiffs were not bound to arbitrate their claims under the agreement between their guardians and Ancestry.com. The court reasoned that the plaintiffs neither signed the agreement nor created Ancestry.com accounts, and did not independently engage with Ancestry.com's services. Furthermore, the court refused to bind the plaintiffs to the agreement based on equitable principles, including the doctrine of direct benefits estoppel. The court noted that while the plaintiffs theoretically could benefit from Ancestry.com's services, there were no allegations that the plaintiffs had actually accessed their DNA test results.The court therefore affirmed the district court's decision denying Ancestry.com's motion to compel arbitration. The court's holding clarified that under Illinois law, a minor cannot be bound to an arbitration agreement that their guardian agreed to on their behalf, unless the minor independently engaged with the services provided under the agreement or directly benefited from the agreement. View "Coatney v. Ancestry.com DNA, LLC" on Justia Law

In a dispute between SmartSky Networks, LLC and DAG Wireless, Ltd., DAG Wireless USA, LLC, Laslo Gross, Susan Gross, Wireless Systems Solutions, LLC, and David D. Gross over alleged breach of contract, trade secret misappropriation, and deceptive trade practices, the United States Court of Appeals for the Fourth Circuit ruled that the district court did not have the jurisdiction to enforce an arbitration award. Initially, the case was stayed by the district court pending arbitration. The arbitration tribunal found in favor of SmartSky and issued an award, which SmartSky sought to enforce in district court. The defendants-appellants argued that, based on the Supreme Court decision in Badgerow v. Walters, the district court lacked subject matter jurisdiction to enforce the arbitration award. The Fourth Circuit agreed, noting that a court must have a basis for subject matter jurisdiction independent from the Federal Arbitration Act (FAA) and apparent on the face of the application to enforce or vacate an arbitration award. The court concluded that the district court did not have an independent basis of subject matter jurisdiction to confirm the arbitration award. As such, the court reversed and remanded the case to the district court for further proceedings. View "Smartsky Networks, LLC v. DAG Wireless, LTD." on Justia Law

The Indiana Supreme Court heard a case involving a dispute between Tonia Land and the IU Credit Union (IUCU). When Land became a customer at the credit union, she was given an account agreement that could be modified at any time. Later, when she registered for online banking, she accepted another agreement that allowed the IUCU to modify the terms and conditions of the services. In 2019, the IUCU proposed changes to these agreements, which would require disputes to be resolved through arbitration and prevent Land from initiating or participating in a class-action lawsuit. Land did not opt out of these changes within thirty days as required, which, according to the IUCU, made the terms binding. However, Land later filed a class-action lawsuit against the credit union, which attempted to compel arbitration based on the addendum.The court held that while the IUCU did provide Land with reasonable notice of its offer to amend the original agreements, Land's subsequent silence and inaction did not result in her assent to that offer, according to Section 69 of the Restatement (Second) of Contracts. The credit union petitioned for rehearing, claiming that the court failed to address certain legal authorities and arguments raised on appeal and in the transfer proceedings.Upon rehearing, the court affirmed its original decision, rejecting the credit union's arguments. However, the court also expressed a willingness to consider a different standard governing the offer and acceptance of unilateral contracts between businesses and consumers in future cases. The court found no merit in the credit union's arguments on rehearing and affirmed its original opinion in full. View "Land v. IU Credit Union" on Justia Law

In a case before the Court of Appeal of the State of California Fourth Appellate District Division Two, the plaintiff, a minor identified as J.R., filed a putative class action against Electronic Arts Inc. (EA), alleging causes of action for unlawful and unfair business practices, violation of the Consumer Legal Remedies Act, and unjust enrichment. J.R. claimed that EA deceptively induced players, particularly minors, to purchase in-game currency for its game, Apex Legends. EA sought to compel arbitration under the terms of its user agreement, which J.R. had accepted to play Apex Legends. The lower court denied EA's motion to compel on the grounds that J.R. had exercised his power under Family Code section 6710 to disaffirm all of his contracts with EA, including the arbitration agreement. EA appealed, arguing that an arbitrator, not the court, should decide issues of arbitrability due to a delegation provision within the agreement. The appellate court rejected EA's arguments, affirming the lower court's decision. The court held that J.R.'s disaffirmance of "any... contract or agreement" accepted through his EA account was sufficient to challenge the validity of the delegation provision specifically, thereby authorizing the court to assess the validity of J.R.'s disaffirmance. View "J.R. v. Electronic Arts" on Justia Law

