Federal Cases
Ain’t No Mountain High Enough: Right to Arbitrate Dispute over Everest Pictures Withstands Copying Snafu
DeVore Family Partnership LLP v. McDougal Littell, No. CIVA 06 C 3484, 2006 WL 3393844 (N.D. Ill. Nov. 22, 2006)
11/22/2006
An Illinois federal court has held that a company did not waive the right to arbitrate when it waited nearly four months to demand arbitration of a copyright dispute over photographs of Mount Everest. The reason? The non-lawyer who sent the license containing the arbitration clause to in-house counsel failed to copy the terms and conditions that were on the back of the document, so counsel was not aware of the arbitration clause.
In DeVore Family Partnership LLP v. McDougal Littell, No. CIVA 06 C 3484, 2006 WL 3393844 (N.D. Ill. Nov. 22, 2006), the DeVore family sued McDougal Littell for unlawfully reprinting 1.2 million copies of Nicholas DeVore’s pictures of Mount Everest. After the suit was filed, in-house counsel for Houghton Mifflin, McDougal Littell’s parent company, requested a copy of the entire file in order to prepare a defense... Full Story
District and Bankruptcy Courts in First Circuit Split on Bankruptcy Courts’ Authority to Deny Arbitration
In re Brown, No. CA 05-5238, 2006 WL 3373333 (D.R.I. Nov. 20, 2006)
11/20/2006
A federal court in Rhode Island took an expansive view of a bankruptcy court’s authority to deny enforcement of an arbitration agreement, ruling that a bankruptcy court may retain jurisdiction of an otherwise arbitrable claim if the claim constitutes a core bankruptcy proceeding. This ruling has created a split within the First Circuit.
In In re Brown, No. CA 05-5238, 2006 WL 3373333 (D.R.I. Nov. 20, 2006), Brown and Mortgage Electronic Registration Systems (MERS) entered into a loan consolidation agreement containing an arbitration clause. Brown later filed for bankruptcy, and as part of that proceeding, she filed a claim against MERS for alleged violations of the Truth-In-Lending Act (TILA)... Full Story
Confidentiality Protections Apply to Hybrid Procedure Consisting of Arbitration and Mediation
Society of Lloyd’s v. Moore, No. 1:06-CV-286, 2006 WL 3167735 (S.D. Ohio Nov. 1, 2006)
11/1/2006
A federal district court in Ohio ruled that the confidentiality protections of the Uniform Mediation Act applied to an email sent during the mediation phase of a hybrid dispute resolution procedure that first started with arbitration.
In Society of Lloyd’s v. Moore, No. 1:06-CV-286, 2006 WL 3167735 (S.D. Ohio Nov. 1, 2006), Lloyd’s sued Moore for alleged fraud. After the Court granted partial summary judgment, the parties agreed to submit the remaining matters to arbitration and mediation.
Under the Arbitration and Mediation Agreement (the Agreement), the arbitration would occur prior to the mediation, but the arbitrator would not disclose his decision “until and unless the parties reach[ed] an impasse in the mediation"... Full Story
Utah Federal Court Holds That Challenge to Arbitration Award Must Fail Entirely to Justify Award of Attorney Fees to Prevailing Party
Youngs v. Behnken, No. 1:04-CV-00183PGC, 2006 WL 3421875 (D. Utah Nov. 27, 2006)
11/27/2006
A United States District Court in Utah held that a party is not entitled to recover attorneys’ fees incurred in obtaining arbitration award confirmation where a challenge to the award was partly successful.
In Youngs v. Behnken, No. 1:04-CV-00183PGC, 2006 WL 3421875 (D. Utah Nov. 27, 2006), Youngs and Behnken were involved in an arbitration proceeding and an award was issued in favor of Youngs. Behnken challenged the award, but the award was confirmed in almost its entirety. However, the Court corrected an error in the relative percentage of ownership interest... Full Story
Employer Acting to Avoid Arbitration Waives Right to Eventually Demand Arbitration of Putative Class Claims
Beauperthuy v. 24 Hour Fitness USA, Inc., No. 06-0715 SC, 2006 WL 3422198 (N.D. Cal. Nov. 28, 2006)
11/28/2006
In a putative class action alleging violations of the Fair Labor Standards Act (FLSA), a federal court in California ruled that the employer waived its right to demand arbitration by acting in a manner inconsistent with an intent to arbitrate.
In Beauperthuy v. 24 Hour Fitness USA, Inc., No. 06-0715 SC, 2006 WL 3422198 (N.D. Cal. Nov. 28, 2006), Beauperthuy and others brought a putative class action against 24 Hour Fitness, their former employer, alleging FLSA violations. The putative class action followed two separate but related proceedings: (1) an FLSA lawsuit against 24 Hour Fitness that eventually settled; and (2) an arbitration involving some of the same plaintiffs and claims as the instant lawsuit... Full Story
Court Adopts Minority Position in Finding Wrongful Death Claim Not Subject to Decedent’s Arbitration Agreement
Washburn v. Beverly Enterprises-Georgia, Inc., No. CV-106-051, 2006 WL 3404804 (S.D. Ga. Nov. 14, 2006)
11/14/2006
Departing from the majority rule, a federal court in Georgia held that a daughter’s wrongful death claim against her deceased mother’s nursing home was not subject to the mother’s arbitration agreement because the daughter was bringing the claim in her individual capacity.
