Federal Cases
"May" in an Arbitration Provision Creates a Right to Insist on Arbitration, Not a Right to Resist Arbitration
Conax Florida Corp. v. Astrium Ltd., No. 8:07-CV-76-T-TGW, 2007 WL 2083582 (M.D. Fla., July 18, 2007)
7/18/2007
The use of "may" in an arbitration provision does not create a post-dispute right in either party to resist arbitration, but instead creates a right in either party to insist on arbitration, according to a federal district court in Florida.
In Conax Florida Corp. v. Astrium Ltd., No. 8:07-CV-76-T-TGW, 2007 WL 2083582 (M.D. Fla., July 18, 2007), Conax and Astrium entered into a contract for the production of satellite equipment, which contained an arbitration provision stating that any claim "arising out of" or "relating to" the contract "may be finally settled by arbitration"... Full Story
Right to Compel Arbitration Waived by Failing to Respond to Another's Requests for Arbitration
Dawson v. Gillespie Chrysler, L.L.C., No. 07 C 2581, 2007 WL 2088598 (N.D. Ill. July 18, 2007)
7/18/2007
The right of a party to compel arbitration is waived when that party fails to respond to an adverse party's requests for arbitration, according to a federal district court in Illinois.
In Dawson v. Gillespie Chrysler, L.L.C., No. 07 C 2581, 2007 WL 2088598 (N.D. Ill. July 18, 2007), Dawson alleged that Gillespie fraudulently sold her a vehicle, with actual knowledge that the vehicle had a false odometer reading. Pursuant to an agreement to arbitrate, Dawson contacted the proper arbitration administrator to start proceedings. Gillespie failed to respond to any of the administrator's inquiries on the matter, and the administrator was unable to proceed. Dawson then filed a lawsuit against Gillespie, which Gillespie met with a motion to compel arbitration. Dawson opposed the motion, alleging Gillespie had waived its right to compel by failing to respond to the arbitration administrator before she had filed the lawsuit... Full Story
Severable Unconscionable Terms in a Contract Do Not Render Arbitration Provisions Unenforceable
Remza Drywall Inc. v. W.G. Yates & Sons Const., No. 1:07CV106-LG-JMR, 2007 WL 2033047 (S.D. Miss. July 10, 2007)
7/10/2007
Substantive unconscionability in a severable provision of a contract does not render the agreement to arbitrate elsewhere within the contract unconscionable and unenforceable, according to a federal district court in Mississippi.
In Remza Drywall Inc. v. W.G. Yates & Sons Const., No. 1:07CV106-LG-JMR, 2007 WL 2033047 (S.D. Miss. July 10, 2007), Remza sued Yates seeking payment for work allegedly done as a subcontractor on a series of construction projects. Yates moved to stay the litigation and compel arbitration in accordance with arbitration agreements signed by Remza at the beginning of each disputed project. Remza maintained that all agreements to arbitrate where invalid, because each were both procedurally and substantively unconscionable... Full Story
Defendant's Motion to Compel Arbitration and Stay Proceedings Stays Time in Which to Answer Complaint
Carlisle v. CitiMortgage, Inc., No. 4:06-CV-677 CAS, 2007 WL 2121064 (E.D. Mo. July 24, 2007)
7/24/2007
Time limits for answering a complaint are stayed pending a defendant's motion to compel arbitration and stay proceedings, according to a federal court in Missouri.
In Carlisle v. CitiMortgage, Inc., No. 4:06-CV-677 CAS, 2007 WL 2121064 (E.D. Mo. July 24, 2007), Carlisle brought an employment discrimination case against CitiMortgage. After the Court granted CitiMortgage's motion to compel arbitration and stay litigation of Carlisle's claims, Carlisle moved for an order of contempt against CitiMortgage for allegedly not answering Carlisle's complaint... Full Story
Failure to Sign, Lack of Date on the First Page of Agreement, and Mere Allegation of Adhesion Does Not Render Arbitration Agreement Invalid
1st Choice Auto Brokers, Inc. v. Credit Acceptance Corp., No. 2:06-CV-816, 2007 WL 2079722 (S.D. Ohio July 17, 2007)
7/17/2007
An arbitration agreement will not be invalidated by the failure of the party seeking arbitration to sign the agreement, by the failure to date the agreement on its opening page, or by a mere unsupported allegation that the agreement is an unconscionable contract of adhesion, according to a federal district court in Ohio.
