Federal Cases
Court May Modify Execution of Terms, but not Substance, of Foreign Arbitration Award
Admart AG v. Stephen & Mary Birch Foundation, Inc., 457 F.3d 302 (3rd Cir. 2006)
8/8/2006
While recognizing that the passage of time required some modification to a foreign arbitral award, the Third Circuit Court of Appeals rejected a district court order modifying the award in favor of an order that adhered more closely to the award.
In Admart AG v. Stephen & Mary Birch Foundation, Inc., 457 F.3d 302 (3rd Cir. 2006), Admart agreed to sell an open-air art exhibit to the Stepehen & Mary Birch Foundation (“Birch”) for $6 million. The agreement required all disputes to be arbitrated in Zurich, Switzerland... Full Story
First Circuit: There Is No Manifest Disregard Unless the Arbitrator Expressly Disregards the Applicable Substantive Law
McCarthy v. Citigroup Global Markets Inc., No. 06-1001, 2006 WL 2673424 (1st Cir. Sep. 19, 2006)
9/19/2006
The First Circuit Court of Appeals reversed a district court finding of manifest disregard of the law because there was nothing in record to indicate that the arbitration panel expressly disregarded the law.
In McCarthy v. Citigroup Global Markets Inc., No. 06-1001, 2006 WL 2673424 (1st Cir. Sep. 19, 2006), McCarthy initiated arbitration against his former employer, Citigroup, to recover contributions he made to his stock option plan during his employment at Citigroup. McCarthy relied on New Hampshire wage law for his theory of recovery... Full Story
Arbitration Award Bars Subsequent RICO Action Under Doctrine of Res Judicata
Batlle v. Associates for Women's Medicine, PLLC, No. 05 Civ. 8373(DC), 2006 WL 2642137 (S.D.N.Y. Sep. 15, 2006)
9/15/2006
A federal district court in New York held that the doctrine of res judicata barred a RICO action that was premised on the same “nucleus of operative facts” at issue in an earlier arbitration proceeding resulting in a valid and final award.
In Batlle v. Associates for Women's Medicine, PLLC, No. 05 Civ. 8373(DC), 2006 WL 2642137 (S.D.N.Y. Sep. 15, 2006), Associates for Women’s Medicine (AWM) and Batlle entered into an agreement whereby Batlle would work as an independent primary care physician for AWM. The agreement contained an arbitration clause... Full Story
Arbitration Agreement Survives Buyer’s Attempt to Undo the Sales Transaction and Covers Non-Signatory Collection Agency
Adams v. Dell Computer Corp., No. CIV A C-06-089, 2006 WL 2670969 (S.D. Tex. Sep. 18, 2006)
9/18/2006
A federal district court in Texas ordered arbitration of a dispute arising from the sale of a personal computer, finding that the buyer’s alleged attempt to return the computer did not operate as a rescission of the sales agreement or its arbitration clause.
In Adams v. Dell Computer Corp., No. CIV A C-06-089, 2006 WL 2670969 (S.D. Tex. Sep. 18, 2006), Adams ordered a Dell computer from a shopping mall kiosk. The computer was shipped to Adams along with a copy of a sales agreement that provided for mandatory arbitration. The sales agreement gave Adams 21 days to return the computer for any reason... Full Story
Absent Independent Federal Jurisdiction, Parties Must Compel Arbitration in State Court
State v. Ho-Chunk Nation, No. 06-1053, 06-1837, 2006 WL 2588936 (7th Cir. Sep. 11, 2006)
9/11/2006
The Seventh Circuit Court of Appeals vacated a district court appointing an arbitrator because neither the Federal Arbitration Act (FAA) nor the Indian Gaming Regulatory Act (IGRA) conferred federal jurisdiction.
