Justia Contracts Opinion Summaries

Plaintiffs filed suit against RAC after entering into a rental agreement with RAC for a wooden trundle bed and mattress infested with bedbugs. On appeal, plaintiffs challenged the district court's order compelling arbitration of their breach of warranty claim under the Magnuson-Moss Warranty Act, 15 U.S.C. 2301 et seq. Relying on regulation promulgated by the FTC under its authority to interpret the Act, plaintiffs argued that RAC could not require binding arbitration as part of a consumer warranty. The court concluded that the district court erred in holding that the FTC regulations contained no ban on binding arbitration. However, the FTC arbitration ban simply did not apply to plaintiffs' rental agreement with RAC. Because plaintiffs have not linked RAC's warranty to any sale, they failed to establish the existence of a written warranty under FTC regulations. Accordingly, the binding arbitration clause was enforceable and the court affirmed the judgment of the district court. View "Seney v. Rent-a-Center, Inc." on Justia Law

The Montana Association of Counties Joint Powers Insurance Authority (MACo/JPIA) obtained catastrophic property insurance from Allianz Global Risks US Insurance Company to cover damages over $100,000. The Lincoln County Port Authority (Port) insured a building in its industrial facility through the MACo/JPIA self-insured risk pool. After the building's roof collapsed, MACo/JPIA informed the Port that it would no longer insure the building. The building was subsequently destroyed by a fire, and MACo/JPIA and Allianz refused to cover the loss. The Port filed this suit against Allianz. The district court concluded that the Allianz policy insured the Port and awarded $6,060,980 based on the findings of an appraisal panel. The Supreme Court (1) affirmed the district court's determination that Allianz's policy provided coverage for the building; (2) affirmed the district court's refusal to reform the Allianz policy; (3) reversed the district court's award of "replacement cost" for those portions of the building that the Port had slated for demolition; and (4) remanded to allow the district court to calculate post-judgment interest owed to the Port for the damages owed under the policy. View "Lincoln County Port Auth. v. Allianz Global Risks US Ins. Co." on Justia Law

This case concerned a dispute involving certain equipment Dakota purchased from the Kloster division of Tromley. On appeal, Tromley appealed the district court's denial of its motion to compel arbitration. Because the arbitration provision was not readily available and because Dakota did not have a reasonable opportunity to reject it, Tromley could not establish the necessary consent to bind Dakota to that provision. Further, the emails exchanged between Dakota and Tromley in June and July 2010 did not constitute an addendum to their agreement which successfully incorporated the arbitration agreement where the court could not say that the parties mutually assented to modify their agreement to include the provision. Accordingly, the court affirmed the judgment of the district court. View "Dakota Foundry, Inc. v. Tromley Industrial Holding" on Justia Law

The multinational telecommunications firm Nortel declared bankruptcy in 2009 and various debtors comprising the Nortel brand auctioned their business lines and intellectual property, raising $7.5 billion. The debtors subsequently disputed whether they had agreed to allocate the auction funds through arbitration. The Bankruptcy Court held that they had not agreed to arbitrate their disputes about allocation. The Third Circuit affirmed: the contract at issue does not reflect the debtors’ intent to arbitrate disputes about the auction funds. The court declined to consider the Joint Administrators’ related challenge to the Bankruptcy Court’s decision to allocate the contested funds, noting that the Bankruptcy Court has not yet held the hearing to allocate the funds, so that review would be premature. View "In Re: Nortel Networks, Inc." on Justia Law

The NECA-IBEW Health and Welfare Fund provides health benefits to members of a local union of electrical workers. The Fund negotiated a Local Agreement with Sav-Rx, a provider of prescription-drug benefits, under which Sav-Rx reimburses pharmacies for dispensing medication and then invoices the Fund for some of its costs. The Local Agreement does not call for arbitration. A few months later, Sav-Rx negotiated a different agreement with the national organization of the IBEW, with which the local is affiliated. The National Agreement offers locals reduced charges and more services than the Local Agreement and contains a mandatory arbitration clause. Local unions and funds could opt into the National Agreement, but the Fund's trustees never voted on the matter. Over the next eight years the Fund accepted from Sav-Rx services provided by the National Agreement. The Fund sued Sav-Rx for invoicing the Fund at rates not authorized by either the Local or National Agreement. The district court dismissed, finding that Fund had accepted the benefits of the National Agreement and was bound to it; Sav-Rx established that the Fund knew it was accepting benefits under the National Agreement. The Seventh Circuit affirmed. View "NECA-IBEW Rockford Local Union 364 Health & Welfare Fund v. A&A Drug Co." on Justia Law

