Federal Cases
Bankruptcy Court Orders Arbitration of Truth-in-Lending Claim
Gardner v. Wells Fargo, No 06-80112-JAC-13, 2006 WL 3735942 (Bankr. N.D. Ala. Dec. 14, 2006)
12/17/2006
An Alabama bankruptcy court ordered arbitration of a truth-in-lending claim based on its finding that arbitration of the claim would not jeopardize the objectives of the United States Bankruptcy Code.
In Gardner v. Wells Fargo, No 06-80112-JAC-13, 2006 WL 3735942 (Bankr. N.D. Ala. Dec. 14, 2006), the Gardners filed for bankruptcy and later brought a claim against Wells Fargo, one of their creditors, seeking damages under the Truth in Lending Act(TILA)... Full Story
Arbitration Agreement Within Attachment to Larger Agreement Applies Only to Disputes Arising from the Attachment
Goodrich Cargo Systems v. Aero Union Corp., No. C 06-06226 CRB, 2006 WL 3708065 (N.D. Cal. Dec. 14, 2006)
12/14/2006
A U.S. District Court in California held that an arbitration clause in an agreement, which was a smaller part of a larger transaction, applied only to disputes arising under that particular agreement.
In Goodrich Cargo Systems v. Aero Union Corp., No. C 06-06226 CRB, 2006 WL 3708065 (N.D. Cal. Dec. 14, 2006), Goodrich purchased part of Aero Union's business (APS business) which had various operations, including a cargo transfer system. The parties entered into an umbrella agreement which encompassed the entire agreement, the Asset Purchase Agreement (APA). As an attachment to that agreement, the parties entered into a licensing agreement which would allow Aero Union to continue operating the portion of the business which dealt with the cargo transfer system, the Manufacturing Licensing Agreement (MLA). The MLA contained an arbitration agreement. The APA did not, although it did refer specifically to the MLA. The APA also indicated that any additions to the agreement were incorporated into the original... Full Story
The Date an Arbitration Award Is Clarified, Not the Original Award Date, Begins Time Limit for Filing a Motion to Vacate
Phillips v. Merrill Lynch, Pierce, Fenner and Smith, Inc., Nos. 3:06cv100(AHN), 3:05cv1959(AHN), 2006 WL 3746692 (D. Conn. Dec. 15, 2006)
12/15/2006
An arbitration award that is referred back to the arbitration panel for clarification is not a finalized award until the clarifications are received, a federal court in Connecticut held. Therefore, the period in which to challenge the award begins to run from the date of the finalized award.
In Phillips v. Merrill Lynch, Pierce, Fenner and Smith, Inc., Nos. 3:06cv100(AHN), 3:05cv1959(AHN), 2006 WL 3746692 (D. Conn. Dec. 15, 2006), Phillips moved to vacate an arbitration award issued in Merrill Lynch's favor... Full Story
An Arbitrator's Failure to Disclose Relationship with Party's Attorney Not Grounds for Vacatur When Opposing Party Knew About the Relationship
Uhl v. Komatsu Forklift Co., Ltd., No. 04-10148, 2006 WL 3751388 (E.D. Mich. Dec. 8, 2006)
12/8/2006
Under the Federal Arbitration Act, the fact that a party's attorney and an arbitrator previously appeared in cases together does not create a conflict of interest sufficient to vacate an arbitration award when the party seeking the vacatur knew about the relationship prior to the arbitration and failed to object, a federal court in Michigan held.
In Uhl v. Komatsu Forklift Co., Ltd., No. 04-10148, 2006 WL 3751388 (E.D. Mich. Dec. 8, 2006), a three-member arbitration panel issued an award in Uhl's favor in a wrongful death proceeding... Full Story
Unsigned Arbitration Agreement Is Enforceable When Other Contract Terms Were Enforced by Contesting Party
Mississippi Valley Title Ins. Co. v. Lewis, No. CIV.A. 4:06CV79LS, 2006 WL 3694603 (S.D. Miss. Dec. 13, 2006)
12/13/2006
A U.S. District Court in Mississippi held that an unsigned arbitration agreement is valid when the party contesting arbitration does not object to the arbitration agreement and enforces other terms of the contract.