In 1st Choice Auto Brokers, Inc. v. Credit Acceptance Corp., No. 2:06-CV-816, 2007 WL 2079722 (S.D. Ohio July 17, 2007), 1st Choice and Credit Acceptance entered into an agreement to finance vehicles. The agreement provided for arbitration of disputes arising between the parties. 1st Choice sued Credit Acceptance for breach of contract, and Credit Acceptance moved to compel arbitration. 1st Choice opposed the motion, alleging that there was no binding agreement between the parties, and, alternatively, that the dispute was not within the scope of the agreement... Full Story
Good Faith Appeal from Order Denying Arbitration Precludes Further Discovery
Combined Energies v. CCI, Inc., No. 07-17-B-W, 2007 WL 2028945 (D. Me. July 11, 2007)
7/11/2007
After denying a motion to compel arbitration on the ground that the dispute was outside the scope of the arbitration agreement, a federal district court in Maine ruled that an interlocutory appeal from the order denying arbitration required a stay of further proceedings and thus precluded the parties from conducting discovery during the pendency of the appeal.
In Combined Energies v. CCI, Inc., No. 07-17-B-W, 2007 WL 2028945 (D. Me. July 11, 2007), Combined Energies (CE) sued CCI, alleging that CCI raided its business. In response, CCI filed a motion to compel arbitration pursuant to an arbitration clause in a purchase order agreement between the two companies... Full Story
State Cases
New Mexico Court Honors Texas Choice-of-Law Provision in Upholding Arbitration Agreement
Fiser v. Dell Computer Corp., No. 25,862, 2007 WL 2197515 (N.M. Ct. App. Apr. 30, 2007)
4/30/2007
In accordance with a choice-of-law provision in the underlying contract, the New Mexico Court of Appeals applied Texas law in rejecting the argument that the unavailability of class-wide relief rendered an arbitration agreement unconscionable. As the Court noted, the Texas courts have previously determined that the procedural right to seek class-wide relief cannot supersede the substantive right to contract for arbitration.
In Fiser v. Dell Computer Corp., No. 25,862, 2007 WL 2197515 (N.M. Ct. App. Apr. 30, 2007), Fiser bought a Dell computer over the Internet. Several months after delivery of the computer, Fiser filed a class action lawsuit against Dell, alleging that the computer contained less memory than advertised... Full Story
Party Waived Right to Arbitrate By Misleading Court on Terms of Proposed Settlement
Aviation Data, Inc. v. American Express Travel Related Services Co., 62 Cal. Rptr. 3d 396 (Cal. Ct. App. July 6, 2007)
7/6/2007
The California Court of Appeal has affirmed a lower court finding that a class action defendant waived its right to arbitrate by misleading the trial court in connection with its effort to obtain court approval of a “no cash” class action settlement. The party’s attempt to mislead the court removed this case from the general rule that settlement efforts do not constitute waiver of the right to arbitrate.
In Aviation Data, Inc. v. American Express Travel Related Services Co., 62 Cal. Rptr. 3d 396 (Cal. Ct. App. July 6, 2007), some American Express cardholders brought a class action against American Express, alleging that American Express sometimes charged its cardholders for travel insurance even though the cardholder had not traveled... Full Story
Advisory Portions of an Arbitrator's Written Opinion Are Not Considered Part of an Enforceable Arbitration Award
Amador v. Charter, No. A114181, 2007 WL 2063113 (Cal. Ct. App. July 19, 2007)
7/19/2007
An "advisory" portion of an arbitrator's written opinion on issues outside the scope of the arbitration should not be considered part of the arbitration award that is enforceable upon confirmation, according to the California Court of Appeal.
