Federal Cases
Notice Deficiencies Render Class Waiver Unenforceable Under Massachusetts Law
Skirchak v. Dynamics Research Corp., No. 06-2136, 2007 WL 4098823 (1st Cir. Nov. 19, 2007)
11/19/2007
The First Circuit Court of Appeals, applying Massachusetts law, held that a class waiver in an employee's arbitration agreement was unconscionable and thus unenforceable. In explaining its holding, which was apparently based solely on procedural unconscionability, the Court took care to limit its decision to the unique circumstances of the case.
In Skirchak v. Dynamics Research Corp., No. 06-2136, 2007 WL 4098823 (1st Cir. Nov. 19, 2007), Skirchak and Aldrich brought a class action lawsuit against Dynamics Research Corp. (DRC), their former employer, alleging that DRC violated the Fair Labor Standards Act by withholding overtime pay from eligible employees... Full Story
Awareness of Underlying Contract Along with Access to Its Terms Sufficient to Prove Existence of Arbitration Agreement
Schwartz v. Comcast Corp., No. 06-4855, 2007 WL 4212693 (3rd Cir. Nov. 30, 2007)
11/30/2007
According to the Third Circuit Court of Appeals, a customer's awareness that services are provided under a contract, coupled with his or her access to the terms of that contract, bind the customer to that agreement – including any arbitration provisions – whether or not the customer actually received a copy of the agreement.
In Schwartz v. Comcast Corp., No. 06-4855, 2007 WL 4212693 (3rd Cir. Nov. 30, 2007), Schwartz filed a class action lawsuit against Comcast for alleged interruptions in internet service. Comcast filed a motion to compel arbitration pursuant to an arbitration provision in the parties' Subscriber Agreement. In opposing the motion, Schwartz argued that he never entered into an arbitration agreement with Comcast... Full Story
To Compel Arbitration, Non-Signatory Must Show Reliance on Arbitration Agreement and Must Demonstrate Claims Against Signatory and Non-Signatory Are Intertwined
Palmer Ventures LLC v. Deutsche Bank AG, No. 06-30584, 2007 WL 4105219 (5th Cir. Nov. 19, 2007)
11/19/2007
The Fifth Circuit Court of Appeals has affirmed an order denying a non-signatory's motion to compel arbitration where the plaintiffs did not rely on the agreement containing the arbitration agreement in its claims against the non-signatory, and where the claims against the non-signatory were not intertwined with any claims against a signatory to the contract.
In Palmer Ventures LLC v. Deutsche Bank AG, No. 06-30584, 2007 WL 4105219 (5th Cir. Nov. 19, 2007), a tax strategy employed by Deutsche Bank was deemed an illegal tax shelter by the IRS. Palmer Ventures filed suit, claiming that Deutsche Bank was aware of the potential illegality but continued marketing the tax strategy to others... Full Story
Court Allows Third Party to Intervene and Stays Litigation Pending Completion of Related Arbitration
Petrik v. Reliant Pharmaceuticals, Inc., No. 8:07-CV-1462-T-24 TBM, 2007 WL 3283170 (D. Fla. Nov. 5, 2007)
11/5/2007
A federal district court in Florida found that a third party's pending arbitration proceedings involved the same operative facts and law as the current litigation, and allowed the third party to intervene and granted a motion to stay litigation pending the outcome of the arbitration proceedings.
In Petrik v. Reliant Pharmaceuticals, Inc., No. 8:07-CV-1462-T-24 TBM, 2007 WL 3283170 (D. Fla. Nov. 5, 2007), Petrik owned the registered trademark, RYTHMOL®. Abbott Laboratories obtained a license for the use of the trademark in the United States... Full Story
Credit Card Issuer Obtains Dismissal in Favor of Arbitration After Clearing Up Ambiguity Over Mismatching Account Numbers
Kelly v. MBNA America Bank, No. CIV.A. 06-228-JJF, 2007 WL 4233671 (D. Del. Nov. 29, 2007)
11/29/2007
A federal district court in Delaware granted a credit card issuer's motion for reconsideration and ordered dismissal in favor of arbitration because the card issuer cleared up any ambiguity over mismatching account numbers.
In Kelly v. MBNA America Bank, No. CIV.A. 06-228-JJF, 2007 WL 4233671 (D. Del. Nov. 29, 2007), Kelly, an MBNA cardholder, sued MBNA for unfair banking, unfair billing, discrimination, and breach of contract. In response, MBNA moved for dismissal on various grounds, including an obligation to arbitrate those claims... Full Story
Employee Failed to Produce Evidence That He Opted Out of Arbitration Agreement
DuBois v. Macy's East Inc., No. 06 CV 6522(NGG)(LB), 2007 WL 3193169 (E.D.N.Y. July 13, 2007)
7/13/2007
In ordering arbitration of an employment dispute, a federal district court in New York rejected the employee's claim that he opted out of the arbitration agreement because there was no evidence to substantiate that claim.
