Justia U.S. 2nd Circuit Court of Appeals Opinion SummariesArticles Posted in Arbitration & Mediation
Belton v. GE Capital Retail Bank
Violation of a bankruptcy court discharge order is not an arbitrable dispute. The Second Circuit affirmed the district court's order denying appellants' motions to compel arbitration of a dispute with two debtors who previously held credit card accounts managed by appellants. Appellants argued that debtors were obliged to arbitrate the dispute concerning whether appellants violated the bankruptcy court's discharge orders when they failed to correct the status of debtors' credit card debt on their credit reports. Though the text and history of the Bankruptcy Code are ambiguous as to whether Congress intended to displace the Federal Arbitration Act in this context, the court held that circuit precedent is clear that the two statutes are in inherent conflict on this issue. In Anderson v. Credit One Bank, N.A., 884 F.3d 382 (2d Cir.), cert. denied, 139 S. Ct. 144 (2018), the court refused to enforce the parties' arbitration agreement, finding that Congress did not intend for disputes over the violation of a discharge order to be arbitrable. View "Belton v. GE Capital Retail Bank" on Justia Law
Washington National Insurance Co. v. OBEX Group LLC
Washington National petitioned the district court under section 7 of the Federal Arbitration Act to enforce two arbitration summonses requiring two non-parties to the arbitration, respondents, to testify at a hearing and to produce certain documents. The Second Circuit held that the district court had subject matter jurisdiction based on the diversity of citizenship of the parties to the petition. The court also held that the district court was not required to consider respondents' challenges to the petition in the first instance. Accordingly, the court affirmed the district court's denial of both motions on the merits. View "Washington National Insurance Co. v. OBEX Group LLC" on Justia Law
Trina Solar US, Inc. v. Jasmin Solar Pty Ltd.
Jasmin appealed the district court's grant of Trina's petition to confirm an arbitration award entered in its favor and denial of Jasmin and JRC's motion to vacate the award. The district court relied on an agency and direct benefits theory of estoppel to find that Jasmin was bound by the arbitration clause. The Second Circuit reversed the district court's judgment as to Jasmin, holding that the district court erred when it determined that Jasmin was bound as a principal to the contract under agency theory. The court was not persuaded that JRC acted as Jasmin's agent in executing the contract or that, in the alternative, Jasmin was bound to the arbitration clause under a direct benefits theory of estoppel. In this case, the commercial contract containing the arbitration clause was governed by New York law and signed by Trina and JRC, not Jasmin. The court explained that Jasmin was not a party to the contract and thus could not enforce any rights or duties under the contract. The court remanded with instructions to enter an amended judgment dismissing the case as to Jasmin. View "Trina Solar US, Inc. v. Jasmin Solar Pty Ltd." on Justia Law
The National Retirement Fund v. Metz Culinary Management, Inc.
Metz appealed the district court's judgment vacating an arbitration award that held that interest rate assumptions for purposes of withdrawal from a multiemployer pension plan liability are those in effect on the last day of the year preceding the employer's withdrawal. The district court held, however, that section 4213 of the Employee Retirement Income Security Act (ERISA) does not require actuaries to calculate withdrawal liability based on interest rate assumptions used prior to an employer's withdrawal from a plan, and that interest rate assumptions must be affirmatively reached and may not roll over automatically from the preceding plan year. The Second Circuit vacated the district court's judgment, holding that interest rate assumptions for withdrawal liability purposes must be determined as of the last day of the year preceding the employer's withdrawal from a multiemployer pension plan. Furthermore, absent any change to the previous plan year's assumption made by the Measurement Date, the interest rate assumption in place from the previous plan year will roll over automatically. Accordingly, the court remanded with directions to enter judgment for Metz and to remand any remaining issues to the arbitrator. View "The National Retirement Fund v. Metz Culinary Management, Inc." on Justia Law
Atlas Air, Inc. v. International Brotherhood of Teamsters
The Second Circuit affirmed the district court's judgment compelling arbitration of grievances raised by airlines in a dispute with the collective bargaining representatives of their pilots. The court held that the district court properly granted the employers' motion for summary judgment and to compel arbitration. The court held that the management grievances did not involve a major dispute; rejected the Union's argument that the case raised issues of representation that would fall within the exclusive jurisdiction of the National Mediation Board; and held that the district court did not err in exercising jurisdiction over the dispute. The court also held that Atlas's motion to compel arbitration of its management grievance was timely. Finally, the court rejected the Union's three arguments with respect to the arbitrability of the employers' management grievances. In this case, Southern was entitled to file a management grievance with the Southern Board regarding the interpretation of Section 1.B.3 of the collective bargaining agreement (CBA); the district court correctly determined that it lacked authority to decide whether the merger provisions of the Atlas CBA were prompted by the announced operational merger of Atlas and Southern; and nothing in the process of interpreting the provisions of the two collective bargaining agreements purports to bind Atlas or Southern pilots to the terms of another existing CBA. View "Atlas Air, Inc. v. International Brotherhood of Teamsters" on Justia Law
Jock v. Sterling Jewelers Inc.
