Federal Cases
Arbitrators Empowered to Decide Consolidation Dispute
Markel International Insurance Co. v. Westchester Fire Insurance Co., No. 05-5522 (WHW), 2006 WL 2310788 (D.N.J. Aug. 10, 2006)
8/10/2006
A federal district court in New Jersey held that an arbitrator must decide whether to consolidate claims brought against separate parties under separate agreements. The Court followed the holdings of other courts which interpreted Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003) to apply to consolidation issues.
In Markel International Insurance Co. v. Westchester Fire Insurance Co., No. 05-5522 (WHW), 2006 WL 2310788 (D.N.J. Aug. 10, 2006), Westchester filed a single arbitration claim against Markel and Lloyd’s seeking reimbursement pursuant to two separate reinsurance contracts. Markel and Lloyd’s moved to compel separate arbitrations, while Westchester moved to have its claims heard in a consolidated arbitration. The arbitration agreements at issue were silent on the issue of consolidation... Full Story
Ninth Circuit Upholds Arbitration Agreement Invoking NASD Rules, Even Though NASD Declined to Administer Arbitration
Reddam v. KPMG LLP, Nos. 05-56664, 05-56671, 2006 WL 2291299 (9th Cir. Aug. 10, 2006)
8/10/2006
The Ninth Circuit Court of Appeals has upheld an arbitration agreement requiring the use of NASD arbitration rules, even though the NASD refused to administer the case because neither party was an NASD member. Holding that there was no evidence that the naming of the NASD was central to the arbitration agreement, the Court overruled a lower court and allowed the arbitration to proceed.
In Reddam v. KPMG LLP, Nos. 05-56664, 05-56671, 2006 WL 2291299 (9th Cir. Aug. 10, 2006), Reddam sued KPMG, Deutsche Bank, and two other entities, alleging that they recommended a tax reduction strategy which resulted in substantial tax liability... Full Story
Second Circuit Affirms that Arbitration Benefits Both Individuals and Businesses
Arciniaga v. General Motors Corp., No. 05-6299-CV, 2006 WL 2260872 (2nd Cir. Aug. 8, 2006)
8/8/2006
The Second Circuit Court of Appeals held that a federal statute limiting the enforcement of arbitration clauses in motor vehicle franchise contracts did not apply to a stockholders agreement between an automobile manufacturer and an individual investor. In so holding, the Court highlighted the strong federal policy in favor of arbitration for all parties, small and large.
In Arciniaga v. General Motors Corp., No. 05-6299-CV, 2006 WL 2260872 (2nd Cir. Aug. 8, 2006), General Motors (“GM”) financed Arciniaga’s acquisition of a GM dealership by contributing capital in exchange for stock in the dealership... Full Story
Motion to Dismiss is Sufficient Procedure to Invoke Arbitration Clause
Filimex, L.L.C. v. Novoa Investments, L.L.C., No. CV 05-3792-PHX-SMM, 2006 WL 2091661 (D. Ariz. July 17, 2006)
7/17/2006
Citing the strong federal policy favoring arbitration, a federal district court in Arizona avoided a “hypertechnical” ruling by treating a motion to dismiss as a motion to compel arbitration.
In Filimex, L.L.C. v. Novoa Investments, L.L.C., No. CV 05-3792-PHX-SMM, 2006 WL 2091661 (D. Ariz. July 17, 2006), Novoa was using a trademark owned by Filimex pursuant to a licensing agreement that provided for arbitration. After the agreement was terminated, Novoa allegedly continued using the trademark... Full Story
In the 11th Circuit, Value of Compelling Arbitration Undeterminable for Purpose of Establishing Subject Matter Jurisdiction
Terminix International Co., L.P. v. Palmer Ranch Limited Partnership, No. 8:04-CV-574-T-24MAP, 2006 WL 2167187 (M.D. Fla. July 26, 2006)
7/26/2006
A federal court in Florida reminded parties that federal courts in the 11th Circuit – unlike the majority of circuits – do not have subject matter jurisdiction to decide motions to compel arbitration in diversity actions because the amount in controversy cannot be determined.
