Federal Cases
Dispute Arising from “Deep Throat” Revelation Must Be Arbitrated
de Toledano v. O’Connor, No. 06-1214, 2007 WL 2350111 (D.D.C. Aug. 17, 2007)
8/17/2007
In a case arising from a copyright dispute over the autobiography of the Watergate player known as “Deep Throat,” a federal district court in the District of Columbia has issued a stay pending arbitration. The Court’s opinion includes dicta questioning whether the Federal Arbitration Act permits the arbitration-specific rule that California courts apply to employee arbitration agreements.
In de Toledano v. O’Connor, No. 06-1214, 2007 WL 2350111 (D.D.C. Aug. 17, 2007), de Toledano and Mark Felt, Sr., co-authored a biographical account of Felt, Sr.’s career as an FBI agent. Twenty-three years later, in early 2003, Felt, Sr.’s son, Mark Felt, Jr., contacted de Toledano about obtaining his copyright in the book. Initially, Felt, Jr., proposed a royalty payment structure, but the parties ultimately agreed that de Toledano would transfer his rights in the book in exchange for a guaranteed payment of $5,000 and an additional payment of $5,000 conditioned on the publication of another book... Full Story
Source Lender Not Named in Borrower’s Lawsuit Has Standing to Compel Arbitration
Republic Bank & Trust Co. v. Kucan, No. 05-1638, 2007 WL 2376927 (4th Cir. Aug. 21, 2007)
8/21/2007
The Fourth Circuit Court of Appeals has held that a party to a contract, while not named as a party in litigation, still had standing to compel arbitration as agreed to in the contract.
In Republic Bank & Trust Co. v. Kucan, No. 05-1638, 2007 WL 2376927 (4th Cir. Aug. 21, 2007), Advance America, a national payday lender, contracted to act as Republic Bank’s servicing and marketing agent, while Republic Bank remained the actual lender. The loan agreements included an arbitration clause requiring disputes between borrowers, Republic Bank, and Advance America to be submitted to arbitration... Full Story
Allegations That an Arbitration Award Was Fraudulently Obtained Through Discovery Misconduct Must Be Supported by “Clear and Convincing Evidence”
Bauer v. Carty & Co., Inc., No. 06-5390, 2007 WL 2492415 (6th Cir. Sept. 4, 2007)
9/4/2007
Parties alleging fraud in the procurement of an arbitration award due to a failure to respond to document requests must show by “clear and convincing evidence” that the failure to produce was intentional or made in bad faith, according to the Sixth Circuit Court of Appeals.
In Bauer v. Carty & Co., Inc., No. 06-5390, 2007 WL 2492415 (6th Cir. Sept. 4, 2007), Carty filed a arbitration claim with the National Association of Securities Dealers (NASD) against former employee Bauer, alleging that Bauer was indebted to Carty for bond-related trading losses. Before the arbitration hearing, Bauer submitted certain document requests to Carty. Carty agreed to comply with one request, but objected to the second request. Bauer did not further challenge Carty’s objection. The arbitration then proceeded, ending with an award in Carty’s favor... Full Story
Right to Challenge Arbitration Agreement Waived Where the Agreement is not Challenged in Arbitration
Lewis v. Circuit City Stores, Inc., No. 05-3383, 2007 WL 2460232 (10th Cir. Aug. 31, 2007)
8/31/2007
The Tenth Circuit Court of Appeals held that a party waived its right to challenge the enforceability of an arbitration agreement by proceeding with arbitration while making no formal objection before the arbitrator, and further held that the agreement did not violate Kansas’s public policy.
In Lewis v. Circuit City Stores, Inc., No. 05-3383, 2007 WL 2460232 (10th Cir. Aug. 31, 2007), Michael Lewis injured his knee while working for Circuit City and received medical treatment, but continued to have pain and sought additional medical treatment... Full Story
Mediation Confidentiality Only Results From “Formal Mediation” Involving the Parties to the Dispute
E.E.O.C. v. Albion River Inn, Inc., No. C 06-05356 SI, 2007 WL 2560718 (N.D. Cal. Sept. 4, 2007)
9/4/2007
In ordering two restaurant owners to produce discovery regarding their communications with a consultant, a federal district court in California rejected the owners’ argument that mediation confidentiality applied to those communications. Even though the consultant may have been helping the parties resolve a dispute between them, mediation confidentiality did not apply because there was no “formal mediation” involving the parties to the lawsuit.
