Federal Cases
California Federal Court Stays Litigation While Ninth Circuit Decides Issue of Arbitral Class Waiver
Winig v. Cingular Wireless LLC, No. C-06-4297 MMC, 2006 WL 3201047 (N.D. Cal. Nov. 6, 2006)
11/6/2006
A federal district court in California granted a stay pending an interlocutory appeal of the Court’s order invalidating an arbitration agreement that barred class-wide proceedings. The stay will preserve the benefits of arbitration in case the Ninth Circuit holds that the Federal Arbitration Act (FAA) requires California courts to honor agreements to arbitrate on an individual basis.
In Winig v. Cingular Wireless LLC, No. C-06-4297 MMC, 2006 WL 3201047 (N.D. Cal. Nov. 6, 2006), Winig brought a class action against Cingular, his wireless phone service provider, alleging that Cingular improperly deducted “anytime minutes” for calls Winig made to check his voice mail... Full Story
Confidentiality Protections Apply to Hybrid Procedure Consisting of Arbitration and Mediation
Society of Lloyd’s v. Moore, No. 1:06-CV-286, 2006 WL 3167735 (S.D. Ohio Nov. 1, 2006)
11/1/2006
A federal district court in Ohio ruled that the confidentiality protections of the Uniform Mediation Act applied to an email sent during the mediation phase of a hybrid dispute resolution procedure that first started with arbitration.
In Society of Lloyd’s v. Moore, No. 1:06-CV-286, 2006 WL 3167735 (S.D. Ohio Nov. 1, 2006), Lloyd’s sued Moore for alleged fraud. After the Court granted partial summary judgment, the parties agreed to submit the remaining matters to arbitration and mediation... Full Story
Missouri Court Refuses to Enforce Agreement to Arbitrate on an Individual Basis
Doerhoff v. General Growth Properties, Inc., No. 06-04099-CV-C-SOW, 2006 WL 3210502 (W.D. Mo. Nov. 6, 2006)
11/6/2006
Even though the underlying contract contained a New York choice-of-law provision, a federal district court in Missouri applied Missouri law while refusing to enforce an agreement to arbitrate on an individual basis.
In Doerhoff v. General Growth Properties, Inc., No. 06-04099-CV-C-SOW, 2006 WL 3210502 (W.D. Mo. Nov. 6, 2006), Doerhoff’s grandmother gave her a $25 gift card for use at shopping malls owned by General Growth Properties (GGP).
The gift card agreement contained an arbitration clause that applied to disputes with American Express Travel Related Services Company, Inc. (American Express) and its affiliates. The arbitration clause referred to American Express because GGP administered the gift card program in partnership with American Express. The arbitration clause also required arbitration on an individual basis, thus precluding class-wide arbitration... Full Story
Cardmember Agreement Altered by Arbitration Provision Included with Periodic Statement
Samadi v. MBNA America Bank, N.A., 178 Fed.Appx. 863 (11th Cir. Apr. 21, 2006), cert. denied, 2006 WL 2078944 (U.S. Oct. 30, 2006)
10/30/2006
In Samadi v. MBNA America Bank, N.A., 178 Fed.Appx. 863 (11th Cir. Apr. 21, 2006), cert. denied, 2006 WL 2078944 (U.S. Oct. 30, 2006), MBNA filed an arbitration claim against Samadi for failure to pay a credit card debt. Samadi argued that his arbitration agreement with MBNA was not binding because he never received notice of the amendment to his cardholder agreement.
MBNA submitted an affidavit stating that it “had mailed notice of the amendment to the address where the plaintiff's statements were sent on or about December 20, 1999, and MBNA's files contained no information that the plaintiff opted out of the arbitration provision.” Based upon MBNA’s affidavit, the district court dismissed Samadi’s complaint and granted MBNA’s motion to compel arbitration. Samadi appealed... Full Story
Court Upholds Broad Scope of Arbitration over Non-Compete Agreement
Millennium Validation Services, Inc. v. Thompson, C.A. No. 02-1430 (GMS), 2006 WL 3159821 (D. Del. Nov. 3, 2006)
11/3/2006
In a stand-alone arbitration agreement to resolve a party’s withdrawal as shareholder of a corporation, a United States District Court in Delaware held that the parties agreed to arbitrate the entire despite, absent any indication to the contrary.
