Federal Cases
Tenth Circuit Holds That Continued Employment Constitutes Assent to Arbitration Agreement
Hardin v. First Cash Financial Services, Inc., Nos. 05-6090, 05-6107, 2006 WL 2848087 (10th Cir. Oct. 6, 2006)
10/6/2006
The Tenth Circuit held that an employee assented to an arbitration agreement through her continued employment because even though she initially objected to the agreement, the employer told her that continued employment would constitute assent. The Court based its holding on the applicable Oklahoma law.
In Hardin v. First Cash Financial Services, Inc., Nos. 05-6090, 05-6107, 2006 WL 2848087 (10th Cir. Oct. 6, 2006), Hardin worked as a store manager for First Cash. In 2002, First Cash implemented a Dispute Resolution Policy (DRP) requiring arbitration of all employment-related disputes. In a letter announcing the DRP, First Cash advised its employees that the DRP would become mandatory on March 1, 2003 and that continued employment after that date would constitute acceptance of its terms... Full Story
Court Strongly Endorses Use of Arbitration for Sarbanes-Oxley Employment Claims
Guyden v. Aetna, Inc., No. 3:05cv1652(WWE), 2006 WL 2772695, (D. Conn. Sept. 25, 2006)
9/25/2006
A federal district court in Connecticut ordered arbitration of a whistleblower claim alleging a violation of the Sarbanes-Oxley Act (SOX), finding that contractual arbitration is consistent with the purpose of the Act.
In Guyden v. Aetna, Inc., No. 3:05cv1652(WWE), 2006 WL 2772695, (D. Conn. Sept. 25, 2006), Linda Guyden sued her former employer, Aetna, for retaliatory discharge in violation of SOX. Guyden alleged that she was wrongfully terminated after warning company executives of SEC violations... Full Story
Employee Prevails in Attempt to Submit Employment Dispute to Arbitration
Stevenson v. Tyco International Inc., No. 04-CV-4037 (KMK), 2006 WL 2827635 (S.D.N.Y. Sept. 29, 2006)
9/29/2006
A federal district court in New York ordered arbitration of an employment dispute, rejecting the employer’s argument that the employee waived his right to arbitration by requesting attorney fees in a separate court proceeding initiated by the employer.
In Stevenson v. Tyco International Inc., No. 04-CV-4037 (KMK), 2006 WL 2827635 (S.D.N.Y. Sept. 29, 2006), Stevenson sued Tyco, his former employer, to recover unpaid retirement benefits... Full Story
Federal Court Dismisses Claims as Collaterally Estopped by Arbitration Proceedings
Heimbuch v. Platinum Financial Services, No. 06-44 Erie, 2006 WL 2191964 (W.D. Pa. Aug. 1, 2006)
8/1/2006
A Pennsylvania federal court has held that when an issue has been decided in arbitration, and a state court has confirmed the arbitration award, the doctrine of collateral estoppel prevents a party from bringing an action that is premised on the same issue in federal court.
In Heimbuch v. Platinum Financial Services, No. 06-44 Erie, 2006 WL 2191964 (W.D. Pa. Aug. 1, 2006), Platinum brought a claim against Heimbuch, a Platinum cardholder, for the balance on a credit card.
Heimbuch argued that she was not liable for the debt because the credit card number did not match the number of her original credit card. She also claimed that she opted out of the arbitration agreement in her original contract... Full Story
Arbitral Award in Texas Construction Dispute Upheld; Court Defers to Arbitrator’s Decision not to Admit Certain Evidence
S & B Engineers and Constructors, Ltd. v. Alstom Power, Inc., No. 3:04-CV-0150-L, 2006 WL 2820085 (N.D. Tex. Oct. 2, 2006)
10/2/2006
In S & B Engineers and Constructors, Ltd. v. Alstom Power, Inc., No. 3:04-CV-0150-L, 2006 WL 2820085 (N.D. Tex. Oct. 2, 2006), the United States District Court for the Northern District of Texas held that the arbitrators in a construction dispute were not guilty of evident partiality or misconduct for refusing to hear certain evidence.
S & B was a subcontractor on a project supervised by Alstom. When a contract dispute arose between the parties, S & B initiated arbitration and received a partial award in its favor. S & B moved to vacate the award, however, since it represented only a fraction of their alleged total losses. Since the arbitration panel had “refused” to admit critical evidence, according to S & B, the award should be vacated... Full Story
Arbitration Clause in Employment Agreement Upheld Despite Validity Challenge
Cockerham v. Sound Ford, Inc., No. C06-1172JLR, 2006 WL 2841881 (W.D. Wash. Sept. 29, 2006)
9/29/2006
According to a Washington federal court, an arbitration clause in an employment agreement is not unconscionable when it clearly marks the arbitration provision and explains that agreeing to arbitration results in waiving a right to a jury trial.