In DuBois v. Macy's East Inc., No. 06 CV 6522(NGG)(LB), 2007 WL 3193169 (E.D.N.Y. July 13, 2007), Macy's implemented a dispute resolution program entitled Solutions InStore (SIS), which was a four-step process for resolving all workplace disputes with Step 4 being binding arbitration... Full Story
New York Federal Court Finds Silence Does Not Constitute Assent to Arbitration
Manigault v. Macy's East, LLC, 506 F. Supp. 2d 156 (E.D.N.Y. 2007)
8/28/2007
Denying an employer's motion to compel arbitration of a sexual harassment suit, a New York federal court held that an employee's silence and failure to return an opt-out form did not amount to acceptance of arbitration.
In Manigault v. Macy's East, LLC, 506 F. Supp. 2d 156 (E.D.N.Y. 2007), Manigault began working for Macy's in 2002. In 2003, Macy's launched a dispute resolution program requiring employees to arbitrate disputes. Macy's conducted informational meetings at each of its stores to explain the program. It also mailed an information packet about the program to its employees in October 2003. The packet included an Election Form that employees could sign and return if they did not wish to participate in the mandatory arbitration program. Otherwise, the packet stated that employees assented to arbitration by failing to return the Election Form. Manigault asserted she never received the information packet... Full Story
Arbitration Clause in Corporate Credit Card Agreement Applied to Dispute with Employee Cardholder
Heiges v. JP Morgan Chase Bank, N.A., No. 3:07CV1157, 2007 WL 3166769 (D. Ohio Oct. 26, 2007)
10/26/2007
A federal district court in Ohio ruled that a corporate employee who held and used a corporate credit card was bound by an arbitration clause in the cardmember agreement because the employee cardholder assented to the terms of the agreement through his use of the card.
In Heiges v. JP Morgan Chase Bank, N.A., No. 3:07CV1157, 2007 WL 3166769 (D. Ohio Oct. 26, 2007), Heiges worked for Bay Area Products, Inc. During his employment, Heiges opened a corporate credit card account with Chase Bank. The cardmember agreement contained an arbitration clause... Full Story
Lender Cannot Recover Attorney Fees Incurred in Compelling Arbitration Because of Disparate Bargaining Power
Boyd v. Allied Home Mortgage Capital Corp., No. 3:07 CV 1192, 2007 WL 4119034 (N.D. Ohio. Nov 20, 2007)
11/20/2007
Declining to award attorney fees to a lender who successfully compelled arbitration of a dispute with a consumer borrower, an Ohio federal court held that the fee-shifting provisions in the loan agreement were unenforceable because the lender failed to prove equal bargaining power.
In Boyd v. Allied Home Mortgage Capital Corp., No. 3:07 CV 1192, 2007 WL 4119034 (N.D. Ohio. Nov 20, 2007), the Boyds obtained a mortgage loan from Allied. The mortgage agreement contained an arbitration clause. Further, the agreement contained a fee shifting provision that required a party resisting arbitration to pay the costs incurred by the other party in compelling arbitration... Full Story
State Cases
Florida Appellate Court Orders Arbitration of Whistleblower Claim
Hospicecare of Southeast Florida, Inc. v. Major, No. 4D07-442, 2007 WL 4126369 (Fla. Dist. Ct. App. Nov. 21, 2007)
11/21/2007
Reversing a trial court's denial of a motion to compel arbitration of a Florida Whistleblower Act claim, a Florida appellate court held that claims arising from the Act are arbitrable and that the arbitral forum provides adequate redress for statutory claims.
In Hospicecare of Southeast Florida, Inc. v. Major, No. 4D07-442, 2007 WL 4126369 (Fla. Dist. Ct. App. Nov. 21, 2007), Major sued Hospicecare, his former employer, for breach of contract and pursuant to the Florida Whistleblower Act. Hospicecare moved to compel arbitration pursuant to the employment contract's arbitration clause. The trial court held the breach of contract claim was arbitrable while the whistleblower claim was not... Full Story
AIA Document No. A-201's Arbitration Agreement Incorporated and Enforceable, Says Florida Appellate Court
Kaye v. Macari Building & Design, Inc., No. 4D07-1165, 2007 WL 3355572 (Fla. Dist. Ct. App. Nov. 14, 2007)
11/14/2007
The arbitration agreement contained in the American Institute of Architects (AIA) Document No. A-201 can be incorporated by reference into architectural contracts by expressing a clear intent to be bound to the document in the plans or contract, and such incorporation binds the parties to arbitrate related contract disputes, according to a state appellate court in Florida.