In Millennium Validation Services, Inc. v. Thompson, C.A. No. 02-1430 (GMS), 2006 WL 3159821 (D. Del. Nov. 3, 2006), Thompson was forced out as shareholder of Millennium Validation Services, Inc. (Millennium). Millennium facilitated a buy-out of his shares, but ceased payments and sued Thompson once it learned that he had accepted employment with a rival company. The parties agreed to arbitration, where Thompson prevailed. The arbitrator determined the value of Thompson’s shares, and awarded him a lump sum in exchange for his remaining shares of capital stock... Full Story
Non-Signatory Is Not Required to Arbitrate Where Other Members of Putative Class Have Agreed to Arbitration
Lustberg v. Blockbuster, Inc., No. 05-CV-1581 FB JO, 2006 WL 3314639 (E.D.N.Y. Nov. 14, 2006)
11/14/2006
A non-signatory to an arbitration agreement who brings a class action is not required to arbitrate simply because other members of the class are parties to an arbitration agreement, a federal court in New York held.
In Lustberg v. Blockbuster, Inc., No. 05-CV-1581 FB JO, 2006 WL 3314639 (E.D.N.Y. Nov. 14, 2006), Lustberg brought a class action lawsuit against Blockbuster, alleging fraud and other claims arising out of Blockbuster’s “End of Late Fees” marketing campaign... Full Story
Under UCC, Seller Must Make a Counteroffer to Add Arbitration Clause to Purchase Order
Stemcor USA, Inc. v. Trident Steel Corp., No. 06 Civ. 585(JGK), 2006 WL 3161417 (S.D.N.Y. Oct. 25, 2006)
10/25/2006
A federal district court in New York found that arbitration language in a sales acknowledgement form did not create a valid agreement to arbitrate where the purchase order did not mention arbitration because the acknowledgment form was not “expressly made conditional” on assent to the added provision for arbitration (i.e., it was not a counteroffer).
In Stemcor USA, Inc. v. Trident Steel Corp., No. 06 Civ. 585(JGK), 2006 WL 3161417 (S.D.N.Y. Oct. 25, 2006), Trident bought steel pipes from Stemcor for the purpose of threading the ends and re-selling them to third parties. The third-party buyers sued Trident for defects in the pipes, and Trident sued Stemcor for indemnification. Stemcor demanded arbitration, pursuant to a clause in the acknowledgement forms sent to Trident... Full Story
U.S. District Court Holds Signature Unnecessary to Enforce Arbitration Agreement
Hyde v. Sterling Jewelers Inc., No. 5:06-CV-02161, 2006 WL 3253136 (N. D. Ohio Nov 08, 2006)
11/8/2006
A United States District Court in Ohio held that a signature is not necessary to establish the existence of a valid agreement to arbitrate.
In Hyde v. Sterling Jewelers Inc., No. 5:06-CV-02161, 2006 WL 3253136 (N. D. Ohio Nov 08, 2006), Wayland Hyde, a jeweler, worked for Sterling Jewelers Inc. (“Sterling”). Sterling adopted a mandatory dispute resolution system called RESOLVE. The final phase of the program required arbitration. It stated that "[n]either party may file a lawsuit instead of using the RESOLVE program or accepting the Arbitrator's final decision"... Full Story
Arbitration Agreement Upheld Over Vague Allegations of Fraud
CirTran Corp. v. Guthy-Renker Corp., No. 2:06-CV-543 TS, 2006 WL 3254470 (D. Utah Nov. 7, 2006)
11/7/2006
A federal court in Utah rejected a fraud in the inducement challenge to an arbitration agreement, finding that the allegations of fraud were neither pleaded with particularity nor sufficient to overcome the strong presumption in favor of arbitrability.
In CirTran Corp. v. Guthy-Renker Corp., No. 2:06-CV-543 TS, 2006 WL 3254470 (D. Utah Nov. 7, 2006), CirTran agreed to supply Guthy-Renker with fitness products. The parties’ agreement contained an arbitration clause, so when CirTran filed a lawsuit alleging breach of contract and other causes of action, Guthy-Renker filed a motion to compel arbitration. In opposing the motion, CirTran argued fraud in the inducement of the arbitration clause... Full Story
Court Upholds Arbitration Award Finding Employer Liable for Discrimination
Brennan v. Cigna Corp., No. 00-2730, 2006 WL 3254529 (E.D. Pa. Nov. 9, 2006)
11/9/2006
A Pennsylvania federal court upheld an arbitration award in favor of two employees who alleged race discrimination against their former employer, finding that the award was based on discriminatory treatment rather than a non-arbitrable hostile work environment claim.
