Federal Cases
Courts Will Not Consider Allegations of Arbitrator Bias Until Award Is Issued
Barlow v. Healthextras Inc., No. 2:05cv00189 PGC, 2006 WL 3306802 (D. Utah Nov. 13, 2006)
11/13/2006
In denying a motion to disqualify an arbitrator for “evident partiality,” a federal court in Utah held that the Federal Arbitration Act does not allow courts to inquire into an arbitrator’s qualifications until an award is issued.
In Barlow v. Healthextras Inc., No. 2:05cv00189 PGC, 2006 WL 3306802 (D. Utah Nov. 13, 2006), the Court ordered the parties to arbitrate their dispute. The arbitration agreement provided for arbitration before a panel of three neutral arbitrators.
Several months after the arbitrators were selected, one of the arbitrators, Rich Humphreys, filed a lawsuit on behalf of his client against a sister company of one of the Defendants. The Defendants subsequently moved to disqualify Humphreys as an arbitrator, arguing that the pending lawsuit constituted “evident partiality” under section 10(a)(2) of the Federal Arbitration Act (FAA)... Full Story
Court Finds No Fault in Collection Letter Warning Debtor of Arbitration
Bruesewitz v. Law Offices of Gerald E. Moore & Associates, P.C., No. 06 C 400 S, 2006 WL 3337361 (W.D. Wis. Nov. 15, 2006)
11/15/2006
A Wisconsin federal court granted a debt collector’s motion for summary judgment in a lawsuit alleging a violation of the Fair Debt Collection Practices Act (FDCPA). In granting summary judgment, the Court held that a letter warning the debtor of impending arbitration did not violate the FDCPA.
In Bruesewitz v. Law Offices of Gerald E. Moore & Associates, P.C., No. 06 C 400 S, 2006 WL 3337361 (W.D. Wis. Nov. 15, 2006), Gerald E. Moore & Associates (GEMA) attempted to collect an unpaid credit card balance from Bruesewitz. As part of its collection efforts, GEMA sent Bruesewitz a letter stating that it was exercising its remedy under the cardmember agreement and submitting the claim to binding arbitration... Full Story
Federal Court Upholds Credit Card Arbitration Agreement Formed by Change of Terms and Subsequent Use
Tickanen v. Harris & Harris, Ltd., No. 05-CV-935, 2006 WL 3365788 (E.D. Wis. Oct. 20, 2006)
10/20/2006
A federal court in Wisconsin ruled that a debt collector was entitled to invoke an arbitration agreement that was formed when the lender sent the borrower a “bill stuffer” advising him that subsequent use of his credit card would signal acceptance of the arbitration agreement.
In Tickanen v. Harris & Harris, Ltd., No. 05-CV-935, 2006 WL 3365788 (E.D. Wis. Oct. 20, 2006), Boston Store issued a credit card to Tickanen. Boston Store later sent notice to its cardholders advising them that subsequent use of the credit card would signal acceptance of changes to the credit card agreement, including the addition of an arbitration clause... Full Story
State Court’s Confirmation of Arbitration Award Has Res Judicata Effect
Myer v. Americo Life, Inc., No. 06-1687, 2006 WL 3299870 (8th Cir. Nov. 15, 2006)
11/15/2006
The Eighth Circuit Court of Appeals held that it did not need to decide an appeal from an abstention ruling because a state court’s subsequent confirmation of the arbitration award had a res judicata effect.
In Myer v. Americo Life, Inc., No. 06-1687, 2006 WL 3299870 (8th Cir. Nov. 15, 2006), Myer sold many of his companies to Americo. Concurrently with the sale, the parties entered into a consulting agreement. Americo subsequently pursued arbitration against Myer for breach of non-competition provisions in the consulting agreement and an award was issued in its favor... Full Story
A Merger Clause Does Not Require Arbitration of Disputes Arising Out of Independent Contracts Between the Parties, Eighth Circuit Holds
Suburban Leisure Center, Inc. v. AMF Bowling Products, Inc., No. 06-1865, 2006 WL 3332965 (8th Cir. Nov. 17, 2006)
11/17/2006
A merger clause in an agreement containing an arbitration provision does not require arbitration of disputes arising out of a different agreement between the parties when the agreements in question are independent, the Eighth Circuit Court of Appeals held.
