Federal Cases
Supreme Court Grants Cert to Answer Lingering Question on Permissible Scope of Union-Negotiated Arbitration Agreements
14 Penn Plaza LLC v. Pyett, No. 07-581, 2008 WL 423540 (Feb. 19, 2008)
2/19/2008
The United States Supreme Court has granted cert in a case that should resolve lingering uncertainty as to whether a union-negotiated collective bargaining agreement (CBA) can require individual union members to submit statutory discrimination claims to an arbitral forum. See 14 Penn Plaza LLC v. Pyett, No. 07-581, 2008 WL 423540 (Feb. 19, 2008).
The case involves three union members who sued for age discrimination after they were reassigned from their positions as night watchmen. The employer moved to compel arbitration pursuant to a CBA that specifically required arbitration of discrimination claims. The trial court denied the motion on the ground that "even a clear and unmistakable union-negotiated waiver of a right to litigate certain federal and state statutory claims in a judicial forum is unenforceable." Pyett v. Pennsylvania Bldg. Co., No. 04 Civ. 7536, 2006 WL 1520517, at *3 (S.D.N.Y. June 1, 2006)... Full Story
Arbitration Agreement Reserving Seller's Right to Sue in Court Fails For Lack of Mutuality
Howard v. King's Crossing, Inc., No. 06-1969, 2008 WL 450460 (4th Cir. Feb. 19, 2008)
2/19/2008
Affirming a district court denial of a motion to compel arbitration, the Fourth Circuit Court of Appeals held that an arbitration agreement was unenforceable, as it lacked consideration because it did not mutually bind both parties.
In Howard v. King's Crossing, Inc., No. 06-1969, 2008 WL 450460 (4th Cir. Feb. 19, 2008), Howard sued King's for various contract and tort claims arising from a condominium purchased from King's. King's removed the case to federal court and moved to compel arbitration. The trial court denied the motion finding the agreement lacked consideration and was unconscionable. King's appealed... Full Story
Seventh Circuit Finds Arbitrator Gave "Parties What They Had Contracted For: A Cost-Effective and Efficient Resolution of Their Dispute"
Halim v. Great Gatsby's Auction Gallery, Inc., No. 07-1615, 2008 WL 383284 (7th Cir. Feb. 14, 2008)
2/14/2008
Affirming a federal district court's confirmation of an arbitration award in an antique auction dispute, the Seventh Circuit Court of Appeals held that an arbitrator did not manifestly disregard the law by deciding not to issue a formal ruling over a discovery dispute.
In Halim v. Great Gatsby's Auction Gallery, Inc., No. 07-1615, 2008 WL 383284 (7th Cir. Feb. 14, 2008), Halim bought various antiques from Gatsby, an antique collector. Halim participated in the auction via telephone and did not see or inspect any items before bidding on them... Full Story
Eleventh Circuit Finds Arbitration Agreement Expressly Excludes Affiliates
World Rentals and Sales, LLC v. Volvo Construction Equipment Rents, Inc., No. 06-16352, 2008 WL 466127 (11th Cir. Feb. 22, 2008)
2/22/2008
Affirming a district court's denial of a motion to compel arbitration of a commercial dispute, the Eleventh Circuit Court of Appeals held that a loan agreement alluding to a separate franchise agreement did incorporate the arbitration agreement by reference, but the dispute was not arbitrable because the arbitration agreement expressly excluded affiliates.
In World Rentals and Sales, LLC v. Volvo Construction Equipment Rents, Inc., No. 06-16352, 2008 WL 466127 (11th Cir. Feb. 22, 2008), Volvo Rents, a company that sells and leases construction equipment through franchises, entered into a franchise agreement containing an arbitration agreement with World Rentals in 2003. World Rentals obtained financing through Volvo Finance, an affiliate of Volvo Rents. The loan documents did not contain arbitration agreements, but did incorporate the franchise agreement between World Rentals and Volvo Rents... Full Story
Vacatur Denied under Contractually Expanded Judicial Review for "Error of Law" Where Arbitrator Made Factual Rather than Legal Determination
Mofet Etzion Ltd. v. General Dynamics Land Systems, Inc., No. 07 Civ. 4566(LAP), 2008 WL 344725 (S.D.N.Y. Feb. 04, 2008)
2/4/2008
A federal court in New York held that a party cannot overturn an arbitration award under contractually expanded judicial review for "error of law" where the arbitrator's determination of whether a party used "best efforts" to market the opposing party's product was essentially a factual determination.
