Federal Cases
Supreme Court Holds That "Judge Alex" Must Arbitrate Dispute with Alleged Talent Agent
Preston v. Ferrer, No. 06-1463, 2008 WL 440670 (Feb. 20, 2008)
2/20/2008
In a case arising from a dispute between a TV judge and his alleged talent agent, the United States Supreme Court held that the Federal Arbitration Act (FAA) preempted the application of a California law that would have given the commissioner of an administrative agency original jurisdiction to decide the validity of the parties' contract.
In Preston v. Ferrer, No. 06-1463, 2008 WL 440670 (Feb. 20, 2008), Preston, an entertainment attorney, and Ferrer, known on TV as "Judge Alex," entered into a contract whereby Preston would render managerial services in aid of Ferrer's entertainment career... Full Story
Frivolous Resistance to a Motion to Compel Arbitration Results in Attorney Sanctions
Parrott v. Corley, No. 06-2333, 2008 WL 227332 (6th Cir. Jan. 28, 2008)
1/28/2008
The Sixth Circuit Court of Appeals has affirmed the imposition of sanctions against an attorney for simultaneously moving for an injunction against arbitration and actively opposing the other party's motion to compel.
In Parrott v. Corley, No. 06-2333, 2008 WL 227332 (6th Cir. Jan. 28, 2008), a dispute arose between an author and her publisher. The parties had executed a contract for services containing an arbitration agreement... Full Story
Requiring Employees to Pay Arbitration Fees Directly to Employer Substantively Unconscionable Under California Law
Abrahim v. ESIS, Inc., No. C-07-04014 JCS, 2008 WL 220104 (N.D. Cal. Jan. 25, 2008)
1/25/2008
Employment arbitration agreements that require an employee to pay a filing fee directly to the employer to initiate arbitration of his or her disputes are substantively unconscionable, according to a federal district court in California.
In Abrahim v. ESIS, Inc., No. C-07-04014 JCS, 2008 WL 220104 (N.D. Cal. Jan. 25, 2008), employee Abrahim filed an employment discrimination action against employer ESIS. ESIS sought to compel arbitration of the dispute under an arbitration agreement within an employment contract. Abrahim opposed the motion, claiming, in part, that the agreement was unconscionable... Full Story
"Prohibitively Expensive" Class Arbitration Fees Meant to Discourage Class Actions, Court Finds
Gonzalez v. Menard, Inc., No. 07 C 2507, 2008 WL 199877 (N.D. Ill. Jan. 25, 2008)
1/25/2008
A federal district court in Illinois has invalidated an arbitration agreement that limits an employee's individual arbitration demand costs to equal or less than a court filing fee, but imposes "prohibitively expensive" costs, without any limit, on demands for class arbitration.
In Gonzalez v. Menard, Inc., No. 07 C 2507, 2008 WL 199877 (N.D. Ill. Jan. 25, 2008), employee Gonzalez filed a court action against employer Menard. Menard moved to compel class arbitration of Gonzalez's representative, in accordance with an underlying arbitration agreement. Gonzalez challenged the motion, claiming that class arbitration under the controlling American Arbitration Association (AAA) Rules was prohibitively expensive, and its costs rendered the agreement unenforceable... Full Story
Ohio Federal Court Denies Motion to Enjoin Securities Arbitration: No Likelihood of Success on the Merits, No Risk of Irreparable Harm
O.N. Equity Sales Co. v. FINRA Dispute Resolution, Inc., No. 1:07CV804, 2008 WL 281788 (S.D. Ohio Feb. 1, 2008)
2/1/2008
A federal district court in Ohio has rejected a party's efforts to avoid arbitration through a preliminary injunction, holding that the party had not shown either a likelihood of success on the merits or a risk of irreparable harm should arbitration commence.