In Mississippi Valley Title Ins. Co. v. Lewis, No. CIV.A. 4:06CV79LS, 2006 WL 3694603 (S.D. Miss. Dec. 13, 2006), Lewis filed suit against MVTIC over his attempted sale of real property. The sale fell through due to a lien, which was undiscovered by a MVTIC attorney in preparing the title insurance policy... Full Story
State Cases
Arbitrator Can Exceed Powers by Committing an Error of Law
Skladanowski v. Clear Channel Radio, No. 261004, 2006 WL 3682184 (Mich. Ct. App. Dec. 14, 2006)
12/14/2006
The Michigan Court of Appeals held that a Michigan trial court properly vacated an arbitration award where the arbitrator exceeded her powers by committing an error of law.
In Skladanowski v. Clear Channel Radio, No. 261004, 2006 WL 3682184 (Mich. Ct. App. Dec. 14, 2006), Skladanowski, a saleswoman for Clear Channel Radio, planned to take leave under the Family and Medical Leave Act (FMLA).
Clear Channel paid commissions to its sales force when an advertisement "aired and billed," not when the sale was made. Based on this practice, Clear Channel advised Skladanowski that she would not be paid any commissions for advertisements that "aired and billed" during her FMLA leave. This decision prompted Skladanowski to resign and initiate arbitration... Full Story
California Appellate Court Upholds Class Action Waiver as Fair and Enforceable
Konig v. U-Haul Co. of California, No. B190547, 2006 WL 3720248 (Cal. Ct. App. Dec. 19, 2006)
12/19/2006
The California Court of Appeal upheld an arbitration agreement that barred class-wide proceedings in a case where the claimant failed to prove that the dispute with his former employer involved a predictably small amount of damages.
In Konig v. U-Haul Co. of California, No. B190547, 2006 WL 3720248 (Cal. Ct. App. Dec. 19, 2006), Konig brought a putative class action against U-Haul, his former employer, alleging that U-Haul withheld overtime pay and engaged in other unfair employment practices.
U-Haul moved to compel arbitration pursuant to an arbitration agreement that Konig signed during his employment at U-Haul. In opposing the motion, Konig argued that agreement’s bar on class-wide proceedings rendered it substantively unconscionable under Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005)... Full Story
Texas Supreme Court Allows Nonsignatories to Claim Benefits of Arbitration
Meyer v. WMCO-GP, LLC, No. 04-0252, 2006 WL 3751585 (Tex. Dec. 22, 2006)
12/22/2006
Applying the doctrine of equitable estoppel, the Texas Supreme Court held that two nonsignatories could claim the benefit of an arbitration clause in a sales agreement because the claims against them depended on the existence of the sales agreement.
In Meyer v. WMCO-GP, LLC, No. 04-0252, 2006 WL 3751585 (Tex. Dec. 22, 2006), WMCO agreed to buy a Ford dealership from Bullock. As the sales agreement acknowledged, Bullock’s dealership agreement gave Ford an assignable right of first refusal... Full Story
Court Cannot Proceed to Trial While Question of Arbitrability Is Under Appeal
Blanchard Valley Health Ass’n v. Bates, 858 N.E.2d 406 (Ohio 2006)
12/27/2006
The Ohio Supreme Court held that a state appellate court properly granted a writ of prohibition preventing the trial court from proceeding to trial while the arbitrability of the dispute was under appeal.
In Blanchard Valley Health Ass'n v. Bates, 858 N.E.2d 406 (Ohio 2006), Blanchard Valley and ProMedica, both owners of Ohio healthcare facilities, formed an entity called BVPH Ventures (BVPH).
