Federal Cases
Sixth Circuit Continues to Apply Manifest Disregard After Hall Street
Coffee Beanery, Ltd. v. WW, L.L.C., No. 07-1830, 2008 WL 4899478 (6th Cir. Nov. 14, 2008)
11/14/2008 12:00:00 AM
The Sixth Circuit Court of Appeals has recognized manifest disregard of the law as a valid ground for vacatur of an arbitration award under the Federal Arbitration Act (FAA) after the Supreme Court's Hall Street decision, citing the high court's "hesitation" to reject manifest disregard in all circumstances and the doctrine's previously universal recognition.
In Coffee Beanery, Ltd. v. WW, L.L.C., No. 07-1830, 2008 WL 4899478 (6th Cir. Nov. 14, 2008), WW entered into a contract as a franchisee of Coffee Beanery. As part of the contract, WW signed a broadly-worded arbitration agreement... Full Story
Without District Court Certification, Circuit Court Cannot Decide Appeal of Order Compelling Arbitration and Execution of Hold-Harmless Agreement
Moglia v. Pacific Employers Insurance Co. of North America, No. 07-1973, 2008 WL 4810080 (7th Cir. Nov. 6, 2008)
11/6/2008 12:00:00 AM
The Seventh Circuit Court of Appeals has held that a bankruptcy trustee cannot seek appellate review of a district court order compelling arbitration and execution of a hold-harmless agreement unless the district court certifies the order for appeal as required by statute.
In Moglia v. Pacific Employers Insurance Co. of North America, No. 07-1973, 2008 WL 4810080 (7th Cir. Nov. 6, 2008), a dispute arose between insurer Pacific and Outboard Marine's bankruptcy trustee regarding the release of excess security in certain letters of credit. In accordance with agreements in the letters of credit, the bankruptcy judge compelled arbitration of the dispute... Full Story
FAA's Section 1 Exception Does Not Apply to International Arbitration Agreements
Rogers v. Royal Caribbean Cruise Line, No. 07-55071, 2008 WL 4811882 (9th Cir. Nov. 6, 2008)
11/6/2008 12:00:00 AM
The provisions of the New York Convention that favor the enforcement of arbitration agreements do not incorporate the "transportation worker" exception contained in Section 1 of the Federal Arbitration Act (FAA), according to the Ninth Circuit Court of Appeals.
In Rogers v. Royal Caribbean Cruise Line, No. 07-55071, 2008 WL 4811882 (9th Cir. Nov. 6, 2008), Rogers was employed by Royal Caribbean as an attendant on a cruise ship. After a dispute arose over the payment of Rogers's wages, Rogers sued Royal Caribbean for violation of 46 U.S.C. § 10313(f), which requires payment of wages to seafarers within a limited time period after the end of a voyage... Full Story
California Federal Court Rejects Non-Residents' Attempt to Invoke California Law Limiting the Enforceability of Class Action Waivers
In re Jamster Mktg. Litig., MDL No. 1751, No. 05-CV-0819 JM(CAB), 2008 WL 4858506 (S.D. Cal. Nov. 10, 2008)
11/10/2008 12:00:00 AM
Observing that California had no more than a minimal interest in a cell phone dispute between T-Mobile and individual residents of other states, a California federal district court has refused to invalidate a class action waiver under California law, and instead enforced the waiver under the laws of the individuals' domicile states.
In In re Jamster Mktg. Litig., MDL No. 1751, No. 05-CV-0819 JM(CAB), 2008 WL 4858506 (S.D. Cal. Nov. 10, 2008), Maryland resident Hall, Mississippi resident Chunn, and Illinois residents Giles and Harmon alleged wrongful charges on their T-Mobile accounts. The customers brought a class action suit against T-Mobile for damages. T-Mobile moved to compel individual arbitration of the claims in accordance with the parties' agreements. The customers opposed, alleging that the class action waiver was unconscionable... Full Story
Massachusetts Federal Court Declines to Exercise Its Authority to Order Discovery from a Non-Party for Use in a Foreign Arbitral Proceeding
In re Babcock Borsig AG, No. 08-mc-10128-DPW, 2008 WL 4748208 (D. Mass. Oct. 30, 2008)
10/30/2008 12:00:00 AM
A Massachusetts federal court has denied a party's motion to compel discovery from a non-party for use in a foreign arbitral proceeding, acknowledging its authority to compel discovery but finding the motion "premature."
