Federal Cases
Arbitration Agreement Governs Underlying Contract Rejected by Bankruptcy Debtor
In re Fleming Companies, Inc., No. 05-749-SLR, 2007 WL 788921 (D. Del. Mar. 16, 2007)
3/16/2007
In affirming a bankruptcy court order compelling arbitration, a federal district court in Delaware held that an arbitration agreement survives the bankruptcy debtor's rejection of the underlying contract even though rejection of an executory contract is generally regarded as "an all-or-nothing proposition."
In In re Fleming Companies, Inc., No. 05-749-SLR, 2007 WL 788921 (D. Del. Mar. 16, 2007), Fleming and Selby's Market (Selby's) entered into a supply agreement whereby Fleming would supply Selby's with groceries and related merchandise. The supply agreement contained an arbitration clause... Full Story
Federal Court Orders Arbitration of FLSA Claims Because Arbitration Agreement Allowed a Full Range of Remedies
Cameron v. National Resort Management Corp., No. 3:06-CV-1724-M, 2007 WL 580622 (N.D. Tex. Feb. 23, 2007)
2/23/2007
In ordering arbitration of an employment dispute, a federal court in Texas upheld an arbitration agreement that seemingly limited the available remedies because the arbitration rules established that the agreement actually allowed a full range of remedies, thus enabling the employee to vindicate her statutory rights.
In Cameron v. National Resort Management Corp., No. 3:06-CV-1724-M, 2007 WL 580622 (N.D. Tex. Feb. 23, 2007), Cameron filed suit claiming her dismissal from National Resort Management (NRM) violated her rights under the Fair Labor Standards Act (FLSA). NRM responded with a motion to compel arbitration under a broadly worded agreement signed by both parties. The Court granted the motion... Full Story
D.C. Circuit Finds No Arbitrator Misconduct in Refusal to Hear Expert Witness Testimony
Lessin v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 06-7067, 2007 WL 776864 (D.C. Cir. Mar. 16, 2007)
3/16/2007
The D.C. Circuit Court of Appeals has ruled that an arbitration panel's refusal to hear testimony from a second expert witness in a dispute over major investment losses did not rise to the level of misconduct, as the refusal did not deprive the proffering party of a fair hearing.
In Lessin v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 06-7067, 2007 WL 776864 (D.C. Cir. Mar. 16, 2007), Lessin lost $5.6 million over a ten month period – nearly 100% of the value of his account with Merrill Lynch. Having determined that his losses were primarily attributable to Lessin's own aggressive investment strategy, an arbitration panel awarded Lessin only $33,000... Full Story
Seventh Circuit: Arbitration Agreement Between Customer and Company Covers Customer's Dispute with Employee
Dunmire v. Schneider, No. 06-1254, 2007 WL 764306 (7th Cir. Mar. 15, 2007)
3/15/2007
The Seventh Circuit Court of Appeals ruled that because the laws of agency cover an employee's actions taken on behalf of his employer, an arbitration agreement between a customer and the company covers actions brought against an employee.
In Dunmire v. Schneider, No. 06-1254, 2007 WL 764306 (7th Cir. Mar. 15, 2007), Dunmire, a disgruntled customer of Morgan Stanley, lost nearly $2,000,000 on silver contracts, allegedly due to the actions of a Morgan Stanley employee... Full Story
Without Proof of Written Agreement, Court Refuses to Compel Arbitration
Spaces, Inc. v. RPC Software, Inc., No. 06-2520-KHV, 2007 WL 675505 (D. Kan. Mar 01, 2007)
3/1/2007
A federal court in Kansas refused to compel arbitration when the moving party could not produce a written agreement to arbitrate.
In Spaces, Inc. v. RPC Software, Inc., No. 06-2520-KHV, 2007 WL 675505 (D. Kan. Mar 01, 2007), Spaces, Inc. (Spaces) sued RPC Software, Inc. (RPC) for breach of contract and other claims stemming from the sale of computer software. RPC maintained that the parties executed a license agreement that included an arbitration provision. Accordingly, RPC moved to stay proceedings and compel arbitration of Spaces' claims. Spaces opposed the motion to compel, arguing that RPC could not prove that a written agreement to arbitrate, as required under the Federal Arbitration Act, existed... Full Story
Seventh Circuit Applies Wisconsin Law in Rejecting Unconscionability Challenge to Arbitration Agreement
Scaffidi v. Fiserv, Inc., No. 06-3123, 2007 WL 648178 (7th Cir. Feb. 28, 2007)
2/28/2007
Applying Wisconsin law, the Seventh Circuit Court of Appeals affirmed a district court order compelling arbitration of an employment dispute because there was no merit to the employee's unconscionability challenge or allegation of waiver.