Several years later, ProMedica filed an action in Lucas County (the Lucas County case), seeking judicial dissolution of BVPH in order to resolve a deadlock over management of the joint venture. Blanchard Valley attempted to resolve the deadlock by filing an action for injunctive relief in Hancock County (the Hancock County case)... Full Story
Oklahoma Supreme Court Diverges from Majority Rule in Holding That the FAA Did Not Apply to a Nursing Home's Arbitration Agreement
Bruner v. Timberlane Manor Ltd. Partnership, No. 103,028, 2006 WL 3593740 (Okla. Dec. 12, 2006)
12/12/2006
The Oklahoma Supreme Court held that the Federal Arbitration Act (FAA) did not preempt the application of an Oklahoma law limiting the use of binding arbitration as means of resolving disputes between a nursing home and its residents. Specifically, the Court reasoned that the FAA did not apply because the nursing home admission contract did not involve interstate commerce despite the receipt of federal funds and the use of materials obtained from out-of-state vendors. In reaching this holding, the Court took a solitary position among the states and rejected the holding of the high court in at least three other states.
In Bruner v. Timberlane Manor Ltd. Partnership, No. 103,028, 2006 WL 3593740 (Okla. Dec. 12, 2006), Bruner was admitted to a nursing home owned and operated by Timberlane Manor. The admission contract contained an arbitration clause that called for the application of Oklahoma law... Full Story
Broad Arbitration Clause in Retainer Agreement Requires Arbitration of Tax Claims
Olson v. Jenkens & Gilchrist, No. 05 C 4216, 2006 WL 3354132 (N.D. Ill. Nov. 17, 2006)
11/17/2006
A federal court in Illinois held that a broad arbitration agreement in a contract between a law firm and its client requires arbitration of disputes arising out of tax advice that the law firm gave the client when the agreement specified that the law firm would also act as a financial advisor.
In Olson v. Jenkens & Gilchrist, No. 05 C 4216, 2006 WL 3354132 (N.D. Ill. Nov. 17, 2006), Olson and other plaintiffs brought suit against Jenkens & Gilchrist and other defendants, including the law firm Timmis & Inman LLP. Plaintiffs sought damages because they suffered losses as a result of an alleged tax shelter scheme put together by defendants... Full Story
Employees Benefit from Finality of Arbitration
Kelly v. RMI Insurance Services, Inc., No. H030047, 2006 WL 3721202 (Cal. Ct. App. Dec. 19, 2006)
12/19/2006
Citing the rule that an "arbitrator's decision should be the end, not the beginning of a dispute," the California Court of Appeal held that an attorney's ignorance of the general law governing arbitration was not an excusable mistake that would justify vacating judgment on an arbitration award.
In Kelly v. RMI Insurance Services, Inc., No. H030047, 2006 WL 3721202 (Cal. Ct. App. Dec. 19, 2006), Kelly filed an arbitration claim against RMI, his former employer, alleging wrongful termination... Full Story
In California, Health Care Plan Arbitration Terms Must Be "Prominently Displayed"
Zembsch v. Superior Court, No. A114157, 2006 WL 3791297 (Cal. App. Dec. 27, 2006)
12/27/2006
Under California law, arbitration agreements within health care service plans must the "prominently displayed" to be enforceable.
In Zembsch v. Superior Court, No. A114157, 2006 WL 3791297 (Cal. App. Dec. 27, 2006), Zembsch brought an action against Health Net of California, his HMO, when Health Net refused to issue a standing referral for Zembsch's son to receive care from a specialist.
Health Net asked the Court to compel arbitration of the dispute pursuant to an arbitration clause on the signed enrollment form. Zembsch argued that the arbitration agreement was unenforceable because it did not comply with the requirements of Cal. Health & Safety Code § 1363.1(b)... Full Story
Voluntary Dismissal of Court Action Does Not Impact Pending Arbitration
Lee v. California Pacific Bank, No. A112310, 2006 WL 3707824 (Cal. Ct. App. Dec. 18, 2006)
12/18/2006
The California Court of Appeals held that a trial court had jurisdiction to confirm an arbitration award even though the aggrieved party dismissed the underlying court action in response to the order compelling arbitration.