In In re Babcock Borsig AG, No. 08-mc-10128-DPW, 2008 WL 4748208 (D. Mass. Oct. 30, 2008), Babcock Borsig AG (BBAG) sold certain assets in 2003 to BPI, an American company, and others to Hitachi, a Japanese company. During litigation of a dispute between BBAG and BPI in 2006, BBAG discovered alleged material misrepresentations by Hitachi during the 2003 asset sale... Full Story
Bankruptcy Court Gives Collateral Estoppel Effect to "Default" Arbitration Award
In re Rhodes, No. 05-51272, Adv. No. 08-4008, 2008 WL 4876765 (Bankr. W.D. Mo. Nov. 12, 2008)
11/12/2008 12:00:00 AM
In granting a motion for summary judgment in part, a federal bankruptcy court in Missouri gave collateral estoppel effect to an arbitration award and held that, as a matter of law, the award was a nondischargeable debt under 11 U.S.C. §§ 523(a)(2)(A) and (a)(4).
In In re Rhodes, No. 05-51272, Adv. No. 08-4008, 2008 WL 4876765 (Bankr. W.D. Mo. Nov. 12, 2008), Zapiler and Ferris (Z & F) formed a law firm with Rhodes. However, the parties later dissolved the law firm under dissociation agreement containing an arbitration clause... Full Story
If Questions of Arbitrability are to be Decided by Arbitrator, Arbitrator Rules On Issue of Claim Preclusion
Emilio v. Sprint Spectrum L.P., No. 08 CV 7147(BSJ), 2008 WL 4865050 (S.D. N.Y. Nov. 6, 2008)
11/6/2008 12:00:00 AM
In granting a motion to compel the continuation of arbitration, a federal court in New York held that where questions of arbitrability are expressly designated to the arbitrator through the incorporation of an arbitration administrator's rules, the arbitrator has the power to decide whether a party's claims are precluded because of a previous settlement.
In Emilio v. Sprint Spectrum L.P., No. 08 CV 7147(BSJ), 2008 WL 4865050 (S.D. N.Y. Nov. 6, 2008), Emilio, representing a class of plaintiffs similarly situated, was a part of an ongoing arbitration against Sprint at JAMS for over three years. After Sprint settled a separate nationwide class action, known as the "Benny/Lundberg" settlement, Sprint sought to apply the Benny/Lundberg settlement release to Emilio's arbitration claims... Full Story
Restyling Pattern of Wrongful Conduct Claim from State Court as Federal RICO Claim Does Not Afford Litigant a "Second Bite" at the Arbitrability "Apple"
Jamaica Hospital Medical Center, Inc. v. United Health Group, Inc., No. 07 CV 506(SJ)(JO), 2008 WL 4701017 (E.D.N.Y. Oct. 22, 2008)
10/22/2008 12:00:00 AM
A party cannot relitigate the arbitrability of its state court wrongful conduct claim by merely restyling the same allegations as a federal RICO claim, according to a New York federal district court.
In Jamaica Hospital Medical Center, Inc. v. United Health Group, Inc., No. 07 CV 506(SJ)(JO), 2008 WL 4701017 (E.D.N.Y. Oct. 22, 2008), Jamaica filed an action in state court against Oxford alleging breach of contract and a "widespread course of rogue conduct" designed to improperly enrich non-party insurer UHG. Asserting an agreement between the parties as a defense, Oxford successfully moved to compel arbitration of Jamaica's claims... Full Story
Court Without Authority to Order Employer to Bear All Costs in Contractual Arbitration
Yapuna v. Global Horizons Manpower Inc., No. CV-06-3048-RHW, 2008 WL 4911905 (E.D. Wash. Nov. 14, 2008)
11/14/2008 12:00:00 AM
A Washington federal district court has held that it is without the authority to order an employer to bear all costs in contractual arbitration, and therefore had no power to lift its prior order compelling arbitration even if the employer refused to bear all costs.
In Yapuna v. Global Horizons Manpower Inc., No. CV-06-3048-RHW, 2008 WL 4911905 (E.D. Wash. Nov. 14, 2008), employee Yapuna brought a putative class action complaint against employment agency Global and employers Green Acres and Valley Fruit. The Court compelled arbitration of the plaintiff's claims against Global in accordance with an arbitration agreement between the parties. However, the plaintiffs then petitioned the Court for an order compelling Global to either pay all costs of the arbitration or lift the stay of proceedings and allow litigation... Full Story
State Cases
Soliciting Donations from Hospital Party Disqualifies Arbitrator
Kay v. Kaiser Foundation Health Plan, Inc., No. 27581, 2008 WL 4757264 (Haw. Ct. App. Oct. 31, 2008)
10/31/2008 12:00:00 AM
In reversing a trial court's decision to confirm an arbitration award, a Hawaii appellate court held that where an arbitrator fails to disclose an ongoing professional relationship with a party to the arbitration in which the arbitrator is soliciting charitable donations from that party, a reasonable impression of bias exists and the award will be vacated.