In O.N. Equity Sales Co. v. FINRA Dispute Resolution, Inc., No. 1:07CV804, 2008 WL 281788 (S.D. Ohio Feb. 1, 2008), O.N. Equity Sales Co. (ONESCO) sought a preliminary injunction against arbitration administrator FINRA. ONESCO alleged that FINRA had no authority to determine the arbitrability of ONESCO's claims and could not compel ONESCO to waive its objections to its forum through a submission agreement... Full Story
State Cases
North Carolina Supreme Court Finds Arbitration Cost-Prohibitive Where Agreement Required Losing Party to Pay for Arbitral Appeal
Tillman v. Commercial Credit Loans, Inc., No. 360A06, 2008 WL 201750 (N.C. Jan. 25, 2008)
1/25/2008
The North Carolina Supreme Court found that arbitration under a lender's arbitration agreement would be cost-prohibitive because the agreement provided for an arbitral appeal to a three-member panel and required the losing party to pay the cost of the appeal. Accordingly, the Court held that the arbitration agreement was unenforceable.
In Tillman v. Commercial Credit Loans, Inc., No. 360A06, 2008 WL 201750 (N.C. Jan. 25, 2008), Tillman and Shirley (collectively, Borrowers) each obtained a loan from Commercial Credit Loans (CCL). Both loan agreements contained an arbitration provision that (1) barred class-wide proceedings, (2) carved out foreclosure proceedings and claims totaling less than $15,000, and (3) provided that either party could appeal an arbitration award to a three-arbitrator panel with the party losing on appeal required to pay all expenses of the appeal... Full Story
Arbitrator Must Decide Issue of Class Arbitrability Under AAA Rules
Ex parte Johnson, Nos. 1061760, 1061762, 2008 WL 204447 (Ala. Jan. 25, 2008)
1/25/2008
The Alabama Supreme Court has granted a writ of mandamus allowing a group of mobile home owners to submit the issue of class arbitrability to an arbitrator in the manner prescribed by their arbitration agreement.
In Ex parte Johnson, Nos. 1061760, 1061762, 2008 WL 204447 (Ala. Jan. 25, 2008), two groups of mobile home owners demanded class arbitration of their disputes against certain mobile home manufacturers. The manufacturers opposed class arbitration, and asked two separate trial courts to enjoin any class arbitration in favor of individual arbitration of each owner's claims. The trial courts granted the injunctions. On a consolidated appeal, the owners sought a writ of mandamus to set aside the injunctions... Full Story
Under a Related Contract's Arbitration Agreement
Kenworth of Mobile, Inc. v. Dolphin Line, Inc., Nos. 1051643, 1051724, 2008 WL 204446 (Ala. Jan. 25, 2008)
1/25/2008
"Inextricably intertwined" claims against both a signatory and non-signatory arising out of a contract without an arbitration agreement are nevertheless arbitrable when those claims are "related to" another contract containing an arbitration agreement, according to the Alabama Supreme Court.
In Kenworth of Mobile, Inc. v. Dolphin Line, Inc., Nos. 1051643, 1051724, 2008 WL 204446 (Ala. Jan. 25, 2008), Dolphin purchased Volvo trucks from the Kenworth dealership. Kenworth and Dolphin executed contracts for the truck purchases, which included a broad arbitration agreement encompassing any controversy or claim arising from the contract or otherwise relating to the purchase or sale of the trucks. The parties also executed trade-back contracts, requiring Kenworth to periodically repurchase the trucks previously purchased by Dolphin... Full Story
Court Enforces Statutory Damages Limitation in Arbitration of Medical Malpractice Dispute
Leon Medical Centers, Inc. v. Martell, Nos. 3D07-96, 3D06-3099, 2008 WL 239029 (Fla. Dist. Ct. App. Jan. 30, 2008)
1/30/2008
A Florida appellate court determined that a lower court had erred in compelling arbitration of a medical malpractice dispute without the statutory damages cap, and reversed the trial court's ruling, so that the arbitration was subject to the statutory damages limitation.
In Leon Medical Centers, Inc. v. Martell, Nos. 3D07-96, 3D06-3099, 2008 WL 239029 (Fla. Dist. Ct. App. Jan. 30, 2008), Estela Martell filed a notice of intent to initiate a medical negligence claim against Leon Medical for the wrongful death of George Martell... Full Story
Court Rejects Unconscionability Challenge to Arbitration Agreement in Automobile Lease Contract
Lopez v. Ernie Harie Ford, Inc., No. 2D06-1665, 2008 WL 313472 (Fla. Dist. Ct. App. Feb. 6, 2008)
2/6/2008
In upholding an order compelling arbitration of a dispute between a car dealer and customer, a Florida Appellate Court found that the customer's initialing of the arbitration agreement and his negotiation of certain terms precluded a finding of procedural unconscionability.