In Scaffidi v. Fiserv, Inc., No. 06-3123, 2007 WL 648178 (7th Cir. Feb. 28, 2007), Scaffidi sued Fiserv, her former employer, for alleged discrimination. After a failed attempt at mediation, Fiserv moved to compel arbitration. The district court granted the motion... Full Story
Court Refuses to Sever Class Claims When Class Has Not Been Certified
Glass v. Beverly Enterprises, Inc., 3:05CV145-B-A, 2007 WL 837241 (N.D. Miss. Mar. 15, 2007)
3/15/2007
A federal court in Mississippi refused to sever the claims of putative class members who signed arbitration agreements from those who did not when the class had yet to be certified and the court did not have jurisdiction over the claims of the named plaintiff because he signed an arbitration agreement.
In Glass v. Beverly Enterprises, Inc., 3:05CV145-B-A, 2007 WL 837241 (N.D. Miss. Mar. 15, 2007), Glass sought declarative and monetary relief for alleged inhumane treatment of nursing home residents of Beverly Enterprises (BEI)... Full Story
Courts May Review Interim Arbitration Awards That Are the Final Award on a Discrete Issue
Crawford Group, Inc. v. Holekamp, No. 4:06-CV-1247 CAS, 2007 WL 844819 (E.D. Mo. Mar. 19, 2007)
3/19/2007
Following the rule applied in most federal circuits, a federal court in Missouri held that an interim arbitration award that finally disposes of an independent claim is subject to judicial review under the Federal Arbitration Act (FAA).
In Crawford Group, Inc. v. Holekamp, No. 4:06-CV-1247 CAS, 2007 WL 844819 (E.D. Mo. Mar. 19, 2007), Crawford Group, Inc. (CGI) arbitrated a dispute over the redemption price of stock held by Holekamp, a former employee of a CGI subsidiary. The parties agreed to a bifurcated arbitration proceeding, in which substantive issues would be settled before determining who would pay attorney fees... Full Story
Corporate Nonsignatory Must Arbitrate Because Person Controlling the Corporation Was Party to the Arbitration Agreement
Benefits in a Card, LLC v. TALX Corporation, No. 6:06-03655-GRA, 2007 WL 750638 (D. S.C. Mar. 7, 2007)
3/7/2007
A federal court in South Carolina ruled that a corporate nonsignatory must arbitrate claims arising out of a contract containing an arbitration agreement because the person controlling the corporation was a party to the contract.
In Benefits in a Card, LLC v. TALX Corporation, No. 6:06-03655-GRA, 2007 WL 750638 (D. S.C. Mar. 7, 2007), TALX and Stecker, the principal owner, manager, president and CEO of Benefits in a Card, entered into an acquisition agreement relating to the sale of stock... Full Story
State Cases
Kentucky Savings Statute Tolls Deadline for Challenging Arbitration Award
Fischer v. MBNA America Bank, N.A., No. 2006-CA-000525-MR, 2007 WL 779295 (Ky. Ct. App. Mar. 16, 2007)
3/16/2007
In a case where the aggrieved party first challenged an arbitration award in federal court, the Kentucky Court of Appeals held that under Kentucky's saving statute, dismissal of the federal action for lack of jurisdiction tolled the 90-day deadline for challenging the award in state court.
In Fischer v. MBNA America Bank, N.A., No. 2006-CA-000525-MR, 2007 WL 779295 (Ky. Ct. App. Mar. 16, 2007), MBNA filed an arbitration claim against Fischer, seeking to collect the balance allegedly owing on an MBNA credit card. Fischer filed a response objecting to arbitration on the ground that the parties had no written agreement to arbitrate... Full Story
Maryland's High Court Diverges from Majority Rule in Holding That Magnuson-Moss Claims Are Not Subject to Binding Arbitration
Koons Ford of Baltimore, Inc. v. Lobach, No. 66, 2007 WL 817225 (Md. Mar. 20, 2007)
3/20/2007
In construing the interplay between the Federal Arbitration Act (FAA) and the Magnuson-Moss Warranty Act (MMWA), the Maryland Court of Appeals held that the FAA does not require courts to enforce an arbitration agreement for claims brought under the MMWA. As the two dissenting justices explained, in reaching this holding, the Court rejected the reasoning of "the vast majority" of courts and instead "pin[ned] its decision on the reasoning adopted previously by only three federal district courts, a handful of law journal articles, and a dissent."