In Lee v. California Pacific Bank, No. A112310, 2006 WL 3707824 (Cal. Ct. App. Dec. 18, 2006), the Lees borrowed money from California Pacific using real estate as collateral. When the Lees defaulted on the loan, California Pacific held a sale of the property. The Lees sued to set aside the sale. Based on an arbitration clause in the loan agreement, California Pacific filed a motion to compel arbitration. The trial court granted the motion... Full Story
Court Does Not Modify Arbitration Award to Add Clarifying Language
General Systems Solutions, Inc. v. Renuit Now, Inc., No. 4006195, 2006 WL 3525022 (Conn. Super. Nov. 17, 2006)
11/17/2006
The Superior Court of Connecticut held that it would only modify an arbitration award "so as to effect the intent thereof and promote justice between the parties," and refused to add language highlighting issues the arbitrator did not address.
In General Systems Solutions, Inc. v. Renuit Now, Inc., No. 4006195, 2006 WL 3525022 (Conn. Super. Nov. 17, 2006), an arbitrator issued an interim award in favor of plaintiff General Systems Solutions, Inc. (GSS). Renuit Now, Inc. (Renuit) did not object to the interim award, but Renuit's owner, Computerized Vehicle Registration (CVR) moved to modify the award and clarify the arbitrator's intent. CVR claimed that it was not a proper party for arbitration and wished to add language indicating the arbitrator only had jurisdiction over CVR for purposes of the interim award... Full Story
California Court Disallows Employer's Late Attempt to Amend Arbitration Agreement and Eliminate Its Offending Terms
Tibbs v. Automobile Club of Southern California, No. B189149, 2006 WL 3719422 (Cal. Ct. App. Dec. 19, 2006)
12/19/2006
The California Court of Appeals disallowed an employer's attempt to amend an arbitration agreement and reconcile its terms with the requirements set forth in Armendariz v. Foundation Health Psychare Services, Inc., 6 P.3d 669 (Cal. 2000), because the employer did not reserve the right to modify the agreement, and the amendments did not go into effect until after the employee was terminated.
In Tibbs v. Automobile Club of Southern California, No. B189149, 2006 WL 3719422 (Cal. Ct. App. Dec. 19, 2006), Tibbs sued the Automobile Club of Southern California (ACSC), her former employer, for wrongful termination... Full Story
Tortious Interference Claim Subject to Arbitration
Coventry First LLC v. Marmorstein, No. 4D06-2139, 2006 WL 3733206 (Fla. Ct. App. Dec. 20, 2006)
12/20/2006
A Florida Appellate Court held that a claim for tortious interference is subject to arbitration because a nexus existed between the dispute and the arbitration agreement.
In Coventry First LLC v. Marmorstein, No. 4D06-2139, 2006 WL 3733206 (Fla. Ct. App. Dec. 20, 2006), Warren Marmorstein, a CPA and financial advisor, and Coventry had a contract where Marmorstein would submit to Coventry the sale of life insurance policies from the existing owners of the policies. The contract was not exclusive on either side, but Marmorstein was required to submit all policies to Coventry regardless of whether he submitted them to other companies... Full Story
Alleged Failure to Hear Evidence Insufficient to Vacate Arbitral Award
Vincent v. Belt, No. E038884, 2006 WL 3530724 (Cal. App. 4 Dist. Dec. 8, 2006)
12/8/2006
Without any record that material evidence was actually excluded from an arbitration hearing, the California Court of Appeal refused to vacate an arbitral award on the basis of the arbitrator's alleged failure to hear such evidence.
In Vincent v. Belt, No. E038884, 2006 WL 3530724 (Cal. App. 4 Dist. Dec. 8, 2006), Vincent prevailed in arbitration against Belt, a police officer who allegedly broke into Vincent's home and assaulted her. Vincent was awarded a total of $176,000 in economic and non-economic damages, but Belt contended that the result might have been different had the arbitrator considered Vincent's psychological evaluation, which could have been used to impeach her testimony... Full Story
Shorter Statute of Limitations Contained in Arbitration Agreement Upheld as Reasonable
Morgan v. Lexington Furniture Industries, Inc., No. COA06-1, 2006 WL 3717555 (N.C. Ct. App. Dec. 19, 2006)
12/19/2006
A North Carolina Appellate Court held that a shorter statute of limitations bargained for in an arbitration agreement was not unreasonable.