In Suburban Leisure Center, Inc. v. AMF Bowling Products, Inc., No. 06-1865, 2006 WL 3332965 (8th Cir. Nov. 17, 2006), Suburban brought an action for damages after AMF cancelled an oral contract between the parties... Full Story
Ninth Circuit Courts Can Only Compel Arbitration Within Their District
Larson v. Speetjeens, No. C 05-3176 SBA, 2006 WL 3365589 (N.D. Cal. Nov. 17, 2006)
11/17/2006
Since a Ninth Circuit court can order arbitration only within its district, a federal district court in California ordered arbitration within its district even though the arbitration agreement called for arbitration in Mississippi.
In Larson v. Speetjeens, No. C 05-3176 SBA, 2006 WL 3365589 (N.D. Cal. Nov. 17, 2006), Larson sought an order from the court clarifying an earlier order compelling arbitration because the parties disagreed over where the arbitration was to take place.
The arbitration clause called for arbitration in Mississippi, but the Ninth Circuit has held that section 4 of the Federal Arbitration Act (FAA) limits courts to compelling arbitration in the district where the suit was initially filed. See Continental Grain v. Dant & Russell, 118 F.2d 967, 968-69 (9th Cir. 1941)... Full Story
Partial Arbitration Award Allows for Class-Wide Arbitration in Specified County
Ramirez v. Cintas Corp., Nos. C04-00281JSW, C 05-03145 JSW, 2006 WL 3388628 (N.D. Cal. Nov. 22, 2006)
11/22/2006
A United States District Court in California upheld a partial arbitration award allowing class arbitration proceedings to take place in Alameda County, but not in a county in which employees currently or recently worked.
In Ramirez v. Cintas Corp., Nos. C04-00281JSW, C 05-03145 JSW, 2006 WL 3388628 (N.D. Cal. Nov. 22, 2006), the Court denied Cintas’ petition to vacate a partial arbitration award that interpreted an employment arbitration agreement to permit class-wide arbitration proceedings only within Alameda County. Cintas, however, argued that the location of arbitration hearings is a “gateway” matter to be determined by the Court... Full Story
Colorado Federal District Court Says That Employment Arbitration Agreement Is Illusory If Employer Can Change It Unilaterally
Hirschi v. Newcastle Properties, Inc., No. 06CV01424 PSFMJW, 2006 WL 2927493 (D. Colo. Oct 12, 2006)
10/12/2006
A Colorado District Court held that an arbitration clause is illusory where the arbitration agreement contained within the employment agreement could be unilaterally modified by the employer at any time.
In Hirschi v. Newcastle Properties, Inc., No. 06CV01424 PSFMJW, 2006 WL 2927493 (D. Colo. Oct 12, 2006), Hirschi brought charges against her employer, Newcastle Properties, Inc. (Newcastle) in state court. Newcastle moved to compel arbitration... Full Story
Evidence of Identity Theft Requires Trial on Question of Arbitrability
Boran v. Columbia Credit Services, Inc., No. 3:06CV806(CFD)(TPS), 2006 WL 3388400 (D. Conn. Nov. 21, 2006)
11/21/2006
A federal court in Connecticut tentatively denied a motion to compel arbitration because there was sufficient evidence of identity theft to necessitate a trial on the question of whether the claimant actually signed the underlying contract.
In Boran v. Columbia Credit Services, Inc., No. 3:06CV806(CFD)(TPS), 2006 WL 3388400 (D. Conn. Nov. 21, 2006), MBNA America Bank (MBNA) assigned a credit card account in Boran’s name to Columbia Credit Services (Columbia) for collection... Full Story
“Consent to Jurisdiction” Clause Does Not Conflict with Arbitration Clause
Harmonic Investment Management, Inc. v. Casals, No. 06 C 2825, 2006 WL 3341202 (N.D. Ill. Nov. 17, 2006)
11/17/2006
A federal court in Illinois held that an arbitration clause in an employment agreement required arbitration of disputes arising out of a promissory note that was incorporated into the employment agreement, despite the fact that the promissory note contained a “Consent to Jurisdiction” clause.
