ADR LAW & POLICY UPDATE

Federal Cases

Fourth Circuit Holds That Party Alleging Unconscionable Arbitration Agreement Lacked Standing to Sue
Jones v. Sears Roebuck and Co., No. 07-1584, 2008 WL 4844717 (4th Cir. Nov. 10 2008)
11/10/2008 12:00:00 AM

Affirming a district court ruling granting a motion to dismiss a declaratory relief claim in a credit card dispute, the Fourth Circuit Court of Appeals declined to hear a challenge alleging an arbitration agreement was unconscionable because doing so amounted to a hypothetical advisory opinion, as no party had invoked or threatened to invoke the arbitration agreement.

In Jones v. Sears Roebuck and Co., No. 07-1584, 2008 WL 4844717 (4th Cir. Nov. 10 2008), Jones filed a class action lawsuit against Sears in West Virginia state court for alleged violations of various consumer protection statutes. Jones also sought a declaratory order stating that the arbitration provision in Sears’ contract was unconscionable. He alleged that the arbitration agreement unlawfully eliminated participation in class actions, prevented access to the courts, and unconstitutionally deprived him of his right to a jury trial... Full Story

Court Confirmation of Arbitration Award Does Not Depend on Inclusion of "Magic Language" in Agreement Authorizing Confirmation
Qorvis Communications, LLC v. Wilson, No. 07-1967, 2008 WL 5077823 (4th Cir. Dec. 3, 2008)
12/3/2008 12:00:00 AM

In affirming confirmation of an arbitration award, the Fourth Circuit Court of Appeals held that confirmation does not depend on the agreement using any "magic language" authorizing confirmation, at least not where the language of the agreement, the rules it invokes, and the parties’ conduct conclusively establish the parties’ intent that any resultant award could be confirmed by a court as an enforceable judgment.

In Qorvis Communications, LLC v. Wilson, No. 07-1967, 2008 WL 5077823 (4th Cir. Dec. 3, 2008), Wilson and Qorvis entered into a consulting contract containing an arbitration agreement. After a dispute arose over the solicitation of clients for an outside venture, Qorvis terminated Wilson’s contract. The parties proceeded to arbitration without objection, and the arbitrator issued an award in favor of Qorvis. Qorvis successfully moved to confirm the award at the trial court, reducing it to a judgment... Full Story

Fifth Circuit Joins Eleventh Circuit in Allowing Non-Signatory to Compel Arbitration Based on Express "Relationship" with the Agreement
Sherer v. Green Tree Servicing LLC, No. 07-60567, 2008 WL 4838702 (5th Cir. Nov. 10, 2008)
11/10/2008 12:00:00 AM

Joining its former companion in the Eleventh Circuit, the Fifth Circuit Court of Appeals has held that a non-signatory may compel arbitration of a statutory debt collection claim where the terms of the signatories’ agreement expressly encompass all claims by parties with a "relationship" to the agreement.

In Sherer v. Green Tree Servicing LLC, No. 07-60567, 2008 WL 4838702 (5th Cir. Nov. 10, 2008), Sherer and Conseco Bank entered into a contract for financing a manufactured home. The contract contained an arbitration agreement providing that all disputes arising out of the contract or relationships resulting from the contract would be settled by arbitration. The resulting loan was later serviced by Green Tree, a non-signatory to the contract and agreement... Full Story

Party Proved That Arbitration Agreement Was Properly Mailed Buy Submitting Affidavit Reciting Presence of Customer's Name and Address on Mailing List
Baylis v. Wachovia Bank, N.A., No. Civ. A. 08-3392, 2008 WL 5055746 (E.D. Pa. Nov. 25, 2008)
11/25/2008 12:00:00 AM

A bank sustained its burden of showing that its arbitration agreement amendment was received by a customer by presenting an affidavit from a third-party mailing company stating that the customer's correct name and address was in its mailing database, according to a federal district court in Pennsylvania.

In Baylis v. Wachovia Bank, N.A., No. Civ. A. 08-3392, 2008 WL 5055746 (E.D. Pa. Nov. 25, 2008), Baylis sued Wachovia, alleging conversion of her checking accounts. Wachovia moved to compel arbitration of the claims in accordance with an arbitration agreement contained in an amendment to the deposit agreement mailed to Baylis. Baylis opposed the motion, arguing that she never received the amendment or consented to its contents. Alternatively, Baylis argued that the agreement was unconscionable... Full Story

State Cases

Lack of Mutuality and Discovery Limitations Render Employee’s Arbitration Agreement Unenforceable Under California Law
Masterson v. Robbins Research International, Inc., No. 37-2007-00065082-CU-WT-CTL, 2008 WL 4681522 (Cal. Ct. App. Oct. 23, 2008)
10/23/2008 12:00:00 AM

In affirming an order denying an employer’s motion to compel arbitration, a California appellate court determined that a lack of mutuality and discovery limitations rendered the arbitration agreement unconscionable and therefore unenforceable.

