Justia Contracts Opinion Summaries

Defendants Pinnacle Property Management Services, LLC (Pinnacle) and Jennifer Stewart (Stewart) appealed a trial court’s order denying their motion to compel arbitration. The court denied the motion because it determined the arbitration agreement was procedurally and substantively unconscionable. As to the former, the court noted the agreement was unconscionable because plaintiff Anthony De Leon was required to sign the arbitration agreement as a precondition to his employment. As to the latter, the court found the agreement was substantively unconscionable because of its limits on discovery and because it shortened the statute of limitations to one year on all claims. On appeal, defendants contended the arbitration agreement had low procedural unconscionability and contained only one substantively unconscionable provision: the statute of limitations provision. They alternatively claimed the court erred by failing to sever any unconscionable provisions. After careful consideration of the agreement at issue, the Court of Appeal agreed with the court’s unconscionability findings. Further, the Court held the trial court also did not abuse its discretion by refusing to sever any portion of the arbitration agreement. View "De Leon v. Pinnacle Property Management Services, LLC" on Justia Law

Eight named plaintiffs, including two minors, brought a nationwide putative class action against e-commerce provider StockX for allegedly failing to protect millions of StockX users’ personal account information obtained through a cyber-attack in May 2019. Since 2015, StockX’s terms of service included an arbitration agreement, a delegation provision, a class action waiver, and instructions for how to opt-out of the arbitration agreement. Since 2017, StockX's website has stated: StockX may change these Terms without notice to you. “YOUR CONTINUED USE OF THE SITE AFTER WE CHANGE THESE TERMS CONSTITUTES YOUR ACCEPTANCE OF THE CHANGES. IF YOU DO NOT AGREE TO ANY CHANGES, YOU MUST CANCEL YOUR ACCOUNT.The Sixth Circuit affirmed the dismissal of the suit and an order compelling arbitration. The court rejected arguments that there is an issue of fact as to whether four of the plaintiffs agreed to the current terms of service and that the defenses of infancy and unconscionability render the terms of service and the arbitration agreement (including the delegation provision) invalid and unenforceable. The arbitrator must decide in the first instance whether the defenses of infancy and unconscionability allow plaintiffs to avoid arbitrating the merits of their claims. View "I. C. v. StockX, LLC" on Justia Law

The First Circuit vacated the judgment of the judgment of the district court granting a motion to compel arbitration filed by the personal representative of the estate of a famous American artist (Estate), dismissing an art publisher's (Publisher) motion for a preliminary injunction as moot, and eventually dismissing the case, holding that the district court erred.At issue was an agreement between the Estate and Publisher. Publisher asserted that the parties' original contract, which included an agreement to arbitration, was terminated and supplanted by a superseding contract that did not contain an arbitration provision. In question was whether the arbitrability of the parties' dispute about the newer contract's enforceability and impact on the earlier agreement to arbitrate should be decided by the court or by arbitrators. The district court concluded that the gateway question of arbitrability was for the arbitrators. The First Circuit reversed, holding that it is the court, and not the arbitrators, that must resolve the disagreement in this case. View "McKenzie v. Brannan" on Justia Law

The federally-recognized Native American Tribe (in California) started an online lending business, allegedly operated by non-tribal companies owned by non-tribal Defendants on non-tribal land. The Plaintiffs are Virginia consumers who received online loans from tribal lenders while living in Virginia. Although Virginia usury law generally prohibits interest rates over 12%, the interest rates on Plaintiffs’ loans ranged from 544% to 920%. The Plaintiffs each electronically signed a “loan agreement,” “governed by applicable tribal law,” and containing an “Arbitration Provision.” The borrowers defaulted and brought a putative class action against tribal officials and two non-members affiliated with the tribal lenders.The district court denied the defendants’ motion to compel arbitration and motions to dismiss on the ground of tribal sovereign immunity except for a Racketeer Influenced and Corrupt Organizations Act (RICO) claim. The Fourth Circuit affirmed. The choice-of-law clauses of this arbitration provision, which mandate exclusive application of tribal law during any arbitration, operate as prospective waivers that would require the arbitrator to determine whether the arbitration provision impermissibly waives federal substantive rights without recourse to federal substantive law. The arbitration provisions are unenforceable as violating public policy. Substantive state law applies to off-reservation conduct, and although the Tribe itself cannot be sued for its commercial activities, its members and officers can be. Citing Virginia’s interest in prohibiting usurious lending, the court refused to enforce the choice-of-law provision. RICO does not give private plaintiffs a right to injunctive relief. View "Hengle v. Treppa" on Justia Law

Plaintiffs-appellees Darrell Reeves and James King worked as welding inspectors for Enterprise Products Partners through third party staffing companies, Cypress Environmental Management and Kestrel Field Services. Reeves brought a collective action claim to recover unpaid overtime wages under the Fair Labor Standards Act. King later consented to join the putative collective action and was added as a named plaintiff. Enterprise argued that both Reeves and King signed employment contracts with their respective staffing companies that contained arbitration clauses for disputes. The Tenth Circuit found that indeed both plaintiffs’ respective contracts contained arbitration clauses, and that under the doctrine of equitable estoppel, these agreements require the claims to be resolved in arbitration. “Because Reeves and James’s claims allege substantially interdependent and concerted misconduct by Enterprise and non-defendant signatories, Cypress and Kestrel, arbitration should be compelled for these claims.” The Court reversed the district court’s denial of Enterprise’s motions to compel. View "Reeves, et al. v. Enterprise Products Partners" on Justia Law