In Harmonic Investment Management, Inc. v. Casals, No. 06 C 2825, 2006 WL 3341202 (N.D. Ill. Nov. 17, 2006), Casals moved to compel arbitration of a dispute with Harmonic pursuant to an arbitration clause in an employment agreement between Casals and Harmonic. The arbitration clause applied to all disputes relating to or arising out of the agreement... Full Story
Nonsignatories May Compel Arbitration When Dispute Is Integrally Related to Agreement Containing the Arbitration Clause
Cunningham v. Van Ru Credit Corporation, No. 06-10452, 2006 WL 3289775 (E.D. Mich. Nov. 12, 2006)
11/12/2006
A federal court in Michigan ordered arbitration based on the rule that a nonsignatory to an arbitration agreement may compel arbitration when the dispute is integrally related to an agreement containing an arbitration clause.
In Cunningham v. Van Ru Credit Corporation, No. 06-10452, 2006 WL 3289775 (E.D. Mich. Nov. 12, 2006), Cunningham sued Van Ru for alleged violations of the Fair Debt Collection Practices Act... Full Story
Agreement to Arbitrate Supported by Consideration of Continued Employment and Mutual Promise to Arbitrate
McCollum v. Tenet Healthcare Corporation, No. 0:06-1934-JFA-BM, 2006 WL 3373096 (D. S.C. Nov. 20, 2006)
11/20/2006
Continued employment and a mutual obligation to arbitrate are adequate consideration for an arbitration provision in an employment agreement, a federal court in South Carolina held.
In McCollum v. Tenet Healthcare Corporation, No. 0:06-1934-JFA-BM, 2006 WL 3373096 (D. S.C. Nov. 20, 2006), McCollum, a former employee of Tenet, brought a variety of Title VII and tort claims against Tenet... Full Story
State Cases
Despite Conflicting Procedures, Separate Arbitration Provisions Still Show Intent to Arbitrate
Franklin v. Sunflower Imports, Inc., No. 95,299, 2006 WL 3257461 (Kan. Ct. App. Nov. 9, 2006)
11/9/2006
The Kansas Court of Appeals held that two arbitration provisions with conflicting procedural rules were sufficient to show the parties’ intent to arbitrate because the conflict concerned ancillary details of arbitration not the central agreement of the parties to arbitrate.
In Franklin v. Sunflower Imports, Inc., No. 95,299, 2006 WL 3257461 (Kan. Ct. App. Nov. 9, 2006), Franklin bought a motor vehicle from Sunflower Imports (Sunflower). During the transaction, Franklin signed two agreements: (1) a “Retail Buyer’s Order” and (2) an “Installment Contract"... Full Story
No Amore for Italian Film Distributor Who Waived the Protections of a California Statute Governing International Arbitration
Mediafiction S.p.A. v. Miramax Film Corp., No. B185953, 2006 WL 3307068 (Cal. Ct. App. Nov. 15, 2006)
11/15/2006
The California Court of Appeals held that an Italian film distributor waived the protections of California’s Arbitration and Conciliation of International Commercial Disputes Act (the Act) because the distributor never informed the Arbitrator that the Act places special restrictions on an arbitrator’s decisionmaking.
In Mediafiction S.p.A. v. Miramax Film Corp., No. B185953, 2006 WL 3307068 (Cal. Ct. App. Nov. 15, 2006), Miramax filed arbitration claims against Mediafiction and several other Italian film distributors (the Distributors), alleging that they violated their distribution agreements with Miramax. The arbitrator entered an award in favor of Miramax... Full Story
Failure to Take Steps to Respond to Confirmation Petition Is Not Excusable Neglect
Freeman & Rishwain G.P. v. Brown, No. C051194, 2006 WL 3365975 (Cal. App. Nov. 21, 2006)
11/21/2006
A party’s failure to file a response to a petition to confirm an arbitration award is not excusable neglect when the party took no steps to protect his legal rights, a California state court held.
In Freeman & Rishwain G.P. v. Brown, No. C051194, 2006 WL 3365975 (Cal. App. Nov. 21, 2006), an arbitrator entered an award in favor of Freeman. The parties’ dispute had centered on a partnership that they had formed for the purchase of property in Mexico... Full Story
Employee Handbook Arbitration Terms Did Not Create a Binding Agreement
McNett v. Network Management Group, Inc., No. B184807, 2006 WL 2892659, (Cal. App. Oct 12, 2006)
10/12/2006
A California Appellate court held that an arbitration provision contained in an employee handbook did not create an enforceable arbitration agreement when the language of the handbook and acknowledgment of receipt specifically disclaimed that a legal contract was formed between the parties by those documents.