In Lopez v. Ernie Harie Ford, Inc., No. 2D06-1665, 2008 WL 313472 (Fla. Dist. Ct. App. Feb. 6, 2008), Lopez and Ernie Harie entered into an automobile lease agreement. Four years later, upon termination of the lease, Lopez sued Ernie Harie over mileage charges... Full Story
Parties Can Contract Outside of State Default Requirements for Arbitration Notification
NCO Portfolio Management, Inc. v. Rice, No. 2007-CA-000400-MR, 2008 WL 275102 (Ky. Ct. App. Jan. 25, 2008)
1/25/2008
A Kentucky appellate court determined that parties have the ability to contract out of state default rules regarding arbitration notification requirements and instead contract to follow a different code of procedure.
In NCO Portfolio Management, Inc. v. Rice, No. 2007-CA-000400-MR, 2008 WL 275102 (Ky. Ct. App. Jan. 25, 2008), NCO brought an action to confirm an arbitration award against Rice for unpaid credit card debts... Full Story
Maryland Court Holds Concerns with Sufficiency of Arbitral Discovery Not Valid Basis to Deny Motion to Compel
Essex Corp. v. Susan Katharine Tate Burrowbridge, LLC, No. 27 Sept. Term 2007, 2008 WL 251975 (Md. Ct. Spec. App. Jan. 31, 2008)
1/31/2008
A trial court cannot properly refuse a motion to compel arbitration merely because of its concerns with the sufficiency of discovery allowed during the arbitral proceedings, according to the Maryland Court of Special Appeals.
In Essex Corp. v. Susan Katharine Tate Burrowbridge, LLC, No. 27 Sept. Term 2007, 2008 WL 251975 (Md. Ct. Spec. App. Jan. 31, 2008), Tate sued Essex for breach of a corporate acquisition contract. The contract contained an agreement requiring arbitration of any dispute regarding Essex's right of offset of the purchase price, and Essex sought to compel arbitration of Tate's claim... Full Story
Mississippi Statutory Health Care Surrogates Have Authority to Bind Non-Parties to Arbitration Agreements Within Admission Contracts
Covenant Health & Rehabilitation of Picayune, L.P. v. Lumpkin ex rel. Lumpkin, No. 2007-CA-00449-COA, 2008 WL 306008 (Miss. Ct. App. Feb. 5, 2008)
2/5/2008
The Mississippi Court of Appeals, consistent with a recent Mississippi Supreme Court opinion, has held that a statutory health care surrogate can bind a non-party to an arbitration agreement under Mississippi law if that agreement is part of a health care admission contract.
In Covenant Health & Rehabilitation of Picayune, L.P. v. Lumpkin ex rel. Lumpkin, No. 2007-CA-00449-COA, 2008 WL 306008 (Miss. Ct. App. Feb. 5, 2008), patient Lumpkin brought claims of negligence and medical malpractice against Covenant. Upon Lumpkin's admission to Covenant's care facility, she was incapacitated, and daughter McDaniel executed all admissions documents, including an incorporated arbitration agreement. Pursuant to this agreement, Covenant moved to compel arbitration of Lumpkin's claims. The trial court denied the motion, finding the agreement substantively unconscionable... Full Story
No Waiver When Party Promptly and Consistently Asserts Right to Arbitration in Answer and Discovery Responses
Virginia College, LLC v. Moore, No. 2006-CA-02064-COA, 2008 WL 305737 (Miss. Ct. App. Feb. 5, 2008)
2/5/2008
A party does not waive its right to arbitrate through participation in pretrial preparations if it consistently, affirmatively, and promptly advances its arbitration rights in all answers and discovery responses, according to the Mississippi Court of Appeals.
