Federal Cases
Drilling Company Goes Deep at Baseball Arbitration
U.S. Steel Mining Co. v. Wilson Downhole Services, No. 02:00CV1758, 2006 WL 2869535 (W.D. Pa. Oct. 5, 2006)
10/5/2006
Confirming an award issued in a baseball-style arbitration, a federal district court in Pennsylvania rejected the losing party’s argument that the arbitrator acted in “manifest disregard” of the law by basing his award on the amount of damages claimed by the prevailing party. As the Court noted, the losing party evidently overlooked the fact that baseball arbitration requires the arbitrator to choose one party’s valuation of the claim.
In U.S. Steel Mining Co. v. Wilson Downhole Services, No. 02:00CV1758, 2006 WL 2869535 (W.D. Pa. Oct. 5, 2006), there was dispute over the amount that U.S. Steel should pay Wilson for drilling services. The parties agreed to resolve the dispute in a baseball arbitration whereby each party would submit its final and best settlement offer to the arbitrator, and the arbitrator would choose one of the offers as his award. Wilson submitted an offer of $294,333.52, while U.S. Steel submitted an offer of $56,000... Full Story
Arbitrators Have Full Authority to Grant Summary Judgment
Sherrock Brothers, Inc. v. DaimlerChrysler Motors Co., No. 06 CV 351, 2006 WL 2927636 (M.D. Pa. Oct. 12, 2006)
10/12/2006
A federal district court Pennsylvania ruled that an arbitrator had authority to grant summary judgment where the underlying claims were barred by res judicata, collateral estoppel, and waiver.
In Sherrock Brothers, Inc. v. DaimlerChrysler Motors Co., No. 06 CV 351, 2006 WL 2927636 (M.D. Pa. Oct. 12, 2006), Sherrock Brothers and DaimlerChrysler submitted an automobile dealership dispute to arbitration. Previously, Sherrock Brothers had unsuccessfully pursued its claims before: (1) the State Board of Motor Vehicle Manufacturers, Dealers, and Sales Persons; (2) the Commonwealth Court of Pennsylvania; and (3) the Pennsylvania Supreme Court... Full Story
Court Allows Litigant to Rescind Settlement Agreement Because of her Attorney’s Coercive Behavior
Ryles v. Palace Hotel, No. C 04-5326 SBA, 2006 WL 2850025 (N.D. Cal. Oct. 4, 2006)
10/4/2006
A federal district court in California held that a discrimination complainant could rescind a mediated settlement agreement because her attorney applied “intense pressure” and coerced her into signing the agreement.
In Ryles v. Palace Hotel, No. C 04-5326 SBA, 2006 WL 2850025 (N.D. Cal. Oct. 4, 2006), Ryles sued Palace Hotel, her former employer, for discrimination in violation of Title VII... Full Story
Requesting Preliminary Injunction does not Waive Right to Arbitrate
Convergys Corp. v. Freedom Wireless, Inc., No. 2:06-CV-0644-LRH(GWF), 2006 WL 2927841 (D. Nev. Oct. 12, 2006)
10/12/2006
According to a Nevada federal court, requesting preliminary injunctions while arbitration is pending does not constitute an act inconsistent with the right to compel arbitration and is therefore insufficient to establish a waiver of the right to arbitrate
In Convergys Corp. v. Freedom Wireless, Inc., No. 2:06-CV-0644-LRH(GWF), 2006 WL 2927841 (D. Nev. Oct. 12, 2006), Convergys filed a complaint with the court requesting injunctive relief while its arbitration with Freedom was pending. Freedom counterclaimed seeking declaratory judgment of the same issues... Full Story
Finding no Conflict Between the Purposes of the Federal Arbitration Act and the Bankruptcy Code, Bankruptcy Court Compels Arbitration of Debtor’s Claims
In re Olympus Healthcare Group, Inc., --- B.R. ---, 2006 WL 2854790 (Bankr. D. Del. Oct. 6, 2006)
10/6/2006
A bankruptcy court must compel arbitration of debtor-derivative claims when the party opposing arbitration fails to show Congressional intent to create an exception to the policy of the Federal Arbitration Act favoring arbitration, a bankruptcy court in Delaware held.