In McNett v. Network Management Group, Inc., No. B184807, 2006 WL 2892659, (Cal. App. Oct 12, 2006), McNett, a longtime employee of Network Management Group, Inc. (Network), brought suit against the company. Network moved to compel arbitration and McNett argued that no agreement to arbitrate had been formed... Full Story
Arbitration Parties May Substitute Private Rules for Statutory Procedures
Porteous v. Porteous, No. A111847, 2006 WL 3308430 (Cal. Ct. App. Nov. 15, 2006)
11/15/2006
In a complex case involving the dissolution of a dental practice partnership, the California Court of Appeal held that parties are free to substitute their own rules or those of an established ADR provider in exchange for state laws setting a time limit for corrections of an arbitral award.
In Porteous v. Porteous, No. A111847, 2006 WL 3308430 (Cal. Ct. App. Nov. 15, 2006), Lawrence and Leland Porteous, who went by the names Dr. Larry and Dr. Lee, were twin brothers who formed a dental practice partnership in three California locations. The brothers’ partnership agreement contained an arbitration clause. When the parties began discussing a separation of their practices, they initiated arbitration to determine how their interests should be divided... Full Story
Arbitration Clause in Homebuilder’s Warranty Agreement Written Too Narrowly to Cover All Construction Disputes
JPG Enterprises, Inc. v. Evans, No. 4D06-2250, 2006 WL 3371894 (Fla. Dist. Ct. App. Nov. 22, 2006)
11/22/2006
The Florida District Court of Appeal held that an arbitration clause in a homebuilder’s warranty agreement did not cover all claims involving alleged failures in construction.
In JPG Enterprises, Inc. v. Evans, No. 4D06-2250, 2006 WL 3371894 (Fla. Dist. Ct. App. Nov. 22, 2006), Evans sued JPG Enterprises, Inc. (JPG), a homebuilder, for breach of contract and violation of a consumer protection statute. JPG moved to compel arbitration pursuant to an arbitration clause in its warranty agreement. The trial court denied the motion... Full Story
Contractor Waived Right to Arbitrate by Suing Under Related Agreement
Twin Oaks at Southwood, LLC v. Summit Constructors, Inc., No. 1D06-3913, 2006 WL 3371495 (Fla. Dist. Ct. App. Nov. 22, 2006)
11/22/2006
The Florida District Court of Appeal held that a building contractor waived its right to demand arbitration of a counterclaim by commencing the underlying litigation. In the case, the contractor demanded arbitration of the owner’s counterclaim, which arose under a “Project Completion Agreement” (PCA), while simultaneously attempting to litigate its claims under the construction contract.
In Twin Oaks at Southwood, LLC v. Summit Constructors, Inc., No. 1D06-3913, 2006 WL 3371495 (Fla. Dist. Ct. App. Nov. 22, 2006), Summit Constructors, Inc. (Summit), the contractor, sued Twin Oaks, the owner, seeking payment for a construction project. The parties had initially entered into a construction contract and later entered into the PCA, which incorporated the terms of the construction contract... Full Story
Arbitration Clause in LLC Membership Agreement Not Broad Enough to Include Law Firm
Simbabear, LLC v. Muskat, No. 4D06-2511, 2006 WL 3371888 (Fla. Dist. Ct. App. Nov. 22, 2006)
11/22/2006
The District Court of Appeal of Florida held that a law firm should not have been required to arbitrate a civil conspiracy claim, since the law firm was “neither a party to, nor a third-party beneficiary of” a membership agreement containing the arbitration clause.
In Simbabear, LLC v. Muskat, No. 4D06-2511, 2006 WL 3371888 (Fla. Dist. Ct. App. Nov. 22, 2006), Muskat was an attorney who formed a limited liability company (LLC), Simbabear, with two law firm colleagues for the purpose of acquiring an office building... Full Story
New Jersey Supreme Court Upholds Arbitration Clause in Adhesion Contract
Meglio v. Taylor Real Estate, Inc., No. A-1992-05T3, 2006 WL 3153426 (N.J. Super. Ct. App. Div. Nov 06, 2006)
11/6/2006
The Supreme Court of New Jersey held that an arbitration clause in a contract of adhesion was valid and enforceable because there was no evidence of fraud which would have prevented the complaining party from reading it.