In Amador v. Charter, No. A114181, 2007 WL 2063113 (Cal. Ct. App. July 19, 2007), a dispute arose between the parties regarding land easements. The dispute was resolved through arbitration, resulting in the entry of an award. The written opinion by the arbitrator contained certain statements regarding the status of the easements that were outside the scope of the arbitration, and were designated by the arbitrator as "advisory in nature." Amador petitioned the trial court for confirmation of the award, opposed by Charter because the particular form of the award presented to the court did not include the conclusions in the "advisory" portion of the written opinion. The trial court granted the petition, and Charter appealed... Full Story
Challenges to Award Confirmation Based on the Absence of an Agreement to Arbitrate Are Not Subject to Statutory Time Limitations on Confirmation Challenges
MBNA America Bank, N.A. v. Boata, No. 17668, 2007 WL 2089678 (Conn. July 31, 2007)
7/31/2007
A party's challenge to the confirmation of an arbitration award based on the absence of an agreement to arbitrate is a common law, contractual challenge to the award, and is not subject to time limitations on challenges expressed within a statute, according to the Connecticut Supreme Court.
In MBNA America Bank, N.A. v. Boata, No. 17668, 2007 WL 2089678 (Conn. July 31, 2007), MBNA and Boata participated in an arbitration proceeding, which resulted in an award in favor of MBNA, over Boata's defense that he never assented to an agreement to arbitrate claims. MBNA brought an application to confirm the arbitration award with the trial court, which was also granted over Boata's renewed objections to the existence of an arbitration agreement, holding that Boata had failed to challenge the award within a 30 day period after the award was issued as required by state statute. Boata appealed the confirmation to the appeals court, which reversed, holding that Boata's challenge to the award at the confirmation proceeding was timely, since a challenge to the existence of an agreement to arbitrate could be brought at any time before an entry of judgment... Full Story
Court Finds Arbitration Agreement Unconscionable Based Upon Procedural Unconscionability
Bess v. DirecTV, Inc., No. 5-05-0394, 2007 WL 2013613 (Ill. App. Ct. July 10, 2007)
7/10/2007
An agreement to arbitrate is procedurally unconscionable if it is not bargained for by the consumer, it is not brought to the attention of the consumer, or it is not conspicuous, and that agreement can be held unenforceable on a strong showing of procedural unconscionability alone, according to an Illinois appeals court.
In Bess v. DirecTV, Inc., No. 5-05-0394, 2007 WL 2013613 (Ill. App. Ct. July 10, 2007), Bess filed a complaint against DirecTV, alleging that its imposition of an administrative late fee violated Illinois state law. DirecTV sought to compel arbitration of her claim, maintaining the claim was arbitrable in accordance with its customer service agreement. Bess opposed the motion, alleging, among other grounds, that the agreement to arbitrate was unconscionable, and, therefore, unenforceable. After initial proceedings, and a remand to the trial court that determined the agreement was both substantively and procedurally unconscionable, DirecTV appealed... Full Story
Kentucky Health Care Surrogates Not Empowered to Consent to Arbitration Agreements
Kindred Hospitals Ltd. Partnership v. Luttrell, No. 2006-CA-000221-MR, 2007 WL 2141810 (Ky. Ct. App. July 27, 2007)
7/27/2007
A health care surrogate is not statutorily empowered to consent to arbitration of medical claims under Kentucky law, because an arbitration agreement does not qualify as a "health care decision," according to the Kentucky Court of Appeals.
In Kindred Hospitals Ltd. Partnership v. Luttrell, No. 2006-CA-000221-MR, 2007 WL 2141810 (Ky. Ct. App. July 27, 2007), Luttrell, as administratrix of her mother Duncan's estate, brought suit against Kindred for Duncan's wrongful death while in Kindred's care. Kindred sought to compel arbitration of Luttrell's claims, maintaining that Luttrell, with authority from and on behalf of Duncan, signed an agreement to arbitrate such claims at the time of Duncan's admission... Full Story
Louisiana Appellate Court: Arbitrator Decides Waiver of Right to Arbitrate
Arkel Constructors, Inc. v. Duplantier & Meric, Architects, LLC., No. 2006 CA 1950, 2006 CA 1951, 2007 WL 2120226 (La. Ct. App. July 25, 2007)
7/25/2007
Reversing a trial court's order denying a motion to compel arbitration, a Louisiana appellate court held that an arbitrator rather than a trial court should decide whether a party waived its right to arbitration by initiating judicial proceedings.
