Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

The Fourth Circuit vacated the district court's denial of appellants' motion to compel arbitration. The complaint alleged claims that were predicated on a massive insurance contract steering and kickback fraud conspiracy that spanned the period from 2001 to 2016.The court held that the district court failed to resolve -- in the proper manner -- factual disputes regarding whether Berkeley Schools agreed to arbitrate the claims alleged in the complaint. Accordingly, 9 U.S.C. 4 requires that those disputes must be resolved in trial proceedings and thus the court remanded. View "Berkeley County School District v. HUB International Limited" on Justia Law

The plaintiff, who arbitrated a claim that arose under a federal statute, the Electronic Communications Privacy Act of 1986 (known as the Stored Communications Act), 18 U.S.C. 2701, sought to vacate or modify the arbitration award. The plaintiff filed a motion in the district court; for jurisdiction, he invoked 28 U.S.C. 1331 (federal-question jurisdiction) and 1332 (diversity jurisdiction). The Federal Arbitration Act, 9 U.S.C. 10-11, which provides for the enforceability of arbitration agreements and specifies procedures for conducting arbitrations and enforcing arbitration awards, does not provide an independent jurisdictional basis for disputes under the Act. The Fourth Circuit vacated the dismissal of the action, stating that the better approach for determining subject-matter jurisdiction over section 10 and 11 motions is to look to the nature of the underlying claim in dispute, as is done with respect to section 4 petitions to compel arbitration. If the underlying claim is one that otherwise could be litigated in federal court, the motion can likewise be resolved in federal court. The district court had federal-question jurisdiction because the plaintiff’s underlying claim arose under federal law. View "McCormick v. America Online, Inc." on Justia Law

The Fourth Circuit reversed the district court's order granting Norfolk Southern's motion to confirm an arbitration award. The court held that the award was not mutual, final, and definite as required by the Federal Arbitration Act (FAA). In this case, the district court erred in finding that the Majority Decision was a final arbitration award where the third appraiser reserved the right to withdraw his assent if his assumptions proved to be incorrect. The court noted that the district court did not err in confirming the Majority Opinion because of an ambiguity rendering it unenforceable and the third appraiser did not base his decision on an improper reason. Accordingly, the court remanded for further proceedings. View "Norfolk Southern Railway Co. v. Sprint Communications Co." on Justia Law

The Fourth Circuit reversed the district court's order granting Norfolk Southern's motion to confirm an arbitration award. The court held that the award was not mutual, final, and definite as required by the Federal Arbitration Act (FAA). In this case, the district court erred in finding that the Majority Decision was a final arbitration award where the third appraiser reserved the right to withdraw his assent if his assumptions proved to be incorrect. The court noted that the district court did not err in confirming the Majority Opinion because of an ambiguity rendering it unenforceable and the third appraiser did not base his decision on an improper reason. Accordingly, the court remanded for further proceedings. View "Norfolk Southern Railway Co. v. Sprint Communications Co." on Justia Law

The Fourth Circuit affirmed the district court's denial of Crazy Horse's motion to compel arbitration. In this case, Crazy Horse pursued a merits-based litigation strategy for three years and actively sought to obtain a favorable legal judgment. The court held that Crazy Horse's conduct was at odds with the Federal Arbitration Act's, 9 U.S.C. 1-16, goal of facilitating the expeditious settlement of disputes. The court explained that Crazy Horse did not seek to use arbitration as an efficient alternative to litigation. Rather, Crazy Horse used arbitration as an insurance policy in an attempt to give itself a second opportunity to evade liability. View "Degidio v. Crazy Horse Saloon and Restaurant" on Justia Law

Plaintiff Simply Wireless, Inc. appealed a district court order dismissing its complaint against Defendants T-Mobile US, Inc. and T-Mobile USA, Inc. (collectively, “T-Mobile”). Upon determining that the parties’ business relationship was governed by a written agreement containing a mandatory arbitration clause, the district court went on to determine that the scope of that arbitration clause included all of Simply Wireless’s claims against T-Mobile. After review, the Fourth Circuit concluded the district court erred in determining the scope of the parties’ arbitration clause, as the parties "clearly and unmistakably" intended for an arbitrator to resolve all arbitrability disputes. Nonetheless, because the parties intended for an arbitrator to resolve all arbitrability disputes, the district court’s ultimate dismissal of Simply Wireless’s complaint in favor of arbitration was proper. Accordingly, the Fourth Circuit affirmed the district court’s dismissal, but on alternate grounds. View "Simply Wireless, Inc. v. T-Mobile US, Inc." on Justia Law