In Mofet Etzion Ltd. v. General Dynamics Land Systems, Inc., No. 07 Civ. 4566(LAP), 2008 WL 344725 (S.D.N.Y. Feb. 04, 2008), Mofet, a ceramic armor manufacturer, entered into an agreement with GDLS, a developer and marketer of armored vehicles which grant exclusive marketing and sales rights of Mofet's products to GDLS... Full Story
Seventh Circuit Upholds Arbitrator's Award of Equitable Relief
Prostyakov v. Masco Corp., No. 06-3928, 2008 WL 170043 (7th Cir. Jan. 22, 2008)
1/22/2008
In keeping with the rule that arbitrators have full authority to fashion appropriate remedies, the Seventh Circuit Court of Appeals rejected the argument that an arbitrator exceeded his powers by awarding equitable relief, which in this case consisted of a directive to the party's CEO that he modify the employment records of a former employee.
In Prostyakov v. Masco Corp., No. 06-3928, 2008 WL 170043 (7th Cir. Jan. 22, 2008), Masco hired Prostyakov, a Russian citizen, to assist them in distributing their products throughout Russia. As the relationship deteriorated, Masco and Prostyakov entered into a settlement agreement whereby they agreed to arbitrate any future disputes and that the end of the relationship would be described as "amicable."... Full Story
State Cases
Arkansas Appellate Court Declines to Enforce Arbitration Agreement Procured Through an Invalid Power of Attorney
Waverly-Arkansas, Inc. v. Keener, No. CA 07-524, 2008 WL 316149 (Ark. Ct. App. Feb. 6, 2008)
2/6/2008
Affirming a trial court's denial of a motion to compel arbitration of a nursing home care dispute, an Arkansas appellate court nullified an arbitration agreement signed by a party with a questionably procured power of attorney.
In Waverly-Arkansas, Inc. v. Keener, No. CA 07-524, 2008 WL 316149 (Ark. Ct. App. Feb. 6, 2008), Davis suffered a stroke in 1996 that paralyzed her and rendered her unable to speak. After Davis declined her daughter's request for a power of attorney, her granddaughter placed a pen in Davis' hand and held it so that Davis would sign the power of attorney for her daughter Keener. Later, Davis' son had the power of attorney notarized by someone not present at the "signing."... Full Story
California Appellate Court Holds That Settlement Agreement Requires Party's Signature
Blix Street Records, Inc. v. Gelbard, No. B196648, 2008 WL 331384 (Cal. Ct. App. Feb. 7, 2008)
2/7/2008
Reversing a trial court's entry of judgment based upon a settlement agreement entered into at mediation, a California appellate court held that, for a settlement agreement entered into during mediation to be valid, the parties themselves must sign the settlement agreement rather than their attorneys.
In Blix Street Records, Inc. v. Gelbard, No. B196648, 2008 WL 331384 (Cal. Ct. App. Feb. 7, 2008), Eva Cassidy sang and wrote songs until her death in 1996. Her parents inherited the rights to Eva's work and entered into an exclusive licensing agreement with Blix Street. A dispute arose concerning royalties from a film the Cassidys planned to produce about their daughter's life. In 2004, Blix Street sued the Cassidys and the Cassidys countersued... Full Story
Florida Court Upholds Nursing Home Arbitration Agreement Over Claim of Unconscionability
Slusser el rex. Slusser v. Life Care Centers of America, Inc., No. 4D07-2906, 2008 WL 441644 (Fla. Dist. Ct. App. Feb. 20, 2008)
2/20/2008
A Florida appellate court held that a voluntary arbitration agreement between a nursing home and its resident was valid, even though the agreement waived access to the courts to resolve claims arising under Florida's Nursing Home Residents Act.