In State v. Ho-Chunk Nation, No. 06-1053, 06-1837, 2006 WL 2588936 (7th Cir. Sep. 11, 2006), the State of Wisconsin (the State) and the Ho-Chunk Nation (the Nation) entered into a compact that authorized the Nation to offer casino gaming on its lands in exchange for payments to the State. The compact required arbitration of all disputes... Full Story
Federal Court Upholds Fairness of Macy’s Dispute Resolution Policy
Hicks v. Macy’s Department Stores, Inc., No. C 06-02345 CRB, 2006 WL 2595941 (N.D.Cal. Sept. 11, 2006)
9/11/2006
In Hicks v. Macy’s Department Stores, Inc., No. C 06-02345 CRB, 2006 WL 2595941 (N.D.Cal. Sept. 11, 2006), Macy’s sought to compel arbitration with one of its employees pursuant to the company’s “Solutions InSTORE” (SIS) dispute resolution program. Hicks, an employee representing a putative class, had never actually signed the policy, but also failed to take advantage of several opportunities to “opt out” of the arbitration provision.... Full Story
Trustee’s Attorney-Client Agreement to Arbitrate Binding on Trust Beneficiaries
Larson v. Speetjens, No. C 05-3176 SBA, 2006 WL 2567873 (N.D. Cal. Sept. 5, 2006)
9/5/2006
In Larson v. Speetjens, No. C 05-3176 SBA, 2006 WL 2567873 (N.D. Cal. Sept. 5, 2006), a group of plaintiffs brought suit against attorney Speetjens and her former law firm, Frazer Davidson in the United States District Court for the Northern District of California. Plaintiff Janet E. Larson hired Frazer Davidson for the purpose of suing Michael Kimsey, an investment advisor. The parties disagreed, however, on whether Larson entered into the attorney-client relationship as an individual or acting as trustee of the Larson Family Revocable Trust.
This question was brought to the forefront after Speetjens and Frazer Davidson sought to compel arbitration of Plaintiffs’ claims, even though Larson’s name was the only signature on the attorney-client agreement containing the binding arbitration clause. The Court ruled in favor of Speetjens, requiring Plaintiffs to arbitrate their claims... Full Story
Illinois Federal Court Says Arbitration Agreement Survives Termination of Employment
Shipp v. XA, Inc., No. 06 C 1193, 2006 WL 2583720 (N.D. Ill., Aug. 31, 2006)
8/31/2006
In Shipp v. XA, Inc., No. 06 C 1193, 2006 WL 2583720 (N.D. Ill., Aug. 31, 2006), the United States District Court for the Northern District of Illinois applied a broad arbitration clause to compel arbitration of an employee’s claims even though she had recently been terminated.
Employee Shipp asserted violations of the Family and Medical Leave Act (FMLA), 29 U.S.C. §2601, as well as claims for breach of contract and promissory estoppel, among others. Wishing to pursue her claims through the judicial system, Shipp opposed her employer’s motion to compel arbitration pursuant to her employment agreement... Full Story
Louisiana Court Upholds Arbitrator’s Punitive Damage Award in Securities Case
Adams v. Securities America, Inc., Nos. 06-2509 c/w, 06-3042, 2006 WL 2631863 (E.D. La. Sept. 12, 2006)
9/12/2006
A federal court in Louisiana upheld an arbitration panel’s award of punitive damages despite Louisiana law limiting when punitive damages may be awarded because the parties agreed to arbitrate under NASD rules, which allow for awards of punitive damages.
In Adams v. Securities America, Inc., Nos. 06-2509 c/w, 06-3042, 2006 WL 2631863 (E.D. La. Sept. 12, 2006), Adams and two other plaintiffs invested their retirement savings with Securities America, which lost the majority of the plaintiffs’ savings through self-dealing. The parties submitted their dispute to arbitration through the National Association of Securities Dealers (NASD), which issued an award – and $3.5 million in punitive damages – in favor of plaintiffs... Full Story
Employer Bound to Arbitrate Disputes, Despite Reservation of Right to Modify the Agreement
Pellow v. Daimler Chrysler Services North America, LLC, No. 05-73815, 2006 WL 2540947 (E.D. Mich. Aug. 31, 2006)
8/31/2006
An employer is bound by its arbitration agreement, even when it can unilaterally modify or revoke the agreement, a federal court in Michigan held.