In Brennan v. Cigna Corp., No. 00-2730, 2006 WL 3254529 (E.D. Pa. Nov. 9, 2006), seven people brought race discrimination claims against Cigna, their former employer. The arbitrator awarded damages to two of the former employees, finding that they were “victim[s] of a racially hostile environment” and subject to “discriminatory treatment"... Full Story
State Cases
Parties Can Agree to Waive Arbitrator Disclosures
Conkle and Olesten v. Goodrich, Goodyear & Hinds, Nos. G033972, G034063, 2006 WL 3095964 (Cal. Ct. App. Nov. 1, 2006)
11/1/2006
The California Court of Appeal held that parties may legally agree to waive disclosure requirements for arbitrators under the state’s statutory scheme.
In Conkle and Olesten v. Goodrich, Goodyear & Hinds, Nos. G033972, G034063, 2006 WL 3095964 (Cal. Ct. App. Nov. 1, 2006), The Law Offices of Phillip K. Fife (Fife) objected to the enforcement of an attorney fee order, as determined through binding arbitration. Fife represented an accounting firm in post-settlement and wrap-up matters. However, after the accounting firm, Fife, and another law firm entered into a “stipulation for binding arbitration” to allocate attorney’s fees, the other law firm was awarded the entire amount of attorney’s fees... Full Story
Florida District Court of Appeals Holds Party Waived Right to Arbitrate Counterclaims by Suing for Defamation
Roth v. Cohen, No. 3D06-116, 2006 WL 3208502 (Fla. Dist. Ct. App. Nov 08, 2006)
11/8/2006
A Florida District Court of Appeals held that a party waives the right to demand arbitration of the opposing party’s counterclaims where the party sued for defamation, where defamation itself was an arbitrable issue.
In Roth v. Cohen, No. 3D06-116, 2006 WL 3208502 (Fla. Dist. Ct. App. Nov 08, 2006), Alan Cohen, an interior designer and sole officer of Alan David, Inc. (“ADI”) entered into a service agreement containing an arbitration provision with Marilyn and Peter Roth to decorate their home... Full Story
In Florida, Non-Binding Arbitration Awards Become Binding if Not Timely Appealed
Quaregna v. Strategic Performance Fund II, Inc., No. 4D05-4263, 2006 WL 3299863 (Fla. App. Nov. 15, 2006)
11/15/2006
A Florida appellate court has held that an arbitration award from non-binding arbitration becomes binding when a party fails to file a request for a trial de novo within 20 days of service of the arbitration award.
In Quaregna v. Strategic Performance Fund II, Inc., No. 4D05-4263, 2006 WL 3299863 (Fla. App. Nov. 15, 2006), Quaregna appealed a final summary judgment order entered in Healthgrades’ favor. The parties had participated in non-binding arbitration to resolve a personal injury dispute, and the arbitrator issued an award in Quaregna’s favor... Full Story
Texas Court of Appeals Issues Writ to Compel Arbitration Despite Unconscionability Claims
D.R. Horton, Inc. v. Hatton, No. 14-06-00262-CV, 14-06-00284-CV, 2006 WL 3193722 (Tex. App. Nov. 07, 2006)
11/7/2006
The Court of Appeals of Texas again enforced the terms of an arbitration agreement contained within an employee handbook acknowledgement form despite multiple employee objections.
In D.R. Horton, Inc. v. Hatton, No. 14-06-00262-CV, 14-06-00284-CV, 2006 WL 3193722 (Tex. App. Nov. 07, 2006), Brenda Hatton brought suit against her employer, D.R. Horton, Inc. (D.R. Horton), alleging discrimination and breach of contract. D.R. Horton moved to compel arbitration pursuant to the arbitration agreement contained in an employee handbook... Full Story
Texas Appellate Court Holds No Evidentiary Hearing Necessary to Compel Arbitration
In re Jim Walter Homes, Inc., No. 14-06-00635-CV, 14-06-00792-CV, 2006 WL 3228602 (Tex. App.-Hous. 14 Dist. Nov 07, 2006)
11/7/2006
A Texas Appellate Court held that no evidentiary hearing was necessary to grant motion to compel arbitration.
In In re Jim Walter Homes, Inc., No. 14-06-00635-CV, 14-06-00792-CV, 2006 WL 3228602 (Tex. App.-Hous. 14 Dist. Nov 07, 2006), Sarah Cryer and Mildred Wooten contracted with Jim Walter Homes, Inc (“Jim Walter”) to build a home. The contract contained an arbitration agreement... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new federal legislation.