In Slusser el rex. Slusser v. Life Care Centers of America, Inc., No. 4D07-2906, 2008 WL 441644 (Fla. Dist. Ct. App. Feb. 20, 2008), Slusser checked herself into Life Care nursing home. As part of the admissions process, Slusser entered into an arbitration agreement with Life Care... Full Story
Florida Appellate Upholds Agreement to Arbitrate Medical Malpractice Claims
Jonathan M. Frantz, M.D., P.A. v. Shedden, No. 2D07-3700, 2008 WL 465543 (Fla. Dist. Ct. App. Feb. 22, 2008)
2/22/2008
Reversing a trial court's denial of a motion to compel arbitration of a medical malpractice dispute, a Florida appellate court held that an arbitration agreement was valid and rejected a finding of procedural unconscionability because the arbitration agreement appeared in a separate document in clear and conspicuous bold letters.
In Jonathan M. Frantz, M.D., P.A. v. Shedden, No. 2D07-3700, 2008 WL 465543 (Fla. Dist. Ct. App. Feb. 22, 2008), Shedden sought elective surgery from Florida Eye Health. During a pre-operation visit, Florida Eye Health employees presented Shedden with documents to fill out before the surgery. One of these documents was an arbitration agreement denoted in large black letters on a separate form. The Florida Eye Health employees provided him with sufficient time to review the agreement and even told him he could take the agreement with him and review it with an attorney. According to Shedden's testimony, he signed the agreement without reading it... Full Story
Michigan Appellate Court Concludes Arbitrator Did Not Exceed His Powers
Toll Bros., Inc. v. Fekete, No. 274964, 2008 WL 466596 (Mich. Ct. App. Feb. 21, 2008)
2/21/2008
Affirming a trial court ruling confirming an arbitration award in an employment discrimination suit, a Michigan appellate court held that an arbitrator fulfilled all legal and contractual requirements when he ruled that a business had unlawfully discriminated against a female employee.
In Toll Bros., Inc. v. Fekete, No. 274964, 2008 WL 466596 (Mich. Ct. App. Feb. 21, 2008), Fekete submitted an employment discrimination claim to arbitration against Toll Bros. The arbitrator ruled in Fekete's favor... Full Story
North Carolina Appellate Court Finds No Agreement to Arbitrate Based on Fraudulent Inducement
Robertson v. Terminix Co. of East Carolina, No. COA07-233, 2008 WL 434579 (N.C. Ct. App. Feb. 19, 2008)
2/19/2008
Affirming a trial court order denying a motion to compel arbitration of a dispute over termite treatment, a North Carolina appellate court held that no arbitration agreement existed between the parties because one party fraudulently induced the other party to sign the agreement.
In Robertson v. Terminix Co. of East Carolina, No. COA07-233, 2008 WL 434579 (N.C. Ct. App. Feb. 19, 2008), James Robertson contracted with Terminix for termite treatment in 1989. After he passed away, his widow, Patricia Robertson, continued making payments under the contract and receiving benefits. In 1999, Terminix employees approached Mrs. Robertson telling her to sign paperwork authorizing new treatment. They told her that there was no need for her to read the paperwork and that she needed to sign the papers immediately because they were in a hurry... Full Story
Texas Appellate Court Holds Lack of Signature Not Necessarily Failure to Assent to Arbitration
In re Citgo Petroleum Corp., No. 09-07-563 CV, 2007 WL 4938701 (Tex. App. Feb. 21, 2008)
2/21/2008
Reversing a trial court's denial of a motion to compel arbitration of an employment dispute, a Texas appellate court held that an employer's failure to sign an arbitration agreement did not signify a lack of intent to arbitrate when its conduct clearly established its intent to arbitrate.
In In re Citgo Petroleum Corp., No. 09-07-563 CV, 2007 WL 4938701 (Tex. App. Feb. 21, 2008), Pat Tank hired Rose, and Rose signed a "Dispute Resolution Agreement" as part of the employment contract. Later, Rose sued Citgo for injuries suffered while Rose was working at a Citgo refinery. Citgo moved to compel arbitration pursuant to the arbitration agreement Rose had signed with Pat Tank... Full Story
Award for Recovery of Attorney's Fees Incurred During Withdrawal Proceedings Held to Violate Texas Public Policy
Lee v. Daniels & Daniels, No. 04-07-00096-CV, 2008 WL 372455 (Tex. Ct. App. Feb. 13, 2008)
2/13/2008
A Texas appellate court has set aside a portion of an arbitration award for attorney's fees incurred while withdrawing from representation, holding that attorneys' attempts to recover such fees are unconscionable as a matter of law.