In Morgan v. Lexington Furniture Industries, Inc., No. COA06-1, 2006 WL 3717555 (N.C. Ct. App. Dec. 19, 2006), Donald Morgan was an independent account manager for Lexington. The contract included an arbitration agreement that specified that any claims must be filed within 180 days of the occurrence.
Lexington terminated the contract. Nearly ten months later, Morgan filed a complaint for lost wages and wrongful termination. Lexington moved for summary judgment on the basis that Morgan had failed to file within 180 days. No demand for arbitration was filed. The trial court granted the motion for summary judgment... Full Story
Pennsylvania Court Declines to Enforce Agreement to Arbitrate on an Individual Basis
Thibodeau v. Comcast Corp., No. 2176 EDA 2005, 2006 WL 3457582 (Pa. Super. Ct. Dec. 1, 2006)
12/1/2006
The Pennsylvania Superior Court affirmed a trial court's ruling that a bar on class-wide proceedings rendered an arbitration agreement unconscionable and unenforceable. According to the Court, it made no difference that the trial court applied Pennsylvania law instead of Massachusetts law.
In Thibodeau v. Comcast Corp., No. 2176 EDA 2005, 2006 WL 3457582 (Pa. Super. Ct. Dec. 1, 2006), Thibodeau was a cable television subscriber, first through AT&T Broadband (AT&T) and later through Comcast. When Comcast acquired AT&T, Comcast sent Thibodeau and other subscribers a customer agreement requiring all disputes to be arbitrated on an individual basis.
Two years later, Thibodeau sued Comcast for improper billing. Comcast filed a motion to compel arbitration based on the arbitration clause in the customer agreement. In opposing the motion, Thibodeau argued that the bar on class-wide proceedings rendered the arbitration agreement unconscionable. The trial court agreed and denied the motion... Full Story
Court Must Decide Mental Capacity in Determining Existence of Arbitration Agreement
Rhymer v. 21st Mortg. Corp., No. E2006-00742-COA-R3CV, 2006 WL 3731937 (Tenn. Ct. App. Dec. 19, 2006)
12/19/2006
In construing Buckeye Check Cashing, Inc. v. Cardegna, 126 S. Ct. 1204 (2006), the Tennessee Court of Appeals held that the court, not an arbitrator, must decide mental capacity in determining the existence of an arbitration agreement.
In Rhymer v. 21st Mortg. Corp., No. E2006-00742-COA-R3CV, 2006 WL 3731937 (Tenn. Ct. App. Dec. 19, 2006), Trivett bought a mobile home from 21st Mortgage. When Trivett's legal custodian, Rhymer, sued 21st Mortgage on his behalf, 21st Mortgage moved to compel arbitration pursuant to an arbitration clause in the sales contract. In opposing the motion, Rhymer argued that Trivett was incompetent to enter into the arbitration agreement by virtue of his mental incapacity. The trial court granted the motion to compel arbitration... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new federal legislation.
STATE LEGISLATION
Arizona SB 1054 (Introduced 1/8/2007)
Subjects: Court-Annexed Arbitration
This bill would amend existing law impacting superior court arbitration proceedings. Among other things, the bill would increase jurisdictional limits on arbitration from $50,000 to $75,000; and increase the maximum sum to be paid to arbitrators from $75 to $140/day.
Connecticut HB 5266 (Introduced 1/8/2007)
Subjects: Eminent Domain, Arbitration
A bill to protect private property owners from having property seized by eminent domain for private development purposes and to expand the duties of the Office of Ombudsman for Property Rights to include arbitration.
Florida HB 13 (Introduced 1/2/2007)
Subjects: Arbitration, Motor Vehicle Warranty
Relates to motor vehicle warranty enforcement. Would revise calculation of offset use for purposes of consumer refunds. Would revise affirmative defenses to claims to limit them to certain modifications or alterations. Provides that filing of consumer claim arising during Lemon Law rights period with manufacturer's certified procedure is discretionary rather than mandatory. Would make participation in RV Mediation and Arbitration Program discretionary.
