Federal Cases
Fourth Circuit Declares Arbitration “Usage of Trade” in Textile Industry
In re Cotton Yarn Antitrust Litigation, Nos. 05-2392, 05-2393, 2007 WL 2965586 (4th Cir. Oct. 12, 2007)
10/12/2007
Reversing a federal district court’s denial of a motion to compel arbitration of a textile industry dispute, the Fourth Circuit Court of Appeals held that arbitration was a “usage of trade” in the textile industry and therefore a part of the parties’ oral sales agreement.
In In re Cotton Yarn Antitrust Litigation, Nos. 05-2392, 05-2393, 2007 WL 2965586 (4th Cir. Oct. 12, 2007), various yarn purchasers commenced a class action against several North Carolina yarn manufacturers for alleged price fixing violations. The manufacturers moved to dismiss the suit for those individuals whose contracts included an arbitration provision... Full Story
Sixth Circuit Retains the “Reference to the Contract” Scope Standard in Enforcing Arbitration Provisions Across Multiple Contracts
Nestle Waters North America, Inc. v. Bollman, No. 07-1031, 2007 WL 2962842 (6th Cir. Oct. 12, 2007)
10/12/2007
An arbitration provision in an initial contract applies to a dispute over the interpretation of a subsequent deed if the dispute cannot be resolved without reference to the initial contract, according to the Sixth Circuit Court of Appeals.
In Nestle Waters North America, Inc. v. Bollman, No. 07-1031, 2007 WL 2962842 (6th Cir. Oct. 12, 2007), Bollman and Nestle entered into a purchase and sale agreement (PSA) for the conveyance of certain water rights on Bollman’s land. This PSA included detailed provisions for arbitration of any controversy or claim arising out of the agreement. Subsequent to the execution of the PSA, the parties also executed a deed, which did not contain an arbitration provision... Full Story
Amendment to Dealership Contract Invoking State Law Trumps Arbitration Agreement
Balar Equipment Corp. v. VT Leeboy, Inc., No. 07-CV-403-PHX-EHC, 2007 WL 2461847 (D. Ariz. Aug. 27, 2007)
8/27/2007
A dealership agreement that invokes state law will be subject to the rights granted by state law that may vary from those found in the dealership agreement’s arbitration terms. In applying Arizona law, a district court determined the arbitration agreement may be abrogated by the Arizona Equipment Dealers Act (Dealers Act).
In Balar Equipment Corp. v. VT Leeboy, Inc., No. 07-CV-403-PHX-EHC, 2007 WL 2461847 (D. Ariz. Aug. 27, 2007), Balar, an Arizona corporation, and Leeboy, a North Carolina corporation, entered into an agreement through which Balar became the exclusive Arizona dealer for Leeboy’s manufactured equipment... Full Story
Arbitration Constitutes Compromise of Third Party Claim, Requires Employer Consent in Worker’s Compensation Claim
Colbert v. District of Columbia Dept. of Employment Services, No. 06-AA-323, 2007 WL 2947224 (D.C. Oct. 11, 2007)
10/11/2007
In a case of first impression, a federal court in Washington, D.C. deferred to an agency interpretation of a worker’s compensation statute whereby an agreement to arbitrate constituted “compromise” of a claim under a statutory provision requiring employer’s consent to “compromise” of claims against a third-party.
In Colbert v. District of Columbia Dept. of Employment Services, No. 06-AA-323, 2007 WL 2947224 (D.C. Oct. 11, 2007), Sonya Colbert was injured in an automobile accident. She received worker’s compensation benefits and also filed suit against the driver of the other car involved. That dispute was submitted to arbitration and she received an award... Full Story
Tortious Interference Claims Beyond Scope of Agreement to Arbitrate Contractual Disputes Between Real Estate Agents
Hackman v. Dickerson Realtors, Inc., No. 06 C 50240, 2007 WL 2570297 (N.D. Ill. Aug. 31, 2007)
8/31/2007
Agreements to arbitrate “contractual disputes” between realtors do not encompass tortious interference claims, according to a federal district court in Illinois.