In In re Olympus Healthcare Group, Inc., --- B.R. ---, 2006 WL 2854790 (Bankr. D. Del. Oct. 6, 2006), Olympus filed for Chapter 13 bankruptcy. After Olympus’s plan for organization was approved, it filed suit against Pacific Employers Insurance Co. to recover money held in a “Deductible Reimbursement Fund”... Full Story
Right to Arbitration Transfers to Successor in Interest
Environmental Barrier Co., LLC v. Slurry Systems, Inc., No. 06C0212, 2006 WL 2853830 (N.D. Ill. Sept. 29, 2006)
9/29/2006
In Environmental Barrier Co., LLC v. Slurry Systems, Inc., No. 06C0212, 2006 WL 2853830 (N.D. Ill. Sept. 29, 2006), the United States District Court for the Northern District of Illinois confirmed an arbitral award in favor of a successor party not named in the original arbitration agreement.
Following bankruptcy proceedings involving construction company Geo-Con, Environmental Barrier Company (EBC) assumed Geo-Con’s subcontract with Slurry Systems, Inc. (SSI) for the construction of a large flood reservoir. At the time, Geo-Con believed that it was owed in excess of $711,335 for its work on the project. The original subcontract contained an arbitration clause, and EBC prevailed in arbitration against SSI for remaining balance under the agreement... Full Story
Affidavit and Cardmember Agreement Sufficient to Establish Agreement to Arbitrate, Missouri Court Holds
Fahey v. U.S. Bank National Association, No. 4:05CV01453FRB, 2006 WL 2850529 (E.D. Mo. Sept. 29, 2006)
9/29/2006
A bank employee’s affidavit and evidence of use of the credit card is sufficient to show that a cardholder accepted the terms of a Cardmember Agreement, including its arbitration provisions, a federal court in Missouri held.
In Fahey v. U.S. Bank National Association, No. 4:05CV01453FRB, 2006 WL 2850529 (E.D. Mo. Sept. 29, 2006), Fahey brought an action alleging negligence and violations of the Fair Credit Reporting Act on the part of U.S. Bank... Full Story
Missouri District Court Holds that Litigation Proceedings Inconsistent with Arbitration do not Create the Necessary Prejudice to Constitute Waiver
Wilbers v. Moneta Group Investment Advisors, Inc., No. 4:06 CV 00005ERW, 2006 WL 2850542 (E.D. Mo. Oct. 03, 2006)
10/3/2006
A Missouri Federal District Court held that a party who filed suit was unaware of a valid arbitration agreement until their opponent successfully argued a motion to compel arbitration, and that the litigation activity did not sufficiently prejudice the opposing party to constitute waiver of the right to arbitrate.
In Wilbers v. Moneta Group Investment Advisors, Inc., No. 4:06 CV 00005ERW, 2006 WL 2850542 (E.D. Mo. Oct. 03, 2006), Wilbers, the trustee of an employee profit sharing plan, sued Moneta Group Investment Advisors, Inc. (“Moneta”) for breach of fiduciary duty. He also filed a separate suit in his personal capacity in state court... Full Story
State Cases
Arbitration Agreement Does Not Support Exercise of Personal Jurisdiction for a Lawsuit By a Nonsignatory
PCC Sterom, S.A. v. Yuma Exploration and Production Co., No. 01-06-00414-CV, 2006 WL 2864478 (Tex. Ct. App. Oct. 5, 2006)
10/5/2006
According to the Texas Court of Appeals, where a foreign manufacturer and an American buyer have agreed to arbitrate disputes in Texas, the manufacturer has not necessarily consented to the personal jurisdiction of the Texas courts in a lawsuit brought by a nonsignatory where no party is asserting the right to arbitrate under the agreement.
In PCC Sterom, S.A. v. Yuma Exploration and Production Co., No. 01-06-00414-CV, 2006 WL 2864478 (Tex. Ct. App. Oct. 5, 2006), Sterom, a Romanian company, sold a valve to ValveWorks, a Louisiana company. Around the next bend in the stream of commerce, United bought the valve and integrated it into a Texas gas well owned by Yuma... Full Story
Thoroughbred Arbitration Award Has Racehorse Owner Out of Joint
Moore v. Landes, No. 2005-CA-002237-MR, 2006 WL 2919064 (Ky. Ct. App. Oct. 13, 2006)
10/13/2006
The Kentucky Court of Appeals refused to vacate an arbitration award in favor of a horse breeder who failed to disclose a horse’s joint surgery, finding that the arbitrator did not manifestly disregard the law and did not violate any public policy to maintain the integrity of Kentucky’s thoroughbred industry.