In E.E.O.C. v. Albion River Inn, Inc., No. C 06-05356 SI, 2007 WL 2560718 (N.D. Cal. Sept. 4, 2007), the EEOC brought suit against the Albion River Inn for allegedly retaliating against a restaurant manager who asked customers making race-based comments to leave the restaurant... Full Story
FAA Applies to Railroad Employee Severance Agreements
Awe v. I & M Rail Link, L.L.C., No. C04-3011-PAZ, 2007 WL 2572405 (N.D. Iowa Sept. 04, 2007)
9/4/2007
A severance agreement between a railroad company and its employee does not fall within the railroad exception to the Federal Arbitration Act (FAA) when the agreement does not change the terms and conditions of the employment relationship, according to a federal district court in Iowa.
In Awe v. I & M Rail Link, L.L.C., No. C04-3011-PAZ, 2007 WL 2572405 (N.D. Iowa Sept. 04, 2007), Awe was employed by railroad I & M, which entered into an "Employee Incentive and Severance Agreement" with Awe and other employees. The agreement promised employees bonuses for remaining with I & M and promised severance pay to employees if I & M was sold. The agreement did stipulate, however, that a change in ownership of I & M would not constitute termination of employment and not entitle employees to severance pay should the employees be offered the substantially same employment with the new owner... Full Story
Court Vacates Borrower’s Arbitration Award for Manifest Disregard of the Law
Homecomings Financial Network v. Kotyk, No. 07-cv-1414, 2007 WL 2417357 (D. N.J. Aug. 24, 2007)
8/24/2007
A New Jersey federal district court vacated a borrower’s arbitration award based upon manifest disregard of the law, because the arbitrator knew of applicable Bankruptcy Code principles, and yet refused to apply bankruptcy law or ignored it altogether even though the law was applicable to the case.
In Homecomings Financial Network v. Kotyk, No. 07-cv-1414, 2007 WL 2417357 (D. N.J. Aug. 24, 2007), Kotyk entered into a loan agreement with Homecomings, and the loan was secured by Kotyk’s real property. The loan contract contained an arbitration agreement calling for arbitration should any dispute arise... Full Story
Alleged Manifest Disregard of Federal Law Can Be Basis for Federal Subject Matter Jurisdiction for Motion to Vacate an Award
Lightwave Communications, LLC v. Verizon Services Corp., No. 07 Civ. 6519(JSR), 2007 WL 2460369 (S.D. N.Y. Aug. 31, 2007)
8/31/2007
The Federal Arbitration Act (FAA) does not confer federal subject matter jurisdiction, but an argument that an arbitration award reflects the manifest disregard of the federal law may be sufficient to establish federal subject matter jurisdiction for the motion for confirm an award, held a New York federal court.
In Lightwave Communications, LLC v. Verizon Services Corp., No. 07 Civ. 6519(JSR), 2007 WL 2460369 (S.D. N.Y. Aug. 31, 2007), Lightwave both provided and purchased telecommunications services from Verizon... Full Story
Plain Language Encompassing “Any” Disputes Will Not Be Subjected to a Contrary Interpretation Narrowing Its Scope
Vertner v. TAC Americas, Inc., No. C07-0385RSL, 2007 WL 2495559 (W.D. Wash. Aug. 30, 2007)
8/30/2007
A dispute resolution provision encompassing “any” dispute will not be subjected to a contrary interpretation that would bring certain related disputes outside the scope of the provision, according to a federal district court in Washington.
In Vertner v. TAC Americas, Inc., No. C07-0385RSL, 2007 WL 2495559 (W.D. Wash. Aug. 30, 2007), Vertner and Williamson, shareholders of Abacus, entered into a merger agreement with TAC. According to the merger agreement, TAC would temporarily retain a portion of the Abacus purchase price for post-closing adjustments to the value of the sale, and would notify Vertner of the amount of the retained amount that was to be returned to Vertner at a later date... Full Story
State Cases
Mutual Obligation to Arbitrate Rendered Illusory by a Remedy Provision Referencing Court Costs
Richard Harp Homes, Inc. v. Van Wyk, No. CA 06-1446, 2007 WL 2660213 (Ark. Ct. App. Sept. 12, 2007)
9/12/2007
An explicit mutual obligation that both parties arbitrate all disputes can be rendered ambiguous, illusory, and unenforceable by a reference to court costs in one party's remedy provision, according to the Arkansas Court of Appeals.
