Hunt v. Moore Bros., Inc.
2017 U.S. App. LEXIS 11607
7th Cir.2017Background
- James Hunt, a Nebraska truck driver, signed (2010) and later renewed an Independent Contractor Operating Agreement with Moore Brothers containing an arbitration clause that required arbitration before an arbitrator "mutually agreed on by both parties."
- Hunt sued Moore in federal court; Attorney Jana Yocum Rine filed a broad multi-count complaint (RICO, antitrust, peonage, Illinois statutes/common law) without initially enforcing the arbitration clause.
- Moore moved to compel arbitration under the Federal Arbitration Act (FAA) and to stay the litigation; the district court compelled arbitration, stayed the case, and told the parties to try to agree on an arbitrator.
- Rine filed meritless motions resisting arbitration (arguing under Nebraska law that the clause was an unenforceable "agreement to agree" and invoking the FAA transportation-worker exception), and later filed a Rule 60(b) motion; the district court rejected these arguments and imposed sanctions under 28 U.S.C. § 1927 (~$7,500) for objectively unreasonable litigation conduct.
- The district court dismissed the case without prejudice to arbitration; Rine appealed the sanctions order, and the Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (Rine) | Defendant's Argument (Moore) | Held |
|---|---|---|---|
| Appealability of sanctions after dismissal | Sanctions order is not appealable because dismissal was "without prejudice" | Dismissal in favor of arbitration is final and appealable | Dismissal in favor of arbitration is final for purposes of appeal; appellate jurisdiction exists (Manez line) |
| Enforceability of arbitration clause | Clause is an unenforceable "agreement to agree" under Nebraska law because arbitrator selection was left for future mutual agreement | FAA preempts conflicting state law; arbitration clauses leaving selection to later agreement are enforceable; courts may appoint arbitrators under 9 U.S.C. § 5 | FAA preempts state rules that single out arbitration; clause enforceable despite leaving arbitrator selection to later agreement |
| Applicability of FAA (transportation-worker exception) | Hunt is a transportation worker and thus exempt from FAA under 9 U.S.C. § 1 | Hunt was an independent truck owner-operator (not an employee), so § 1 exemption doesn't apply | FAA applies; transport-worker exemption inapplicable because Hunt was an independent contractor |
| Sanctions under 28 U.S.C. § 1927 | Sanctions improper because district court found only objective unreasonableness, not subjective bad faith; motions were justified | Rine multiplied proceedings with objectively baseless claims and motions, imposing unnecessary costs on Moore | Sanctions proper: § 1927 may be imposed for objective bad faith; district court acted within broad discretion and sanction amount was reasonable |
Key Cases Cited
- Manez v. Bridgestone Firestone N. Am. Tire, LLC, 538 F.3d 578 (7th Cir. 2008) (dismissal in favor of another forum can be final and appealable despite "without prejudice")
- Green v. U.S. Cash Advance Ill., LLC, 724 F.3d 787 (7th Cir. 2013) (arbitration clauses remain enforceable despite lapses in naming an arbitrator; courts may appoint arbitrators)
- Kindred Nursing Ctrs. Ltd. P'ship v. Clark, 137 S. Ct. 1421 (2017) (FAA requires equal treatment of arbitration agreements; state rules that single out arbitration are preempted)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state laws that disfavor arbitration agreements)
- Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287 (2010) (arbitration clauses are to be generously construed)
- NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998) (limits on antitrust claims where a single firm's independent decision to cease dealing does not automatically violate § 1)