In Pellow v. Daimler Chrysler Services North America, LLC, No. 05-73815, 2006 WL 2540947 (E.D. Mich. Aug. 31, 2006), Pellow challenged a dispute resolution provision is his employment contract with Chrysler after he was terminated from his position. Pellow argued that Chrysler did not intend to be bound because the arbitration agreement allowed Chrysler to modify or revoke terms of the employment contract... Full Story
Ohio Court Enforces Arbitration Agreement That Franchisee Challenged as Ambiguous
GeoVantage of Ohio, LLC v. GeoVantage, Inc., No. 2:05-CV-1145, 2006 WL 2583379 (S.D. Ohio Sept. 6, 2006)
9/6/2006
A broadly worded arbitration clause requiring arbitration of “any dispute” is not rendered ambiguous by another clause allowing a party to seek a legal remedy in the event that arbitration procedures are not followed, a federal district court in Ohio held.
In GeoVantage of Ohio, LLC v. GeoVantage, Inc., No. 2:05-CV-1145, 2006 WL 2583379 (S.D. Ohio Sept. 6, 2006), GeoVantage of Ohio (Plaintiff) brought suit alleging various causes of action against GeoVantage, Inc. (Defendant). Plaintiff’s claims arose out of a franchise agreement between Plaintiff and Defendant... Full Story
Federal Court Extends Arbitral Immunity to Include Testimonial Privilege
Garzella v. Borough of Dunmore, No. 3:05-CV-01626, 2006 WL 2583649 (M.D. Pa. Sept. 7, 2006)
9/7/2006
Unless a party shows bias or prejudice, an arbitrator’s quasi-judicial immunity protects the arbitrator from being subpoenaed to give a deposition, a federal court in Pennsylvania held.
In Garzella v. Borough of Dunmore, No. 3:05-CV-01626, 2006 WL 2583649 (M.D. Pa. Sept. 7, 2006), Alan Symonette served as the Chairman of an arbitration panel. Garzella then brought suit against Dunmore, alleging breach of contract and other claims, and sought to depose Symonette... Full Story
Texas Federal Court Says Parties Can Recover Attorney Fees Incurred in Enforcing Arbitration Agreement
Daniels v. Progressive Turf, LLC, No. 4:05-CV-394, 2006 WL 2589114 (E.D. Tex. Sep. 7, 2006)
9/7/2006
A federal district court in Texas ordered a party who filed a lawsuit covered by an arbitration agreement to reimburse the other party for attorney fees incurred in enforcing the arbitration agreement.
In Daniels v. Progressive Turf, LLC, No. 4:05-CV-394, 2006 WL 2589114 (E.D. Tex. Sep. 7, 2006), Daniels sued Progressive Turf despite a previous ruling in a “virtually identical” lawsuit that the dispute was subject to arbitration under the parties’ license agreement... Full Story
Texas Federal Court Holds That Parties Can Agree to De Novo Review of Arbitrator’s Legal Conclusions
Spinal Concepts, Inc. v. Curasan, AG, No. 3:06-CV-0448-P, 2006 WL 2577820 (N.D. Tex., Sept. 7, 2006)
9/7/2006
In Spinal Concepts, Inc. v. Curasan, AG, No. 3:06-CV-0448-P, 2006 WL 2577820 (N.D. Tex., Sept. 7, 2006), the United States District Court for the Northern District of Texas partially vacated an arbitrator’s award on the basis of a contractual provision allowing for de novo review of issues of law.