Michigan HB 6359 (Passed 12/20/2006)
Subjects: Arbitration, healthcare insurance
This act amends the state insurance code to require a Medicare select insurer to use procedures for hearing complaints and resolving written grievances from subscribers. The procedures must be aimed at mutual agreement for settlement and may include arbitration procedures. The grievance procedure must be described in the policy and certificate and in the outline of coverage.
Michigan HB6456 (Introduced 09/12/2006) Enacted 12/21/2006
Subjects: Dispute Resolution, Cable
Cable television regulation bill, which, among other things, establishes the following dispute resolution requirements: "(1) Each video service provider shall establish a dispute resolution process for its customers. Each provider shall maintain a local or toll-free telephone number for customer service contact. (2) The commission shall establish a process to review disputes which are not resolved under subsection (1), disputes between a provider and a franchising entity, and disputes between providers. (3) Each provider shall notify its customers of the dispute resolution process created under this section." Text of the bill
Michigan SB 631/632/826 (Pocket vetoed 1/5/2007)
Subjects: Licensing, Construction, ADR
This series of bills failed to take effect after Governor Jennifer Granholm pocket vetoed SB 631 and SB 632. The bills would have increased licensing fees for individual construction licensing and regulation, and allow a licensee to contractually provide for an ADR procedure to resolve complaints filed with the Department of Labor and Economic Growth over licensing of residential builders, which were to be conducted by a neutral third party.
Mississippi HB 158 (Introduced 1/2/2007)
Subjects: Mediation, Civil disputes
Would require the pursuit of mediation in all civil disputes: "The Mississippi Bar shall appoint and certify mediators for such disputes. Mediators shall be members of The Mississippi Bar who have been engaged in the active practice of law for a minimum of five (5) years. The mediator shall make every effort to help parties resolve their dispute in order to avoid litigation."
Mississippi HB 232 (Introduced 1/2/2007)
Subjects: Motor vehicle insurance; arbitration
Creates the "Mississippi Consumer Choice in Motor Vehicle Insurance Act":
"Arbitration. Any dispute with respect to personal injury protection coverage between a personal injury protection insurer and an injured person, or the dependents of such person, shall be submitted to arbitration. Such dispute either shall be submitted to the American Arbitration Association, or be submitted for determination in the following manner: Upon the request for arbitration being made by either party, each party to the dispute shall select an arbitrator and the two (2) arbitrators so named shall select a third arbitrator. The written decision of any two (2) arbitrators is binding on each party. If arbitrators are not selected within forty-five (45) days from such request, either party may require that such arbitration be submitted to the American Arbitration Association."
Mississippi HB 278/SB 2299 (Introduced 1/2/2007 & 1/5/2007)
Subjects: Employment, arbitration
The "Good Faith in Employment Act" would abolish "employment at will," require decisions to terminate employees to be made for good faith business reasons, and prohibit any arbitration clause from circumventing the provisions of this law.
New York AB 343 (Introduced 12/20/2006)
Subjects: Motor vehicle retail leasing, arbitration
Conforms state law to recent federal changes pertaining to motor vehicle retail leasing to enhance consumer protection; provides for additional disclosures regarding terms and conditions, and fees; provides for a 3 day cooling off period for leases and for the purchase of new and used vehicles; discourages leasing companies from charging termination fees by allowing those lessors who do not charge such a fee to dispose of the vehicle immediately; includes arbitration provisions.
New York AB 1115 (Introduced 1/3/2007)
Subjects: Modification of arbitration awards
Would amend New York arbitration law to allow for modification of an arbitral award when the "award is subject to a valid offset provision."
Wyoming HB 124 (Prefiled 1/5/2007)
Subjects: Eminent Domain, Arbitration
An Act relating to eminent domain; defining public use and public necessity; providing for mediation or arbitration in disputes.
REGULATIONS
No new regulations.
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