In Hackman v. Dickerson Realtors, Inc., No. 06 C 50240, 2007 WL 2570297 (N.D. Ill. Aug. 31, 2007), Hackman brought a complaint against fellow real estate agent Parvin for tortious interference with business expectancy. Parvin moved to compel arbitration of the claim. Parvin maintained that she and Hackman were signatories to a real estate association agreement which required arbitration of all disputes between the parties. Hackman opposed the motion, stating that the claim against Parvin fell outside the scope of the real estate association agreement... Full Story
Manifest Disregard of Federal Law Challenge Confers Subject Matter Jurisdiction on Federal Courts to Review Award
Louis J. Kennedy Trucking Co. v. Teamsters Local Union, No. CIV.A 05-6005JLL, 2007 WL 2705161 (D. N.J. Sept. 17, 2007)
9/17/2007
Confirming an arbitration award in a labor dispute, a New Jersey federal court held that it had subject matter jurisdiction to review a manifest disregard challenge because it required a court to immerse itself substantially in federal law.
In Louis J. Kennedy Trucking Co. v. Teamsters Local Union, No. CIV.A 05-6005JLL, 2007 WL 2705161 (D. N.J. Sept. 17, 2007), Kennedy Trucking temporarily relieved its driver Fernandes from driving duties after an alleged road rage incident. Kennedy Trucking sought to have a psychologist examine Fernandes. Fernandes refused and filed a grievance with the union... Full Story
Federal Court Holds Arbitrator Should Decide Who Should Resolve Dispute
Gone to the Beach, LLC v. Choicepoint Services, Inc., No. 05-2715 JPM, 2007 WL 2768256 (W.D. Tenn. Sep. 21, 2007)
9/21/2007
Declining to hear a commercial dispute, a Tennessee federal court held that an arbitrator should decide who resolves a dispute, where the arbitration agreement is valid and the dispute only concerns interpretation of the contract generally, rather than the arbitration provision specifically.
In Gone to the Beach, LLC v. Choicepoint Services, Inc., No. 05-2715 JPM, 2007 WL 2768256 (W.D. Tenn. Sep. 21, 2007), Gone to the Beach sold all its business assets to Choicepoint. The agreement stipulated that Gone to the Beach would receive a $20,400,000 base price and an earnout amount not to exceed $15,000,000 based on the business’ financial performance in 2004. Choicepoint agreed to operate the business consistent with past practices... Full Story
Under the FAA, Choice of Law and Venue Are Decisions for the Arbitrator to Resolve
Burress, Inc. v. John Deere Construction & Forestry Co., No. 7:07-CV-00310, 2007 WL 3023975 (W.D. Va. Oct. 15, 2007)
10/15/2007
Under the Federal Arbitration Act (FAA), disputes over where arbitration will occur or which law is applicable are matters for the arbitrator to resolve, according to a Virginia federal court.
In Burress, Inc. v. John Deere Construction & Forestry Co., No. 7:07-CV-00310, 2007 WL 3023975 (W.D. Va. Oct. 15, 2007), Burress and John Deere entered into a dealership agreement that contained an arbitration clause. A contract dispute between Burress and John Deere arose out of the dealership agreement... Full Story
State Cases
Automobile Purchase Contract Arbitration Agreements Are Governed by the FAA When Dealer Is Engaged in Interstate Commerce
Edwards v. Costner, No. 1060099, 2007 WL 2343706 (Ala. Aug. 17, 2007)
8/17/2007
An agreement to arbitrate disputes regarding an intrastate automobile purchase is governed by the FAA if the automobile dealer engages in interstate commerce during its course of business, according to the Alabama Supreme Court.
In Edwards v. Costner, No. 1060099, 2007 WL 2343706 (Ala. Aug. 17, 2007), Kimbril purchased a car from Edwards. Concurrently, Kimbril and Edwards entered into an agreement to arbitrate any dispute “arising out of, relating to, resulting from, or concerning” the purchase... Full Story
Class Action Waiver and Provision Reserving Unconscionability Issues to the Arbitrator Render Agreement Unconscionable
Murphy v. Check ‘N Go of California, Inc., NO. A114442, 2007 WL 3016414 (Cal. Ct. App. Oct. 17, 2007)
10/17/2007
Under California law, the presence of more than one unconscionable provision in an arbitration agreement, such as an oppressive class action waiver or the reservation of issues of unconscionability to the arbitrator, can be enough to render an entire agreement unenforceable, according to a California Court of Appeal.
