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Nora Valenza-Frost

Fifth Circuit Affirms That District Court in Texas Lacks Jurisdiction to Vacate Arbitration Award in Florida

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Defendants-appellees picked up work orders from the plaintiff-appellant in its Florida offices, performed field work in Florida, and sent invoices to the plaintiff-appellant in Texas, who eventually stopped paying the invoices. The defendants-appellees commenced a AAA arbitration, and a Florida arbitrator eventually found in their favor. The plaintiff-appellant filed suit in Texas seeking to vacate the arbitration award under state law, which defendants-appellees opposed under FRCP 12(b)(2), (b)(3), (b)(5) and under the Colorado River abstention doctrine. The Western District of Texas dismissed the suit for lack of personal jurisdiction.

The circuit court focused on whether the defendants-appellees had “minimum contacts” in Texas, such that a Texas court could exercise specific personal jurisdiction over them. Looking at the parties’ contract, the place of performance was Florida. The circuit court dismissed the remainder of the plaintiff-appellant’s arguments in favor of jurisdiction, notably the argument that the parties’ agreement contained a Texas choice-of-law clause. “While such clauses can be probative of purposeful availment, they’re never dispositive.” Here, despite the Texas choice-of-law clause, the parties’ agreement does not suggest that they expected to resolve their disputes in Texas. In fact, the agreement required arbitration take place in accordance with the AAA’s venue-selection rules, i.e., as close as possible to the project in Florida. Finding no jurisdiction, the circuit court concluded that, “[i]n short, this is Florida’s problem. Not Texas’s.”

Sayers Const., LLC v. Timberline Const., Inc., et al., No. 19-51099 (5th Cir. Oct. 2, 2020)

Western District of Washington Reverses Course and Compels Arbitration

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Following unsuccessful motions to dismiss, the defendants moved to compel arbitration, arguing that they had not moved to compel the matter to arbitration earlier because the plaintiffs had not yet completed all stages of the dispute resolution procedures required before the parties could arbitrate. The court found that Aliera Companies, Inc. and Aliera Healthcare, Inc. (collectively, “Aliera”) demonstrated it had not waived its right to compel arbitration, as Aliera’s initial motion to dismiss did not seek to dismiss the matter on the merits, and thus, Aliera did not act inconsistently with their right to compel arbitration.

As to Trinity HealthShare, Inc. (“Trinity”), the court found that Trinity’s motion to dismiss the complaint as a matter of law with prejudice did seek a resolution on the merits, and thus Trinity acted inconsistently with its right to compel arbitration. Notwithstanding, the court found that the plaintiffs were not prejudiced by Trinity’s action, and thus could not establish that Trinity waived its rights to arbitration. The court’s prior decision denying the defendants’ motion to compel arbitration was vacated, and the parties required to arbitrate.

Jackson, et al. v. The Aliera Companies, Inc., 2:19-cv-01281 (W.D. Wash. Oct. 6, 2020)

S.D.N.Y. Affirms Arbitration Award Over Challenge to Impartiality of Arbitrator

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Schuyler Line Navigation Co., LLC (“SLNC”) argued, in part, that the arbitrator’s partiality should be inferred from his previous representation of KPI Bridge Oil, Inc. (“KPI”) and its affiliates, alleged hope for future business from KPI, and the extent of his relationship with KPI and other business relationships. The District Court rejected these arguments, finding that SLNC fell short of demonstrating evidence of partiality or corruption.

SLNC also raised an issue with the arbitrator’s “belated disclosure and the lack of his transparency regarding his prior representation of KPI and its affiliate.” The Second Circuit “has repeatedly cautioned that it is not quick to set aside the results of an arbitration because of an arbitrator’s alleged failure to disclose information. Mere failure to disclose, by itself, is an insufficient ground for vacatur. Rather, the critical question is whether the facts that were not disclosed suggest a material conflict of interest.” The District Court, while noting that the arbitrator’s “behavior may not have been exemplary,” found that the belated disclosure did not give rise to an inference of evident partiality sufficient to vacate the arbitration award.

Schuyler Line Navigation Co., LLC v. KPI Bridge Oil, Inc., 1:20-cv-02772 (S.D.N.Y. Sept. 2, 2020)

Georgia Court of Appeals Reverses Confirmation of Arbitration Award Finding Arbitrator Ignored Contractual Language

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Interstate National Dealer Services, Inc. (“INDS”) challenged an arbitration award pursuant to OCGA § 9-9-13(b)(3), alleging the arbitrators overstepped their authority, and (5) the arbitrator’s manifest disregard of the law. Here, the arbitrator’s award found that respondent drafted the insurance agreements at issue with explicit authorization to recover certain fees, namely, “warranty claims” and “fees associated with contracts written.” INDS argued that the award ignored the fact the contracts expressly required the parties to utilize pricing structures set out by INDS in the Rate Card. The Court concluded that by rejecting the Rate Card, the arbitrator manifestly disregarded the law. The trial court’s ruling affirming the arbitration award was reversed on appeal.

Adventure Motorsports Reinsurance, Ltd. v. Interstate National Dealer Services Inc., A20A0036 & A20A0037 (Ga. Ct. App. June 25, 2020)

Ninth Circuit Affirms Order Denying Uber’s Motion to Compel Arbitration of Claims Brought Under the ADA

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In a dispute over Uber’s alleged failure to provide a wheelchair-accessible ride-sharing option in New Orleans, the District Court held that, under California law, plaintiffs were not equitably estopped from avoiding arbitration because their ADA claims did not rely on Uber’s Terms and Conditions.

California law permits a party to compel a nonsignatory to arbitrate when a nonsignatory should be equitably estopped from arguing that he cannot be bound by an arbitration clause. Uber argued that Plaintiffs’ standing theory – that they may sue without downloading the Uber App and assenting to its Terms and Conditions because downloading the Uber App would be futile -is inextricably intertwined with the Terms and Conditions. However, equitable estoppel is inapplicable where a plaintiff’s allegations reveal no claim of any violation of any duty, obligation, term or condition imposed by the contract. Here, the plaintiffs do not rely on Uber’s Terms and Conditions – the case arises entirely under the ADA – and plaintiffs’ ADA claims are fully viable without any reference to Uber’s Terms and Conditions, so equitable estoppel does not apply. The decision denying Uber’s motion to compel arbitration was upheld by the Ninth Circuit.

Namisnak, et al. v. Uber Techs., Inc., et al., No. 18-15860 (9th Cir. August 24, 2020)