In Cockerham v. Sound Ford, Inc., No. C06-1172JLR, 2006 WL 2841881 (W.D. Wash. Sept. 29, 2006), Cockerham sued her employer, Sound Ford, alleging racial and sexual harassment. Sound Ford moved to compel arbitration according to the terms of Cockerham’s employment agreement... Full Story
Court Orders “National Arbitration Council” to Cease Issuance of Sham Arbitration Awards
Citibank (South Dakota) N.A. v. National Arbitration Council, Inc., Nos. 3:04-cv-1076-J-32MCR, 3:04-cv-1205-J-20MCR, 2006 WL 2691528 (M.D. Fla. Sept. 19, 2006)
9/19/2006
A federal court in Florida issued a permanent injunction against an arbitration organization that tortiously interfered with contracts between credit card companies and cardholders by issuing sham arbitration awards.
In Citibank (South Dakota) N.A. v. National Arbitration Council, Inc., Nos. 3:04-cv-1076-J-32MCR, 3:04-cv-1205-J-20MCR, 2006 WL 2691528 (M.D. Fla. Sept. 19, 2006), Plaintiffs Citibank and Chase brought an action against National Arbitration Council (NAC), alleging tortious interference with a contractual relationship and seeking a permanent injunction of NAC’s activities... Full Story
Court Compels Arbitration of In Personam Maritime Claims
Amegy Bank Nat’l Ass’n v. Miss Cony, No. 06-00405 SOM/KSC, 2006 WL 2793172 (D. Hawaii Sept. 27, 2006)
9/27/2006
In Amegy Bank Nat’l Ass’n v. Miss Cony, No. 06-00405 SOM/KSC, 2006 WL 2793172 (D. Hawaii Sept. 27, 2006), the United States District Court for the District of Hawaii compelled arbitration of Amegy Bank’s in personam claims, but not in rem claims based on the seizure of a vessel.
Amegy Bank asserted that Richard Foreman defaulted on payment obligations under a series of promissory notes. Subsequent amendments to the notes included an arbitration clause covering “all disputes claims and controversies between [the parties].” Amegy filed an action against Foreman, and obtained a warrant to arrest the vessel “Miss Cony,” which was detained at the marina where it was located. Foreman moved to arbitrate Amegy Bank’s claims... Full Story
Court Orders Arbitration of Mortgage Payment Dispute
Williams v. WMC Mortgage Corp., No. 05-73356, 2006 WL 2844128 (E.D. Mich. Sept. 29, 2006)
9/29/2006
In Williams v. WMC Mortgage Corp., No. 05-73356, 2006 WL 2844128 (E.D. Mich. Sept. 29, 2006), a federal district court in Michigan ordered the parties to arbitrate a mortgage payment dispute.
Williams made a lump sum mortgage payment to Defendants with the understanding that he could restore a lower monthly mortgage payment. When Defendants refused to reduce Williams’ monthly payment, Williams sued. The Defendants moved to compel arbitration. The Court granted Defendants’ motion and ordered the parties to arbitrate the dispute... Full Story
Arbitration Agreement in Chicken Grower Contract Withstands Multiple Challenges
Steed v. Sanderson Farms, Inc., No. 2:05cv02146-KS-MTP, 2006 WL 2844546 (S.D. Miss. Sept. 29, 2006)
9/29/2006
A Mississippi federal court rejected an array of challenges to the validity of an arbitration agreement contained in a chicken grower contract and granted a motion to compel arbitration.
In Steed v. Sanderson Farms, Inc., No. 2:05cv02146-KS-MTP, 2006 WL 2844546 (S.D. Miss. Sept. 29, 2006), Elizabeth and Don Steed entered into a contract with Sanderson to become contract broiler chicken growers. The contract included an arbitration agreement requiring “[a]ny controversy or claim arising between the parties…including…the arbitrability of any dispute relating to this Agreement” to be settled by binding arbitration... Full Story
Broad Arbitration Agreement and Presumption of Arbitrability Require Arbitration of Collateral Matters
Polesuk v. CBR Systems, Inc., No. 05 CV 8324(GBD), 2006 WL 2796789 (S.D. N.Y. Sept. 29, 2006)
9/29/2006
The United States District Court for the Southern District of New York compelled arbitration of a dispute between parties, noting that even collateral matters are arbitrable under a broad arbitration agreement.
