Federal Cases
Arbitral Immunity Protects Arbitration Administrator from Lawsuit
Sathianathan v. Pacific Exchange, Inc., No. 06-3783, 2007 WL 2686847 (3d Cir. Sept. 14, 2007)
9/14/2007
The Third Circuit Court of Appeals affirmed a district court’s dismissal of claims filed against an arbitration administrator based on the doctrine of arbitral immunity. The doctrine protects both arbitrators and arbitration administrators.
In Sathianathan v. Pacific Exchange, Inc., No. 06-3783, 2007 WL 2686847 (3d Cir. Sept. 14, 2007), Sathianathan lost an arbitration administered by Pacific Exchange. After an unsuccessful attempt at challenging the arbitration award, Sathianathan filed suit against Pacific Exchange and some of its employees. The district court dismissed Sathianathan’s claims based on the doctrine of arbitral immunity... Full Story
Arbitrators Enjoy Same Broad Discretion as Courts in Applying Offensive Non-Mutual Collateral Estoppel Doctrine
Collins v. D.R. Horton, Inc., No. 05-15737, 2007 WL 2756956 (9th Cir. Sept. 24, 2007)
9/24/2007
Arbitrators should be given the same broad discretion as courts to determine whether the doctrine of offensive non-mutual collateral estoppel should be applied to a particular claim, and an arbitrator does not engage in manifest disregard of the law in exercising that discretion without the benefit of clear precedent on the issue, according to the Ninth Circuit Court of Appeals.
In Collins v. D.R. Horton, Inc., No. 05-15737, 2007 WL 2756956 (9th Cir. Sept. 24, 2007), Collins and other employees entered into employment contracts with Continental, as it began merger negotiations with Horton. Once the merger was complete, several employees, including Collins and Hickcox, alleged that Horton violated those agreements by failing to honor the severance packages within the contracts once the employees’ employment terminated. Hickcox, another former Continental employee under the contract, alleged Horton had terminated him without good cause; Collins had resigned, alleging that the resignation fell under the “for good reason” provision of the contract, and therefore entitled him to severance... Full Story
Mediation Provision Would Not Bar Lawsuit If Contract Was Terminated
USA Flea Market, LLC v. EVMC Real Estate Consultants, Inc., No. 07-11486, 2007 WL 2615887 (11th Cir. Sept. 12, 2007)
9/12/2007
The Eleventh Circuit Court of Appeals has held that a district court erred in granting summary judgment for failure to pursue mediation because the mediation provision did not survive the contract’s termination and there was a question of fact as to whether the contract had been terminated.
In USA Flea Market, LLC v. EVMC Real Estate Consultants, Inc., No. 07-11486, 2007 WL 2615887 (11th Cir. Sept. 12, 2007), USA Flea Market and EVMC entered into a contract for EVMC’s purchase of real property. After EVMC failed to appear at the closing, USA Flea Market sued EVMC... Full Story
Debt Collector Did Not Waive Right to Arbitrate by Engaging in Limited Discovery
Balezos v. Cavalry Portfolio Services, LLC, No. CV 06-1952-PHXSMM, 2007 WL 2330861 (D. Ariz. Aug. 15, 2007)
8/15/2007
Rejecting arguments that a debt collector waived its right to arbitrate by engaging in discovery, an Arizona federal court held that merely responding to discovery requests did not amount to waiver of the right to arbitrate.
In Balezos v. Cavalry Portfolio Services, LLC, No. CV 06-1952-PHXSMM, 2007 WL 2330861 (D. Ariz. Aug. 15, 2007), Balezos defaulted on his Discover Card debt. Discover sold the delinquent account, which Cavalry eventually purchased. Cavalry obtained a small claims judgment against Balezos. Balezos then sued Cavalry for various Fair Debt Collection Practices Act claims. In response, Cavalry filed a motion to compel arbitration. In opposing the motion, Balezos argued that Cavalry had waived its right to arbitrate... Full Story
Proper Challenges to an Award are Limited to Those Provided in the Arbitration Rules and Motions to Vacate, Modify, or Correct Under the FAA
Nickoloff v. Wolpoff & Abramson, L.L.P., No. CV 07-3990ER, 2007 WL 2735289 (C.D. Cal. Sept. 18, 2007)
9/18/2007
According to a federal district court in California, an aggrieved party can only challenge an arbitration award by invoking the applicable arbitration rules or through a motion to vacate, modify, or correct the award, and not through a related statutory claim after the award is issued.
