Federal Cases
Court Confirms Partial Arbitration Award Where Arbitrator Resigned Before Determining Appropriate Remedy
New United Motor Manufacturing, Inc. v. United Auto Workers Local 2244, No. C 08-0976 TEH, 2008 WL 2540702 (N.D. Cal. June 19, 2008)
6/19/2008 12:00:00 AM
A federal district court in California confirmed a partial arbitration award issued by an arbitrator who decided the liability issue in the case, but then ordered the parties to find a different arbitrator to decide the appropriate remedy.
In New United Motor Manufacturing, Inc. v. United Auto Workers Local 2244, No. C 08-0976 TEH, 2008 WL 2540702 (N.D. Cal. June 19, 2008), United Auto Workers Local 2244 (UAW) entered into a collective bargaining agreement (CBA) with New United Motor Manufacturing (NUMM), and the CBA provided a dispute resolution procedure that culminated in binding arbitration. After NUMM implemented a new sick leave policy that resulted in the termination of about 100 employees, UAW filed a grievance and the dispute went to arbitration... Full Story
Franchisee’s Allegation of Fraudulent Inducement Subject to Arbitration Because It Pertained to Contract as a Whole
Brooke Credit Corp. v. Buckeye Insurance Center, No. 07-1322-JTM, 2008 WL 2609808 (D. Kan. June 27, 2008)
6/27/2008 12:00:00 AM
A federal district court in Kansas enforced an agreement to arbitrate between franchisor and franchisee, explaining that since the franchisee objected to the franchise agreement in its entirety, and not just the arbitration agreement, the issue should be submitted to arbitration.
In Brooke Credit Corp. v. Buckeye Insurance Center, No. 07-1322-JTM, 2008 WL 2609808 (D. Kan. June 27, 2008), Brooke franchised insurance agencies throughout the United States. Buckeye was one such franchisee. Brooke filed a lawsuit against Buckeye for breach of its obligations arising from a loan. Buckeye filed several counterclaims against Brooke, including breach of contract and breach of the duty of good faith... Full Story
Court Retains Jurisdiction Over Unconscionability Challenge Because Parties Did Not Delegate Questions of Arbitrability to the Arbitrator
Awuah v. Coverall North America, Inc., No. 07-10287-WGY, 2008 WL 2618199 (D. Mass. July 1, 2008)
7/1/2008 12:00:00 AM
In a case arising from a franchise dispute, a federal district court in Massachusetts ruled that the court, not an arbitrator, should determine the issue whether the arbitration agreement was unconscionable because the parties did not agree to delegate questions of arbitrability to the arbitrator. Moreover, the agreement restricted the arbitrator’s authority to strike any offending provisions.
In Awuah v. Coverall North America, Inc., No. 07-10287-WGY, 2008 WL 2618199 (D. Mass. July 1, 2008), Coverall and Awuah entered into a franchise agreement whereby Awuah would own and operate a Coverall franchise providing janitorial services. The franchise agreement provided for arbitration... Full Story
Federal Court in Minnesota Finds “Manifest Disregard” No Longer Basis for Vacatur
Prime Therapeutics LLC v. Omnicare, Inc., No. 08-375, 2008 WL 2152207 (D. Minn. May 21, 2008)
5/21/2008 12:00:00 AM
In construing the Supreme Court’s recent decision in Hall Street, a federal district court in Minnesota found that “manifest disregard of the law” is no longer a viable basis for vacating an arbitration award under the Federal Arbitration Act. Accordingly, the Court did not even entertain a “manifest disregard” challenge to an arbitration award.
In Prime Therapeutics LLC v. Omnicare, Inc., No. 08-375, 2008 WL 2152207 (D. Minn. May 21, 2008), Prime Therapeutics (Prime) and Omnicare entered into a Pharmacy Network Agreement (the Agreement) whereby Omnicare, a pharmacy chain, would check with Prime, a benefits manager, to see whether an individual seeking a prescription was exempt from any copayment obligations under the Medicare Part D program... Full Story
State Cases
Court Upholds Arbitration Agreement and Class Action Waiver in Motor Vehicle Purchase Agreement
Bass v. Carmax Auto Superstores, Inc., No. 07-0883-CV-W-ODS, 2008 WL 2705506 (W.D. Mo. July 9, 2008)
7/15/2008 12:00:00 AM
A federal district court in Missouri upheld a class action waiver in a used car dealer’s arbitration agreement because the agreement did not limit the claimant’s ability to seek relief.
