Gibbons Law Alert

Gibbons Law Alert

Tagged: Arbitration

Third Circuit Holds That Challenges to the Validity of a Contract Containing an Arbitration Provision Can Only Be Adjudicated by the Arbitrator

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Posted in General Litigation

On November 30, 2016

In a recent precedential decision, South Jersey Sanitation Co., Inc. v. Applied Underwriters Captive Risk Assurance Co., Inc., the Third Circuit held that although arbitration agreements may be invalidated by generally applicable contract defenses, like fraud, in order for the court to decide the issue, the challenge “must focus exclusively on the arbitration provision, rather than on the contract as a whole.” “If the challenge encompasses the contract as a whole, the validity of that contract, like all other disputes arising under the contract, is a matter for the arbitrator to decide.”

Court Compels Arbitration of Lawsuit Filed by Employees Discharged After Discovery of Personal Text Messages About a Coworker on a Company-Issued iPad

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Posted in Class Action Defense / General Litigation / Policies and Handbooks / Technology Developments and Issues

On September 12, 2016

A recent decision from the District of New Jersey granting a motion to compel arbitration not only reinforces the strong federal policy in favor of arbitration, but also highlights issues pertaining to company-issued devices and employees’ personal use of these devices. While employed by Anheuser-Busch, Victor Nascimento received a company-issued iPad. Nascimento and other employees exchanged text messages about a coworker over their personal cell phones outside of the work day, but the messages were received on Nascimento’s company-issued iPad because the iTunes account on his iPad was linked to his personal cell phone.

New Jersey District Court Enforces Comprehensive Arbitration Clause Between Car Dealer and Consumer

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Posted in Class Action Defense

On September 8, 2016

Notwithstanding a recent trend of seemingly anti-arbitration decisions in the state courts, a New Jersey District Court recently dismissed a consumer fraud complaint that it found to be duplicative of a prior arbitration award. In 2009, the plaintiff purchased a vehicle, and then leased an additional car from the same dealer in 2010. Despite signing agreements to arbitrate with the dealer, the plaintiff filed a complaint in state court against the dealer, Metro Honda, which was dismissed on the ground that the arbitration agreements were enforceable and required her to arbitrate her dispute. Plaintiff filed a demand for arbitration, citing a variety of consumer fraud statutes. An arbitration award was entered denying all of the plaintiff’s claims, and she neither appealed nor moved to vacate or modify the award.

Ninth Circuit Holds Class Action Waivers Illegal Under the NLRA

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Posted in Alternative Dispute Resolution

On August 30, 2016

On August 22, 2016, in Morris v. Ernst & Young, LLP, the Ninth Circuit Court of Appeals joined the Seventh Circuit Court of Appeals in holding that class action waiver provisions in arbitration agreements governing employment disputes are illegal under the National Labor Relations Act (NLRA or the Act) because these waivers interfere with the right of employees to engage in concerted activity protected by Section 7 of the Act (Section 7). The holdings of these courts are in indirect conflict with an opinion of the Fifth Circuit Court of Appeals, which upheld the validity of such waivers in the face of a challenge under Section 7. Employers in jurisdictions whose courts have not yet decided this issue, and who employ such waivers in their arbitration agreements or otherwise, should be prepared for attacks on their arbitration agreements by employees seeking to bring class or collective actions or by the National Labor Relations Board (NLRB).

Parties Must Clearly Agree to Delegate Arbitrability to an Arbitrator, Says the NJ Supreme Court

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Posted in Class Action Defense / General Litigation

On July 28, 2016

In its most recent pronouncement on arbitration clauses, the New Jersey Supreme Court confirmed that it is for the Court, and not an arbitrator, to determine whether the parties have agreed to arbitrate consumer fraud claims in the absence of a clear delegation clause to the contrary. In Morgan v. Sanford Brown Inst., the New Jersey Supreme Court reversed an order of the Appellate Division holding that arbitrability was for the arbitrator to decide, finding that under Atalese v. U.S. Legal Servs. Grp. and First Options of Chi., Inc. v. Kaplan, the agreement to delegate arbitrability to an arbitrator must, as with the other arbitration provisions, clearly inform the average consumer of the rights he or she is giving up.

Arbitration Clause Held Too Vague to Cover Statutory Claims

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Posted in Alternative Dispute Resolution

On July 25, 2016

Employers drafting arbitration clauses for employment contracts and others drafting arbitration agreements generally need to be familiar with the line of New Jersey cases involving arbitration clauses, including the Appellate Division’s recent opinion in Anthony v. Eleison Pharmaceuticals LLC, Docket No. A-932-15T4 (App. Div. July 18, 2016), where the court held that an arbitration clause that does not include reference to a waiver of plaintiff’s statutory rights or a jury trial does not constitute a valid waiver of the right to have claims decided in a judicial forum.

Seventh Circuit Creates Circuit Split, Striking Down Agreement to Arbitrate Employment Claims on an Individual Basis

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Posted in Alternative Dispute Resolution

On June 8, 2016

On May 26, 2016, the United States Court of Appeals for the Seventh Circuit issued its decision in Lewis v. Epic Systems Corp., becoming the first federal court of appeals to decide that an agreement between an employer and an employee to arbitrate wage-and-hour claims only on an individual basis, as opposed to a class action basis, is unenforceable. The court’s opinion has created a circuit split, as the Second, Fifth, and Eighth Circuits have enforced similar agreements.

“Bound by the Terms of His Bargain”: Third Circuit Underscores the Difficulty of Vacating Arbitration Awards

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Posted in General Litigation

On February 4, 2016

In a recent precedential decision, Whitehead v. The Pullman Grp., LLC, the Third Circuit reminded litigants that it’s as tough as ever to vacate an arbitration award – and cast further doubt on the viability of the “manifest disregard of the law” standard here. Appellant Pullman entered into a contract with two singer-songwriters in May 2002, which gave him the exclusive option to purchase their song catalog following a 180-day due diligence period.

Third Circuit in Chesapeake Appalachia: Incorporating AAA Rules Not Enough to Satisfy the Onerous Burden of Overcoming Presumption in Favor of Judicial Resolution of Class Arbitrability

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Posted in Class Action Defense

On February 3, 2016

In Chesapeake Appalachia, L.L.C. v. Scout Petroleum, L.L.C., the Third Circuit picked up where it left off after Opalinski v. Robert Half International Inc. In Opalinski, the Circuit held, for the first time, that “the availability of class arbitration constitutes a ‘question of arbitrability’ to be decided by the courts—and not the arbitrators—unless the parties’ arbitration agreement ‘clearly and unmistakably’ provides otherwise.”

Fifth Circuit Upholds Arbitration Agreement Prohibiting Class/Collective Actions and Cautions NLRB to Reconsider Board Policy

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Posted in Alternative Dispute Resolution

On November 5, 2015

Last week, in Murphy Oil USA, Inc. v. NLRB, the United States Court of Appeals for the Fifth Circuit upheld an arbitration agreement requiring employees to arbitrate claims on an individual basis, thereby reaffirming its holding in D.R. Horton, Inc. v. NLRB, despite the National Labor Relations Board’s (“NLRB”) aggressive attempt to find arbitration agreements unlawful. The case is noteworthy because the court rebuffed the Board’s effort to circumvent D.R. Horton and cautioned the NLRB “to strike a more respectful balance between its views and those of circuit courts” that review them. One wonders whether the NLRB will change its current stance against arbitration agreements that prohibit class/collective actions. Regardless, the Fifth Circuit’s decision helps to settle the current state of the law at the circuit court level that arbitration agreements and class/collective action waivers are lawful under the National Labor Relations Act (“NLRA”).

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