In Lee v. Daniels & Daniels, No. 04-07-00096-CV, 2008 WL 372455 (Tex. Ct. App. Feb. 13, 2008), client Lee retained law firm Daniels to represent him in divorce proceedings. The parties executed an engagement letter outlining the costs of representation. The letter also included an arbitration agreement... Full Story
Court Upholds Lessor's Arbitration Award Over Lessee's Objections to the Arbitrator's Conduct
Tri-County Investments, LLC v. Toney Law Offices, S.C., No. 2007AP195, 2008 WL 426233 (Wis. Ct. App. Feb. 19, 2008)
2/19/2008
A Wisconsin appellate court upheld an arbitration award between a lessor and lessee, despite a host of objections from the lessee, and warned the lessee that vigorous advocacy is not inconsistent with civility, as contemplated by the rules of appellate procedure and professional conduct.
In Tri-County Investments, LLC v. Toney Law Offices, S.C., No. 2007AP195, 2008 WL 426233 (Wis. Ct. App. Feb. 19, 2008), Toney entered into a five-year lease with Tri-County for an office space. After certain remodeling efforts failed due to the existing structural design of the office, Toney declared the lease rescinded... Full Story
ADR Legislation & Regulation
LEGISLATION
FL H 1219 SIMILAR: FL S 2076
AUTHOR: McBurney [R]
TITLE: Florida Arbitration Code
DISPOSITION: Pending
LOCATION: HOUSE
Commentary: Revises Florida Arbitration Code. Revisions include: "(2) A provision for mandatory binding arbitration within any arbitration agreement is void and unenforceable except to the extent federal law provides for its enforceability." This prohibition does not apply to insurance contracts or self regulatory securities organizations. The amendments also include limitations on the rights which can be waived by a consumer in an arbitration agreement. Also imposes reporting requirements on arbitration organizations.
FL S 2682
AUTHOR: Diaz [R]
TITLE: Department of Lottery
DISPOSITION: Pending
LOCATION: SENATE
Commentary: Amends a bill relating to the Department of Lottery and pari mutual facilities. It requires arbitration if agreements are not in place. Amendments include: arbitration administered by AAA; other procedural aspects of arbitration.
HI H 2692
AUTHOR: Say [D]
TITLE: Volume 11
DISPOSITION: Pending
LOCATION: HOUSE
Commentary: Amends various provisions of Volume 11 of the Hawaii Revised Statutes for the purpose of correcting errors and references, and clarifying language. Amendments made are in relation to arbitration procedure.
IA S 2242
AUTHOR: Bolkcom [D]
TITLE: Insurance Consumer Advocate
DISPOSITION: Pending
Commentary: Creates the office of insurance consumer advocate. The bill provides that "[i]f the insurance consumer advocate makes a finding that probable cause exists regarding the allegations of the complaint, the advocate shall endeavor to remedy or resolve the unfair or deceptive act or practice by conference, conciliation, and mediation between the complainant and the respondent for a period of thirty days following the initial conciliation meeting between the insurance consumer advocate's staff and the respondent after a finding of probable cause." Further, "[u]pon a finding that the terms of the conciliation or mediation agreement are not being complied with by the respondent, the advocate shall report that finding to the commissioner of insurance who shall take appropriate action to assure compliance." Finally, "[t]he insurance consumer advocate or a party to a complaint may request mediation of the complaint at any time during the processing of the complaint. If the complainant and the respondent participate in mediation, any mediation agreement may be enforced pursuant to this section. Mediation may be discontinued at the request of any party or the advocate."
IA SSB 3249
AUTHOR: Commerce Cmt
TITLE: Foreclosure Reconveyances
DISPOSITION: Pending
Commentary: Relates to foreclosure consultants and foreclosure reconveyances; includes a prohibition of pre dispute arbitration agreement: a "provision in a contract which attempts or purports to require arbitration of a dispute arising under sections 714E.2 through 714E.5 is void at the option of the owner." Further, "[a] provision in a contract which attempts or purports to require arbitration of any dispute arising under this chapter is void at the option of the foreclosed homeowner."