In Moore v. Landes, No. 2005-CA-002237-MR, 2006 WL 2919064 (Ky. Ct. App. Oct. 13, 2006), Moore bought a racehorse from Landes at a thoroughbred auction in Maryland. Landes failed to disclose a prior joint surgery on the colt even though the parties’ contract required disclosure. When Moore discovered the surgery, Landes offered the remedy specified in the contract – namely, rescission of the sale and reimbursement for any related expenses. Instead of accepting the specified remedy, Moore kept the horse and sued Landes for fraud... Full Story
Michigan Court Applies Rational Basis Test to Arbitrators’ Award
Dietrich R. Bergmann Living Trust v. Pilot Corp., No. 260665, 2006 WL 2739325 (Mich. Ct. App. Sept. 26, 2006)
9/26/2006
The Michigan Court of Appeals held that a trial court improperly reviewed the legal basis for an arbitration panel’s award by requiring the panel to provide lengthy reasoning for its decision, resulting in “unnecessarily protracted litigation.” Instead, the Court held that an arbitration award premised on a rational interpretation of the underlying agreement must be confirmed.
In Dietrich R. Bergmann Living Trust v. Pilot Corp., No. 260665, 2006 WL 2739325 (Mich. Ct. App. Sept. 26, 2006), the parties arbitrated a dispute over the alleged breach of a real estate lease. The arbitration panel awarded Bergmann damages for an insurance claim and ordered Pilot to undertake certain risk reduction measures... Full Story
Ohio Law Requires Hearing Before Confirmation of an Arbitration Award
MBNA America Bank, N.A v. Anthony, No. 05AP090059, 2006 WL 1063752 (Ohio Ct. App. April 18, 2006)
4/18/2006
Under Ohio law, courts are required to hold a hearing before confirming an arbitration award, a state court in Ohio held.
In MBNA America Bank, N.A v. Anthony, No. 05AP090059, 2006 WL 1063752 (Ohio Ct. App. April 18, 2006), MBNA petitioned the Court to confirm an arbitration award issued in MBNA’s favor. The trial court confirmed the award prior to holding a confirmation hearing... Full Story
Texas Arbitration Law Inapplicable When Parties Contractually Elect the Substantive Law of Another State
In re Citigroup Global Markets, Inc., No. 05-05-01430-CV, 2006 WL 2876989 (Tex. App. Sept. 26, 2006)
9/26/2006
In In re Citigroup Global Markets, Inc., No. 05-05-01430-CV, 2006 WL 2876989 (Tex. App. Sept. 26, 2006), the Court of Appeals of Texas held that there was no basis for applying the Texas Arbitration Act (TAA) to an agreement electing New York’s substantive law, and that Defendant had waived the right to arbitrate by repeatedly signaling an intent to litigate.
The Nickells invested large amounts of money in WorldCom, Inc. under the advice of Citigroup Global Markets, Inc. (CGM). When WorldCom went bankrupt, the Nickells filed suit against CGM for breach of fiduciary duty and other claims. CGM proceeded to remove the case to federal court and prepare for discovery for several months, never attempting to invoke arbitration pursuant to the parties’ agreement... Full Story
States Take Different Approaches to Arbitrating Health Care Disputes
Kruger Clinic Orthopaedics, LLC v. Regence Blueshield, 138 P.3d 936 (Wash. 2006)
7/13/2006
Based on federal law providing for state regulation of insurance, the Washington Supreme Court held that the Federal Arbitration Act (“FAA”) does not preempt a Washington regulation that precludes health care providers and insurers from resolving their disputes through mandatory and binding arbitration.
In Kruger Clinic Orthopaedics, LLC v. Regence Blueshield, 138 P.3d 936 (Wash. 2006), Kruger and Regence entered into an agreement whereby Kruger would provide health care services to Regence’s insureds on a fee-for-service basis. The agreement provided for mandatory arbitration with a binding result. When Regence reduced Kruger’s rates, Kruger sued for breach of contract. Regence moved to compel arbitration... Full Story
Court Rejects Belated Challenge to Arbitration Agreement that Required One Party to Pay All of the Arbitration Fees
Minor v. 24 Hour Fitness USA, Inc., No. 56840-0-I, 2006 WL 2873785 (Wash. Ct. App. Oct. 2, 2006)
10/20/2006
According to a Washington State Appellate Court, an order compelling arbitration cannot be vacated merely because the party opposed to arbitration failed to determine whether the proceedings would be prohibitively costly before the order was issued.