In Murphy v. Check ‘N Go of California, Inc., NO. A114442, 2007 WL 3016414 (Cal. Ct. App. Oct. 17, 2007), Murphy was employed by Check ‘n Go as a manager. After leaving its employment, Murphy sued Check ‘N Go on her behalf and on behalf of all similarly situated employees, alleging that it had misclassified employees in her position as exempt, violating certain wage and labor laws... Full Story
Florida Appellate Court Finds Condition Precedent Must Be Satisfied To Compel Arbitration
Hubbard Const. Co. v. Jacobs Civil, Inc., No. 5D06-3640, 2007 WL 2962593 (Fla. Dist. Ct. App. Oct. 12, 2007)
10/12/2007
Reversing a trial court’s ruling granting a motion to compel arbitration, a Florida appellate court held that a provision requiring a party to submit disputes to arbitration contained a condition precedent that must therefore be satisfied in order for a court to compel arbitration.
In Hubbard Const. Co. v. Jacobs Civil, Inc., No. 5D06-3640, 2007 WL 2962593 (Fla. Dist. Ct. App. Oct. 12, 2007), Hubbard Construction Company (HCC) hired Jacobs Civil (JCI) to provide construction and design services for a highway project. A dispute arose between the parties concerning amounts due under the contract. JCI alleged that HCC owed more than $600,000 while HCC asserted JCI owed a higher sum due to its defective performance... Full Story
New Jersey Court Holds Arbitrations Under New York Law “Fundamentally Flawed” Without a Hearing
Air Pegasus of New York, Inc. v. Liberty Helicopter Tours, Inc., Nos. A-3656-05T5, A-3703-05T5, 2007 WL 2188250 (N.J. App. Div. Aug. 1, 2007)
8/1/2007
Absent consent or waiver of the parties, New York arbitration law requires that an arbitrator conduct a hearing during arbitration, and failing to do so requires vacatur of the award upon the motion of a complaining party contesting confirmation, according to a New Jersey appellate court.
In Air Pegasus of New York, Inc. v. Liberty Helicopter Tours, Inc., Nos. A-3656-05T5, A-3703-05T5, 2007 WL 2188250 (N.J. App. Div. Aug. 1, 2007), a dispute arose between Pegasus, Liberty, and third-party defendant Trenk regarding the operation of a heliport in Manhattan. The parties agreed to arbitrate the dispute. Without a hearing, the arbitrator issued an award in favor of Liberty... Full Story
ADR Legislation & Regulation
LEGISLATION
MA S 142
AUTHOR: Jehlen (D)
TITLE: Franchisee Protection
INTRODUCED: 01/10/2007
DISPOSITION: Pending
LOCATION: Joint Committee on Community Development and Small Businesses
Commentary:
Authorizes AAA to handle “good cause termination” arbitrations in franchise agreements.
US H 3915
SPONSOR: Miller B (D), Frank B (D)
TITLE: Consumer Mortgage Practices
INTRODUCED: 10/22/2007
DISPOSITION: Pending
LOCATION: House Financial Services 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.”
US S 2210
SPONSOR: Sanders (I)
TITLE: Medical Innovation Prize Act
INTRODUCED: 10/19/2007
DISPOSITION: Pending
LOCATION: SENATE
Commentary:
“Medical Innovation Prize Act of 2007,” to provide incentives for investment in research and development for new medicines, to enhance access to new medicines. In the case of a drug that is on the market on October 1, 2008, and subject to patents owned by a party other than the person who first received market clearance for the drug, the Board shall establish an arbitration procedure to determine an equitable division of any prize payments under this Act among the patent owners and the person who first received market clearance for the drug.
WI S 294
AUTHOR: Breske (D)
TITLE: Interstate Insurance Product Regulation Compact
INTRODUCED: 10/22/2007
DISPOSITION: Pending
LOCATION: Senate Transportation, Tourism and Insurance Committee
Commentary:
This bill would enact the Interstate Insurance Product Regulation Compact (Compact). The stated purposes of the Compact include promoting and protecting the interests of consumers of annuity, life insurance, disability income, and long-term care insurance products; developing uniform standards for insurance products; establishing a central clearinghouse for review of insurance products, and advertisements related to insurance products, that are filed with the Interstate Insurance Product Regulation Commission (Commission); and giving regulatory approval to insurance products and related advertisements filed with the commission. As it relates to ADR, the Compact would restrict the use of arbitration clauses in such 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.
REGULATION
Mississippi 2007-3
AGENCY: Department of Insurance
TITLE: Special Non-binding Arbitration Program
PROPOSED: 07/24/2007
ADOPTED: 09/19/2007
Commentary:
This Regulation establishes a special non-binding arbitration program for personal lines residential insurance claims resulting from Hurricane Katrina.
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