In Nickoloff v. Wolpoff & Abramson, L.L.P., No. CV 07-3990ER, 2007 WL 2735289 (C.D. Cal. Sept. 18, 2007), Nickoloff alleged that Wolpoff and co-defendant Centurion violated the federal Fair Debt Collection Practices Act (FDCPA) and the California Fair Debt Collection Practices Act (Rosenthal Act) by filing an arbitration claim on debt that they allegedly had no legal right to collect. Specifically, Nickoloff maintained that the documentary evidence produced at arbitration was insufficient to prove the alleged debt, even though an award was entered against Nickoloff after a full hearing... Full Story
Discovery Limitations Render Arbitration Agreement Unenforceable
Sherwood v. Blue Cross, No. CIV. S-07-633 LKK/DA, 2007 WL 2705262 (E.D. Cal. Sept. 14, 2007)
9/14/2007
A federal court in California denied an employer’s motion to compel arbitration on the grounds that (1) the arbitration agreement did not apply because the employee was not terminated and (2) even if the agreement were applicable, discovery limitations rendered the agreement unconscionable and thus unenforceable.
In Sherwood v. Blue Cross, No. CIV. S-07-633 LKK/DA, 2007 WL 2705262 (E.D. Cal. Sept. 14, 2007), Sherwood, a 51 year old employee of Blue Cross, was passed up for a promotion that was given to a 24 year old woman. Sherwood ended her employment with Blue Cross and then sued for age discrimination... Full Story
Court Refuses to Stay Class Action During Appeal from Ruling That Class Waiver is Unenforceable
Bradberry v. T-Mobile USA, Inc., No. C 06-6567 CW, 2007 WL 2221076 (N.D. Cal. Aug. 2, 2007)
8/2/2007
A federal district court in California refused to stay a class action during the pendency of an appeal from the Court’s ruling that a class waiver rendered the arbitration agreement unconscionable under California law. The Court found that the party seeking arbitration presented a “substantial question” in arguing for enforcement, but denied a stay based on the balance of equities.
In Bradberry v. T-Mobile USA, Inc., No. C 06-6567 CW, 2007 WL 2221076 (N.D. Cal. Aug. 2, 2007), Bradberry filed a class action lawsuit against T-Mobile, alleging that it was charging customers for services used by former customers who had previously been assigned the same phone number... Full Story
Alleged Right to Jury Trial on Motions to Compel Arbitration Does Not Apply Where Party is Seeking Confirmation of Arbitration Award
Carmack v. Chase Manhattan Bank (USA), No. C 07-02124 WHA, 2007 WL 2729226 (N.D. Cal. Sept. 18, 2007)
9/18/2007
In denying a motion for reconsideration of an order confirming an arbitration award, a federal district court in California held that any right to a jury trial under section 4 of the Federal Arbitration Act (FAA) does not apply to a motion to confirm an arbitration award because confirmation proceedings are governed by section 9, not section 4.
In Carmack v. Chase Manhattan Bank (USA), No. C 07-02124 WHA, 2007 WL 2729226 (N.D. Cal. Sept. 18, 2007), Carmack unsuccessfully challenged an arbitration award in favor of Chase. The Court subsequently confirmed the award. Carmack later filed a motion for reconsideration, claiming that under section 4 of the FAA, she had a right to a jury determination of whether an arbitration agreement ever existed... Full Story
Rooker-Feldman Doctrine Bars Federal Court from Vacating Arbitration Award Confirmed by State Court
Nitzke v. Seivers, No. CIVS061937 FCD KJMPS, 2007 WL 2688434 (E.D. Cal. Sep 10, 2007)
9/10/2007
In dismissing an action seeking vacatur of an arbitration award that was confirmed in state court, a California federal court held that, under the Rooker-Feldman doctrine, it lacked subject matter jurisdiction to hear the dispute.