In Koons Ford of Baltimore, Inc. v. Lobach, No. 66, 2007 WL 817225 (Md. Mar. 20, 2007), Lobach bought a used car from Koons Ford (Koons). When he discovered that the car was allegedly defective and damaged, Lobach sued Koons, alleging violations of the MMWA and several other causes of action. Koons responded by filing a motion to compel arbitration in accordance with the parties' arbitration agreement. The trial court denied the motion with respect to the alleged violation of the MMWA but granted the motion in all other respects... Full Story
California Court Refused to Compel Arbitration of Claim Brought by Potential Class Action Member Who Did Not Agree to Arbitrate
Lee v. Southern California University for Professional Studies, No. G036809, 2007 WL 778818 (Cal. Ct. App. Mar. 16, 2007)
3/16/2007
A California appellate court refused to allow the fact that a plaintiff brought a putative class action to bind her to an arbitration agreement when the plaintiff never signed an arbitration agreement and the court had yet to certify a class.
In Lee v. Southern California University for Professional Studies, No. G036809, 2007 WL 778818 (Cal. Ct. App. Mar. 16, 2007), Lee, a law student at Southern California University for Professional Studies (SCUPS), was denied a tuition refund after being "administratively withdrawn" from the school. She filed a putative class action suit against the school. Neither Lee nor any other law student at the University had signed an arbitration agreement; however, most other potential class members did sign such agreements... Full Story
Lack of Finality Defeats Plaintiff's Challenge of Court Order Regarding Settlement Agreement
Rodriguez v. Hewlett Packard, No. H029055, 2007 WL 708799 (Cal. Ct. App. Mar. 9, 2007)
3/9/2007
A California appellate court held that a court order enforcing a mediated settlement agreement could not be appealed when the plaintiff had a seven-day period to revoke the agreement.
In Rodriguez v. Hewlett Packard, No. H029055, 2007 WL 708799 (Cal. Ct. App. Mar. 9, 2007), Rodriguez entered into a lengthy dispute with her former employer, Hewlett Packard, regarding discrimination and wrongful termination claims... Full Story
Massachusetts Court: Arbitration Award Did Not Violate Public Policy
Massachusetts Mutual Life Insurance Co. v. O'Connell, No. 064379BLS1, 2007 WL 756505 (Mass. Super. Jan. 2, 2007)
1/2/2007
A Massachusetts state court held that an arbitration award granting a corporate executive the lavish compensation and benefits outlined in his employment agreement after a finding that he was terminated without cause did not violate any clearly defined and dominant public policy.
In Massachusetts Mutual Life Insurance Co. v. O'Connell, No. 064379BLS1, 2007 WL 756505 (Mass. Super. Jan. 2, 2007), O'Connell, the former CEO of Mass Mutual, requested arbitration to determine whether Mass Mutual had adequate grounds to support terminating him for cause... Full Story
New York Court Refuses to Confirm Arbitration Award When Party Waited Too Long to File Petition to Confirm
Asset Acceptance, LLC v. Sisson, No. 2007-0026, 2007 WL 860920 (N.Y. Sup. Ct. Mar. 22, 2007)
3/22/2007
A state court in New York refused to confirm an arbitration award when the petition to confirm was not filed until after the one-year period allowed by state law.
In Asset Acceptance, LLC v. Sisson, No. 2007-0026, 2007 WL 860920 (N.Y. Sup. Ct. Mar. 22, 2007), an arbitrator issued an award in Asset's favor on December 14, 2005. However, Asset did not file to confirm the award until nearly thirteen months later... Full Story
Party Waived Arbitration Right by Participating in Extensive Discovery
Rhodes v. Benson Chrysler-Plymouth, Inc., No. 4222, 2007 WL 816811 (S.C. Ct. App. Mar. 19, 2007)
5/19/2007
Although less than a year passed between the filing of a claim and a party's request to compel arbitration of that claim, a South Carolina appellate court held that a party waived its right arbitration because extensive discovery clearly prejudiced the opposing party's case.
