Justia Contracts Opinion Summaries

Plaintiffs Morris and McDaniel filed suit against Ernst & Young, alleging that the company misclassified Morris and similarly situated employees and denied overtime wages under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq., and California laws. Ernst & Young subsequently moved to compel arbitration under the agreements signed by Morris and McDaniel. The district court ordered arbitration and dismissed the case. Morris and McDaniel argue that their employment agreements, where they signed a "concerted action waiver" with the company, violate federal labor laws and cannot be enforced. Plaintiffs claim that the “separate proceedings” clause in the agreement contravenes three federal statutes: the National Labor Relations Act (NLRA), 29 U.S.C. 151 et. seq., the Norris LaGuardia Act, 29 U.S.C. 101 et seq., and the FLSA. The court agreed with the Board's interpretation of section 7 and section 8 of the NLRA that an employer violates the NLRA when it requires employees covered by the Act, as a condition of their employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions against the employer in any forum, arbitral or judicial. In this case, the terms of the concerted action waiver are unenforceable. The “separate proceedings” clause prevents concerted activity by employees in arbitration proceedings, and the requirement that employees only use arbitration prevents the initiation of concerted legal action anywhere else. The court also concluded that the Federal Arbitration Act, 9 U.S.C. 1 et seq., does not dictate a contrary result. Accordingly, the court vacated and remanded for the district court to determine whether the “separate proceedings” clause was severable from the contract. View "Morris v. Ernst & Young, LLP" on Justia Law

Plaintiff filed claims alleging breach of contract and claims under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., against BAH and others. Under California law, a breach of a written contract must be brought within four years of the date of the alleged breach, Cal. Civ. Proc. Code 337. The court concluded that plaintiff's cause of action accrued in September 2003 and the filing of his complaint was untimely. Therefore, plaintiff's breach of contract claim is time barred. The court also concluded that the district court did not abuse its discretion by denying plaintiff a third opportunity to amend his complaint. Finally, the court held that the employer’s stock rights plan did not qualify as an employee pension benefit plan subject to ERISA under 29 U.S.C. 1002(2)(A) because its primary purpose was not to provide deferred compensation or other retirement benefits. Because, in this case, the stock rights plan was not designed or intended to provide retirement or deferred income, it is not covered by ERISA. Accordingly, the court affirmed the judgment. View "Rich v. Shrader" on Justia Law

ItalFlavors filed suit against Caffe Vergnano, blaming the failure of an Italian cafe venture on Caffe Vergnano's failure to offer support. The parties had entered into an agreement, the Commercial Contract, which appears to be a franchise agreement setting forth the rights and responsibilities of the parties. The second agreement is the Hold Harmless Agreement. Caffe Vergnano filed a petition to compel arbitration and the district granted the petition. The court concluded that the declaration in the Hold Harmless Agreement signed contemporaneously with the Commercial Contract proves that the latter was a mere sham to help Hector Rabellino obtain a visa. Therefore, the court concluded that the Commercial Contract was not a contract and is thus unenforceable. Because the court found that the document the parties described as the Commercial Contract was a sham, the arbitration clause is no more enforceable than any other provision in that document. Accordingly, the court reversed the judgment. View "Casa del Caffe Vergnano v. ItalFlavors, LLC" on Justia Law

FTB initiated a nonjudicial foreclosure on residential real property and sold the property at a foreclosure sale to DM. On appeal, DM challenged the district court's grant of summary judgment for FTB. The court concluded that there was a genuine issue of material fact as to whether DM could have discovered the defect at issue - lack of a utilities easement - prior to the foreclosure sale, which is the relevant inquiry under Karoutas v. HomeFed Bank. Nonetheless, the district court did not err in concluding on summary judgment that DM is not entitled to the equitable remedy of rescission where DM had a duty to investigate wrongdoing and FTB’s status as a foreclosing lender does not alter this conclusion because a foreclosing lender has the same duties of disclosure regarding the property as any other seller. Therefore, the court concluded that there is no genuine issue of material fact that DM was put on inquiry of wrongdoing at the time it discovered the lack of electricity, and therefore is deemed to know all facts that could be discovered from a reasonable investigation. Finally, the court concluded that because there is no genuine issue of material fact as to whether DM’s two-year delay deprived it of the equitable remedy of rescission, FTB is entitled to summary judgment on that issue. View "DM Residential Fund v. First Tennessee Bank" on Justia Law

Plaintiffs filed a class action suit against Ford, alleging that Ford breached implied and express warranties and committed fraud in the sale of Ford Focus vehicles containing rear suspension defects. The court concluded that the district court's order granting summary judgment as to the Song-Beverly Consumer Warranty Act, Cal. Civ. Code 1792, claims of plaintiffs is reversed in light of Mexia v. Rinker Boat Co. Mexia held that “latent defects” may breach the implied warranty even when they are not discovered within the implied warranty’s duration. The court reversed the district court's order granting summary judgment as to the express warranty claims of plaintiffs given the ambiguous terms of Ford's express warranty. Finally, the court reversed the district court's order granting summary judgment on plaintiff's Consumers Legal Remedies Act, Cal. Civ. Code 1770(a), and Unfair Competition Law, Cal. Bus. & Prof. Code 17200, because plaintiffs have raised a genuine issue of fact as to reliance. The court declined to address additional issues raised by Ford. Because the court reversed plaintiffs’ implied and express warranty claims, the court also reversed the district court’s order granting summary judgment as to the Magnuson-Moss Warranty Act, 15 U.S.C. 2301–2312, claims. View "Daniel v. Ford Motor Co." on Justia Law