In Nitzke v. Seivers, No. CIVS061937 FCD KJMPS, 2007 WL 2688434 (E.D. Cal. Sep 10, 2007), Nitzke filed an action in federal court, seeking vacatur of an arbitration award that was confirmed in state court... Full Story
Court Upholds Arbitration Agreement Despite Exemption for Some Claims
Dwyer v. Dynetech Corp., No. C 07-02309 JSW, 2007 WL 2726699 (N.D. Cal. Sept. 17, 2007)
9/17/2007
In dismissing a lawsuit alleging employment discrimination, a federal district court in California rejected an unconscionability challenge to the employee’s arbitration agreement. Specifically, the Court found that the exemption for some of the employer’s claims did not render the agreement substantively unconscionable.
In Dwyer v. Dynetech Corp., No. C 07-02309 JSW, 2007 WL 2726699 (N.D. Cal. Sept. 17, 2007), Dwyer applied for an instructor position with Dynetech. Later, as an independent contractor for Dynetech, Dwyer executed a letter agreement that included an arbitration clause. Accordingly, when Dwyer sued for discrimination, Dynetech moved for dismissal pursuant to the arbitration agreement. In opposing the motion, Dwyer argued that the arbitration agreement was unconscionable and therefore unenforceable... Full Story
Testimony-Based Challenge to Arbitration Award Requires Transcript
Dolton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 05-CV-1317, 2007 WL 2489701 (D.C. Cir. Sept. 6, 2007)
9/6/2007
The District of Columbia Court of Appeals held that a party’s failure to produce a transcript of the arbitration hearing was fatal to its motion to vacate the award where the party was challenging the award based on testimony presented during the hearing.
In Dolton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 05-CV-1317, 2007 WL 2489701 (D.C. Cir. Sept. 6, 2007), the Doltons hired Merrill Lynch and two of its advisers, King and Fraley, to diversify their investment portfolio, which was heavily focused on the technology sector... Full Story
USERRA Claims May Be Arbitrated
Landis v. Pinnacle Eye Care, LLC, No. 3:06-CV-569-R, 2007 WL 2668519 (W.D. Ky. Sept. 6, 2007)
9/6/2007
A federal court in Kentucky has held that United Services Employment and Reemployment Rights Act (USERRA) claims, like other federal claims, are arbitrable.
In Landis v. Pinnacle Eye Care, LLC, No. 3:06-CV-569-R, 2007 WL 2668519 (W.D. Ky. Sept. 6, 2007), Landis was employed by Pinnacle as an optometrist, but he was sent to Afghanistan as a member of the National Guard. Upon Landis’ return, Pinnacle allegedly demoted him because of his involvement in the military... Full Story
Credit Insurance Does Not Come within Nevada Law Limiting Arbitration Agreements in Health Insurance Contracts
Coleman v. Assurant, Inc., No. 2:06-CV-00925-RLHRJJ, 2007 WL 2695239 (D. Nev. Sept. 10, 2007)
9/10/2007
In ordering arbitration of a credit insurance dispute, a federal court in Nevada rejected the argument that the credit insurance policy came within a Nevada law limiting arbitration agreements in health insurance contracts.
In Coleman v. Assurant, Inc., No. 2:06-CV-00925-RLHRJJ, 2007 WL 2695239 (D. Nev. Sept. 10, 2007), Coleman, an MBNA cardholder, allegedly signed up for insurance, through Assurant, to cover his credit card debt if he became unable to pay the balance... Full Story
Obligations to Arbitrate Survive Termination of Contractual Relationships; Class Action Waivers Enforceable Barring a Lack of Meaningful Choice or Denial of Remedies
Howard v. Wells Fargo Minnesota, NA, No. 1:06CV2821, 2007 WL 2778664 (N.D. Ohio, Sept. 21, 2007)
9/21/2007
According to a federal district court in Ohio, the obligation to arbitrate claims pursuant to a valid agreement can survive the termination of the underlying contractual relationship, and a class action waiver within is enforceable without evidence of a lack of meaningful choice and a deprivation of remedies.