In Arkel Constructors, Inc. v. Duplantier & Meric, Architects, LLC., No. 2006 CA 1950, 2006 CA 1951, 2007 WL 2120226 (La. Ct. App. July 25, 2007), PCS sued Arkel to recover money allegedly owed by Arkel. PCS later filed a motion to compel arbitration pursuant to a contract containing an arbitration agreement. Arkel opposed the motion without challenging the existence of an arbitration agreement or its applicability... Full Story
Contracting As a "Healthcare Surrogate" Under Mississippi Law Requires That One Act for an Incompetent Party
Grenada Living Center, LLC v. Coleman, No. 2006-CA-00169-SCT, 2007 WL 2128392 (Miss. July 26, 2007)
7/26/2007
To find a third-party a "healthcare surrogate" for the purpose of contracting under Mississippi's Uniform Healthcare Act, the person for whom the surrogate is acting must be incompetent at the time of contracting, according to the Mississippi Supreme Court.
In Grenada Living Center, LLC v. Coleman, No. 2006-CA-00169-SCT, 2007 WL 2128392 (Miss. July 26, 2007), Coleman was admitted to Grenada's nursing home facility with the help of his half-sister. Coleman's half-sister signed his admission contract, which included an arbitration agreement... Full Story
Disputes Related to Validity of Insurance Policies Not Arbitrable Under New Jersey PIP Statute
Nationwide Mut. Fire Ins. Co. v. Fiouris, No. A-5458-05T2, 2007 WL 2141376 (N.J. Super. Ct. App. Div. July 27, 2007)
7/27/2007
Disputes related to medical expenses or other personal injury benefits resulting from an automobile accident must be heard by an arbitrator under New Jersey law, but that arbitration requirement does not apply to disputes regarding the validity of the underlying insurance policy, according to a New Jersey state appellate court.
In Nationwide Mut. Fire Ins. Co. v. Fiouris, No. A-5458-05T2, 2007 WL 2141376 (N.J. Super. Ct. App. Div. July 27, 2007), Fiouris was injured in an automobile accident resulting in personal injury medical expenses. Nationwide, Fiouris's insurer at the time of the accident, investigated the claim, and found Fiouris had allegedly committed insurance fraud by misrepresenting his state of residence. Nationwide sued to void the insurance policy, and Fiouris opposed, moving to dismiss the complaint and claiming that the matter had to be submitted to an arbitrator under state law. The trial court granted Fiorius's motion, and Nationwide appealed... Full Story
ADR Legislation & Regulation
LEGISLATION
CA A 422
AUTHOR: Hancock [D]
TITLE: Underground Storage Tanks: Hazardous Substance
INTRODUCED: 02/16/2007
LAST AMEND: 08/01/2007
DISPOSITION: Pending
COMMITTEE: Senate Appropriations Committee
HEARING: 08/20/2007 10: 00 am
Commentary:
Deals with underground storage tanks, providing: "Any public water supplier or private well owner receiving replacement water...may request nonbinding mediation of all replacement water claims." An 8/1/07 amendment to the bill removed this mediation provision.
MA S 2177
AUTHOR: Children and Families
TITLE: Interstate Compact For Juveniles
INTRODUCED: 04/04/2007
LAST AMEND: 07/26/2007
DISPOSITION: To Governor
Commentary:
This bill would adopt the Interstate Compact for Juveniles. The Act provides that disputes among compacting states may be settled through mediation or "binding dispute resolution."