The Fourth Circuit held that the district court correctly denied Applied Underwriters' motion to compel arbitration in a suit alleging that Applied Underwriters engaged in the business of insurance in Virginia without complying with Virginia insurance and workers' compensation laws. However, the court held that the district court reversibly erred in applying the doctrine of judicial estoppel to hold that the agreement between Applied Underwriters and plaintiff constituted an insurance contract for purposes of Virginia law. Therefore, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Minnieland Private Day School v. Applied Underwriters Captive Risk Assurance Co." on Justia Law

The Fourth Circuit affirmed the district court's order denying BMO Harris's renewed motion to compel arbitration. Plaintiff filed suit against BMO Harris, alleging that BMO Harris violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.1961 et seq., when BMO Harris used its role within a network of financial institutions to conduct and participate in the collection of unlawful payday loans. BMO Harris sought to enforce an arbitration agreement for the loan, which was entered into by plaintiff and the lender, Great Plains. The Fourth Circuit affirmed the denial of BMO Harris's motion to enforce the arbitration agreement in light of Hayes v. Delbert. In Hayes, the Fourth Circuit applied the prospective waiver doctrine and held that the entire arbitration provision at issue was unenforceable. The choice of law provisions in this case were indistinguishable in substance from the related provisions in the agreement in Hayes. These choice of law provisions were not severable from the broader arbitration agreement and rendered the entire arbitration agreement unenforceable. View "Dillon v. BMO Harris Bank, N.A." on Justia Law

The Foundation agreed to lend $2 million pursuant to a loan agreement to Al-Harmoosh for a company headquartered in Iraq. After Mohammed Harmoosh, a managing partner of the company, refused to pay the loan, the Foundation filed suit for breach of contract in Maryland. Harmoosh moved to dismiss based on an arbitration clause in the loan agreement. The district court dismissed the Foundation's complaint. The Foundation later filed another suit against Harmoosh to collect on the promissory note, this time in the Court of First Instance for Commercial Disputes in Baghdad. After the Foundation and Harmoosh litigated their dispute to final judgment in Iraq, the Foundation filed suit in the District of Maryland, seeking recognition of the Iraqi judgment under the Maryland Uniform Foreign Money-Judgments Recognition Act, Md. Code Ann., Cts. & Jud. Proc. 10-701 et seq. The Foundation also alleged that Harmoosh fraudulently conveyed some of his assets both before and after the Iraqi judgment was rendered. The district court granted summary judgment to Harmoosh on the Maryland Recognition Act claim, and granted Harmoosh's motion to compel arbitration. The court held that judicial proceedings in a foreign court are not "contrary to" an arbitration clause for the purpose of the Maryland Recognition Act if the parties choose to forego their rights to arbitrate by paricipating in those proceedings. The court also concluded that the Foundation raised genuine issues of material fact that preclude a summary judgment holding that Harmoosh preserved his arbitration rights. Accordingly, the court vacated and remanded. View "Iraq Middle Market Development v. Harmoosh" on Justia Law

UBSFS filed suit seeking to vacate an arbitral award that, in practical effect, granted Gary Padussis over $900,000 in compensatory damages. The district court confirmed the arbitration award in its entirety and declined to impose an offset. In this case, UBSFS plainly agreed to arbitration; the dispute was within the scope of that agreement; and the rules by which the arbitration would proceed were openly declared and followed. The arbitration here spanned eighteen hearing sessions over nine separate days. Because the court found no basis for overturning the arbitral decision, the court affirmed the district court's judgment. The court explained that any other result would open arbitration proceedings to a host of challenges over the very type of subsidiary questions that Howsam v. Dean Witter Reynolds, indicated should be left to the discretion of the arbitral body. View "UBS Financial Services, Inc. v. Padussis" on Justia Law