In Terminix International Co., L.P. v. Palmer Ranch Limited Partnership, No. 8:04-CV-574-T-24MAP, 2006 WL 2167187 (M.D. Fla. July 26, 2006), Palmer filed a state court complaint against Terminix, and Terminix then petitioned in federal court to compel arbitration of the dispute, claiming subject matter jurisdiction based on diversity... Full Story
Pre-Agreement Disputes Not Covered by Broad Arbitration Agreement
Watson Wyatt Corp. v. SBC Holdings, Inc., No. CIV.05-71473, 2006 WL 2023549 (E.D. Mich. Jun 30, 2006)
6/30/2006
A Michigan federal court has compelled arbitration in a dispute over the Stroh’s Brewing Company pension plan. But the court split the baby, compelling arbitration for the claims arising after the parties signed a 2002 arbitration agreement and sending the pre-agreement disputes to court.
At issue in Watson Wyatt Corp. v. SBC Holdings, Inc., No. CIV.05-71473, 2006 WL 2023549 (E.D. Mich. Jun 30, 2006), is an accounting error made in 2001 by Watson Wyatt, which provided actuarial services to the former Stroh’s Brewing Company pension plan. The error affected several decisions made by SBC Holdings, the plan’s administrator, between 2001 and 2003. During this period, the parties entered into a broad agreement to arbitrate “any dispute or claim.” When SBC sued Watson Wyatt upon learning of the error, Watson Wyatt moved to compel arbitration... Full Story
Arbitration Award Confirmed More Than a Year After it was Issued
Wachovia Securities, LLC v. Riddle, No. 8:06CV233, 2006 WL 2128011(D. Neb. July 26, 2006)
7/26/2006
A federal district court in Nebraska confirmed an arbitration award more than a year after it was issued, applying Eight Circuit precedent holding that the one-year time period for seeking confirmation under the Federal Arbitration Act (“FAA”) is merely permissive.
In Wachovia Securities, LLC v. Riddle, No. 8:06CV233, 2006 WL 2128011(D. Neb. July 26, 2006), Wachovia moved for confirmation of an arbitration award more than a year after if was issued... Full Story
Arbitrator Must Decide Whether Forum Selection Clause is Unconscionable
Gill v. World Inspection Network International, Inc., No. 06-CV-3187, 2006 WL 2166821 (E.D.N.Y. July 31, 2006)
7/31/2006
A federal district court in New York denied a motion to enjoin arbitration in Washington because the validity of the forum selection clause was an issue for the arbitrator.
In Gill v. World Inspection Network International, Inc., No. 06-CV-3187, 2006 WL 2166821 (E.D.N.Y. July 31, 2006), World Inspection Network (“WIN”) initiated arbitration, alleging that Gill, its former franchisee, violated a non-compete provision in the parties’ franchise agreement. The agreement provided for arbitration in the state of Washington... Full Story
Federal Court Upholds Arbitration Clause Prohibiting Class-Wide Proceedings
Venezie v. MBNA America Bank, No. 2:05CV1458, 2006 WL 2092567 (W.D. Penn. July 26, 2006)
7/26/2006
A federal district court in Pennsylvania granted a motion to compel arbitration, rejecting plaintiff’s challenge to the prohibition on class-wide proceedings.
In Venezie v. MBNA America Bank, No. 2:05CV1458, 2006 WL 2092567 (W.D. Penn. July 26, 2006), Venezie brought a putative class action against MBNA, alleging that MBNA violated the Truth in Lending Act (TILA) by changing the terms of his cardholder agreement without notice... Full Story
State Cases
Arbitration Agreement Upheld Despite Administrator’s Refusal to Accept the Matter
Deeds v. Regence Blueshield of Idaho, No. 31180, 2006 WL 2089247 (Idaho July 28, 2006)
7/28/2006
The Idaho Supreme Court held that arbitration should proceed even though the designated administrator refused to accept the matter for lack of a post-dispute agreement to arbitrate.