IL S 1993
SPONSOR: Lightford [D]
TITLE: Payday Loan Reform Act
DISPOSITION: Pending
Commentary: Amends the Payday Loan Reform Act. Prohibits the inclusion of: " (B) a waiver of the right to a jury trial, if applicable, in any action brought by or against a consumer, unless the waiver is included in an arbitration clause allowed under subparagraph (C) of this paragraph (11); ... (C) a mandatory arbitration clause that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of ...; [or a provision] (17) Charging for, or attempting to collect, attorney's fees, court costs, or arbitration costs incurred in connection with the collection of a payday loan" in a loan document.
IL S 2866
SPONSOR: Trotter [D]
TITLE: Payday Loan Finance Charges
DISPOSITION: Pending
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."
MD H 1528
AUTHOR: Lafferty [D]
TITLE: State Finance and Procurement
DISPOSITION: Pending
LOCATION: House Health and Government Operations Committee
Commentary: "Authorizes a procurement officer who receives a protest or a contract claim from a contractor to participate in mediation and, subject to conditions, agree to arbitration; authorizes a person who reviews a contract claim to refer the matter to mediation and, subject to conditions, agree to arbitration; authorizes a procurement officer who receives a contract claim from a unit to participate in mediation and, subject to conditions, agree to arbitration."
MN H 3533 COMPANION: MN S 3197
AUTHOR: Davnie [DFL]
TITLE: Financial Institutions
DISPOSITION: Pending Carryover
LOCATION: House Commerce and Labor Committee
Commentary: Relates to financial institutions; regulates consumer small loans. Prohibits arbitration in small loans by providing that "(l) No contract or agreement between a consumer small loan lender and borrower may contain a mandatory arbitration provision. Any such provision is void and unenforceable."
MS S 2745
AUTHOR: Bryan [D]
TITLE: Health Insurance Exchange Act
DISPOSITION: Failed
LOCATION: Died
Commentary: "Establishes the State Health Insurance Exchange as an instrumentality of the State; provides for the appointment of a Board of Directors and power to appoint an Executive Director and organize for business; prescribes powers and responsibilities; provides for enrollment and coverage election under the program; requires for participation of plans; prescribes underwriting rules; provides for continuation of coverage; provides for dispute resolution; provides for participating employer plans."
SC H 3674
AUTHOR: Cato [R]
TITLE: Health Care Financial Recovery and Protection Act
DISPOSITION: Pending
LOCATION: SENATE
Commentary: Amending existing act by adding: "CHAPTER 19 South Carolina Health Care Financial Recovery and Protection Act" including Section 44 19 60 which states that no portion of this section may be construed to prohibit parties to a provider contract from agreeing to submit their disputes to mediation or arbitration.
VA H 408
AUTHOR: Oder [R]
TITLE: Foreclosure Rescues
DISPOSITION: To Governor
LOCATION: Eligible for Governor
Commentary: Amends law relating to foreclosure. Amendments include: "[a]ny provision in an agreement with the owner of such residential real property that requires the owner to submit to mandatory arbitration shall be null and void, and notwithstanding any such provisions, the owner of such residential real property shall have the rights and remedies under this chapter."
VA S 768
AUTHOR: Watkins [R]
TITLE: Conditional Zoning
DISPOSITION: Pending Carryover
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.
WI S 294
AUTHOR: Breske [D]
TITLE: Interstate Insurance Product Regulation Compact
DISPOSITION: Pending
LOCATION: Assembly Second Reading
Commentary: As it relates to ADR, the Compact would restrict the use of arbitration clauses in contracts that were not pre approved by rule or pre approved by the Interstate Insurance Product Regulation Commission or which do not conform with the form contracts in use among the compacting states.
WV H 2039
SPONSOR: Ellem [R]
TITLE: Consumer Loan Agreements
DISPOSITION: Pending
LOCATION: TabledCommentary: "The purpose of this bill is to establish that unless preempted by federal law, a regulated contract may not contain a mandatory arbitration clause, and that any mandatory arbitration clause in a regulated contract is void."
REGULATIONS
None.
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