Federal Cases
Ninth Circuit: Posting Arbitration Agreement on Company's Website Does Not Constitute Notice in an Ongoing Relationship
Douglas v. United States District Court, No. 06-75424, 2007 WL 2069542 (9th Cir. July 18, 2007)
7/18/2007
In a case where a business entity attempted to add an arbitration agreement to an ongoing relationship by posting the agreement on its website, the Ninth Circuit Court of Appeals held that the district court erred in compelling arbitration because the party opposing arbitration had no notice, actual or constructive, of the arbitration agreement.
In Douglas v. United States District Court, No. 06-75424, 2007 WL 2069542 (9th Cir. July 18, 2007), Douglas contracted with America Online (AOL) for long distance phone service. Talk America later acquired this business from AOL and added four provisions to the service contract: (1) additional service charges; (2) a class action waiver; (3) an arbitration agreement; and (4) a choice of law provision calling for the application of New York law... Full Story
Inventorship Disputes Can Be Resolved Through Arbitration
INVISTA North America, S.a.r.l. v. Rhodia Polyamide Intermediates S.A.S., No. 06-2180, 2007 WL 2230273 (D.D.C. Aug. 6, 2007)
8/6/2007
In ordering arbitration of an inventorship dispute, a federal district court in the District of Columbia explained that arbitration was fully capable of providing the relief prescribed by the underlying statute. Specifically, to effect the appropriate relief, the arbitrator could direct the parties to petition to have the patent corrected, and if the parties failed to comply, the arbitration award could be converted into a court order for correction.
In INVISTA North America, S.a.r.l. v. Rhodia Polyamide Intermediates S.A.S., No. 06-2180, 2007 WL 2230273 (D.D.C. Aug. 6, 2007), INVISTA and Rhodia were parties to a confidentiality agreement that prohibited Rhodia from using or disclosing confidential technology utilized in the production of nylon fiber... Full Story
Federal Court Holds That Qui Tam Claims Brought Under the False Claims Act Are Arbitrable
U.S. ex rel. McBride v. Halliburton Co., No. 05-00828, 2007 WL 1954441 (D.D.C. July 5, 2007)
7/5/2007
In a case where a former Halliburton employee brought qui tam claims alleging that Halliburton engaged in fraud in Iraq, a federal district court held that qui tam claims brought under the False Claim Act (FCA) are arbitrable.
In U.S. ex rel. McBride v. Halliburton Co., No. 05-00828, 2007 WL 1954441 (D.D.C. July 5, 2007), McBride, a former Halliburton employee, brought an action against Halliburton for FCA violations. The FCA allows private persons to bring qui tam actions alleging violations of the FCA on the government's behalf. McBride alleged that, while working in Iraq, she witnessed Halliburton defraud the government. Halliburton moved to compel arbitration pursuant to an arbitration clause in the employment agreement... Full Story
Court Slams Sham Arbitration Providers
Chase Bank USA, N.A. v. Dispute Resolution Arbitration Group, No. 02:05-CV-1208-LRH (LRL), 2007 WL 1577853 (D. Nev. May 31, 2007)
5/31/2007
Granting Chase Bank's summary judgment motion against bogus arbitration services providers, a federal court in Nevada found the sham arbitration providers liable for tortious interference, defamation, and conspiracy.
In Chase Bank USA, N.A. v. Dispute Resolution Arbitration Group, No. 02:05-CV-1208-LRH (LRL), 2007 WL 1577853 (D. Nev. May 31, 2007), Dispute Resolution Arbitration Group (DRAG) and its founder, Mark Swanson, created bogus arbitration proceedings purporting to eliminate the credit card debt of Chase Bank's (Chase) customers. Further, DRAG sometimes entered sham arbitration awards against Chase. Chase filed an unopposed summary judgment motion for intentional interference with contractual relations, defamation, civil conspiracy, imposition of liability on Mark Swanson under the alter ego doctrine, and a permanent injunction... Full Story
Responding to an EEOC Inquiry and Failing to Compel the EEOC to Arbitrate Does Not Constitute Waiver of the Right to Arbitrate
Lyman v. Mor Furniture For Less, Inc., NO. 306-CV-0666-ECR, 2007 WL 2300683 (D. Nev. Aug. 7, 2007)
8/7/2007
An employer's response to an EEOC inquiry prompted by a former employee's claims and its failure to attempt to compel the EEOC to arbitrate those claims does not constitute a waiver of the right to arbitrate once the former employee brings the claims to court, according to a federal district court in Nevada.