In Meglio v. Taylor Real Estate, Inc., No. A-1992-05T3, 2006 WL 3153426 (N.J. Super. Ct. App. Div. Nov 06, 2006), homeowners Steven and Jennifer Meglio sued Ecological One Source Inspections, Inc. (Ecological One) alleging prior fire damage not discovered during a pre-purchase inspection. Ecological One successfully moved to dismiss, citing the arbitration terms contained in the inspection agreement between the parties. The Meglios concurrently arbitrated the dispute and moved for reconsideration... Full Story
Boilerplate Language Requesting Attorney Fees Does Not Constitute "Unmistakably Clear" Intent to Waive American Rule
Matza v. Oshman, Helfenstein & Matza, 823 N.Y.S.2d 47 (N.Y.A.D. 2006)
10/24/2006
A New York Appellate Court held that “boilerplate” arbitration submissions requesting attorney fees are insufficient to constitute an “unmistakably clear” expression of intent to waive the American Rule that parties bear their own attorneys’ fees.
In Matza v. Oshman, Helfenstein & Matza, 823 N.Y.S.2d 47 (N.Y.A.D. 2006), Matza prevailed in an arbitration against his former law firm and was awarded damages as well as attorneys’ fees. Oshman argued that the attorneys’ fee portion of the award should be vacated... Full Story
Arbitrator Exceeded His Powers by Applying Incorrect Legal Standard
Smith v. Palm Harbor Homes, Inc., No. 05 CA 31, 2006 WL 3199608 (Ohio Ct. App. Nov. 6, 2006)
11/6/2006
The Ohio Court of Appeals held that an arbitrator exceeded his powers by applying an incorrect legal standard in denying a prevailing claimant’s request for attorney fees.
In Smith v. Palm Harbor Homes, Inc., No. 05 CA 31, 2006 WL 3199608 (Ohio Ct. App. Nov. 6, 2006), Smith bought a manufactured home from Palm Harbor. Shortly after the home was delivered, Smith complained that the home was damaged during delivery and did not conform to the display model.
When Smith refused to pay the balance of the purchase price, Palm Harbor filed an arbitration demand for the balance. Smith answered with a claim of her own, seeking the return of her partial payment along with incidental damages... Full Story
Tennessee Appellate Court Confirms Award Issued During Stay
Diagnostic Center v. Steven B. Stubblefield, M.D., P.C., No. E2005-02662-COA-R3CV, 2006 WL 2872466 (Tenn. Ct. App. Oct 10, 2006)
10/10/2006
The fact that an award is entered and sent to the arbitrating parties during a court-ordered stay of arbitration pending an extraordinary appeal of a previous court order compelling arbitration does not render the award void and unenforceable, according to the Court of Appeals of Tennessee.
In Diagnostic Center v. Steven B. Stubblefield, M.D., P.C., No. E2005-02662-COA-R3CV, 2006 WL 2872466 (Tenn. Ct. App. Oct 10, 2006), Stubblefield, a cardiologist, dissociated from his partnership with Diagnostic Center (Diagnostic). Stubblefield subsequently began a solo practice allegedly in violation of the covenant not to compete contained in the Diagnostic partnership agreement... Full Story
Filing a Lawsuit Did Not Waive Right to Arbitration in Texas Court
Grand Homes 96 v. Loudermilk, No. 2-06-00030-CV, 2006 WL 3247890 (Tex. App. Nov. 9, 2006)
11/9/2006
A party does not waive its right to invoke arbitration proceedings merely by filing a lawsuit, even if eight months pass before the party attempts to compel arbitration, according to the Court of Appeals of Texas.
In Grand Homes 96 v. Loudermilk, No. 2-06-00030-CV, 2006 WL 3247890 (Tex. App. Nov. 9, 2006), Loudermilk purchased a house from Grand Homes 96 (Appellant), and the parties executed a limited warranty agreement with an arbitration clause through Home Owners Management Enterprises, Inc. (HOME) and Warranty Underwriters Insurance Company (WUIC). Loudermilk identified several items requiring repairs, but Appellant failed to make the repairs. Loudermilk filed suit against Appellant, HOME, and WUIC for negligence, breach of contract, breach of warranty, and other violations of Texas law... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new federal legislation.
STATE LEGISLATION
Florida HB 13 (Prefiled 11/29/2006)
Subjects: Arbitration, Lemon Law
This bill would change Florida’s current Lemon Law to make filing of consumer claims arising during the Lemon Law rights period with a manufacturer's certified procedure discretionary rather than mandatory; also makes participation in RV Mediation and Arbitration Program discretionary.
REGULATIONS
No new regulations.
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