In Howard v. Wells Fargo Minnesota, NA, No. 1:06CV2821, 2007 WL 2778664 (N.D. Ohio, Sept. 21, 2007), Howard entered into a home loan agreement, later assigned to Wells Fargo, as well as a separate arbitration agreement. The arbitration agreement, with exceptions for certain claims and for small claims court actions, required the arbitration of any claim, dispute, or controversy arising from or relating to the loan... Full Story
NASD Policies Mandating Arbitration Serve as Arbitration Agreement
The O.N. Equity Sales Co. v. Venrick, No. CV07-0735RSL, 2007 WL 2705859 (W.D. Wash. Sept. 17, 2007)
9/17/2007
Granting a motion to compel arbitration of a securities fraud dispute between a broker/dealer and a registered representative, a Washington federal court held that NASD policies requiring members and representatives to arbitrate certain claims serves as a valid arbitration agreement because the signatory agrees to be bound by NASD policies.
In The O.N. Equity Sales Co. v. Venrick, No. CV07-0735RSL, 2007 WL 2705859 (W.D. Wash. Sept. 17, 2007), Venrick invested in the Lancorp fund owned by The O.N. Equity Sales Co. (ONESCO) in April, 2004. Venrick also began working for ONESCO shortly before investing in Lancorp, which made him an NASD registered representative. ONESCO terminated Venrick’s employment in January 2005... Full Story
State Cases
Courts May Grant Injunctive Relief in Cases Stayed Pending Arbitration, But Only to Prevent Irreparable Harm
Drago v. Holiday Isle, L.L.C., Civ. No. 07-0430-KD-B, 2007 WL 2683675 (S.D. Ala. Sept. 7, 2007)
9/7/2007
According to a federal district court in Alabama, courts are permitted to grant injunctive relief in an action stayed pending arbitration, but the court must find a threat of irreparable harm before granting the injunction.
In Drago v. Holiday Isle, L.L.C., Civ. No. 07-0430-KD-B, 2007 WL 2683675 (S.D. Ala. Sept. 7, 2007), Drago and Holiday entered into an agreement for the purchase of a condominium. Later, Drago rescinded the agreement, a rescission that Holiday did not honor. Drago field a complaint with the Court, seeking an order that Holiday honor the rescission. Holiday instead moved to stay the proceedings and compel arbitration of the dispute in accordance with their contract, which the Court granted... Full Story
Vacatur Challenge Not Time Barred
MBNA America Bank, N.A. v. Blanks, No. CA06-1396, 2007 WL 2713361 (Ark. Ct. App. Sep. 19, 2007)
9/17/2007
Affirming a trial court’s denial of a motion to confirm an arbitration award, an Arkansas appellate court held that the FAA requirement that a party seeking to vacate an arbitration award must do so within three months does not apply when there is no written arbitration agreement.
In MBNA America Bank, N.A. v. Blanks, No. CA06-1396, 2007 WL 2713361 (Ark. Ct. App. Sep. 19, 2007), MBNA obtained an arbitration award against Blanks. MBNA petitioned to confirm the award and attached a copy of the award along with an amendment to the credit card agreement adding an arbitration provision... Full Story
California Appellate Court Holds That Alleged Legal Error No Basis for Vacatur
Bruinbilt, LLC v. Somoza, No. B193703, 2007 WL 2696508 (Cal. Ct. App. Sept. 17, 2007)
9/17/2007
Upholding a trial court’s ruling confirming an arbitration award, a California appellate court held that California law does not permit a court to vacate an award based upon an arbitrator’s alleged legal error.
In Bruinbilt, LLC v. Somoza, No. B193703, 2007 WL 2696508 (Cal. Ct. App. Sept. 17, 2007), Bruinbilt entered into an agreement with Persistence Capital to purchase five pools of life insurance policies as investments. Bruinbilt invested $7.5 million dollars, and Somoza and Coberly signed personal guarantees for the enterprise... Full Story
Mississippi Supreme Court Finds Arbitration Agreement Inapplicable to Preexisting Dispute
Amsouth Bank v. Quimby, No. 2006-CA-00826-SCT, 2007 WL 2495112 (Miss. Sept. 6, 2007)
9/6/2007
In affirming an order denying arbitration, the Mississippi Supreme Court held that the dispute was outside the temporal scope of the parties’ most recent arbitration agreement because the agreement did not contain an express provision for retroactive application.