In Lyman v. Mor Furniture For Less, Inc., NO. 306-CV-0666-ECR, 2007 WL 2300683 (D. Nev. Aug. 7, 2007), Lyman was employed by Mor under an agreement which included an arbitration provision. The provision clearly stated that any arbitration would be administered by JAMS rules... Full Story
Method of Damages Calculation Within Courts' Authority; Denial of Interest on Award Within Arbitrators' Authority
Coastal Caisson Corp. v. E.E. Cruz/NAB/Frontier-Kemper, No. 05 Civ. 7462 DLC, 2007 WL 2285936 (S.D.N.Y. Aug. 10, 2007)
8/10/2007
A court does not exceed its authority in ordering arbitrators to recalculate damages based on an appropriate legal standard, and arbitrators do not act in manifest disregard of the law by denying interest in accordance with the controlling arbitration rules, according to a New York federal district court.
In Coastal Caisson Corp. v. E.E. Cruz/NAB/Frontier-Kemper, No. 05 Civ. 7462 DLC, 2007 WL 2285936 (S.D.N.Y. Aug. 10, 2007), Coastal's predecessor Bauer entered into a construction contract with Cruz. Coastal first initiated litigation against Cruz, but the parties agreed post-dispute to arbitrate the matter, with New York law governing the arbitration... Full Story
State Cases
Right to Arbitrate Preserved Absent a Showing of Added Expense or Procedural Delay Through Invocation of Litigation
Century 21 Maselle and Associates, Inc. v. Smith, No. 2005-IA-01696-SCT, 2007 WL 2325271 (Miss. Aug. 16, 2007)
8/16/2007
A party does not waive its right to compel arbitration when its actions do not force the opposing party to incur additional legal expenses or endure procedural delay, according to the Mississippi Supreme Court.
In Century 21 Maselle and Associates, Inc. v. Smith, No. 2005-IA-01696-SCT, 2007 WL 2325271 (Miss. Aug. 16, 2007), Century 21, as an agent of Smith, entered into a real estate agreement with Hendon, containing a provision to arbitrate any controversy or claims arising out of or relating to the agreement. Smith later filed a complaint against Century 21 and other parties, alleging negligence and fraudulent misrepresentation in violation of the agreement. In response to the complaint, Century 21 filed a document entitled "Jury Trial Requested," but the pleading also averred that the cause of action should be dismissed and arbitration compelled. Century 21 also noticed its motion to compel, sixty-one days after suit was filed but after it had requested written discovery... Full Story
Court Finds Contract Challenge Subject to Arbitration
Kirby v. Grand Crowne Travel Network, LLC, No 28091, 2007 WL 1732761 (Mo. Ct. App. June 18, 2007)
6/18/2007
Reversing a trial court's denial of a motion to compel arbitration, the Missouri Court of Appeals held that challenges to the underlying contract's validity, rather than to the arbitration agreement itself, were for the arbitrator to decide.
In Kirby v. Grand Crowne Travel Network, LLC, No 28091, 2007 WL 1732761 (Mo. Ct. App. June 18, 2007), Kirby sued Grand Crowne asserting that Grand Crowne persuaded Kirby to purchase a $3,389 membership through high pressure tactics, misrepresentation, and other practices prohibited by the Missouri Merchandise Practices Act (MMPA). Kirby sought to cancel the contract, recover $ 3,389 in actual damages, punitive damages, and attorney fees... Full Story
Court Finds Unsigned Arbitration Agreement Enforceable
Sozzi v. Moishe's Moving Systems, Inc, No. 111822/06, 2007 WL 2295401 (N.Y. Sup. Ct. Aug. 7, 2007)
8/7/2007
An insurance policy arbitration agreement is enforceable, even though the agreement was unsigned, where it is evident that the parties intended to be bound by the agreement, according to a New York Supreme Court.
In Sozzi v. Moishe's Moving Systems, Inc, No. 111822/06, 2007 WL 2295401 (N.Y. Sup. Ct. Aug. 7, 2007), Sozzi hired Moishe's to pack, ship, and move his personal items from New York to Italy. Sozzi insured the value of the items with Fortis Corporate Insurance. Upon delivery, Sozzi discovered that several of the items were damaged, so he filed a claim under the insurance policy... Full Story
Termite Inspection Dispute Not Subject to Arbitration Clause in Termite Treatment Contract
Hailey v. Terminix Co. of North Carolina, Inc., 2007 WL 1892559 No. COA06-675 (N.C. Ct. App. July 3, 2007)
7/3/2007
The North Carolina Court of Appeals held that a dispute arising from an allegedly negligent termite inspection was not subject to arbitration because the arbitration clause applied only to the termite treatment contract.
