In addition to periodically making new and interesting law, the courts can refresh us on some basics of arbitration procedure.  That is a theme in yesterday’s case reports.

Arbitration Agreements as “Containers”

Lovette v. CCFI Companies, LLC, 2023 U.S. Dist. LEXIS 226841 (N.D. Cal. December 20, 2023), is a reminder that contracts containing arbitration clauses are like Matryoshka dolls; the provisions of the agreement nest inside each other.  Defendant contended that Lovette’s wage and hour claims were subject to arbitration under her terms of employment.  As a subset of that argument, CCFI asserted that any issues as to arbitrability had been delegated to the arbitrator. Lovette maintained that delegation was improper because the entire agreement was unconscionable.  Because Lovette’s unconscionability attack did not focus on the delegation clause, but, rather, attacked the whole employment agreement, the court, Corley, J., compels arbitration and enforces the delegation provision. “Because, at this point, CCFI is seeking to enforce the specific delegation provision, rather than the contract as a whole, Lovette must make ‘arguments specific to the delegation provision’ rather than arguing ‘that the [Arbitration Clause] as a whole is unconscionable under state law’. . . .” (internal citation omitted; brackets in opinion). In summary, when making an unconscionability challenge, like a child playing with nesting dolls, keep opening the agreement until you reach the specific provision at issue.

Ordering Arbitration outside the Court’s District; Moss-Magnuson Act

Section 4 of the Federal Arbitration Act provides that a court may enter “an order directing the parties to proceed to arbitration in accordance with the terms of the agreement,” 9 U.S.C. § 4.  The same provision states that “the hearing and proceedings. . . shall be within the district in which the petition for an order directing such arbitration is filed.” Allco Finance Limited, Inc. v. Trina Solar (U.S.), Inc., 2023 U.S. Dist. LEXIS 226348 (S.D. Fla. November 2, 2023), addresses whether a federal court in Florida may compel arbitration under an agreement which requires that the arbitration “shall be held at San Francisco, CA.”  Recognizing that there is no Eleventh Circuit authority expressly point, Judge Rosenberg finds Dupuy-Busching General Agency, Inc. v Ambassador Insurance Co., 524 F.2d 1275 (5^th Cir. 1975), persuasive and stays this litigation pending arbitration.  The Court also holds that claims under the Moss-Magnuson warranty act are subject to arbitration.

Certification of Interlocutory Appeal of Order Compelling Arbitration

While Section 16 of the FAA allows an interim appeal from the denial of a motion to compel arbitration, it also provides that there is no immediate appeal from the granting of such an order, 9 U.S.C. § 16(b)(1). Queens Beauty Supply, LLC v. Independent Specialty Insurance Co., 2023 U.S. Dist. LEXIS 227075 (E.D. La. December 20, 2023), addresses whether the interlocutory appeal provisions of 28 U.S.C. § 1292(b) provide a work-around to get an immediate review of an order sending a case to arbitration.  Magistrate Judge Guidry holds that the answer is “No.”  Even assuming that the case meets two of the prongs for an interlocutory appeal – a controlling question of law and a substantial ground for a disagreement on that question – the Court holds that an interim appeal would not “materially advance the ultimate termination of the litigation.”  “In the absence of an appeal, this matter will immediately proceed toward speedy resolution via arbitration, in accord with Congress’s intent. . . ‘[A]n appeal would do just the opposite, and thereby, counteract the purpose of arbitration.’” (internal citation omitted).

To those of you celebrating Christmas this weekend, have a wonderful holiday. To everyone else, enjoy your long weekend.

David Reif, FCIArb
ReifADR
Dreif@Reifadr.com
ReifADR.com