Curasan, a supplier of bone-graft substitute, entered into an agreement with Spinal Concepts for the exclusive distribution of its products. When a dispute arose regarding the minimum amount of product Spinal Concepts was required to purchase, an arbitrator ruled in favor of Curasan... Full Story
Creative Effort to Avoid Arbitration to be Decided…By an Arbitrator
Teltschik v. JP Morgan Chase & Co., Civil Action No. H-06-2190, 2006 WL 2620515 (S.D. Tex. Sept. 12, 2006)
9/12/2006
In Teltschik v. JP Morgan Chase & Co., Civil Action No. H-06-2190, 2006 WL 2620515 (S.D. Tex. Sept. 12, 2006), a United States District Court in Texas compelled arbitration of a credit cardholder’s claims against her bank. The cardholder, Teltschik, attempted to cancel her arbitration agreement with the bank by writing a new agreement on the back of checks sent to the bank... Full Story
State Cases
Poor Drafting of Employment Arbitration Agreement Nearly Leads to Finding of Unconscionability
Reynolds v. Cornerstone Staffing Solutions, Inc., No. A110952, 2006 WL 2536712 (Cal. App. 1 Dist. Sept. 5, 2006)
9/5/2006
While conceding that the question was “exceptionally close,” the California First District Court of Appeal held that an employment arbitration agreement was not substantively unconscionable under California’s Armendariz standard.
In Reynolds v. Cornerstone Staffing Solutions, Inc., No. A110952, 2006 WL 2536712 (Cal. App. 1 Dist. Sept. 5, 2006), the Court considered whether an arbitration clause singling out actions “brought by the employee” was sufficiently one-sided to be invalidated as unconscionable. California law requires a showing of both procedural and substantive unconscionability. Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000)... Full Story
In California, Arbitration Awards are Presumed to be Binding Unless Parties Specify Otherwise
Massa v. Ruskin, No. A110704, 2006 WL 2474885 (Cal. App. Aug. 29, 2006)
8/29/2006
Unless parties to an arbitration agreement specify that arbitration will not be binding, the arbitrator’s award is binding on the parties, a California state court held.
In Massa v. Ruskin, No. A110704, 2006 WL 2474885 (Cal. App. Aug. 29, 2006), Ruskin hired general contractor Massa to build a home. Massa finished the home and Ruskin refused to pay part of the contracted price... Full Story
In California, the Court Ordering Arbitration is not the Only Court That Can Confirm the Subsequent Award
Sternberg, Horner & Associates v. Emerald International Security Group, No. B183794, 2006 WL 2244321 (Cal. Ct. App. Aug. 7, 2006)
8/7/2006
A California Court of Appeal held that a court ordering arbitration is not the only court with authority to confirm the subsequent award.
In Sternberg, Horner & Associates v. Emerald International Security Group, No. B183794, 2006 WL 2244321 (Cal. Ct. App. Aug. 7, 2006), Emerald moved the trial court to vacate an arbitration award. The trial court denied Emerald’s motion and confirmed the award... Full Story
In Georgia, Assignees Are Presumed to Have Knowledge of Contractual Arbitration Terms
M. Homes, LLC v. Southern Structural, Inc., No. A06A1554, 2006 WL 2498010 (Ga. Ct. App. Aug. 30, 2006)
8/30/2006
According to a Georgia appellate court, an assignee is presumed to know whether the contract terms include an arbitration clause, and if the assignee fails to raise arbitration as a defense before substantially participating in litigation, it waives its arbitration defense.
In M. Homes, LLC v. Southern Structural, Inc., No. A06A1554, 2006 WL 2498010 (Ga. Ct. App. Aug. 30, 2006), M. Homes, the assignee to a construction contract, demanded arbitration with Southern Structural during the litigation discovery process. Southern Structural argued that M. Homes had waived its right to arbitration by participating in discovery... Full Story
Court Refuses to Impose Pleading Specificity Requirements on Arbitration Proceedings
Frebar, Inc. v. Sanctum, LLC, No. 95,568, 2006 WL 2595307 (Kan. Ct. App. Sep. 8, 2006)
9/8/2006
The Kansas Court of Appeals rejected a party’s argument that an arbitrator exceeded his powers in rendering an award for fraud when fraud was not specifically alleged because the claimant’s arbitration filings gave sufficient notice of the fraud allegations.