In Minor v. 24 Hour Fitness USA, Inc., No. 56840-0-I, 2006 WL 2873785 (Wash. Ct. App. Oct. 2, 2006), Minor sued 24 Hour Fitness for the unauthorized use of her image in their buildings. 24 Hour Fitness filed a motion to compel arbitration according to an arbitration provision in Minor’s membership agreement. The arbitration provision provided that Minor would be required to pay all the arbitration fees... Full Story
Party Waives Arbitration Rights by not Raising the Issue Until After Vehicle is Repossessed
Almonte v. West Ashley Toyota, Nos. A06A1250, A06A1251, 2006 WL 2865510 (Ga. Ct. App. Oct. 6, 2006)
10/6/2006
A party who fails to respond to a writ of possession and does not assert arbitration rights until after the vehicle has been repossessed and the car dealer has filed a breach of contract suit has waived its right to arbitration, a state court in Georgia held.
In Almonte v. West Ashley Toyota, Nos. A06A1250, A06A1251, 2006 WL 2865510 (Ga. Ct. App. Oct. 6, 2006), West Ashley Toyota repossessed an SUV from Almonte after Almonte’s credit application was denied and he failed to pay the contract price for the vehicle... Full Story
Attorney Lacked Authority to Bind Client’s Children to Mediated Settlement of Probate Dispute
In re Estate of Bart, No. 05-1599, 2006 WL 2872956 (Iowa Ct. App. Oct. 11, 2006)
10/11/2006
The Iowa Court of Appeals held that an attorney did not have actual or apparent authority to bind his client’s children to a mediated settlement of a probate dispute.
In In re Estate of Bart, No. 05-1599, 2006 WL 2872956 (Iowa Ct. App. Oct. 11, 2006), Anna Bart died leaving two adult children, Galen and Mary Lou. Mary Lou had two children of her own: Timothy and Kelly... Full Story
Court Refuses to Enforce Arbitration Agreement Signed Several Weeks After the Payment of Earnest Money
Quebedeaux v. Sunshine Homes, Inc., No. 06-349, 2006 WL 2871994 (La. Ct. App. Oct. 11, 2006)
10/11/2006
The Louisiana Court of Appeals held that under Louisiana law, a party may not unilaterally amend a sales contract to add an arbitration clause after the parties have already agreed to the contract terms.
In Quebedeaux v. Sunshine Homes, Inc., No. 06-349, 2006 WL 2871994 (La. Ct. App. Oct. 11, 2006), Quebedeaux and Sunshine entered into a mobile home purchase agreement. Under the purchase agreement, which did not contain an arbitration clause, Quebedeaux had to pay $15,000 in earnest money... Full Story
Party Requesting Confirmation Only Required to Make Application or Motion
Parks v. MBNA America Bank, No. WD65646, WD65691, 2006 WL 2805131 (Mo. Ct. App. Oct. 3, 2006)
10/3/2006
In Parks v. MBNA America Bank, No. WD65646, WD65691, 2006 WL 2805131 (Mo. Ct. App. Oct. 3, 2006), the Missouri Court of Appeals confirmed that the requirements for a party seeking confirmation of an arbitral award are not the same as for a motion to compel arbitration. A party seeking confirmation need only petition or move for it under the terms of Section 9 of the Federal Arbitration Act.
The Parks, who were credit card consumers with MBNA America Bank (MBNA), allowed their three accounts to become delinquent. Following an award in favor of MBNA on one of the accounts (Parks I), MBNA agreed not to seek confirmation of the award, and to release “any and all claims” arising under actions occurring prior to that date, in exchange for $3,500. However, an MBNA attorney claimed that he was unaware of the second and third arbitral awards against the Parks (Parks II and Parks III, respectively), and therefore did not intend to settle on those claims. MBNA sought confirmation of the Parks II and Parks III arbitral awards... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
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STATE LEGISLATION
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REGULATIONS
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