In Washburn v. Beverly Enterprises-Georgia, Inc., No. CV-106-051, 2006 WL 3404804 (S.D. Ga. Nov. 14, 2006), Genevieve Washburn brought a wrongful death action against her mother’s nursing home. The mother’s contract with the nursing home included an arbitration clause covering “any and all claims, disputes, and controversies…arising out of, or in connection with, or relating in any way” to her medical care... Full Story
Breach of Mediation Confidentiality Leads to Disqualification of Experts
Irwin Seating Company v. International Business Machines Corporation, No. 1:04-CV-568, 2006 WL 3446584 (W.D. Mich. Nov. 29, 2006)
11/29/2006
A party may not share confidential mediation materials, and giving such materials to experts will result in the experts being disqualified from testifying, a federal court in Michigan held.
In Irwin Seating Company v. International Business Machines Corporation, No. 1:04-CV-568, 2006 WL 3446584 (W.D. Mich. Nov. 29, 2006), Irwin and IBM participated in a voluntary mediation in an attempt to settle their dispute... Full Story
State Cases
Frivolous Challenge to Arbitration Award Triggers Sanctions
U.S. Claims, Inc. v. Dougherty, No. 958-EDA-2006, 2006 WL 3396651 (Pa. Super. Ct. Nov. 27, 2006)
11/27/2006
The Pennsylvania Superior Court ordered a pro se litigant to reimburse the opposing party for fees and costs incurred in opposing a frivolous challenge to a valid arbitration award. In challenging the award, the pro se litigant argued that a legitimate arbitration agreement was illegal and that he was deprived of a hearing when in fact he voluntarily refused to attend.
In U.S. Claims, Inc. v. Dougherty, No. 958-EDA-2006, 2006 WL 3396651 (Pa. Super. Ct. Nov. 27, 2006), U.S. Claims filed a demand for arbitration against Dougherty after he refused to pay a fee to U.S. Claims for advancing him money on his impending uninsured motorist claim. Despite the existence of a written arbitration agreement, Dougherty refused to arbitrate the claim and failed to appear at the arbitration hearing. The arbitrator entered an award in favor of U.S. Claims, and the trial court confirmed the award... Full Story
Court Enforces Arbitration Agreement Absent Specific Evidence That Arbitration Costs Are Excessive and Deter Individual Claims
Rosenberg v. BlueCross BlueShield of Tennessee, Inc., No. M2005-01070-COA-R9-CV, 2006 WL 3455209 (Tenn. Ct. App. Nov. 29, 2006)
11/29/2006
The Tennessee Court of Appeals was unpersuaded by a class of physicians who argued that the cost of arbitrating several individual payment disputes meant it was too expensive to arbitrate a deceptive practices class action against a health insurance company. The Court found that this argument was meritless since it compared an individual lawsuit to a multi-claim class action.
In Rosenberg v. BlueCross BlueShield of Tennessee, Inc., No. M2005-01070-COA-R9-CV, 2006 WL 3455209 (Tenn. Ct. App. Nov. 29, 2006), two physicians who provided services under contracts with Blue Cross Blue Shield Tennessee (BCBST) brought a putative class action BCBST alleging deceptive practices relating to the insurer’s payments to its physicians. BCBST filed a motion to compel arbitration, which was granted by the trial court over the physicians’ objection that arbitration was “cost-prohibitive.” The physicians appealed... Full Story
Louisiana Court Rejects Manifest Disregard of the Law as a Basis for Challenging Arbitration Awards
Wittich v. Wittich, No. 06-CA-418, 2006 WL 3421252 (La. Ct. App. Nov. 28, 2006)
11/28/2006
In affirming an arbitration award issued in connection with a divorce proceeding, the Louisiana Court of Appeals held that “manifest disregard of the law” is not a legitimate basis for challenging an arbitration award.
In Wittich v. Wittich, No. 06-CA-418, 2006 WL 3421252 (La. Ct. App. Nov. 28, 2006), Beverly and Rainer Wittich divorced after twenty-three years of marriage. They stipulated to a division of community property, specifically agreeing not to partition their stock in The Brinson Company (Brinson). Rainer had acquired the Brinson stock by buying it from his father. Under the sales agreement, if Rainer predeceased his father, the agreement would terminate, and the stock would revert back to his father... Full Story
California Court Allows "Judge Alex" to Bog Down Dispute Resolution
Ferrer v. Preston, No. B188997, 2006 WL 3438255 (Cal. Ct. App. Nov. 30, 2006)
11/30/2006
When television’s Judge Alex was sued by his manager over unpaid fees, he did not turn to court or the parties’ arbitration agreement to settle the dispute. Instead, Judge Alex turned to the Commissioner of Labor, and a California appellate court supported his decision.