In Frebar, Inc. v. Sanctum, LLC, No. 95,568, 2006 WL 2595307 (Kan. Ct. App. Sep. 8, 2006), Frebar initiated arbitration, claiming that Sanctum, a contractor, had misappropriated funds and falsified documents. The arbitrator awarded Frebar $478,379.69, based partly on his finding that Sanctum committed fraud... Full Story
Mutuality Requirement not Offended by Arbitration Agreement Authorizing Limited Modification by Employer
Bell v. Hollywood Entertainment Corp., No. 87210, 2006 WL 2192053 (Ohio Ct. App. Aug. 3, 2006)
8/3/2006
The Ohio Court of Appeals held that an employer’s limited ability to unilaterally modify an arbitration agreement does not offend the requirement of mutuality.
In Bell v. Hollywood Entertainment Corp., No. 87210, 2006 WL 2192053 (Ohio Ct. App. Aug. 3, 2006), Bell sued Hollywood, her former employer, alleging a hostile work environment, sexual harassment and civil battery. Hollywood moved to stay proceedings pursuant to an arbitration agreement in Bell’s employment application. The trial court granted the motion, and Bell appealed... Full Story
No Court Findings Necessary for Confirmation of Arbitral Award
MBNA America Bank, N.A. v. Williams, No. 20060073, 2006 WL 2578914 (Utah App. Sept. 8, 2006)
9/8/2006
In MBNA America Bank, N.A. v. Williams, No. 20060073, 2006 WL 2578914 (Utah App. Sept. 8, 2006), the a Utah appellate court upheld the confirmation of an arbitral award, despite the court’s failure to publish its findings.
Williams first argued that the lower court improperly vacated an earlier summary judgment ruling against MBNA. After filing his case in the wrong district, Williams had re-filed his summary judgment motion with the proper court, but MBNA did not learn of this filing until the response period had lapsed. Nonetheless, the lower court properly vacated the summary judgment order under Rule 60(b) of the Utah Rules of Civil Procedure, due to unfair surprise or excusable neglect... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
United States S394 (Introduced 09/21/2006)
Subjects: Mediation, Freedom of Information Act
This bill would provide for the mediation of disputes arising under the Freedom of Information Act.
STATE LEGISLATION
California AB 1553 (Introduced 02/22/2005) Adopted 09/14/2006
Subjects: Consumer Affairs, Contracts Law, Civil Procedure, and Arbitration
Provides, if an arbitration agreement requires that arbitration of a controversy be demanded or initiated within a period of time, the commencement of a civil action within that period of time shall toll the applicable time limitations contained in the arbitration agreement with respect to that controversy from the date the civil action is commenced until 30 days after a final determination by the court that the controversy must be arbitrated. Text of the bill.
California AB 2482 (Introduced 02/23/2006) Adopted 09/20/2006
Subjects: Arbitration, Out of State Representation
Existing law, effective until January 1, 2007, permits persons admitted to the bar of any other state to represent a party in an arbitration proceeding in this state, or to render legal services in this state in connection with an arbitration proceeding in another state. Existing law requires out-of-state attorneys representing a party in a California arbitration proceeding to serve upon the arbitrator, the State Bar of California, the parties, and counsel, a certificate containing specified information prior to the first scheduled hearing in the arbitration. Existing law also permits any party to an arbitration arising under certain collective bargaining agreements to be represented by any person. This bill removes the January 1, 2007, repeal date, thereby extending those provisions indefinitely, and make a related, conforming change. Text of the bill.