In Hailey v. Terminix Co. of North Carolina, Inc., 2007 WL 1892559 No. COA06-675 (N.C. Ct. App. July 3, 2007), Hailey hired Terminix to perform a termite inspection on property he intended to purchase. On November 29, 2003, Terminix inspected the property and informed Hailey that there were no signs of termite damage. Hailey purchased the property on December 9, 2003. On December 10, 2003, Terminix performed a termite pest control treatment pursuant to a termite treatment plan purchased by Hailey on December 9... Full Story
Under Ohio Law, Parties Can Seek Common Law Enforcement of Arbitration Award After Statutory Deadline Has Expired
MBNA America Bank, N.A. v. Canfora, No. 23588, 2007 WL 2318095 (Ohio Ct. App. Aug. 15, 2007)
8/15/2007
Under Ohio law, parties can enforce arbitration awards through a common law suit on the award even after the statutory deadline for confirmation has expired, according to the Ohio Court of Appeals.
In MBNA America Bank, N.A. v. Canfora, No. 23588, 2007 WL 2318095 (Ohio Ct. App. Aug. 15, 2007), MBNA obtained two arbitration awards against Canfora, an MBNA cardholder. When Canfora failed to pay, MBNA filed a petition to confirm the awards. The trial court dismissed the petition without prejudice because MBNA failed to comply with an Ohio statute requiring the party seeking confirmation to submit a copy of the underlying arbitration agreement... Full Story
Washington Appellate Court Narrows Scope of Buckeye
Nelson v. Westport Shipyard, Inc., No. 35308-3-II, 2007 WL 2274469 (Wash. Ct. App. Aug. 7, 2007)
8/7/2007
Affirming a trial court's denial of a motion to compel arbitration, the Washington Court of Appeals held that the United States Supreme Court decision in Buckeye Check Cashing, Inc v. Cardegna, 546 U.S. 440 (2006) does not apply to a narrowly tailored arbitration agreement governed by state law.
In Nelson v. Westport Shipyard, Inc., No. 35308-3-II, 2007 WL 2274469 (Wash. Ct. App. Aug. 7, 2007), Nelson and Westport executed a Shareholders Agreement in which Nelson agreed to sell his shares back to Westport "upon unresolvable differences between shareholders" or "upon termination of [Nelson's] employment"... Full Story
ADR Legislation & Regulation
LEGISLATION
IL S 223
SPONSOR: Haine [D]
TITLE: General Revisory Act
INTRODUCED: 02/07/2007
ENACTED: 08/21/2007
DISPOSITION: Enacted
Commentary:
Appropriates funds for Mandatory Arbitration Fund.
NY S 1589
SAME AS: NY A 434
SPONSOR: Libous [R]
TITLE: Motor Vehicle Franchise Dealer Administrative Hearings
INTRODUCED: 01/23/2007
ENACTED: 08/15/2007
DISPOSITION: Enacted
Commentary:
The May 7, 2007 amended version of this bill provides a system for mediation of franchisor dealer disputes. Under the new statute, any franchised motor vehicle dealer aggrieved under the provisions of the motor vehicle franchise statute would be entitled to mediation upon request. The bill does not state who would provide the mediation services.
REGULATION
California Title 28 CCR Sections 1300.71, -.71.38, -.71.39
AGENCY: Business, Transportation and Housing Agency/Department of Managed Health Care
TITLE: Plan and Provider Claims Settlement
PROPOSED: 08/17/2007
Commentary:
Proposed regulation "to provide for a balanced comprehensive and integrated approach to correct and eliminate the problems in the plan-provider claims settlement systems which generate incentives for providers, especially providers of emergency services, to balance bill enrollees of health plans." Amends and clarifies rules pertaining to plan and provider claims settlements, provider billing practices, and fair health plan payment practices for care services rendered by providers who lack written contracts with the health plans. The proposed regulation also defines what activities constitute unfair billing practices by health care providers who render services to enrollees of health plans but lack written contracts with the health plans.
The proposed regulation also would require all health care service plans to establish a "fast, fair and cost-effective dispute resolution mechanism" to internally process and resolve contracted and non-contracted provider disputes. But the regulation then states, "arbitration shall not be deemed a provider dispute or a provider dispute resolution mechanism for the purposes of this section." Claims would then be submitted to an Independent Dispute Resolution Process (IDRP) administered by an independent organization contracted or appointed by the Department of Managed Health Care.
United States 12 CFR Part 535
AGENCY: Department of the Treasury/Office of Thrift Supervision
TITLE: Unfair or Deceptive Acts or Practices
PROPOSED: 08/03/2007
CITATION:
The Office of Thrift Supervision (OTS) recently released an Advanced Notice of Proposed Rulemaking (ANPR) seeking public comment on approaches for the OTS to consider in expanding its regulatory authority to address unfair or deceptive acts or practices in OTS-regulated industry. Specifically, OTS has proposed prohibiting "Requiring as a condition of a credit card account, a consumer's waiver of his or her right to a court trial and consent to binding mandatory arbitration."
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