Justia Contracts Opinion Summaries

In 2006, Warciak’s mother signed an agreement with T-Mobile to begin cell phone service. In 2012, she signed another agreement when she purchased a new phone. Each agreement contained an arbitration clause. Although Warciak uses a phone on his mother’s plan and is an authorized user who can make changes to the account, he never signed either agreement nor is he otherwise a party to them. In 2016, Warciak received a spam text message promoting a Subway sandwich. He sued Subway under federal and state consumer protection statutes. Subway moved to compel arbitration based on the agreements between T-Mobile and Warciak’s mother. In the district court, Subway argued that federal estoppel law required Warciak to arbitrate under his mother’s contracts. Warciak countered that under Illinois law he is not bound by his mother’s contracts. The district court applied federal law. The Seventh Circuit reversed, holding that state law applies and that Subway cannot claim estoppel because it cannot show detrimental reliance. View "Warciak v. Subway Restaurants, Inc." on Justia Law

An arbitration provision in a maritime insurance policy is enforceable despite law in the forum state assertedly precluding its application. This case concerned the scope of insurance coverage Galilea bought for its yacht. The Ninth Circuit held that the Federal Arbitration Act (FAA), 9 U.S.C. 1-16, applied to the insurance policy but not the insurance application. In this case, the insurance application was not a contract, but the insurance policy was a contract subject to the FAA because the FAA constituted established federal maritime law for maritime transactions; federal maritime law was not precluded by Montana law under the McCarran-Ferguson Act, 15 U.S.C. 1012; and federal maritime law was not precluded by Montana law under M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972). The panel also held that the parties have delegated arbitrability issues to an arbitrator. Therefore, the panel affirmed the district court's order finding the policy's arbitration clause enforceable and affirmed the district court's order granting the Underwriters' motion to compel arbitration as to certain causes of action. The panel affirmed in part, reversed in part, and remanded. View "Galilea, LLC v. AGCS Marine Insurance Co." on Justia Law

Maine attorneys must obtain a client’s informed consent regarding the scope and effect of any contractual provision that prospectively requires the client to submit malpractice claims against those attorneys to arbitration.The Supreme Judicial Court affirmed the judgment of the superior court denying Bernstein, Shur, Sawyer & Nelson, P.A.’s (Bernstein) motion to compel arbitration in a legal malpractice claim filed against it. The superior court concluded that Bernstein failed to obtain informed consent from Susan Snow, its client, to submit malpractice claims to arbitration and that federal law does not preempt a rule requiring attorneys to obtain such informed consent from their clients. The Supreme Judicial Court affirmed, holding that the superior court did not err in concluding that (1) Bernstein’s failure to obtain informed consent from Snow regarding an arbitration provision rendered that provision unenforceable as contrary to public policy; and (2) the Federal Arbitration Act does not preempt a requirement that attorneys obtain informed consent from their clients before contracting to submit disputes to arbitration. View "Snow v. Bernstein, Shur, Sawyer & Nelson, P.A." on Justia Law

Plaintiff Simply Wireless, Inc. appealed a district court order dismissing its complaint against Defendants T-Mobile US, Inc. and T-Mobile USA, Inc. (collectively, “T-Mobile”). Upon determining that the parties’ business relationship was governed by a written agreement containing a mandatory arbitration clause, the district court went on to determine that the scope of that arbitration clause included all of Simply Wireless’s claims against T-Mobile. After review, the Fourth Circuit concluded the district court erred in determining the scope of the parties’ arbitration clause, as the parties "clearly and unmistakably" intended for an arbitrator to resolve all arbitrability disputes. Nonetheless, because the parties intended for an arbitrator to resolve all arbitrability disputes, the district court’s ultimate dismissal of Simply Wireless’s complaint in favor of arbitration was proper. Accordingly, the Fourth Circuit affirmed the district court’s dismissal, but on alternate grounds. View "Simply Wireless, Inc. v. T-Mobile US, Inc." on Justia Law

The Supreme Court affirmed the order of the district court compelling arbitration and its judgment confirming the arbitration award.A few months after beginning work for Home Savings of America (HSOA), Plaintiff signed an employment agreement containing a provision that required the parties to submit any disputes to binding arbitration. After HSOA terminated Plaintiff’s employment, Plaintiff sued HSOA, its CEO and Board chair Dirk Adams, and Home Savings Bancorp (HSBC), which owned all of HSOA’s stock, alleging breach of contract, wrongful discharge, and fraud. The district court ordered the parties to proceed to binding arbitration. The arbitrator issued an award in favor of HSBC and Adams. The district court confirmed the award. The Supreme Court affirmed both orders, holding (1) the parties had a valid agreement to arbitrate, and therefore, the district court properly referred Plaintiff’s claims to arbitration; and (2) the district court did not abuse its discretion in confirming the arbitration award because the court had jurisdiction to hear Plaintiff’s motion to vacate the arbitration award, and the arbitrator did not manifestly disregard the law. View "Tedesco v. Home Savings Bancorp, Inc." on Justia Law