In Virginia College, LLC v. Moore, No. 2006-CA-02064-COA, 2008 WL 305737 (Miss. Ct. App. Feb. 5, 2008), former student Moore sued Virginia College for "educational malpractice." Virginia College sought to compel arbitration of Moore's claim under an arbitration agreement included in an enrollment contract... Full Story
E-mail Negotiations Between Parties' Attorneys About Arbitration Terms Do Not Create Agreement to Arbitrate
Arrowhead Contracting, Inc. v. M.H. Washington, LLC, No. WD68243, 2008 WL 169714 (Mo. App. W.D. Jan. 22, 2008)
1/22/2008
A Missouri appellate court held that e-mails between the parties' attorneys about terms of arbitration do not result in an agreement to arbitrate.
In Arrowhead Contracting, Inc. v. M.H. Washington, LLC, No. WD68243, 2008 WL 169714 (Mo. App. W.D. Jan. 22, 2008), Arrowhead did construction work for Weitz Company. After a dispute arose regarding the work, Arrowhead filed suit for nonpayment. Weitz had the option of submitting the suit to arbitration pursuant to a subcontract between the parties... Full Story
Missouri Court Finds That Cardholder Did Not Admit to Arbitration Agreement
Creech v. MBNA America Bank, N.A., No. 28453, 2008 WL 216311 (Mo. Ct. App. Jan. 28, 2007)
1/28/2008
In affirming an order staying arbitration of a credit card dispute, a Missouri appellate court found that the trial court did not err when it concluded that the cardholder's admission applied only to acknowledging the existence of a cardholder agreement and not to having entered into an arbitration agreement.
In Creech v. MBNA America Bank, N.A., No. 28453, 2008 WL 216311 (Mo. Ct. App. Jan. 28, 2007), credit card issuer MBNA filed an arbitration claim against cardholder Creech. Creech moved to stay arbitration, arguing no arbitration agreement existed between the parties. The trial court granted the motion. MBNA appealed, arguing that Creech made a judicial admission in his pleadings when he acknowledged signing a contract containing an arbitration agreement... Full Story
Utah Supreme Court Thwarts Party's Attempt to Depose Opposing Counsel About Alleged Oral Agreement During Confidential Mediation Proceedings
Reese v. Tingey Const., No. 20060594, 2008 WL 268987 (Utah Feb. 1, 2008)
2/1/2008
A party to confidential mediation proceedings cannot compel the deposition of opposing counsel as to whether an oral settlement agreement was reached during the proceedings, according to the Utah Supreme Court.
In Reese v. Tingey Const., No. 20060594, 2008 WL 268987 (Utah Feb. 1, 2008), employee Reese and insurer LWP participated in mediation, attempting to reach a workers' compensation claim settlement. Reese maintained that he reached an oral settlement agreement with LWP during mediation, which LWP denied. Reese then moved to compel LWP's counsel to submit to a deposition as to whether an oral settlement agreement was reached during mediation... Full Story
Franchisees May Not Bind Employees to Arbitrate with Franchisor as Administrator and Franchisees' Associates as Arbitrators
Rodriguez v. Windermere Real Estate/Wall Street, Inc., No. 59526-1-I, 2008 WL 217086 (Wash. Ct. App. Jan. 28, 2008)
1/28/2008
A franchisee employer may not bind an employee to arbitrate his or her dispute with an arbitration panel administered by its franchisor and constituted entirely of parties affiliated with other franchisees, according to the Washington Court of Appeals.
In Rodriguez v. Windermere Real Estate/Wall Street, Inc., No. 59526-1-I, 2008 WL 217086 (Wash. Ct. App. Jan. 28, 2008), Rodriguez became a real estate agent for Windermere Real Estate/Wall Street (WRE/WS). The parties executed a broker contract, which contained an arbitration agreement... Full Story
ADR Legislation & Regulation
LEGISLATION
AZ H 2668
AUTHOR: Lopes [D]
TITLE: Health Security Act
DISPOSITION: Pending
LOCATION: House Health Committee
Commentary: Concerning the Health Security Act. There is a right of judicial review of a decision of the commission if the person has exhausted all available administrative remedies, including good faith efforts to resolve the dispute through mediation. The bill further provides that the Commission's dispute resolution rules must provide for adequate notice, opportunity to be heard informally before mediation, and all procedural due process safeguards.