In Masterson v. Robbins Research International, Inc., No. 37-2007-00065082-CU-WT-CTL, 2008 WL 4681522 (Cal. Ct. App. Oct. 23, 2008), Masterson entered into an arbitration agreement with her employer RRI. When RRI terminated Masterson, she sued for age discrimination... Full Story

Nursing Home Waived Right to Arbitrate Through Delay and Discovery
Roland v. Covenant Care of California, Inc., No. C056658, 2008 WL 4817016 ( Cal. Ct. App. Nov. 6, 2008)
11/6/2008 12:00:00 AM

A California appellate court denied a nursing home’s motion to compel arbitration, because the court determined that the nursing home had waived its right to compel arbitration by participating in the litigation process.

In Roland v. Covenant Care of California, Inc., No. C056658, 2008 WL 4817016 ( Cal. Ct. App. Nov. 6, 2008), Roland spent time recovering from knee surgery at Covenant Care, a nursing home and rehabilitation facility. Roland later sued Covenant Care. In response, Covenant Care moved to compel arbitration based on an arbitration agreement with Roland. The trial court denied Covenant Care’s motion on the basis that Covenant Care had actively participated in the litigation process and failed to seek arbitration until trial was imminent... Full Story

Indiana Appellate Court Upholds Delivery of Award Under FORUM Code of Procedure
Weldon v. Asset Acceptance, LLC, No. 53A01-0804-CV-159, 2008 WL 4980408 ( Ind. Ct. App. Nov. 25, 2008)
11/25/2008 12:00:00 AM

Affirming a trial court order confirming an arbitration award in a credit card dispute, an Indiana appellate court held that the cardholder’s challenge to the award was time barred under the Federal Arbitration Act (FAA) and also upheld the FORUM Code of Procedure method for delivering an arbitration award by U.S. mail.

In Weldon v. Asset Acceptance, LLC, No. 53A01-0804-CV-159, 2008 WL 4980408 ( Ind. Ct. App. Nov. 25, 2008), Weldon had an MBNA credit card. The MBNA credit card contract contained an arbitration agreement. He fell behind on his payments and stopped making them in 1999. Eventually, Asset Acceptance became the assignee of MBNA’s credit card debt... Full Story

Fundamental Fairness Requires an Opportunity to Be Heard
Pennington v. CUNA Brokerage Services, Inc., No. 2008 CA 0589, 2008 WL 4425965 ( La. Ct. App. Oct. 1, 2008)
10/1/2008 12:00:00 AM

A Louisiana appellate court determined that fundamental fairness required an arbitration panel to allow a party to amend her pleadings and present material evidence, prior to dismissal. Since the panel did not allow this opportunity, the Court reversed the lower court ruling and vacated the arbitration award. In Pennington v. CUNA Brokerage Services, Inc., No. 2008 CA 0589, 2008 WL 4425965 ( La. Ct. App. Oct. 1, 2008), Pennington entered into a brokerage agreement with CUNA. Pennington invested a lump sum in CUNA's mutual funds. Thereafter, Pennington claimed that she sustained significant losses in the investments made on her behalf... Full Story

Arbitration Rules "Then in Effect" Refers to Rules at Time of Demand, Not Time of Contracting
Buice v. WMA Securities, Inc., 668 S.E.2d 430 (S.C. Ct. App. Oct 14, 2008)
10/14/2008 12:00:00 AM

A South Carolina appellate court has interpreted language requiring arbitration under rules "then in effect" as invoking the rules in effect at the time of demand, not at the time of contracting.

In Buice v. WMA Securities, Inc., 668 S.E.2d 430 (S.C. Ct. App. Oct 14, 2008), a group of investors individually bought variable life insurance policies from WMA. Each policy contained an arbitration agreement requiring arbitration of disputes "in accordance with the rules then in effect of the National Association of Securities Dealers, Inc." (NASD)... Full Story

ADR Legislation & Regulation

LEGISLATION

None.

REGULATIONS

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