In Bass v. Carmax Auto Superstores, Inc., No. 07-0883-CV-W-ODS, 2008 WL 2705506 (W.D. Mo. July 9, 2008), Bass purchased and financed a vehicle through Carmax. Bass paid a document preparation fee for a Retail Installment Contract and a Buyer’s Order and Bill of Sale. Both documents contained an agreement to arbitrate ‘claims,’ which was defined to have the broadest meaning possible... Full Story
Court Compels Arbitration of Procedural Issues to be Decided at Court’s Discretion
Jock v. Sterling Jewelers, Inc., No. 08 CIV.2875(JSR), 2008 WL 2738098 (S.D.N.Y. July 15, 2008)
7/15/2008 12:00:00 AM
A federal district court in New York held that where an employment arbitration agreement provided that a court “may” decide procedural issues, the agreement gave the court discretion on whether or not to decide the procedural issues, such that the court was free to compel arbitration of such issues.
In Jock v. Sterling Jewelers, Inc., No. 08 CIV.2875(JSR), 2008 WL 2738098 (S.D.N.Y. July 15, 2008), Jock and other female employees of Sterling Jewelers brought a class action lawsuit and arbitration claim against Sterling, alleging sex discrimination... Full Story
Expedited Nature of Discovery in Arbitration and Limited Right to Appeal Does Not Render Arbitration Agreement Unconscionable
Rodgers v. Homes, No. B199193, 2008 WL 2568482 (Cal. Ct. App. June 30, 2008)
6/30/2008 12:00:00 AM
A California appellate court reversed a trial court’s holding that an arbitration agreement was unconscionable because it required a party to litigate a matter without any “right to discovery or appeal.” As the Court explained, arbitration does not deprive a party of its right to discovery.
In Rodgers v. Homes, No. B199193, 2008 WL 2568482 (Cal. Ct. App. June 30, 2008), Christopher and Lisa Rodgers signed a contract to purchase a home from Davidon Homes (Davidon), and the contract contained an arbitration agreement. Lisa subsequently came down with a serious medical condition, so the Rodgers attempted to rescind the purchase contract with Davidon. Davidon responded that unless Lisa was unable to work for three consecutive months, it would consider the Rodgers to be in breach and would keep their deposit pursuant to the liquidated damages clause in the contract... Full Story
California Court Rejects “Public Records” Exception to Arbitrator Disclosure Requirements
Haworth v. Superior Court, No. B204354, 2008 WL 2690296 (Cal. Ct. App. July 10, 2008)
7/10/2008 12:00:00 AM
A California appellate court affirmed a trial court’s decision to vacate an arbitration award issued in a medical malpractice case because one of the arbitrators failed to disclose that he had been censured while he was a judge for making inappropriate remarks about the physical attributes and ethnicity of some of his female colleagues.
In Haworth v. Superior Court, No. B204354, 2008 WL 2690296 (Cal. Ct. App. July 10, 2008), Haworth performed cosmetic surgery on Susan Ossakow, and Ossakow subsequently sued Haworth for medical malpractice. The matter was submitted to arbitration pursuant to the parties’ arbitration agreement. The parties chose a panel of arbitrators, and retired Judge Gordon served as the “neutral” arbitrator that the parties mutually selected... Full Story
Party Waived Right to Arbitration by Conducting Discovery on Merits
Olson Electric Co. v. Winter Park Redevelopment Agency, No. 5D07-3915, 2008 WL 2774449 (Fla. Dist. Ct. App. July 18, 2008)
7/18/2008 12:00:00 AM
A Florida appellate court reversed the lower court’s decision and determined that a development company had waived its right to arbitrate by conducting discovery on the merits of the case.
In Olson Electric Co. v. Winter Park Redevelopment Agency, No. 5D07-3915, 2008 WL 2774449 (Fla. Dist. Ct. App. July 18, 2008), Olson sued Winter Park for breach of contract and foreclosure of a construction lien. Winter Park argued that Olson’s claims were subject to the parties’ arbitration agreement. Nevertheless, Winter Park proceeded to file discovery-related pleadings directed at the merits of the case... Full Story
Participation in Preliminary Litigation Proceedings Not Inconsistent with Right to Arbitrate
TSP-Hope, Inc. v. Home Innovators of Illinois, LLC, No. 4-07-1028, 2008 WL 2569340 (Ill. App. Ct. June 26, 2008)
6/26/2008 12:00:00 AM
An Illinois appellate court determined that because of the involvement of liens on property, a construction company did not act inconsistently with its right to arbitrate, even though it filed an answer to the opposing party’s claim.