AZ H 2845
AUTHOR: Driggs [R]
TITLE: Uniform Arbitration Act
DISPOSITION: Pending
LOCATION: House Second Consideration
Commentary: Concerns the Uniform Arbitration Act. Added chapter 21, which includes general provisions regarding definitions relating to arbitration, notice, applicability, effect of agreement to arbitrate/waiver, application for judicial relief, motions to compel or stay arbitration, interim relief, initiation of arbitration, consolidation of separate arbitration proceedings, appointment of, disclosures made by, and immunity of arbitrators, and other issues relating to arbitration/the arbitration process.
CT H 5154
INTRODUCER: Joint Insurance and Real Estate
TITLE: Dispute Resolution Mechanism
DISPOSITION: Pending
LOCATION: Joint Committee on Insurance and Real Estate
Commentary: Establishes a mediation mechanism for homeowners following major catastrophes.
CT H 5166
INTRODUCER: Joint Banks
TITLE: Mortgage Prepayment Penalties
DISPOSITION: Pending
Commentary: Concerns mortgage prepayment penalties. Replaces section to include a provision that "a high cost home loan shall not provide for or include the following: (7) A mandatory arbitration clause or a waiver of participation in a class action".
ID S 1261
AUTHOR: Judiciary and Rules Cmt
TITLE: Uniform Mediation Act
DISPOSITION: Pending
LOCATION: HOUSE
Commentary: A bill to adopt the Uniform Mediation Act.
IL H 5157
SPONSOR: Hoffman [D]
TITLE: Uniform Arbitration Act
DISPOSITION: Pending
LOCATION: House Rules Committee
Commentary: Amends the Uniform Arbitration Act. Provides that no agreement to arbitrate any liability arising out of the employment of a seaman, master, vessel crew member, or railroad employee is binding or enforceable.
IL S 2866
SPONSOR: Trotter [D]
TITLE: Payday Loan Reform Act
DISPOSITION: Pending
LOCATION: Senate Rules Committee
Commentary: Would amend the Payday Loan Reform Act to prohibit mandatory arbitration clauses in their entirety, instead of "a mandatory arbitration clause that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers."
IN S 159
AUTHOR: Gard [R]
TITLE: Third Party Health Service Agreements
DISPOSITION: Pending
LOCATION: HOUSE
Commentary: Specifies terms under which a third party may obtain a contractor's rights and responsibilities concerning a provider's delivery of health care services. As it relates to arbitration, a health care contract may provide for arbitration of disputes arising under the bill.
MA H 900
AUTHOR: Ayers [D]
TITLE: Automobile Insurance Property Damage
DISPOSITION: Pending
LOCATION: Joint Committee on Financial Services
Commentary: Draft bill relating to arbitration for automobile insurance property damage. Provides for arbitration of repair disputes. The arbitrators will be auto damage appraisers.
MA H 947
AUTHOR: Fennell [D]
TITLE: Automobile Insurance Property Damage
DISPOSITION: Pending
LOCATION: Joint Committee on Financial Services
Commentary: Draft bill relating to arbitration for automobile insurance property damage. Provides for arbitration of repair disputes. The arbitrators will be auto damage appraisers.
MA H 1789
AUTHOR: Flynn [D]
TITLE: Private Construction Contract Fairness
DISPOSITION: Pending
LOCATION: Joint Committee on Labor & Workforce Development
Commentary: Related to "Private Construction Contract Fairness," makes any provision waiving substantive or procedural rights in a construction contract void as against public policy, except for a mutual (and otherwise legal) binding arbitration clause.
MD H 1330
AUTHOR: Rosenberg [D]
TITLE: Circuit Courts
DISPOSITION: Pending
Commentary: Specifies a $25 fee for filing a petition in a circuit court for an order confirming an arbitration award; provides for specified procedures concerning a petition for an order confirming an arbitration award; applies the Act prospectively.
MD H 1341
AUTHOR: Morhaim [D]
TITLE: Nonprofit Associations
DISPOSITION: Pending
Commentary: Authorizes a non profit organization to participate in an arbitration, mediation, or other form of dispute resolution.