Plaintiffs, a group of current and former retail sales employees of Sterling Jewelers, filed suit alleging that they were paid less than their male counterparts, on account of their gender, in violation of Title VII of the Civil Rights Act of 1964 and the Equal Pay Act. After an arbitrator certified a class of Sterling Jewelers employees that included employees who did not affirmatively opt in to the arbitration proceeding, the district court held that the arbitrator exceeded her authority in purporting to bind those absent class members to class arbitration. The Second Circuit reversed, holding that the arbitrator was within her authority in purporting to bind the absent class members to class proceedings because, by signing the operative arbitration agreement, the absent class members, no less than the parties, bargained for the arbitrator's construction of their agreement with respect to class arbitrability. The court remanded to the district court to consider, in the first instance, the issue of whether the arbitrator exceeded her authority in certifying an opt-out class. View "Jock v. Sterling Jewelers Inc." on Justia Law
Daly v. Citigroup Inc.
Plaintiff filed suit against Citigroup, alleging gender discrimination and whistleblower retaliation claims under several local, state, and federal statutes, including the Dodd‐Frank and Sarbanes‐Oxley Acts. The Second Circuit affirmed the district court's judgment and held that the district court appropriately compelled arbitration of all but plaintiffʹs Sarbanes‐Oxley claim, including her Dodd‐Frank whistleblower retaliation claim, because her claims fall within the scope of her employment arbitration agreement and because she failed to establish that they are precluded by law from arbitration. The court also held that plaintiff's Sarbanes‐Oxley claim was properly dismissed because the district court lacked subject matter jurisdiction over it inasmuch as plaintiff failed to exhaust her administrative remedies under the statute. View "Daly v. Citigroup Inc." on Justia Law
Weiss v. Sallie Mae, Inc.
Plaintiff appealed the district court's grant of Sallie Mae's motion to vacate an arbitration award based on the arbitrator's failure to apply a general release provision in a settlement agreement that barred all of plaintiff's claims. The Second Circuit held that the arbitrator ignored the unambiguous terms of the general release and concluded that the award of statutory damages for a subset of plaintiff's claims was irreconcilable with the arbitrator's determination that plaintiff was a member of the settlement class and that she received adequate notice of its terms; because the arbitrator failed to provide an explanation for these mutually exclusive determinations, the court was unable to ascertain whether the arbitrator adhered to applicable substantive law as required by the parties' arbitration agreement and whether the arbitral award was issued in manifest disregard of the law; and therefore the court vacated and remanded for clarification. View "Weiss v. Sallie Mae, Inc." on Justia Law
Doctor’s Associates, Inc. v. Alemayehu
After DAI denied defendant's application to purchase an existing Subway franchise, defendant filed suit alleging that DAI discriminated against him on the basis of race. DAI then filed this action seeking to compel defendant to arbitrate, but the district court denied DAI's motion to compel. The Second Circuit agreed with the district court that whether or not an agreement is supported by adequate consideration is a question about contract formation for the court, not the arbitrator, to decide. However, the court held that the promise to arbitrate in the Franchise Application was supported by adequate consideration. Accordingly, the court vacated the district court's judgment and remanded for further proceedings. View "Doctor's Associates, Inc. v. Alemayehu" on Justia Law
Abdullayeva v. Attending Homecare Services, LLC
The Second Circuit reversed the district court's denial of Attending's motion to compel arbitration in an action under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). The court held that the arbitration clause mandated arbitration of the relevant claims and did not deny due process to Attending's employees. In this case, the union agreed to mandatory arbitration in the collective bargaining agreement on behalf of its members and the arbitration agreement here clearly and unmistakably encompassed the FLSA and NYLL claims. Furthermore, the challenged portion of the arbitration clause, which simply specified with whom arbitration will be conducted in accordance with established Supreme Court precedent, did not violate due process. View "Abdullayeva v. Attending Homecare Services, LLC" on Justia Law