In Deeds v. Regence Blueshield of Idaho, No. 31180, 2006 WL 2089247 (Idaho July 28, 2006), Deeds sued Regence seeking reimbursement under a health insurance policy that provided for “arbitration in accordance with the applicable rules of the American Arbitration Association [“the AAA”]"... Full Story
Appellate Court Requires Arbitration Awards to be Confirmed Absent Valid Challenge
MBNA America Bank, N.A. v. O'Brien, No. 21216, 2006 WL 2041478 (Ohio Ct. App. Jul 21, 2006)
7/21/2006
An Ohio appellate court has reversed a lower court’s decision to vacate a pair of arbitration awards sua sponte. A court does not have discretion to vacate an award on its own, and a signature on an arbitration agreement is not required for confirmation, the Court held.
In NCO Portfolio Management, Inc. v. McGill, No. 21229, 2006 WL 2041476 (Ohio Ct. App. Jul 21, 2006), and MBNA America Bank, N.A. v. O'Brien, No. 21216, 2006 WL 2041478 (Ohio Ct. App. Jul 21, 2006), the consumers, McGill and O’Brien, opened up credit card accounts with MBNA. Pursuant to the terms of the cardholder agreements, the two agreed to arbitrate all disputes. When both consumers defaulted on the accounts, MBNA and NCO, MBNA’s assignee, submitted successful claims to arbitration... Full Story
Court Vacates Arbitration Award Issued Against Non-Party
Harper v. Business Advisors, Inc., No. D045817, 2006 WL 2303186 (Cal. App. Aug. 10, 2006)
8/10/2006
A California state court vacated an arbitration award erroneously issued against a party that was not a party to the arbitration.
In Harper v. Business Advisors, Inc., No. D045817, 2006 WL 2303186 (Cal. App. Aug. 10, 2006), an arbitration award stated that Business Advisors (“BAI”) owed Harper $26,000. BAI sought to have the award vacated because it claimed that it was not a party to the arbitration... Full Story
Attempt to Resolve Dispute in Court Does Not Waive Right to Arbitrate
Zamani v. St. John Knits Inc., No. G035818, 2006 WL 2261621 (Cal. App. Aug. 8, 2006)
8/8/2006
A party who is bound by an arbitration agreement and attempts to resolve a dispute in court does not waive the right to arbitration, a California state court held.
In Zamani v. St. John Knits Inc., No. G035818, 2006 WL 2261621 (Cal. App. Aug. 8, 2006), Zamani signed an employment agreement with St. John that included an arbitration agreement. After Zamani was terminated, he brought claims against St. John in court... Full Story
Mediation Agreement in Pending Divorce Did Not Survive Husband’s Death
Marlowe v. Brown, No. 4D03-3076, 2006 WL 2135997 (Fla. Dist. Ct. App. Aug. 2, 2006)
8/2/2006
The Florida District Court of Appeal held that a tentative mediation agreement in a pending divorce did not survive the husband’s death.
In Marlowe v. Brown, No. 4D03-3076, 2006 WL 2135997 (Fla. Dist. Ct. App. Aug. 2, 2006), Neuberne Brown’s wife, Catherine, filed for divorce after a 25-year marriage. Shortly thereafter, the Browns entered into a “mediation agreement for temporary relief.” The agreement provided for equal distribution of assets and liabilities... Full Story
Court Cannot Vacate an Arbitration Award Sua Sponte
MBNA America Bank, N.A. v. Boyce, No. 04-1733, 2006 WL 2265297 (Iowa App. Aug. 09, 2006)
8/9/2006
Citing state policy favoring arbitration as an alternative to litigation, and noting a court’s limited ability to review awards, the Iowa Court of Appeals reversed a lower court ruling vacating ten arbitration awards when no application to vacate was made.