Hyatt and Shen Zhen entered into an agreement providing that Shen Zhen would renovate a Los Angeles hotel and operate it using Hyatt’s business methods and trademarks. Two years later Hyatt declared that Shen Zhen was in breach. An arbitrator concluded that Shen Zhen owes Hyatt $7.7 million in damages plus$1.3 million in attorneys’ fees and costs. The Seventh Circuit affirmed the district court’s order of enforcement, upholding the arbitrator’s refusal to issue a subpoena to Cadwalader, who represented Shen Zhen during the contract negotiations. The dispute arose two years after Cadwalader stopped working for Shen Zhen. The contract has an integration clause that forecloses resort to the negotiating history as an interpretive tool. The arbitrator also declined to disqualify Hyatt’s law firm, which Cadwalader joined about three years after the contract was signed, finding that the firm’s ethics screen ensured that no confidential information would reach Hyatt's lawyers. The court also rejected an argument that the award disregarded federal and state franchise law and should be set aside under 9 U.S.C. 10(a)(4), which covers situations in which “the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” View "Hyatt Franchising, L.L.C. v. Shen Zhen New World I, LLC" on Justia Law

This case turned on whether an attorney-in-fact made a “health care decision” by admitting her principal to a residential care facility for the elderly and, in the process, agreeing to an arbitration clause. The trial court found she acted outside the scope of her authority under the power of attorney, and the arbitration clause this appeal seeks to enforce was void. The issue this case presented for the Court of Appeal’s review centered on the scope of two statutes, the Power of Attorney Law (Prob. Code, sec. 4000 et seq. (PAL)), and the Health Care Decisions Law (Prob. Code, sec. 4600 et seq. (HCDL)), in light of the care a residential care facility for the elderly agreed to provide, and actually provided, in this instance (Health & Saf. Code, sec. 1569 et seq.). For resolution, the Court had to parse the authority of two of the principal’s relatives, one holding a power of attorney under the PAL and one holding a power of attorney under the HCDL. The Court concluded admission of decedent to the residential care facility for the elderly in this instance was a health care decision, and the attorney-in-fact who admitted her, acting under the PAL, was not authorized to make health care decisions on behalf of the principal. As a result of this conclusion, the Court affirmed the trial court’s denial of a motion by the residential care facility to compel arbitration. Because the attorney-in-fact acting under the PAL did not have authority to make health care decisions for her principal, her execution of the admission agreement and its arbitration clause are void. View "Hutcheson v. Eskaton Fountainwood Lodge" on Justia Law

The Supreme Court declined to grant mandamus relief to the Regional Convention and Sports Complex Authority, which sought a writ to compel the circuit court to stay arbitration of the Authority’s claims in its petition for a declaratory judgment and to reinstate the cause on the circuit court’s docket.The Authority, which leased a training facility to the St. Louis Rams, LLC, filed a three-count petition for declaratory judgment against the Rams seeking to void provisions in the lease. The Rams filed a motion to compel arbitration, asserting that the Authority’s claims fell within the scope of the lease’s arbitration provisions. The circuit court sustained the Rams’ motion to compel arbitration. In this original action, the Supreme Court held that the parties’ intent to arbitrate disputes involving the lease was clear and that any doubt as to arbitrability must be resolved in favor of the application of the arbitration clause. View "State ex rel. Regional Convention & Sports Complex Authority v. Honorable Michael D. Burton" on Justia Law

This interlocutory appeal concerned a contract dispute about the provision of food services at the Fort Riley Army base in Kansas. The Department of the Army (Army) contracts with outside vendors for food preparation and related supporting services for its cafeteria dining facilities at Fort Riley. Since 2006, the State of Kansas, through the Kansas Department for Children and Families (Kansas), successfully bid under the RSA on those food preparation and related services contracts at Fort Riley. Kansas’s most recent contract awarded under the RSA was scheduled to expire in February 2016. As that date approached, the Army determined that its next dining contract at Fort Riley would be for supporting services only. The Army therefore decided that it need not solicit bids under the RSA and it approached another vendor directly, as permitted by the JWOD. Kansas took exception to the Army’s decision because it eliminated Kansas’s ability to bid on the contract. So Kansas initiated arbitration proceedings under the RSA’s dispute resolution provisions. And upon learning that the Army intended to contract with the other vendor despite the commencement of arbitration proceedings, Kansas sued in federal court, seeking to preliminarily enjoin the Army from executing the JWOD contract pending arbitration. The root of the dispute was the intersection of two federal statutes that both address the procurement of food services at federal facilities: (1) the Randolph-Sheppard Vending Facility Act of 1936 (RSA), and (2) the Javits Wagner O’Day Act (JWOD). The parties disagreed as to which of these statutes governed the award of the Fort Riley food services contract. And due to events that have occurred since this action was filed, the parties also disputed whether this appeal was rendered moot. The Tenth Circuit concluded that the issue raised by this appeal fell within an exception to the mootness doctrine for matters capable of repetition yet evading review. Because an arbitration panel has since issued its decision thereby dissolving the injunction at issue in this appeal, the Court declined to address whether the district court correctly granted the injunction. View "Kansas Department for Children v. SourceAmerica" on Justia Law

Baxter sued her former employer, Genworth, for wrongful termination and related causes of action, based on discrimination and retaliation, arising out of her employment. Genworth moved to compel arbitration as part of Genworth’s Resolve Employee Issue Resolution Program, which consists four stages, The trial court concluded, and the court of appeal affirmed, that the arbitration agreement Baxter signed in 2006, as a condition of continued employment, is unconscionable, refusing to sever any provisions. Agreement as a condition of continued employment amounted to “modest procedural unconscionability.” The court concluded that several features of the agreement were substantively unconscionable: default discovery limitations, a prohibition against contacting witnesses, procedural deadlines that effectively shorten the statute of limitations and preclude a meaningful opportunity for a pre-litigation Fair Employment and Housing Act investigation, and accelerated hearing procedures that infringe upon an employee’s ability to adequately present his or her case. The severance of the offending provisions was not an option because the arbitration agreement is permeated by unconscionability. View "Baxter v. Genworth North America Corp." on Justia Law