MI H 5048
SPONSOR: Accavitti [D]
TITLE: Video Service Provider
INTRODUCED: 07/24/2007
DISPOSITION: Pending
LOCATION: House Energy and Technology Committee
Commentary:
Provides for mandatory mediation of video service disputes.
NC H 730
SAME AS: NC S 735
AUTHOR: Goforth [D]
TITLE: Mediation of Property Insurance Claims
INTRODUCED: 03/15/2007
ENACTED: 07/28/2007
DISPOSITION: Enacted
Commentary:
Makes minor changes to law concerning mediation of property insurance claims.
OR H 2331
AUTHOR: Minnis [R]
TITLE: Jury Trials in County Courts
INTRODUCED: 01/10/2007
LAST AMEND: 06/23/2007
ENACTED: 07/31/2007
DISPOSITION: Enacted
Commentary:
A 6/23/07 amendment to this bill regarding court fees includes several provisions regarding vacating arbitral awards, specifically: "a) The party making application furnishes proof that:
(A) A party to the arbitration agreement referred to in ORS 36.466 was under some incapacity or that the agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the laws of the State of Oregon or the United States;
(B) The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present the party's case;
(C) The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters not submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
(D) The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of ORS 36.450 to 36.558 from which the parties cannot derogate, or, failing such agreement, was not in accordance with ORS 36.450 to 36.558; or
(b) The circuit court finds that:
(A) The subject matter of the dispute is not capable of settlement by arbitration under the laws of the State of Oregon or of the United States; or
(B) The award is in conflict with the public policy of the State of Oregon or of the United States."
OR H 3242
AUTHOR: Schaufler [D]
TITLE: Construction Contractors
INTRODUCED: 03/12/2007
LAST AMEND: 06/27/2007
ENACTED: 07/27/2007
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary:
Creates categories and levels of construction contractor licensing... modifies claim and recovery provisions. Outlines arbitration procedures for disputes involving the "Construction Contractor's Board," must be properly licensed to initiate claim, can avoid arbitration if requested within 30 days of notice.
US H 1585
SPONSOR: Skelton [D]
TITLE: Appropriations for Military Activities
INTRODUCED: 03/20/2007
LAST AMEND: 07/17/2007
DISPOSITION: Pending
LOCATION: SENATE
Commentary:
"National Defense Authorization Act for Fiscal Year 2008." As part of the Act, if the Secretary of the Army decides to acquire real property or an interest in real property located near the Pinon Canyon Maneuver Site in the State of Colorado for the purpose of expanding the Site, the acquisition of such real property shall be subject to the requirements of this section, which includes mandatory binding arbitration of disputes between the Army and landowners.
US H 3221
SPONSOR: Pelosi [D]
TITLE: United States Energy Independence
INTRODUCED: 07/30/2007
DISPOSITION: Pending
LOCATION: Multiple Committees
Commentary:
"United States Energy Independence" bill that provides for mandatory arbitration of disputes between oil drillers and surface owners. The Secretary of Energy is to provide a list of arbitrators to disputing parties. Also provides for mediation of railroad right of way disputes.
REGULATION
Washington
STATE ID: 07-16-146
CITATION: WAC 284-37-010, -020, -030, -040, -050, -060
AGENCY: Office of Insurance Commissioner
TITLE: Market Conduct Oversight
PROPOSED: 04/18/2007
ADOPTED: 08/01/2007
Commentary: Regarding market conduct oversight activities.
Sec. 14(3) of ESSB 5717 requires the adoption of a rule establishing a mediation process for market conduct oversight activities.
West Virginia
STATE ID: 60-3
CITATION: Title 60, Series 3
AGENCY: Department of Environmental Protection
TITLE: Voluntary Remediation and Redevelopment Rule
PROPOSED: 06/05/2007
Commentary: Amendments to a proposed rule regarding environmental protection. Amendments include Section 48. "The applicant agrees to pay for the services of any mediator and arbitrator used by the parties in attempting to resolve disputes arising out of or relating to this agreement. Each party shall pay its own legal fees in conducting mediation or arbitration.
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