In Kaye v. Macari Building & Design, Inc., No. 4D07-1165, 2007 WL 3355572 (Fla. Dist. Ct. App. Nov. 14, 2007), the parties signed an architecture contract, which incorporated the project's plans and specifications by reference. The contract also stated that AIA Document No. A-201, containing an agreement to arbitrate disputes, was "made a part of these specifications and this contract." After a dispute arose regarding the contract, Kaye sought to compel arbitration of the dispute, but the trial court denied the motion, finding that Document No. A-201 was not properly incorporated into the contract... Full Story
Party Waives Right to Challenge Untimely Issuance of Award
Novak v. Liberty Mutual Insurance Co., 2007 WL 4179106 (N.J. Super. Ct. App. Div. Nov. 28, 2007)
11/28/2007
Reversing a trial court's decision to vacate an arbitration award, a New Jersey appellate court held that a party waives its right to object to the untimely issuance of an award if not done before the arbitrator issues the award.
In Novak v. Liberty Mutual Insurance Co., 2007 WL 4179106 (N.J. Super. Ct. App. Div. Nov. 28, 2007), Novak suffered injury in a car accident on March 11, 2002, and submitted requests for Personal Injury Protection (PIP) benefits totaling $249,707.45. Liberty argued that medical treatment was unnecessary or not casually related to Novak's accident. Novak filed an arbitration claim with the American Arbitration Association (AAA)... Full Story
Ohio Appellate Court Rejects Unconscionability Challenge to Nursing Home Arbitration Agreement
Fortune v. Castle Nursing Homes, Inc., No. 07 CA 001, 2007 WL 4227458 (Ohio. Ct. App. Nov. 30, 2007)
11/30/2007
Affirming a trial court's rejection of an unconscionability challenge to an arbitration agreement, the Ohio Court of Appeals held that a nursing home arbitration agreement was not unconscionable, as the party challenging the agreement failed to show that she did not have time to review the agreement.
In Fortune v. Castle Nursing Homes, Inc., No. 07 CA 001, 2007 WL 4227458 (Ohio. Ct. App. Nov. 30, 2007), Fortune, a former resident of Castle, sued the nursing home for negligence after a nursing home aide allegedly allowed her to fall to the floor, which injured her right leg. Castle moved to compel arbitration pursuant to an arbitration clause in the admission contract. Fortune opposed the motion, arguing the admissions agreement was unconscionable. The trial court granted the motion... Full Story
Authority to Bind Spouse in Admission Agreement Extended to Associated Arbitration Agreement
Necessary v. Life Care Centers of America, Inc., No. E2006-00453-COA-R3-CV, 2007 WL 3446636 (Tenn. Ct. App. Nov. 16, 2007)
11/16/2007
According to the Tennessee Court of Appeals, the express authority given to a spouse to enter into a nursing home admission agreement also gives that spouse the authority to enter into an arbitration agreement.
In Necessary v. Life Care Centers of America, Inc., No. E2006-00453-COA-R3-CV, 2007 WL 3446636 (Tenn. Ct. App. Nov. 16, 2007), Necessary admitted her husband into Life Care's nursing home facility. During admission, Necessary signed various documents, including an agreement to arbitrate all claims against Life Care. Her husband was admitted to the facility, but later died in its care... Full Story
Purchase of Construction Materials Manufactured Out-of-State Affects Interstate Commerce, Thus Triggering FAA
State Farm Fire and Casualty Co. v. Easyheat, Inc., No. M2006-02363-COA-R3-CV, 2007 WL 3306765 (Tenn. Ct. App. Nov. 7, 2007)
11/7/2007
The purchase and use of construction materials manufactured outside the state substantially affects interstate commerce and, thus triggers the application of the Federal Arbitration Act (FAA) as to the arbitration agreement in the construction contract, according to the Tennessee Court of Appeals.