MI H 5722
SPONSOR: Smith V [D]
TITLE: Auditing Procedures
DISPOSITION: Pending
LOCATION: House Insurance Committee
Commentary: Provides for general amendments to insurance auditing procedures. Amendments include: (3) AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT MAY ENTER INTO AN AGREEMENT WITH AN INSURER TO HAVE DISPUTES RELATING TO AN AUDIT RESOLVED BY MEDIATION OR ARBITRATION. HOWEVER, IF A DELINQUENCY PROCEEDING IS COMMENCED AGAINST THE INSURER UNDER CHAPTER 81, THE MEDIATION OR ARBITRATION PROVISION SHALL OPERATE AT THE OPTION OF THE STATUTORY SUCCESSOR.
MI S 1061
SPONSOR: Sanborn [R]
TITLE: Captive Insurer Regulation
DISPOSITION: Pending
LOCATION: House Second Reading
Commentary: Regulates captive insurance companies. Amendments include a provision that "THE COUNTERPARTY SHALL RETURN TO THE SPFC AMOUNTS WITHDRAWN UNDER SUBSECTION (11) IN EXCESS OF ACTUAL AMOUNTS REQUIRED UNDER SUBSECTION (11)(A) TO (C), AND IN EXCESS OF THE AMOUNTS SUBSEQUENTLY DETERMINED TO BE DUE UNDER SUBSECTION (11)(D), PLUS INTEREST AT A RATE NOT IN EXCESS OF THE PRIME RATE FOR THE AMOUNTS HELD PURSUANT TO SUBSECTION (11)(C) UNLESS A HIGHER RATE OF INTEREST HAS BEEN AWARDED BY AN ARBITRATION PANEL, AND ANY NET COSTS OR EXPENSES, INCLUDING ATTORNEY FEES, AWARDED BY AN ARBITRATION PANEL."
MO S 1005
SPONSOR: Bray [D]
TITLE: Uniform Planned Community Act
DISPOSITION: Pending
LOCATION: Senate Economic Development, Tourism and Local Government Committee
Commentary: Would enact the "Uniform Planned Community Act". As it relates to ADR, the bill allows Parties to a dispute arising under sections 445.151 to 445.420 of a bill, the declaration or the bylaws to agree to resolve the dispute by any form of binding or nonbinding alternative dispute resolution, provided that an agreement to submit to binding arbitration must be made in writing signed by the parties.
UT S 143
AUTHOR: VanTassell [R]
TITLE: Insurance Code
DISPOSITION: Passed Senate, now in House
Commentary: Modifies the Insurance Code to address financial requirements related to insurers or insurance products. As related to arbitration, amendment states that Utah law doesn't override parties' agreement to arbitrate.
VA S 768
AUTHOR: Watkins [R]
TITLE: Conditional Zoning
DISPOSITION: Pending
LOCATION: House Rules Committee
Commentary: Provides in the amendments that an ordinance may provide for the resolution of disputes over an impact fee by arbitration or otherwise.
WA H 2016
AUTHOR: Springer [D]
TITLE: Property Owner Option for Repurchase
DISPOSITION: Pending
LOCATION: Senate Judiciary Committee
Commentary: Provides for arbitration process where a real property owner is given a "repurchase" option on condemned land.
WY H 115
AUTHOR: Childers [R]
TITLE: Subdivisions and Homeowners Associations
DISPOSITION: Failed
LOCATION: Died
Commentary: Relates to subdivisions and homeowner's associations. Provides for arbitration or mediation for disputes between members of homeowner associations.
REGULATIONS
Ohio OAC 1301:8-3-03 thru -09, -11 thru -19, -22 thru -24
AGENCY: Department of Commerce/Division of Financial Institutions
TITLE: Second Mortgage Loans
Commentary: Amends rules regarding second mortgage loans. Amendments include a provision that "[t]he registrant may in addition to, or as part of, its loan modification process offer the borrower the option to have the matters under dispute submitted for mediation before an unbiased private third party."
Oregon OAR 137-045-0010, -0015, -0020, -0030, -0035, -0050, -0055, -0060, -0070, -0080, -0090
AGENCY: Department of Justice
TITLE: State Contracts
Commentary: Amends the administrative rules relating to legal sufficiency review of state contracts. Amendments include: "(e) An Agency must delete, modify with the specific advice of an Assistant Attorney General, or include only with the specific advice of an Assistant Attorney General, any provision in a proposed Public Contract that is substantially in any of the following forms:...(C) Arbitration: This contract is subject to binding arbitration."
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