This case involves a dispute between a group of individuals and companies associated with John Logan and a mix of investors and former investors in medical clinics that Logan has run. The parties attended a mediation to resolve five separate but related lawsuits. Following the mediation, RedMed believed there was an enforceable settlement agreement, while Logan believed the mediation only created a framework for further negotiations. The trial court granted RedMed’s Motion to Enforce Settlement, finding that a binding settlement agreement had been reached. Logan appealed, arguing that the trial court erred in finding a binding settlement agreement. The Supreme Court of Mississippi reverses the trial court's ruling. The court found that the proposed settlement agreement lacked material terms required by Mississippi contract law, such as the interest rate and term of a promissory note, and therefore no meeting of the minds occurred. The court further found that the conduct of the attorneys and mediator at the conclusion of the mediation indicated that mutual assent to the terms of a contract was lacking. As a result, the court concluded that no enforceable contract was formed at the mediation. Therefore, the case is remanded back to the trial court. View "Logan v. RedMed, LLC" on Justia Law

In a dispute between Jonathan H. Paul and Rockpoint Group, LLC, the Delaware Court of Chancery denied Rockpoint's motion to dismiss Count III and granted Paul's cross-motion for partial summary judgement. The case stemmed from a disagreement about how to divide the proceeds from a transaction involving the investment fund complex that Paul co-founded and later left. After Paul's departure, he and his former partners agreed to an amendment to the company’s limited liability agreement, which stipulated Paul would receive a share of the proceeds from certain future transactions. A dispute arose over the calculation of Paul’s share when a qualifying transaction occurred. The court determined that the dispute resolution mechanism in the agreement called for an expert determination, not a plenary arbitration. The court also affirmed that the third amended and restated LLC agreement, not the first, governed the dispute. The court ruled that the appraiser could not consider extrinsic evidence, such as legal arguments and affidavits, presented by Rockpoint in its valuation. The court further directed that Rockpoint's appraisal must be redacted to omit the offending material. View "Paul v. Rockpoint Group, LLC" on Justia Law

In this case from the Court of Appeal of the State of California First Appellate District Division Three, the plaintiff, Sally Ann Haydon, a former resident of Elegance at Dublin, a residential care facility for the elderly, sued the facility and its affiliated entities for elder abuse and other claims. The defendants attempted to compel arbitration based on an arbitration clause in the resident agreement that Haydon had signed. The trial court denied the motion, finding the arbitration agreement to be unconscionable. The defendants appealed this decision.Haydon had lived at the facility for a few days and has dementia. The agreement she signed, which contained the arbitration clause, was over 40 pages long, and the arbitration clause was one of over 20 "miscellaneous" provisions at the end of the document. Haydon claimed she signed the agreement under duress and without understanding its contents.On appeal, the court found that there was a high degree of both procedural and substantive unconscionability in the arbitration clause, and therefore affirmed the trial court's decision not to enforce it. The court found procedural unconscionability in the circumstances of the agreement's formation, considering the pressure Haydon was under to sign the agreement, the lack of explanation about the arbitration clause, and the confusing presentation of the clause. The court found substantive unconscionability in the confidentiality provision of the arbitration agreement, the limitations on discovery under the applicable arbitration rules, and the requirement that parties bear their own costs and fees in connection with the arbitration. The court also found that the trial court did not abuse its discretion by refusing to sever the unconscionable provisions from the arbitration clause, given the extent of the unconscionability. View "Haydon v. Elegance at Dublin" on Justia Law