In Amsouth Bank v. Quimby, No. 2006-CA-00826-SCT, 2007 WL 2495112 (Miss. Sept. 6, 2007), Quimby opened a line of credit with Deposit Guaranty National Bank, which later merged with Amsouth. When he opened the line of credit, Quimby allegedly requested credit disability insurance... Full Story
ADR Legislation & Regulation
LEGISLATION
CA A 500
AUTHOR: Lieu [D]
TITLE: Civil Actions: Telephonic Appearances
INTRODUCED: 02/20/2007
DISPOSITION: Enacted
Commentary:
Adding and repealing sections to the Code of Civil Procedure relating to appearance by telephone conference in civil actions.
Amendments include: (b) Except as provided in subdivision (c), in all general civil cases, as defined in the California Rules of Court, a party that has provided notice may appear by telephone at the following conferences, hearings, and proceedings: (5) A conference to review the status of an arbitration or mediation.
OH H 332
SPONSOR: Wagoner [R]
TITLE: Revised Uniform Partnership Act
INTRODUCED: 10/02/2007
DISPOSITION: Pending
LOCATION: House Rules and Reference Committee
Commentary:
Adopts the Revised Uniform Partnership Act; governs new partnerships that elect to be governed by the act; establishes that the act governs all partnerships in the State; establishes that the existing Partnership Law no longer governs partnerships. Amendments include changing the definition of tribunal to include an arbitrator, arbitration panel, or other tribunal, if agreed. The bill also allows for the written consent to the jurisdiction of an arbitrator and method of notice.
OH S 207
SPONSOR: Miller [D]
TITLE: Check Cashing Loan Act
INTRODUCED: 08/14/2007
DISPOSITION: Pending
LOCATION: 10/2/07 Referred to Senate Finance and Financial Institutions Committee
Commentary:
Would modify the Check Cashing Loan Act to state as follows: "No check cashing business ... shall ...Require the borrower to waive the borrower's right to legal recourse under any otherwise applicable provision of state or federal law; [or] Require the borrower to submit to arbitration or impose onerous legal notice provisions in the case of a dispute."
PA HR 430
PN: 2566
AUTHOR: Buxton [D]
TITLE: Conflict Resolution Day
INTRODUCED: 10/03/2007
DISPOSITION: Adopted
Commentary:
Designating October 18, 2007, as "Conflict Resolution Day" in Pennsylvania.
US S 221
SPONSOR: Grassley [R]
TITLE: Livestock and Poultry Contracts
INTRODUCED: 01/09/2007
DISPOSITION: Pending
LOCATION: SENATE
This bill, which would eliminate mandatory arbitration agreements in certain poultry contracts, passed the Senate committee and was referred to the Senate on October 4, 2007.
US S 2113
SPONSOR: Baucus [D]
TITLE: United States Peru Trade Promotion Agreement
INTRODUCED: 09/27/2007
DISPOSITION: Pending
LOCATION: Senate Finance Committee
Commentary:
Implements the United States Peru Trade Promotion Agreement, which includes a section on arbitration of claims.
US S 2136
SPONSOR: Durbin [D]
TITLE: Treatment of Primary Mortgages in Bankruptcy
INTRODUCED: 10/03/2007
DISPOSITION: Pending
LOCATION: Senate Judiciary Committee
Commentary:
Would enact the `Helping Families Save Their Homes in Bankruptcy Act of 2007'. Makes a number of amendments to foreclosure and bankruptcy law. As it relates to arbitration, the bill would amend Section 1334 of title 28, United States Code, to add: "Notwithstanding any agreement for arbitration that is subject to chapter 1 of title 9, in any core proceeding under section 157(b) of this title involving an individual debtor whose debts are primarily consumer debts, the court may hear and determine the proceeding, and enter appropriate orders and judgments, in lieu of referral to arbitration."
REGULATION
New Jersey 39 NJR 4071
AGENCY: Department of Banking and Insurance/Division of Insurance
TITLE: Actuarial Services
PROPOSED: 10/01/2007
CITATION: NJAC 11: 4-42.1 - 42.5, 42.7, 42.9, 42.13, 42.14, 42.15, 42.16
Amends actuarial services. As it relates to arbitration, includes a proposed amendment that would prohibit requiring binding arbitration in group health and group life insurance policies.
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