In Richard Harp Homes, Inc. v. Van Wyk, No. CA 06-1446, 2007 WL 2660213 (Ark. Ct. App. Sept. 12, 2007), Harp and Van Wyk entered into a construction agreement, which included provisions requiring that disputes or claims be resolved through arbitration, and specifying the types of remedies available to each party upon a successful claim. A dispute arose as to whether the construction project complied with certain setback requirements. A third party filed suit against both Van Wyk and Harp for allegedly violating the setback requirements; Van Wyk and Harp then asserted cross-claims against one another... Full Story
Nursing Home Waived Right to Arbitrate by Affirmatively Engaging in Litigation Discovery
Estate of Orlanis ex rel. Marks v. Oakwood Terrace Skilled Nursing and Rehabilitation Center, No. 3D05-2366, 2007 WL 2428426 (Fla. Dist. Ct. App. Aug. 29, 2007)
8/29/2007
A Florida appellate court determined that a nursing home defendant waived its right to arbitrate by engaging in discovery before filing a motion to compel arbitration.
In Estate of Orlanis ex rel. Marks v. Oakwood Terrace Skilled Nursing and Rehabilitation Center, No. 3D05-2366, 2007 WL 2428426 (Fla. Dist. Ct. App. Aug. 29, 2007), Orlanis and her daughter executed documents necessary to admit Orlanis into residence at Oakwood Terrace... Full Story
Texas Supreme Court Stays Litigation of Claims That Overlap Arbitration
In re Merrill Lynch Trust Co. FSB, No. 04-0865, 2007 WL 2404845 (Tex. Aug. 24, 2007)
8/24/2007
The Texas Supreme Court held that non-signatory third party affiliates could not be compelled to arbitrate their claims on the basis of an arbitration agreement signed by the main corporation. Instead, the Court stayed litigation of the overlapping claims against the main corporation and its affiliates pending the resolution of the claims subject to arbitration.
In In re Merrill Lynch Trust Co. FSB, No. 04-0865, 2007 WL 2404845 (Tex. Aug. 24, 2007), Juan Alaniz was severely injured and recovered more than two million dollars in a settlement. He hired Merrill Lynch to manage the recovery through its employee Henry Medina. For each account opened with Merrill Lynch, Alaniz agreed to arbitrate disputes... Full Story
ADR Legislation & Regulation
LEGISLATION
CA A 1178
AUTHOR: Hernandez [D]
TITLE: Medical Information: Disclosures
INTRODUCED: 02/23/2007
DISPOSITION: To Governor
Commentary:
"A provider of health care, a health care service plan, or a contractor shall disclose medical information if the disclosure is compelled by any of
the following...By an arbitrator or arbitration panel, when arbitration is lawfully requested by either party, pursuant to a subpoena duces tecum issued under Section 1282.6 of the Code of Civil Procedure, or any other provision authorizing discovery in a proceeding before an arbitrator or arbitration panel."
FL S 290
AUTHOR: Geller [D]
(2008)TITLE: Electronic Gaming Machines
PREFILED: 09/19/2007
DISPOSITION: Pending
LOCATION: SENATE
Commentary:
Relates to regulation of video lotteries. Requires arbitration in certain instances where establishments that offer off track betting on horse races seek to install video lottery machines.
IL H 4
SPONSOR: Jefferson [D]
TITLE: Airport Authorities Act
INTRODUCED: 01/10/2007
LINE ITEM: 08/17/2007
DISPOSITION: Pending
LOCATION: Amendatorily Vetoed by Governor
Commentary:
Amending the Airport Authorities Act. Amendments include: the Rail has the authority (xii) To enter into arbitration arrangements, which may be final and binding. The Governor did not veto the portions of this bill relating to arbitration.
REGULATION
Texas 32 TEXREG 6492, 10 TAC 1.80.F.80.70 -.73
AGENCY: Department of Housing and Community Affairs
TITLE: Manufactured Housing
PROPOSED: 09/06/2007
Commentary:
Establishes enforcement guidelines for manufactured housing rules. The dispute resolution section would be amended to allow the Department to offer, at no charge, alternative dispute resolution to resolve any claim or dispute. Depending on the parties, this may involve informal meetings or non-binding mediation
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