In Polesuk v. CBR Systems, Inc., No. 05 CV 8324(GBD), 2006 WL 2796789 (S.D. N.Y. Sept. 29, 2006), Polesuk brought an action against CBR, who Polesuk had contracted with to preserve placenta cord blood. Polesuk also brought claims against Quick, the courier who was responsible for transporting the cord blood... Full Story
“Alteration” Defense Forfeited when “Clarification” of the Arbitration Award goes Unchallenged
International Brotherhood of Electrical Workers v. Verizon New England, Inc., Nos. 06-1170, 06-1169, 2006 WL 2773485 (1st Cir. Sept. 28, 2006)
9/28/2006
The First Circuit held that when a party fails to challenge clarification of an adverse arbitration award, the party forfeits its defense that the clarification was a prohibited “alteration” of the final award.
In Local 2322, International Brotherhood of Electrical Workers v. Verizon New England, Inc., Nos. 06-1170, 06-1169, 2006 WL 2773485 (1st Cir. Sept. 28, 2006), an arbitrator decided the merits of a dispute between Verizon and Ouellette, a Verizon employee represented by union Local 2322. The union demanded arbitration on Ouellette’s behalf when Verizon deemed Oullette’s absence to attend a funeral an unauthorized absence, resulting in a one-day work suspension... Full Story
Court Refuses to Vacate Arbitration Award for Evident Partiality When Party Failed to Present any Evidence of Partiality
Henry v. Standard Automation & Control, No. 04-16588, 2006 WL 2233390 (9th Cir. March 23, 2006)
3/23/2006
In Henry v. Standard Automation & Control, No. 04-16588, 2006 WL 2233390 (9th Cir. March 23, 2006), Henry filed a pro se appeal of the district court’s decision to vacate an arbitration award that denied him relief, claiming that the arbitrator showed “severe partiality.”
However, the Court refused to vacate the award. Although Henry alleged that Standard’s counsel made an admission in arbitration that would show evident partiality, neither party submitted a transcript of the arbitration hearing to the Court. Therefore, the Court could not find evident partiality, and confirmed the arbitration award... Full Story
“Noncore” Bankruptcy Issues may be Arbitrated, but not Violations of Court Authority
In re Norman, Bankruptcy No. 04-11682, 2006 WL 2818814 (Bankr. M.D. Ala. Sept. 29, 2006).
9/29/2006
The United States Bankruptcy Court in Alabama has ruled that while many “noncore” bankruptcy issues may be arbitrated, matters of court authority, including whether or not an injunction has been violated, must be determined by a bankruptcy judge. In re Norman, Bankruptcy No. 04-11682, 2006 WL 2818814 (Bankr. M.D. Ala. Sept. 29, 2006).
Norman filed for bankruptcy in 2004, and the Court issued a discharge injunction shortly thereafter. However, Norman claimed that Defendant Applied Card Bank (Bank) violated the injunction by reporting Norman’s indebtedness to credit reporting agencies as “charged off account,” for the purpose of collecting discharged debt. The Bank moved to dismiss and to compel arbitration... Full Story
Citing FAA, Federal Court Sends Case to Arbitration Though Another Court’s Decision on a Consolidation Motion is Pending
Clearwater Insurance Co. v. Granite State Insurance Co., Nos. C 06-4472 SI, C 06-4500 SI,C 06-4501 SI, C 06-4502 SI, 2006 WL 2827872 (N.D. Cal. Oct. 2, 2006)
10/2/2006
An arbitrator, and not the court, should decide consolidation issues, and the court will not appoint an umpire for parties when the parties’ agreement provides a method for doing so, a federal court in California held.
In Clearwater Insurance Co. v. Granite State Insurance Co., Nos. C 06-4472 SI, C 06-4500 SI,C 06-4501 SI, C 06-4502 SI, 2006 WL 2827872 (N.D. Cal. Oct. 2, 2006), Clearwater petitioned the Court to compel arbitration of disputes with Granite and three other insurance companies... Full Story
Court Defers to Arbitrators on Whether to Exclude Evidence Covered by Confidentiality Agreement
Discover Re Managers, Inc. v. Preferred Employers Group, Inc., No. 3-05-CV-809 (WWE), 2006 WL 2838901 (D. Conn. Sept. 29, 2006)
9/29/2006
In a lawsuit involving an insurance underwriting agreement, a federal district court in Connecticut deferred to an arbitration panel on the question of whether a confidentiality agreement between the parties required the Court to exclude certain documents as evidence.