In Kay v. Kaiser Foundation Health Plan, Inc., No. 27581, 2008 WL 4757264 (Haw. Ct. App. Oct. 31, 2008), Kay brought a medical malpractice claim against Kaiser for failing to timely diagnose his brain tumor. After a Medical Claim Conciliation Panel found Kay's claim to be actionable, Kay demanded arbitration of his claims pursuant to an arbitration agreement he had signed with Kaiser... Full Story
"Genuine and Painful" Medical Condition Has No Bearing on Capacity to Enter Arbitration Agreement
Mitchell v. Kindred Healthcare Operating, Inc., No. W2008-00378-COA-R3-CV, 2008 WL 4936505 (Tenn. Ct. App. Nov 19, 2008)
11/19/2008 12:00:00 AM
A Tennessee appellate court has rejected an executor's argument that she was incapacitated at the time she acted as attorney-in-fact on behalf of a nursing home admittee, noting that her condition was "undoubtedly genuine and painful," but did not show a lack of capacity to contract.
In Mitchell v. Kindred Healthcare Operating, Inc., No. W2008-00378-COA-R3-CV, 2008 WL 4936505 (Tenn. Ct. App. Nov 19, 2008), Mitchell's incapacitated husband was admitted to Kindred's nursing home facility. After admission, Mitchell executed a power of attorney, admission documents, and a separate arbitration agreement. At the time of the execution, Mitchell was suffering from side effects from cancer treatments... Full Story
Procedural Arbitrability Issue Incorrectly Styled as Waiver Argument Improperly Decided by Texas Trial Court
In re Frost National Bank, No. 13-07-00748-CV, 2008 WL 4889836 (Tex. App. Nov. 7, 2008)
11/7/2008 12:00:00 AM
Procedural arbitrability issues, even if presented as waiver arguments, are reserved for resolution by the arbitrator and are not within the jurisdiction of the courts, according to a Texas appellate court.
In In re Frost National Bank, No. 13-07-00748-CV, 2008 WL 4889836 (Tex. App. Nov. 7, 2008), Goldbloom secured a loan from Frost for the construction of an office building. The contract contained a broadly-worded arbitration agreement. A dispute arose between Goldbloom and Frost, and Goldbloom sued for negligent misrepresentation, breach of fiduciary duty, and fraud. Frost moved to compel arbitration of the dispute, but the trial court denied the motion... Full Story
FAA preempts Texas's Prohibition on Consumer Arbitration Agreements
In re MP Ventures of South Texas, Ltd., No. 04-08-00620-CV, 2008 WL 4862518 (Tex. App. Nov. 12, 2008)
11/12/2008 12:00:00 AM
The Texas Arbitration Act's (TAA) exception to enforcement of consumer arbitration agreements is preempted by the Federal Arbitration Act when the transaction affects or involves interstate commerce, according to a Texas state appellate court.
In In re MP Ventures of South Texas, Ltd., No. 04-08-00620-CV, 2008 WL 4862518 (Tex. App. Nov. 12, 2008), Oggoian contracted with MP for the construction of a greenhouse. After the greenhouse allegedly failed to maintain a constant temperature, Oggoian brought suit against MP for breach of contract. MP moved to compel arbitration under the TAA in accordance with an arbitration agreement in the parties' contract... Full Story
ADR Legislation & Regulation
LEGISLATION
CT S 1200 e
INTRODUCER: Williams [D]
TITLE: Relief for Municipalities
LOCATION: Signed by Governor
Commentary: Establishes a mortgage mediation procedure in the Connecticut courts. Parties may elect to mediate mortgage disputes, with court personnel serving as mediators. More information about the program can be found at: http://www.jud.state.ct.us/foreclosure/.
NJ A 2243
SPONSOR: Cryan [D]
TITLE: Arbitration Procedures
LOCATION: Senate Labor Committee
Commentary: "Establishes timeframes [and procedures] for certain stages in interest arbitration procedures".
NJ S 1599
SPONSOR: Rice [D]
TITLE: Homeownership Preservation Act
LOCATION: ASSEMBLY
Commentary: Amends the New Jersey Homeownership Preservation Act to include foreclosure mediation and legal services "in conjunction with loan modifications and other foreclosure prevention activities." A November 13, 2008 amendment eliminated the mediation provision of this bill.
REGULATIONS
None.
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