arbitration

Plaintiffs sometimes try to sidestep an arbitration agreement with one company by suing only a second company for interrelated conduct.  Last month, a California federal court applied principles of fairness under the doctrine of “equitable estoppel” to reject this tactic, holding that a software vendor (Twilio) could enforce a plaintiff’s arbitration agreement with a website operator (Keeps) that was not named as a defendant.  Perry-Hudson v. Twilio, Inc., 2024 WL 493333 (N.D. Cal. Dec. 2, 2024).Continue Reading California Federal Court Allows Software Vendor to Enforce Website Operator’s Arbitration Agreement in Privacy Lawsuit

The Court of Appeal for Ontario dismissed Binance’s appeal after a lower court declined to stay a proposed class action and enforce an arbitration agreement contained in Binance’s terms and conditions. The decision carries implications for companies who do retail business or distribute products in multiple jurisdictions, including in Canada.

Background

As a Cayman Islands company, Binance Holdings Limited (“Binance”), together with associated companies, marketed and sold cryptocurrency derivative contracts to Canadian retail investors though the Binance website. In the wake of Binance’s exit from the Ontario market, in June 2022 a proposed class filed an action against Binance in the Superior Court of Justice of Ontario. The proposed class of retail investors argued that Binance distributed securities and investment contracts under Canada’s securities laws, but failed to file or deliver a prospectus required by law.Continue Reading Canadian Appellate Decision Highlights Class Action and Mass Arbitration Risks for Companies in Operating in Multiple Jurisdictions

A recent Seventh Circuit decision, Wallrich v. Samsung Elecs. Am., Inc., — F.4th —-, 2024 WL 3249646 (7th Cir. July 1, 2024), will be of interest to companies facing mass arbitration demands.Continue Reading Seventh Circuit Reverses Order Compelling Payment of Mass Arbitration Fees

On Tuesday May 16th, the U.S. Supreme Court ruled that a federal district court does not have discretion to dismiss a case where all claims are subject to arbitration and a party has requested a stay. This resolves a long-standing circuit split. Continue Reading Supreme Court Says Courts Cannot Dismiss Claims Pending Arbitration When Stay is Requested

Last week, a divided Second Circuit panel affirmed a district court ruling denying a motion to compel arbitration of a putative class action seeking classwide equitable remedies under ERISA for alleged mismanagement of an employee stock ownership plan.  The Second Circuit found the defined contribution plan’s mandatory arbitration clause unenforceable because it limited plaintiff’s ability to assert a claim that would result in any relief other than individual relief, and specifically prevented him from pursuing the plan-wide remedy authorized by ERISA Section 502(a)(2).  The Court’s decision extends the “effective vindication exception” and raises questions about the extent to which plans can force individual arbitration of ERISA claims that apply to an entire plan.  

In Cedeno v. Sasson, 2024 WL 1895053 (2d Cir. May 1, 2024), the plaintiff asserted claims under ERISA Sections 502(a)(2) and 409(a), alleging that defendants breached fiduciary duties by purchasing stock shares for purportedly more than fair market value, saddling the Plan with tens of millions of dollars of debt and decreasing its value. Continue Reading Second Circuit Blocks Use of Arbitration Clause to Prevent Class Action ERISA Claims

On November 3, the Second Circuit reversed a lower court decision denying a motion to compel arbitration in a putative class action against Klarna.  See Edmundson v. Klarna, Inc., 85 F.4th 695 (2d Cir. 2023).  The decision offers guidance (and support) for companies looking to enforce similar “click-wrap” agreements with mandatory arbitration provisions.Continue Reading A Closer Look: Second Circuit Steps In to Reverse Decision Refusing To Enforce “Click-Wrap” Mandatory Arbitration Agreement

The Supreme Court, in a 5–4 ruling, has resolved a circuit split on the issue of litigation stays pending appeal of denials of motions to compel arbitration.  In the underlying putative class action, Bielski et al v. Coinbase, Inc., 3:21-cv-07478 (N.D. Cal.), Coinbase moved to compel arbitration of the plaintiffs’ claims, but the motion was denied by the district court.  The Ninth Circuit—in a split from several other Circuits—declined to stay the district court proceedings while the appeal was pending.  The Supreme Court now has ruled that a district court must stay proceedings while an interlocutory appeal on the question of arbitrability is ongoing.  The decision means that defendants should be able to minimize ongoing litigation costs while an appeal of an adverse arbitration decision is pending.Continue Reading Supreme Court Resolves Circuit Split to Require Stays Pending Appeal of Refusals to Compel Arbitration

            The Supreme Court recently declined to review the Sixth Circuit’s decision in Sevier County Schools Federal Credit Union v. Branch Banking & Trust Co., 990 F.3d 470 (6th Cir. 2021), which presents a potential challenge to enforcing arbitration clauses added to standard account agreements.  The cert denial serves as a reminder that companies introducing arbitration agreements should take care to follow all contractual change-of-term requirements and create a record of affirmative customer assent whenever possible.Continue Reading A Closer Look: Arbitration Clauses Added to Account Agreements Face Risks After Supreme Court Declines Review of Sixth Circuit’s BB&T Decision

On May 23, 2022, the Supreme Court unanimously held that a party opposing arbitration is not required to demonstrate prejudice to show that the other party has waived its contractual arbitration rights. 

Before today’s decision, nine federal courts of appeals had adopted the rule that a “party can waive its arbitration right by litigating only when its conduct has prejudiced the other side.”  Morgan v. Sundance, 596 U.S. __ (2022).  Two other circuits had held no showing of prejudice was required.Continue Reading Supreme Court Decision Makes It Easier to Waive Right to Arbitration