Illinois HB 5833 (Introduced 09/21/2006)
Subjects: Arbitration, Consumer Installment Loan Act
Amends the Consumer Installment Loan Act, which regulates loans carrying an interest rate above 36%. Among other things, the bill would forbid a waiver of the right to a jury trial unless the waiver is included in an allowed arbitration clause. The bill would also prohibit a mandatory arbitration clause that is “oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers.” The Department of Financial and Professional Regulation would have oversight over these regulations. Text of the introduced bill.
Michigan HB 6359 (Introduced 08/23/2006)
Subjects: Insurance, Health, Medical Services, Arbitration
This act amends the state insurance code to require a Medicare select insurer to use procedures for hearing complaints and resolving written grievances from subscribers. The procedures must be aimed at mutual agreement for settlement and may include arbitration procedures. The grievance procedure must be described in the policy and certificate and in the outline of coverage.
New Jersey SB 2184 (Introducted 09/18/2006)
Subjects: Law Enforcement, Arbitration
Entitled the "State Law Enforcement Officers' Bill of Rights," this bill provides police officers subject to a disciplinary hearing with a hearing officer or impartial arbitrator. If the arbitrator determines that the officer is guilty of the allegations, he or she is disciplined accordingly. If the arbitrator determines that the officer is not guilty, the determination is conclusive and the officer will not be subject to disciplinary action. The officer may appeal to the Commissioner of Personnel or the Merit System Board.
New York SB 3078 (Introduced 03/07/2005) Vetoed by Governor 09/13/2006
Subjects: Arbitration Court Clerks, Officers Public Hearings
Provides for the use of binding arbitration for court clerks or uniformed court officers of the unified court system; the parties shall refer the dispute to a three member public arbitration panel; requires the arbitration panel to hold hearings on all matters within the scope of negotiations related to the dispute; determinations of the panel are final and binding on all parties.
REGULATIONS
Louisiana Reg 10602 (Proposed 09/20/2006) Regulation Adopted 09/20/2006
Subjects: Mediation, Hurricanes Katrina and Rita
Establishes special mediation program for personal lines residential insurance claims from Hurricanes Katrina and Rita. Creates procedures for notice of right to mediation, request for mediation, assignment of mediators, payment for mediation, conduct of mediation, and guidelines for quality of repair of residential property damage. EFFECTIVE DATE: 9/20/2006. EXPIRATION DATE: 01/18/2007.
New Hampshire 6349 (Proposed 05/19/2006) Regulation Adopted 09/15/2006
Subjects: Board of Marital Mediator Certification, Marital Mediation, Board of Marital Mediator Certification.
Relates to changes in definitions for consistency with revisions in RSA 328-C.
New Hampshire 6350 (Proposed 05/19/2006) Regulation Adopted 09/15/2006
Subjects: Board of Marital Mediator Certification, Marital Mediation
Requires applicants for certification to have a bachelor's or higher degree, whereas the current rule requires applicants to have an associate's or higher degree or credit for 60 hours of post secondary study or a certificate of completion of a program in mediation/conflict resolution. Clarifies changes or changes in terminology made to conform to statutory revisions and to recognize the new concept of 'mediated agreements'.
New Hampshire 6351 (Proposed 05/19/2006) Regulation Adopted 09/15/2006
Subjects: Board of Marital Mediator Certification, Marital Mediation
Incorporates the Model Standards of Practice for Family and Divorce Mediation as the ethical standards to be met by those certified by the Board of Marital Mediator Certification and established violation of the Model Standards as misconduct subjecting the violator to disciplinary action.
New York Reg 18578 (Proposed 09/01/2006) Regulation Adopted 09/01/2006
Subjects: Arbitration, Claims for Personal Injury Protection Benefits
Provides the procedures for administration of the special expedited arbitration for disputes regarding the designation of the insurer for the first part benefits. Emergency Rule Adoption EFFECTIVE DATE: 09/01/2006. EXPIRATION DATE: 11/29/2006.
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