In Discover Re Managers, Inc. v. Preferred Employers Group, Inc., No. 3-05-CV-809 (WWE), 2006 WL 2838901 (D. Conn. Sept. 29, 2006), Discover Re Managers, Inc. (Discover) sued Preferred Employers Group, Inc. (PEGI), alleging that PEGI failed to pay Discover for insurance premiums collected by PEGI... Full Story
State Cases
Illinois Supreme Court Supports Class Arbitration Waivers Where Consumers Can Opt Out or Have Affordable Arbitral Remedy
Kinkel v. Cingular Wireless LLC, No. 100925, 2006 WL 2828664 (Ill. Oct. 5, 2006)
10/5/2006
The Illinois Supreme Court held that a general bar on class-wide proceedings was unconscionable and therefore unenforceable. The Court carefully limited the reach of its holding and said that it would uphold a bar on class-wide proceedings if the party drafting the agreement gave the other party a “meaningful opportunity” to opt out or if the plaintiff had a cost-effective arbitration remedy available.
In Kinkel v. Cingular Wireless LLC, No. 100925, 2006 WL 2828664 (Ill. Oct. 5, 2006), Kinkel brought a class action alleging that Cingular wrongfully imposed a $150 fee for early termination of a two-year agreement for wireless phone service... Full Story
Illinois Court Sends Question of Arbitrability to the Arbitrator
Carey v. Richards Building Supply Co., No. 2-06-0712, --- N.E.2d ---, 2006 WL 2847394 (Ill. App. Ct. Sept. 28, 2006)
9/28/2006
When an arbitration agreement is broad and it is unclear whether a particular dispute falls within the arbitration agreement, an arbitrator should decide whether the dispute is arbitrable, a state court in Illinois held.
In Carey v. Richards Building Supply Co., No. 2-06-0712, --- N.E.2d ---, 2006 WL 2847394 (Ill. App. Ct. Sept. 28, 2006), Carey brought a claim against Richards, claiming that he had being wrongfully terminated in retaliation for filing for a workers’ compensation claim... Full Story
Massachusetts Court Upholds Settlement Agreement Reached at Mediation Despite Disagreement over Final Settlement Terms
Targus Group International, Inc. v. Sherman, No. 044907BLS1, 2006 WL 2205508 (Mass. Super. Ct. July 24, 2006)
7/24/2006
A state trial court in Massachusetts held that an “agreement in principle” reached at mediation was enforceable as written even though the parties could not come to an agreement regarding final settlement terms.
In Targus Group International, Inc. v. Sherman, No. 044907BLS1, 2006 WL 2205508 (Mass. Super. Ct. July 24, 2006), Targus and Sherman entered into an Agreement in Principle (Agreement) after two days of mediation. Following mediation, the parties exchanged drafts of proposed final settlement papers, but they never reached a final agreement... Full Story
New Jersey Court Refuses to Apply Statute of Limitations Defense to Motion to Compel Arbitration when Counsel have Already Agreed to Arbitrate
Estate of Hainthaler v. Zurich Commercial Insurance, 903 A.2d 1103 (N.J. Super. Ct. App. Div. Aug. 7, 2006)
8/7/2006
A New Jersey appellate court held that even though the statute of limitations for the underlying cause of action had already run, the statute of limitations would not foreclose a motion to compel arbitration because the parties’ attorneys had already stipulated to arbitration as a means of resolving their dispute.
In Estate of Hainthaler v. Zurich Commercial Insurance, 903 A.2d 1103 (N.J. Super. Ct. App. Div. Aug. 7, 2006), Hainthaler was involved in a car accident in December 1997, and there was a dispute regarding underinsured motorist coverage... Full Story
Ohio Appellate Court Confirms Award Despite Notice, Agreement Validity, and Improper Venue Arguments
CACV of Colorado, L.L.C. v. Kogler, No. 021329, 2006 WL 2790398 (Ohio Ct. App. 2 Dist. Sep 29, 2006)
9/29/2006
The Court of Appeals of Ohio confirmed an arbitration award in the face of untimely arguments that the challenging party had not agreed to arbitrate, was not notified of the award, and that the arbitration had not occurred in the appropriate venue.
In CACV of Colorado, L.L.C. v. Kogler, No. 021329, 2006 WL 2790398 (Ohio Ct. App. 2 Dist. Sep 29, 2006), Linda Kogler appealed the decision of the trial court to dismiss her objections to an arbitration award rendered in favor of CACV of Colorado (“CACV”) because the objections were not filed in a timely manner... Full Story
Pennsylvania Court Says “No” to De Novo Review of Arbitration Awards
Trombetta v. Raymond James Financial Services, Inc., Nos. 1250 WDA 2005, 1347 WDA 2005, 2006 WL 2424873 (Pa. Super. Ct. Aug. 22, 2006)
8/22/2006
In a case of first impression, the Pennsylvania Superior Court held that a provision for de novo review of an arbitration award is unenforceable under Pennsylvania law.