In a case before the United States Court of Appeals for the Eleventh Circuit, several clients of Wyndham Vacation Resorts (Resorts) sought to arbitrate disputes with Resorts, but their petitions were rejected by the American Arbitration Association (AAA) because Resorts had failed to comply with AAA’s policies. The clients then sued Resorts in federal court. Resorts moved to stay the litigation and direct arbitration, but the district court denied the motion, reasoning that Resorts cannot rely on the Federal Arbitration Act (FAA) to compel arbitration because it had defaulted in its obligation to arbitrate by failing to comply with AAA's policies.The appellate court held as follows: First, the three clients who originally sought to arbitrate their claims against Resorts, only to see their petitions rejected due to Resorts’ noncompliance with AAA policies, may proceed to litigation. Second, three other clients who never formally submitted their claims against Resorts to the AAA, but whose agreements with Resorts contained identical arbitration provisions, may also proceed to litigation. However, two clients who had an agreement with different Wyndham-related entities must return to the district court for further consideration of the FAA’s applicability to their dispute.The court found that the district court correctly concluded that Resorts could not compel arbitration under the FAA. However, the court found that the district court's decision was too broad regarding the other Wyndham-related entities, Development and WorldMark, because there was no evidence that they had violated the AAA’s policies. As a result, the court vacated and remanded the case for further proceedings concerning these entities. View "Bedgood v. Wyndham Vacation Resorts, Inc., et al." on Justia Law

Salvatore Baglione, insured under Health Net of California Inc. through his employer, the County of Santa Clara, brought a lawsuit against Health Net alleging breach of contract and bad faith. This followed Health Net's inconsistent authorization of a medication prescribed for Baglione's chronic condition. Health Net moved to compel arbitration of Baglione's claims based on an arbitration provision in the enrollment form Baglione had signed. The Superior Court of Los Angeles County denied Health Net's motion, finding that the agreement between Health Net and the County did not satisfy the disclosure requirements of Health and Safety Code section 1363.1, and therefore, the arbitration provision was unenforceable. Health Net appealed the decision.The Court of Appeal of the State of California, Second Appellate District, Division Eight, affirmed the trial court's order. The appellate court ruled that the enrollment form did not comply with the requirements of section 1363.1. It found that the form was not clear in its disclosure of which disputes were subject to arbitration, particularly with references to additional documents and laws that did not pertain to the arbitration agreement. Furthermore, the form did not place the arbitration provision immediately before the signature line, as required by the statute. The court also agreed with the lower court that the agreement between Health Net and the County was non-compliant. It ruled that an arbitration agreement, which is part of a health plan, is not enforceable unless both the enrollment form and the County agreement are compliant. Therefore, the court affirmed the trial court's order denying Health Net's motion to compel arbitration. View "Baglione v. Health Net of Cal." on Justia Law

Abraham Bielski, a user of cryptocurrency exchange Coinbase, brought a lawsuit alleging that Coinbase failed to investigate the unauthorized transfer of funds from his account. Coinbase attempted to compel arbitration based on an arbitration agreement in its User Agreement, which included a delegation provision stating that any dispute arising out of the agreement, including enforceability, should be decided by an arbitrator, not a court. Bielski argued that the delegation provision and arbitration agreement were unenforceable due to unconscionability. The United States Court of Appeals for the Ninth Circuit held that a party must specifically reference and challenge the delegation provision for a court to consider it, and that a party may use the same arguments to challenge both the delegation provision and the arbitration agreement, as long as they articulate why the argument invalidates each specific provision. The court also held that when evaluating whether a delegation provision is unconscionable under California law, a court must interpret the provision in the context of the entire agreement, which may require examining the underlying agreement. After analyzing the Coinbase delegation provision in context, the court determined that it was not unconscionable. The court reversed the district court’s order denying Coinbase’s motion to compel arbitration. View "BIELSKI V. COINBASE, INC." on Justia Law