STATE LEGISLATION
District of Columbia LB 146 (Introduced 02/17/2005)
Subject: Uniform Arbitration Act
Uniform Arbitration Act of 2005. After a dormant period of nearly two years, this bill received its first reading on November 14. Link to the bill.
Montana M.D. 150 (Draft Version11/20/2006)
Subjects: Arbitration, Bridges
A bill entitled “an Act providing for reasonable and safe public access to streams and rivers from a county bridge, its right-of-way, and its abutments.” The bill also provides for arbitration through the district court and the costs of arbitration.
Montana M.D. 265 (Draft Version 11/21/2006)
Subjects: Arbitration, Deferred Deposit Loans
An Act revising the Montana Deferred Deposit Loan Act. Includes deferred deposit lenders in the definition of regulated lenders, prohibits additional deferred deposit loans to consumers with an outstanding deferred deposit loan, creates a database of consumers with outstanding deferred deposit loans that deferred deposit lenders are required to subscribe to, and adds additional investigation enforcement mechanisms. The portion of the bill that relates to arbitration, and applies specifically to deferred deposit loans, remains unchanged, and states: “(6) (a) A loan agreement may not contain a mandatory arbitration clause that is oppressive, unconscionable, unfair, or in substantial derogation of a borrower’s rights. (b) A mandatory arbitration clause that complies with the applicable standards of the American Arbitration Association must be presumed to not violate the provisions of subsection (6)(a).” Text of the draft bill.
Montana M.D. 266 (Draft Version 11/17/2006)
Subjects: Arbitration, Title Loans
Amends the existing statute regulating title loans by: adding additional investigation enforcement mechanisms; including title loan licensees in the definition of regulated lenders; and expanding the Act to include pawnbrokers. The portion of the bill that relates to arbitration, and applies specifically to title loans, remains unchanged, and states: “(5) (a) A loan agreement may not contain a mandatory arbitration clause that is oppressive, unconscionable, unfair, or in substantial derogation of a borrower’s rights. (b) A mandatory arbitration clause that complies with the applicable standards of the American Arbitration Association must be presumed to not violate the provisions of subsection (5)(a).” Copy of the draft.
Montana M.D. 389 (Draft Version 11/21/2006)
Subjects: Arbitration, Deferred Deposit Loans
An Act revising the Montana Deferred Deposit Loan Act. Includes deferred deposit lenders in the definition of regulated lenders, prohibits additional deferred deposit loans to consumers with an outstanding deferred deposit loan, creates a database of consumers with outstanding deferred deposit loans that deferred deposit lenders are required to subscribe to, and adds additional investigation enforcement mechanisms. The portion of the bill that relates to arbitration, and applies specifically to deferred deposit loans, remains unchanged, and states: “(6) (a) A loan agreement may not contain a mandatory arbitration clause that is oppressive, unconscionable, unfair, or in substantial derogation of a borrower’s rights. (b) A mandatory arbitration clause that complies with the applicable standards of the American Arbitration Association must be presumed to not violate the provisions of subsection (6)(a).” Text of the draft bill.
New Jersey ACR 222 (Introduced 11/20/2006)
Subjects: Mediation, Medical Malpractice
This Concurrent Resolution directs the Legislature to conduct public hearing on, and provides for expedited consideration of, Medical Care Availability Task Force recommendations, including: (1) the advantages and disadvantages of establishing limitations on noneconomic damages for medical malpractice judgments and on extending current limitations on liability that apply to nonprofit hospitals to employees, other than physicians, of those hospitals; (2) the impact of third party reimbursement policies by insurers and health maintenance organizations on access to health care services in the context of the current affordability crisis in the State affecting health care providers in the purchase of necessary liability coverage; (3) the advantages and disadvantages of adopting additional changes to the statute of limitations regarding medical malpractice actions; (4) the advantages and disadvantages of establishing additional procedures for mediation of actions alleging medical malpractice and for screening for frivolous medical malpractice lawsuits; and (5) the advantages and disadvantages of establishing a pre-suit procedure. Text of the resolution.
Pennsylvania SB1104 (Introduced 02/14/2006) Enrolled 11/21/2006
Subjects: Dispute Resolution, Utility Lines
An Act amending the act of December 10, 1974 (P.L.852, No.287), referred to as the Underground Utility Line Protection Law. Amends the duties of the “One Call System” to include establishing a payment dispute resolution system which may be used by excavators, facility owners, designers, project owners, and other involved persons. The dispute resolution panels shall be selected from among a list of representatives of stakeholder groups, including facility owners, excavators, designers, and regulators. Text of the bill.
REGULATIONS
No new regulations.
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