In TSP-Hope, Inc. v. Home Innovators of Illinois, LLC, No. 4-07-1028, 2008 WL 2569340 (Ill. App. Ct. June 26, 2008), TSP and Home Innovators entered into a contract for the construction of homes in Springfield, Illinois. Work on the homes stopped prior to completion. TSP filed a breach of contract action against Home Innovators and served it with a demand to enforce liens on the property. Home Innovators filed an answer, which included an affirmative defense and a counterclaim... Full Story
Courts Should Compel Arbitration of Any Dispute that “Touches” Matters Covered by the Parties’ Contract
Kansas City Urology, P.A. v. United Healthcare Services, No. WD 67814, WD 67815, 2008 WL 2726313 (Mo. Ct. App. July 15, 2008)
7/15/2008 12:00:00 AM
A Missouri appellate court held that where a contract contains an arbitration agreement that is broad in scope, a court should compel arbitration of any dispute that “touches” matters covered by the parties’ contract.
In Kansas City Urology, P.A. v. United Healthcare Services, No. WD 67814, WD 67815, 2008 WL 2726313 (Mo. Ct. App. July 15, 2008), Kansas City area physicians and medical organizations (the Physicians) entered into contracts with United Healthcare (UH) and Blue Cross and Blue Shield (BCBS). The contracts set the rate of reimbursement that UH and BCBS would pay the Physicians for their services, and they also contained arbitration agreements... Full Story
New Jersey Court Denies Arbitration Where Construction Contract Did Not State that Arbitration was Sole Remedy
South Street Theatre Co., Inc. v. McGowan Builders, Inc., No. L-1577-07, 2008 WL 2521075 (N.J. Super. Ct. App. Div. June 26, 2008)
6/26/2008 12:00:00 AM
A New Jersey appellate court stayed arbitration proceedings because it determined that a rider agreement signed by both parties allowing litigation was controlling over a generic construction contract.
In South Street Theatre Co., Inc. v. McGowan Builders, Inc., No. L-1577-07, 2008 WL 2521075 (N.J. Super. Ct. App. Div. June 26, 2008), South Street Theatre (Theatre) and McGowan entered into a generic construction contract for expansion of the Theatre’s facilities... Full Story
Federal Arbitration Act Preempts State Law Precluding Enforcement of an Employee’s Arbitration Agreement
In re Bison Building Materials, Ltd., Nos. 01-07-00003-CV, 01-07-00029-CV, 2008 WL 2548568 (Tex. Ct. App. June 26, 2008)
6/26/2008 12:00:00 AM
A Texas appellate court held that the Federal Arbitration Act (FAA) preempts Texas state law that would have precluded the enforcement of an employee’s arbitration agreement.
In In re Bison Building Materials, Ltd., Nos. 01-07-00003-CV, 01-07-00029-CV, 2008 WL 2548568 (Tex. Ct. App. June 26, 2008), Sambrano signed an at-will employment contract with Bison. The contract contained an arbitration agreement. Sambrano was subsequently injured on the job, and although Sambrano was receiving benefits from Bison under its welfare benefit plan, she sued Bison for negligence... Full Story
Application of Mailbox Rule Requires Evidence of All Crucial Steps in Mailing Process
Olson v. The Bon, Inc., 183 P.3d 359 (Wash. Ct. App. 2008)
7/28/2008 12:00:00 AM
In affirming a lower court’s ruling that a party seeking arbitration failed to prove the existence of a valid arbitration agreement, the Washington Court of Appeals refused to apply the mailbox rule because even though the party submitted evidence on the mailing procedures used by its third-party vendor, the party submitted no evidence on the procedures used to supply mailing lists to the third-party vendor.
In Olson v. The Bon, Inc., 183 P.3d 359 (Wash. Ct. App. 2008), Olson, Peterson, and Colyer (collectively, Plaintiffs) – each a credit card customer at The Bon Marche department store – were offered enrollment in a credit protection program run by Trilegiant Corporation (Trilegiant). The offer included a free trial membership that could be accepted by endorsing and negotiating a “check” for $2.50. The Plaintiffs accepted the trial membership by endorsing and negotiating the $2.50 check... Full Story
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