Decedent was a resident of Searcy Healthcare Center (SHC) from January 7 to January 29. On January 8, Decedent executed a written arbitration agreement with SHC that was binding on Decedent's children, personal representatives, and administrators of Decedent's estate. Decedent died on February 12. The next year, Appellee filed a nursing-home-malpractice action against SHC as administrator of Decedent's estate and on behalf of the statutory wrongful-death beneficiaries. The circuit court denied SHC's motion to compel arbitration against the wrongful-death beneficiaries, concluding that Decedent had not extinguished the substantive rights of the wrongful-death beneficiaries by signing the arbitration agreement. The Supreme Court reversed, holding that the circuit court erred as a matter of law in finding that the wrongful-death beneficiaries were not bound by the arbitration agreement executed by Decedent. Remanded. View "Searcy Healthcare Ctr., LLC v. Murphy" on Justia Law

In 2006, Respondents obtained an adjustable rate mortgage loan from a mortgage company. Respondents executed a deed of trust on the real property being purchased and separately executed an arbitration rider. Respondents later defaulted on the loan, and Petitioner, which serviced the loan, assessed a number of fees. Respondents filed an action against Petitioner alleging violations of the West Virginia Consumer Credit and Protection Act. Petitioner filed a motion to compel arbitration. The circuit court denied the motion, concluding that the arbitration agreement was unenforceable under the Dodd-Frank Act and that it was procedurally and substantively unconscionable. The Supreme Court granted Petitioner's requested writ of prohibition to prevent enforcement of the circuit court's order, holding (1) the Dodd-Frank Act did not apply to the mortgage loan because the loan was executed prior to the Act's enactment; and (2) the arbitration agreement was neither procedurally nor substantively unconscionable. View "State ex rel. Ocwen Loan Servicing, LLC v. Circuit Court of Kanawha County" on Justia Law

Verizon New England, Inc. ("Verizon") had a collective bargaining agreement (CBA) with Local 2327, International Brotherhood of Electrical Workers, AFL-CIO (the "Union") that was originally signed in 2003. When, in 2008, FairPoint Communications ("FairPoint") purchased Verizon's telecommunication operations in Vermont, New Hampshire, and Maine, FairPoint agreed to hire all former Verizon employees, represented by the Union, in those states. In 2010, the Union filed a grievance against FairPoint based on allegedly wrongful transfer of work. An arbitration panel entered an award against FairPoint, concluding that the facts constituted a wrongful conveyance. FairPoint filed suit in district court, arguing that the arbitral panel had exceeded its authority by wrongfully adding and subtracting terms from the CBA. The district court granted summary judgment in favor of the Union. Nonetheless, the district court denied costs and fees pursuant to Fed. R. Civ. P. 11. The First Circuit Court of Appeals affirmed, holding (1) no grounds existed on which to vacate the arbitral award; and (2) the district court did not abuse its discretion by denying costs and fees. View "N. New England Telephone Operations LLC v. Local 2327, Int'l Brotherhood of Elec. Workers, ALF-CIO" on Justia Law

In 2009, GameStop, Inc., which operated retail stores that sold video games and video gaming software, hired Petitioner as an assistant manager. When she began her employment, Petitioner received a store associate handbook. In a document included with the handbook was an arbitration agreement. Petitioner signed and dated an acknowledgment of the handbook and rules including arbitration. In 2011, Petitioner sued GameStop and some of its managers (collectively, GameStop) for wrongful discharge, sexual harassment, and intentional infliction of emotional distress, among other causes of action. The circuit court dismissed the complaint pending Petitioner's submission of her claims to final and binding arbitration. Petitioner appealed, arguing that she did not enter into a valid arbitration with GameStop or, in the alternative, the arbitration agreement was unconscionable and unenforceable. The Supreme Court affirmed, holding (1) Petitioner and GameStop entered into a valid agreement to arbitrate Petitioner's claims; and (2) the arbitration agreement was neither procedurally nor substantively unconscionable. View "New v. GameStop, Inc." on Justia Law

Crockett’s former law firm subscribed to a LexisNexis legal research plan that allowed unlimited access to certain databases for a flat fee. Subscribers could access other databases for an additional fee. According to Crockett, LexisNexis indicated that a warning sign would display before a subscriber used a database outside the plan. Years after subscribing, Crockett complained that his firm was being charged additional fees without any warning that it was using a database outside the Plan. LexisNexis insisted on payment of the additional fees. The firm dissolved. Crockett’s new firm entered into a LexisNexis subscription agreement, materially identical to the earlier plan; it contains an arbitration clause. Crockett filed an arbitration demand against LexisNexis on behalf of two putative classes. One class comprised law firms that were charged additional fees. The other comprised clients onto whom such fees were passed. The demand sought damages of more than $500 million. LexisNexis sought a federal court declaration that the agreement did not authorize class arbitration. The district court granted LexisNexis summary judgment. The Sixth Circuit affirmed. “The idea that the arbitration agreement … reflects the intent of anyone but LexisNexis is the purest legal fiction,” but the one-sided adhesive nature of the clause and the absence of a class-action right do not render it unenforceable. The court observed that Westlaw’s contract lacks any arbitration clause.View "Reed Elsevier, Inc. v. Crockett" on Justia Law