In Rhodes v. Benson Chrysler-Plymouth, Inc., No. 4222, 2007 WL 816811 (S.C. Ct. App. Mar. 19, 2007), Rhodes sued Benson Chrysler-Plymouth (Benson) after Benson allegedly substituted a stolen 1999 Dodge Durango for properly-titled 2001 Durango that Rhodes agreed to purchase. Benson did not move to compel arbitration for nearly ten months after Rhodes brought the claim in court. Rhodes then argued that Benson waived its right to arbitration... Full Story
ADR Legislation & Regulation
LEGISLATION
AL S 332
AUTHOR: Lindsey [D]
TITLE: Motor Vehicle Insurer Provisions
INTRODUCED: 03/29/2007
DISPOSITION: Pending
LOCATION: Senate Economic Expansion and Trade Committee
Commentary:
Enacting an act regarding insurers of motor vehicles and towing/storage procedure, and to provide for mediation and provide the procedure for mediation.
CO H 1103
SPONSOR: Buescher [D]
TITLE: Malt Beverage Suppliers and Wholesalers
INTRODUCED: 01/12/2007
LAST AMEND: 01/29/2007
ENACTED: 03/26/2007
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary:
Allows for arbitration of disputes between wholesalers and other parties (suppliers/other wholesalers) relating to the sale of malt beverages. Arbitration shall be conducted under the terms of the Uniform Arbitration Act, and shall determine the fair market value of the existing wholesaler's right to distribute the product in the existing wholesaler's territory.
CO S 79
SPONSOR: Johnson [R]
TITLE: Standard Health Care Provider Contracts
INTRODUCED: 01/15/2007
LAST AMEND: 03/21/2007
DISPOSITION: To Governor
LOCATION: To Governor
Commentary:
In contractual agreements with health care providers for health care services, this bill allows such contracts to provide for binding arbitration. Also allows previous arbitration awards to be introduced as "persuasive authority" suggesting a violation of this Article.
FL H 7077
AUTHOR: Jobs and Entrepreneurship Council Cmt
TITLE: Hurricane Preparedness and Insurance
PREFILED: 03/26/2007
INTRODUCED: 03/26/2007
LAST AMEND: 03/28/2007
DISPOSITION: Pending
LOCATION: House Third Reading
Commentary:
General: Revises various provisions of insurance law relating to coverage under Florida Hurricane Catastrophe Fund; continues to insist that for access to the funds, "The corporation shall provide a process for neutral arbitration of any dispute between the corporation and the insurer."
KY H 259
BR: 1353
SPONSOR: Belcher [D]
TITLE: Accounting Practice
INTRODUCED: 02/06/2007
LAST AMEND: 03/07/2007
ENACTED: 03/21/2007
DISPOSITION: Enacted
LOCATION: Chaptered
CHAPTER: 50
Commentary:
Relating to accounting practice and licensure, mediation may be used to informally resolve disputes.
KY H 490
BR: 1327
SPONSOR: Yonts [D]
TITLE: The Construction Industry
INTRODUCED: 02/14/2007
LAST AMEND: 03/27/2007
DISPOSITION: To Governor
LOCATION: To Governor
Commentary:
Provides that a clause in a contract for construction shall be against the public policy of this Commonwealth and shall be void and unenforceable if it "purports to waive, release, or extinguish the right to resolve disputes through litigation, in court or substantive or procedural rights in connection with such litigation, except that a contract may require binding arbitration as a substitute for litigation or require non-binding alternative dispute resolution as a prerequisite to litigation."
ME H 1193
LD: 1710
AUTHOR: Mills JT [D]
TITLE: Municipal Foreclosure Procedures
INTRODUCED: 03/27/2007
DISPOSITION: Pending
LOCATION: Joint Committee on Taxation
Commentary:
This bill would require a municipality to provide notice of the availability of excess funds following foreclosure for failure to pay taxes, and provides for [private] arbitration of excess funds disputes to be administered by the American Arbitration Association.
MS H 835
AUTHOR: Brown [D]
TITLE: Conflict Resolution and Mediation Materials
INTRODUCED: 01/11/2007
LAST AMEND: 02/01/2007
DISPOSITION: Failed
LOCATION: Died
Commentary:
Revises conflict resolution and mediation materials, and how they are developed by the State Board of Education.
MS H 1368
AUTHOR: Miles [D]
TITLE: State Transportation Arbitration Board
INTRODUCED: 01/15/2007
LAST AMEND: 03/06/2007
ENACTED: 03/27/2007
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary:
Revises composition, method of selection, and terms of members of State Transportation Arbitration Board.
MS S 2948
AUTHOR: Hewes [R]
TITLE: Department of Transportation
INTRODUCED: 01/15/2007
DISPOSITION: Failed
LOCATION: Died
Commentary:
Revises arbitration process between the Department of Transportation and contractors.