In MBNA America Bank, N.A. v. Boyce, No. 04-1733, 2006 WL 2265297 (Iowa App. Aug. 09, 2006), MBNA filed ten separate motions to confirm arbitration awards. None of the defendants contested the motions... Full Story
Minnesota Court Upholds Mediated Settlement Agreement
Chesney v. Hypertension Diagnostics, Inc., No. A05-2210, 2006 WL 2256590 (Minn. App. August 8, 2006)
8/8/2006
The Minnesota Court of Appeals held that a mediated settlement agreement was binding and enforceable because it met statutory requirements for a binding settlement agreement.
In Chesney v. Hypertension Diagnostics, Inc., No. A05-2210, 2006 WL 2256590 (Minn. App. August 8, 2006), Hypertension Diagnostics, Inc. (“HDI”) and two former employees settled the latter’s whistleblower claims at a voluntary mediation. They memorialized the settlement in a written agreement. When the parties later failed to agree on final language, the former employees brought a motion to enforce the agreement. The trial court granted their motion... Full Story
Court Will Not Consider a Second Motion to Compel Arbitration Unless the Party Presents Newly Discovered Evidence
Vest v. Duncan-Williams, Inc., No. M2005-00466-COA-R3-CV, 2006 WL 2252750 (Tenn. Ct. App. Aug. 3, 2006)
8/3/2006
When an appellate court affirms denial of a motion to compel arbitration, the moving party may not bring a second motion to compel without presenting newly discovered evidence, according to the Tennessee Court of Appeals.
In Vest v. Duncan-Williams, Inc., No. M2005-00466-COA-R3-CV, 2006 WL 2252750 (Tenn. Ct. App. Aug. 3, 2006), Duncan-Williams moved to compel arbitration, arguing it was a third-party beneficiary of a contract requiring arbitration. The trial court denied the motion. On appeal, the Court affirmed the denial because there was no evidence that the parties entered into the contract “directly and primarily” for the benefit of Duncan-Williams... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new legislation
STATE LEGISLATION
California AB 1553 (Introduced 02/22/2005) Enrolled 08/16/2006
Subjects: Arbitration, Consumer Affairs, Contracts
Provides, if an arbitration agreement requires that arbitration of a controversy be demanded or initiated within a period of time, the commencement of a civil action within that period of time shall toll the applicable time limitations contained in the arbitration agreement with respect to that controversy from the date the civil action is commenced until 30 days after a final determination by the court that the controversy must be arbitrated.
California AB 3020 (Introduced 04/24/2006) Amended 08/14/2006
Subjects: Real estate, Time-share developments, Arbitration
A bill modifying disclosure requirements in time-share developments. The amended terms require certain agreements to include an arbitration provision. Buy down subsidy agreements between a developer and an association related to exoneration or release of the security must include an arbitration provision, enforceable by either party.
Massachusetts SB2607 or SB2655 (Introduced 06/29/2006) Vetoed by Governor 08/09/2006
Subjects: Public Works, Arbitration
This bill would establish a mandatory alternative dispute resolution program for contractually-based claims with a value of less than $10,000,000 in connection with the construction of public works and capital facilities for the commonwealth, and all its agencies, authorities and political subdivisions, excluding cities and towns. For claims with a value of at least $10,000,000, parties shall agree to participate in either the alternative dispute resolution program established in this section or mediation. The bill also allows for binding arbitration as a means of settling disputes.
The Governor sent the following message to the House and Senate:
“Senate Bill No. 2655 only permits state contractors to compel binding arbitration to settle construction disputes with the Commonwealth. Such a one-sided arrangement is not in the best interest of the Commonwealth. Furthermore, in light of the recent problems with the ‘Big Dig,’ I believe the Commonwealth must preserve its ability to exercise appropriate fiscal oversight on public works projects, including its ability to defend itself in court against construction claims.
For this reason, I am returning to you Senate Bill No. 2655 unsigned.”
REGULATIONS
Ohio Reg 12037 (Introduced 04/06/2005) Withdrawal of Rule Adoption 08/10/2006
Subjects: Bureau of Workers’ Compensation, Arbitration, Civil Liability, Malpractice
Repeals and replaces rules relating to dispute resolution for HPP Medical Issues. Relates to medical treatment reimbursement requests.
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