In Ferrer v. Preston, No. B188997, 2006 WL 3438255 (Cal. Ct. App. Nov. 30, 2006), Arnold Preston brought an arbitration claim against Alex Ferrer (Judge Alex) for failure to pay Preston’s management fees. The parties had entered into a management contract calling for all disputes to be resolved in arbitration... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new federal legislation.
STATE LEGISLATION
California EO 2 (Introduced 11/28/06)
Subjects: Broadband Services, Dispute Resolution
Creates a California Broadband Task Force to remove barriers to broadband access, identify opportunities for increased broadband adoption, and enable the creation and deployment of new advanced communication technologies. Requires the establishment of dispute resolution procedures for the resolution of ROW disputes between State Agencies and broadband providers.
Missouri SB 74 (Prefiled 12/01/2006)
Subjects: Arbitration, Predatory Lending
Would enact the “Missouri Predatory Lending Prevention Act” which, among other provisions, would forbid “high-cost home loans” from containing a provision for mandatory arbitration or any other restriction that limits a borrower's right to seek relief through the judicial process.
Pennsylvania SB 1104 (Introduced 02/14/2006) Signed by Governor 11/29/2006
Subjects: Underground lines, Dispute Resolution
This Act was created to protect the public by preventing excavation or demolition work from damaging underground lines used in providing electricity, communication, gas, oil delivery, oil product delivery, sewage, water or other services. A voluntary dispute resolution provision grants One Call System the authority to establish and administer a dispute resolution process which may be used by excavators, facility owners, designers, project owners, and other involved persons. Text of the bill.
Virginia HB1666 (Prefiled 12/05/2006)
Subjects: Arbitration, Development Impact Fee
Imposes reasonable impact fees on new development or new subdivisions that are situated on an access road which has become part of the primary system of state highway to pay for all or part of the cost of reasonable road improvements. Permits the Commonwealth Transportation Board to provide for the resolution of disputes over an impact fee by arbitration or otherwise.
Virginia HB1667/1668 (Prefiled 12/05/2006)
Subjects: Arbitration, Development Impact Fee
Provides for reasonable impact fees on new development or new subdivisions that abut, are adjacent to, or are along side U.S. Route 50 in Loudoun County between U.S. route 15 and the Fairfax County line. Permits the Commonwealth Transportation Board to provide for the resolution of disputes over an impact fee by arbitration or otherwise.
REGULATIONS
Oregon Reg 27824 2006 (Proposed 09/01/2006) Effective 11/28/2006
Subjects: Dispute Resolution, Managed Care
As part of this Managed Care Regulation, “The MCO plan must include a procedure for internal dispute resolution to resolve complaints by enrolled injured workers, medical providers, and insurers in accordance with OAR 436-015-0110. The internal dispute resolution procedure shall include a provision allowing the waiver of the time period to appeal a decision to the MCO upon a showing of good cause.
Texas 31 TEXREG 7300 (Proposed 08/25/2006) Effective 12/07/2006
Subjects: Dispute Resolution, Development and Contract Claims
The following language in this Comprehensive Developments Agreement (CDA) Regulation pertains to ADR: “The department believes it may be necessary that CDAs, and especially those that include the developer operating and financing the project, include a dispute resolution procedure other than as contemplated in Section 9.2. New Section 9.6 is intended to authorize the executive director to enter into a CDA with a negotiated dispute resolution procedure. The procedure must comply with Transportation Code, Section 201.112, and meet the requirements of Section 9.6. Section 9.6 includes specific requirements to ensure that a negotiated procedure complies with Transportation Code, Section 201.112, and Section 9.6(d) specifies the mandatory provisions in a disputes board procedure. There shall be a disputes board that shall consider disputes and issue decisions. Before a dispute is referred to a disputes board, a CDA shall require that a claim be referred for informal dispute resolution, optional mediation, or other alternative dispute resolution process. The party making a claim shall file a certified claim.
Vermont VT 1064 2006 (Proposed 11/30/2006)
Subjects: Arbitration, Medicaid Waiver Program
Implements the grievance and appeal process required under the federally-approved Global Commitment to Health 1115 Medicaid Waiver Program. Amends developmental-disabilities regulations to add a grievance process and conform the existing appeals process to the Global Commitment grievance and appeal requirements. Enables the Department to resolve disputes fairly, enhances participant and public confidence in the equity and integrity of the service system, ensures eligible participants access to the developmental-disabilities service system, and allows for the independent review of managed-care organization (MCO) staff decisions concerning appealable actions. Provides for the arbitration of disputes arising under this Act.
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