In State Farm Fire and Casualty Co. v. Easyheat, Inc., No. M2006-02363-COA-R3-CV, 2007 WL 3306765 (Tenn. Ct. App. Nov. 7, 2007), Heritage and Newell entered into a construction contract containing an agreement to arbitrate disputes. When an insurance dispute arose, Heritage, the builder, sought to compel arbitration with State Farm, Newell's insurance company. The trial court denied the motion, ruling that, since the parties to the construction contract were not diverse and any effect of the contract on interstate commerce was indirect, arbitration of the related dispute could not be compelled under the FAA... Full Story
ADR Legislation & Regulation
LEGISLATION
IL S 549
SPONSOR: Delgado [D]
TITLE: Title Loan Regulation Act
INTRODUCED: 02/08/2007
LAST AMEND: 03/15/2007
DISPOSITION: Pending
LOCATION: Re-referred to Senate Rules Committee
Commentary:
The "Title Loan Regulation Act" provides: "A licensee or unlicensed person or entity making title loans may not commit, or have committed on behalf of the licensee or unlicensed person or entity, any of the following acts...(8)(C) a mandatory arbitration clause that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of borrowers." The bill was re-referred to the Senate Rules Committee on 12/3/07.
MA S 2437
AUTHOR: Joint Public Health
TITLE: Nurse Licensure Compact
INTRODUCED: 12/03/2007
DISPOSITION: Pending
LOCATION: Joint Committee on Health Care Financing
Commentary:
This bill would adopt the Nurse Licensure Compact, providing, among other things, for interstate communication on licensure and enforcement issues. Provides for arbitration of disputes arising under the Compact. The NLC homepage can be found at https: //www.ncsbn.org/160.htm.
NH H 1344
AUTHOR: Mickelonis [D]
TITLE: Public Employment Negotiations
PREFILED: 12/03/2007
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
This bill mandates the use of binding arbitration for failed negotiations between public employees and employers.
US H 3915
SPONSOR: Miller B [D]
TITLE: Consumer Mortgage Practices
INTRODUCED: 10/22/2007
LAST AMEND: 11/14/2007
DISPOSITION: Pending
LOCATION: Senate Banking, Housing and Urban Affairs Committee
Commentary:
This bill would create a number of new regulations for consumer mortgage practices, would establish licensing and registration requirements for residential mortgage originators, and other provisions. As it relates to arbitration, the bill states, "(1) IN GENERAL No residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer (other than a reverse mortgage) may include terms which require arbitration or any other nonjudicial procedure as the method for resolving any controversy or settling any claims arising out of the transaction. (2) POST CONTROVERSY AGREEMENTS Subject to paragraph (3), paragraph (1) shall not be construed as limiting the right of the consumer and the creditor or an assignee, including a securitizer, to agree to arbitration or any other nonjudicial procedure as the method for resolving any controversy at any time after a dispute or claim under the transaction arises." Passed the House and was assigned to the Senate Committee on Banking, Housing and Urban Affairs on 12/3/07.
US S 2136
SPONSOR: Durbin [D]
TITLE: Treatment of Primary Mortgages in Bankruptcy
INTRODUCED: 10/03/2007
DISPOSITION: Pending
LOCATION: Senate Judiciary Committee
Commentary:
Would enact the "Helping Families Save Their Homes in Bankruptcy Act of 2007." Makes a number of amendments to foreclosure and bankruptcy law. As it relates to arbitration, the bill would amend Section 1334 of title 28, United States Code, to add: "Notwithstanding any agreement for arbitration that is subject to chapter 1 of title 9, in any core proceeding under section 157(b) of this title involving an individual debtor whose debts are primarily consumer debts, the court may hear and determine the proceeding, and enter appropriate orders and judgments, in lieu of referral to arbitration." Committee hearings held on 12/5/07.
WI A 604
AUTHOR: Rhoades [R]
TITLE: Cable and Satellite Television System Operators
INTRODUCED: 11/29/2007
DISPOSITION: Pending
LOCATION: Assembly Energy and Utilities Committee
Commentary:
This bill allows a person who creates video programming for cable or satellite television systems (video programmer) to seek arbitration if that video programmer believes that a cable or satellite television system operator has not treated the video programmer in a fair, reasonable, and nondiscriminatory manner concerning the proposed amount to be paid for the addition or renewal of a video channel to the cable or satellite operator's television system.
REGULATIONS
Arkansas 187.00.07-001; 187.00.07-002; 187.00.07-003
AGENCY: Alternative Dispute Resolution Commission
TITLE: Certification Of Mediators For Arkansas Circuit Courts
PROPOSED: 12/01/2007
Commentary: Proposed amendments to the requirements for the Certification of Mediators for Arkansas Circuit Courts, Requirements for the Conduct of Mediation and Mediators, and the Minimum Standards for Basic Training.
Texas 32 TEXREG 8734
AGENCY: Department of Transportation
TITLE: Utility Relocation Prepayment Funding
PROPOSED: 11/16/2007
CITATION: 43 TAC 1.21.P.21.921 -.930
Commentary: Provides for mediation of disputes over reimbursing utility companies for costs of adjusting utility facilities required by state highway improvement projects.
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