In Trombetta v. Raymond James Financial Services, Inc., Nos. 1250 WDA 2005, 1347 WDA 2005, 2006 WL 2424873 (Pa. Super. Ct. Aug. 22, 2006), Trombetta sued Raymond James for allegedly mismanaging his investment account. The parties went to arbitration, where the panel rendered an award in favor of Raymond James... Full Story
Arbitration Waived when Party Files Moves to Compel Arbitration Ten Days Before Trial
Interconex, Inc. v. Ugarov, No. 01-05-00524-CV, 2006 WL 2506562 (Tex. App. Aug. 31, 2006)
8/31/2006
According to a Texas appellate court, a party waives its right to arbitrate when it files a motion to compel arbitration ten days before a trial on damages, after partial summary judgment has been entered, and after it has already requested an alternative trial date.
In Interconex, Inc. v. Ugarov, No. 01-05-00524-CV, 2006 WL 2506562 (Tex. App. Aug. 31, 2006), Russian authorities confiscated several personal items belonging to Ugarov, who then sued Interconex, the company hired to coordinate his move from Russia to Texas, for failing to obtain the appropriate export permits... Full Story
Arbitration Agreements in Loan Documents Need to Exhibit Mutual Obligations to Arbitrate Claims
Brown v. Tennessee Title Loans Inc., No. E200600887COAR9CV, 2006 WL 2842788 (Tenn. Ct. App. Oct. 4, 2006)
10/4/2006
The Tennessee Court of Appeals sided with the majority of courts by striking down an arbitration clause that only required one party to arbitrate.
In Brown v. Tennessee Title Loans Inc., No. E200600887COAR9CV, 2006 WL 2842788 (Tenn. Ct. App. Oct. 4, 2006), Brown brought a putative class action against Tennessee Title Loans (TTL), alleging violations of the Tennessee Pledge Act and Tennessee Consumer Protection Act. TTL filed a motion to compel arbitration, relying upon the arbitration clause in Brown’s loan agreement... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new federal legislation.
STATE LEGISLATION
California AB 2511 (Introduced 02/23/2006) Signed by Governor 9/30/2006
Subjects: Mediation, Land Use
Existing law authorizes the court to invite the parties involved in specified land use actions before the court to consider resolving their dispute by mediation. Actions filed on or after January 1, 2006, are not subject to this provision. This bill would repeal the provision that makes those actions not subject to the invitation to mediate the dispute. Complete text of the bill.
California AB 2781 (Introduced 02/24/2006) Signed by Governor 9/29/2006
Subjects: Arbitration, Child Support Collection
On or after January 1, 2007, no private child support collector may require, as a condition of providing services to the obligee, that the obligee waive any right or procedure provided for in any state law regarding the right to file and pursue a civil action , or that the obligee agree to resolve disputes in a jurisdiction outside of California or to the application of laws other than those of California, as provided by law. Any waiver by the obligee of the right to file and pursue a civil action , the right to file and pursue a civil action in California, or the right to rely upon California law as provided by law must be knowing, voluntary, and not made a condition of doing business with the private child support collector. Any waiver, including, but not limited to, an agreement to arbitrate or regarding choice of forum or choice of law , that is required as a condition of doing business with the private child support collector, shall be deemed involuntary, unconscionable, against public policy, and unenforceable. The private child support collector has the burden of proving that any waiver of rights, including any agreement to arbitrate a claim or regarding choice of forum or choice of law , was knowing, voluntary and not made a condition of the contract with the obligee. Complete text of the bill.
California SB 678 (Introduced 02/22/2005) Signed by Governor 9/30/2006
Subjects: Indian Child Welfare, Mediation
This bill amends the Indian Child Welfare Act, including a dispute resolution provision. Any conflict related to termination or modification of the post-adoption contract of an Indian child is required to go to good faith mediation, or other type of dispute resolution, before a related action can be filed with the court. Complete text of the bill.
California SB 1476 (Introduced 02/23/2006) Signed by Governor 9/29/2006
Subjects: Guide dogs for the blind, Arbitration
Law regulating various professions and vocations by various boards within the Department of Consumer Affairs. A pilot project establishes an arbitration program for disputes between guide dog users and guide dog schools relating to the continued physical custody and use of the guide dog. The procedures provide for a three-panel arbitration system, and if the parties voluntary agree to the arbitration, the award is binding and non-appealable. This project would be continued until 2010. Complete text of the bill.
REGULATIONS
No new regulations.
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