Union Square owns the San Francisco building where Saks has operated a store since 1991. The lease's initial 25-year term was followed by successive options to renew; it mandates arbitration to determine Fair Market Rent for renewals. Section 3.1(c)(iv) states that “[e]ach party shall share equally the fees and expenses of the arbitrator. The attorneys’ fees and expenses of counsel for the respective parties and of witnesses shall be paid by the respective party engaging such counsel or calling such witnesses.” Section 23.10 permits a prevailing party to recover costs, expenses, and reasonable attorneys’ fees, “Should either party institute any action or proceeding to enforce this Lease ... or for damages by reason of any alleged breach ... or for a declaration of rights hereunder,The parties arbitrated a rent dispute in 2017. The trial court vacated the First Award, in favor of Union Square. To avoid re-arbitration, Union Square sought mandamus relief, which was summarily denied. While discussions concerning another arbitration were pending, Union Square filed a superior court motion to appoint the second arbitrator. The court-appointed arbitrator ruled in favor of Saks.The court of appeal affirmed the orders vacating the First Award and confirming the Second Award. Saks sought $1 million in attorneys’ fees for “litigation proceedings arising out of the arbitration,” not for the arbitrations themselves, citing Section 23.10. The court of appeal affirmed the denial of the motion. Each party agreed to bear its own attorneys’ fees for all proceedings related to settling any disagreement around Fair Market Rent under Section 3.1(c). View "California Union Square L.P. v. Saks & Company LLC" on Justia Law

Janet signed a Durable Power of Attorney and Nomination of Conservator (DPOA), appointing Randall as her attorney-in-fact. The DPOA advised that it “does not authorize anyone to make medical and other health care decisions,” authorized Randall to “demand, arbitrate, and pursue litigation on [Janet’s] behalf, authorized Randall to “do all things and enter into all transactions necessary to provide for the Principal’s personal care,” including the provision of institutional residential care. Janet later moved into a residential care facility, Atria; Randall signed a one-page “Agreement to Arbitrate.”While living at Atria, Janet allegedly fell and broke her hip. Janet, through Randall as her guardian ad litem, sued Atria under the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code 15600), asserting elder neglect and abuse, negligence, fraud, financial elder abuse, and unfair business practices, alleging that Atria failed to assist with her activities of daily living, failed to supervise her, and failed to check on her after knowing she felt dizzy and unwell. Atria sought to compel arbitration. Janet argued the arbitration clause was not enforceable because it was not signed by Janet or an agent pursuant to a valid power of attorney for healthcare. The court of appeal reversed the denial of Atria’s petition, holding that Randall was authorized to enter into the arbitration agreement. View "Gordon v. Atria Management Co." on Justia Law

Timothy and Rebecca Hillhouse entered into a contract with Chris Cook Construction for the construction of their home. The contract contained an arbitration provision mandating that arbitration be conducted before a forum that was unavailable at the time the contract was executed. The trial court entered an order compelling arbitration and appointing an arbitrator. The Mississippi Supreme Court concluded the trial court erred in so doing: because the forum was a contract requirement, the arbitration provision was unenforceable, and appointing an arbitrator required courts to reform the contractual agreement between the parties. Judgment was reversed and the trial court’s order compelling arbitration and remanded the case for further proceedings. View "Hillhouse v. Chris Cook Construction, LLC, et al." on Justia Law

Caballero, who reads and writes only in Spanish, signed a two-page “RESIDENT FACILITY ARBITRATION AGREEMENT” when his mother, Maria, was admitted to Premier Care. The Arbitration Agreement is in English. Three years after signing the agreement Caballero and his siblings brought a wrongful death action against Premier Care and others. In denying Premier Care’s petition to compel arbitration, the trial court found it had failed to sufficiently inform Caballero of the Arbitration Agreement’s contents.The court of appeal reversed. A party who does not understand English sufficiently to comprehend the contents of a contract in that language is required to “have . . . it read or explained to him.” Caballero signed the Arbitration Agreement notwithstanding his limited English skills and that neither Caballero nor any family member provided evidence of the circumstances surrounding the signing. The Premier Care representative also had no specific recollection of the transaction, so there is no evidence that Caballero either requested assistance in understanding the document or was prevented from obtaining such assistance. The Arbitration Agreement complies with the requirements of Code of Civil Procedure section 1295 for arbitration clauses in medical service contracts and “is not a contract of adhesion, nor unconscionable nor otherwise improper.” View "Caballero v. Premier Care Simi Valley, LLC" on Justia Law

The Supreme Court denied Wyoming Cardiopulmonary Services's (WCS) motion to dismiss this appeal of the district court's confirmation of the decision of an arbitration panel concluding that the parties' non-compete agreement was enforceable if modified and reversed the confirmation of the panel's decision, holding that the panel made a manifest error of law.Dr. Michel Skaf, a cardiologist, signed a non-compete agreement when he became a shareholder in WCS. After WCS terminated Dr. Skaf for cause, he set up his own practice. WCS subsequently brought this complaint and a motion to compel arbitration. The panel found that the covenant not to compete was enforceable if modified and rewrote the agreement. The district court confirmed the panel's decision to enforce the covenant not to compete and entered judgment of $193,000. The Supreme Court reversed and vacated the award, holding that the panel made a manifest error of law in violation of public policy in its review and revision of the covenant not to compete. View "Skaf v. Wyoming Cardiopulmonary Services, P.C." on Justia Law