MT H 409
AUTHOR: Sinrud [R]
TITLE: Motorsport Vehicle Manufacturers Trade Practices
INTRODUCED: 01/22/2007
LAST AMEND: 03/17/2007
DISPOSITION: To Governor
LOCATION: To Governor
Commentary:
Prohibits any provisions in a motorsport vehicle manufacturer/dealer agreement that "require that any arbitration proceedings or legal action between the parties take place in a venue other than the state of Montana."
NH H 840
AUTHOR: Infantine [R]
TITLE: Home Improvement Contracts
INTRODUCED: 01/31/2007
DISPOSITION: Failed
LOCATION: Died
Commentary:
Establishes requirements for home contractors and consumers of home contractor services, which must be complied with in order to maintain any arbitration proceeding.
NV A 571
AUTHOR: Judiciary Cmt
TITLE: Dispute Resolutions in Domestic Relations Cases
INTRODUCED: 03/26/2007
DISPOSITION: Pending
LOCATION: Assembly Judiciary Committee
Commentary:
Provides for arbitration and mediation of certain domestic dispute cases.
NV S 538
AUTHOR: Commerce and Labor Cmt
TITLE: Provisions Regarding Trade Practices
INTRODUCED: 03/26/2007
DISPOSITION: Pending
LOCATION: Senate Commerce and Labor Committee
Commentary:
Amending an act regarding trade practices. Sec. 2 4, relating to mortgage agreements, proposes that any unconscionable arbitration clause, unconscionable clause requiring the consumer to pay the attorney fees of the supplier or unconscionable liquidated damages clause included in a mortgage loan is unenforceable.
NY A 7045
SPONSOR: DelMonte [D]
TITLE: Video Lottery Gaming
INTRODUCED: 03/27/2007
DISPOSITION: Pending
LOCATION: Assembly Racing and Wagering Committee
Commentary:
An act amending the racing, pari mutuel wagering and breeding law, in relation to requiring racetracks eligible for video lottery gaming to enter into binding contracts with its horsemen's association and the appropriate breeding fund and providing for binding arbitration in negotiations between such racetracks and the representative horsemen's associations and breeding funds
Sec. 207A 2. discusses appointment of arbitrator and other arbitration procedure.
NY S 4148
SPONSOR: Volker [R]
TITLE: Uniform Arbitration Act
INTRODUCED: 03/28/2007
DISPOSITION: Pending
LOCATION: Senate Codes Committee
Commentary:
Revises present law relating to arbitration to better reflect the provisions of the uniform arbitration act.
OR H 2139
AUTHOR: Minnis [R]
TITLE: Mediation of Workplace Interpersonal Disputes
INTRODUCED: 01/08/2007
ENACTED: 03/29/2007
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary:
Provides that mediation of workplace interpersonal disputes between employees of public body may be confidential.
PA H 933
PN: 1099
AUTHOR: Lentz [D]
TITLE: Managed Care Plans and Providers
PREFILED: 03/23/2007
INTRODUCED: 03/29/2007
DISPOSITION: Pending
LOCATION: House Insurance Committee
Commentary:
States that a managed care plan may not compel a health care provider to accept arbitration as the "sole or primary means of dispute resolution between the parties." Arbitration may be provided as an "option" where certain requirements are met.
SC H 3396
AUTHOR: Cato [R]
TITLE: Cable Television Services
INTRODUCED: 01/31/2007
DISPOSITION: To Governor
LOCATION: To Governor
Commentary:
Amends existing law relating to cable television services, including mediation provisions.
WV H 2763
SPONSOR: Kominar [D]
TITLE: Financial Examinations
INTRODUCED: 01/30/2007
LAST AMEND: 03/08/2007
ENACTED: 03/28/2007
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary:
A qualified independent certified public accountant may enter into an agreement with an insurer to have disputes relating to an audit resolved by mediation or arbitration. However, in the event of a delinquency proceeding commenced against the insurer under article ten of this chapter, the mediation or arbitration provisions shall operate at the option of the statutory successor.
REGULATION
OH 13317 (2006)
AUTHOR: Department of Insurance
TITLE: Fair Insurance Claim Handling Procedures
PROPOSED: 12/29/2006
ADOPTED: 3/26/2007
Commentary:
Makes technical changes to a regulation prohibiting unfair trade practices that mislead insurance arbitration claimants.
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