Federal Cases
Arbitration Rules Preserve Arbitration Agreement by Allowing Claimant to Avoid Unaffordable Costs
March v. Tysinger Motor Co., No. 3:07-CV-508, 2007 WL 4358339 (E.D. Va. Dec. 12, 2007)
12/12/2007
In ordering arbitration of a dispute arising from the aborted sale of a motor vehicle, a federal district court in Virginia held that arbitration was not cost-prohibitive because the designated rules – namely, the National Arbitration Forum Code of Procedure – allowed the claimants to request that the other party cover any expenses that would preclude them from vindicating their statutory rights.
In March v. Tysinger Motor Co., No. 3:07-CV-508, 2007 WL 4358339 (E.D. Va. Dec. 12, 2007), the Marches attempted to buy a motor vehicle from Tysinger by trading in their old vehicle and applying for financing. Several days later, after the trade-in, Tysinger notified the Marches that their application for financing had been rejected... Full Story
Party Waives Arbitration Rights by Failing to Notify Opposing Party of Intention to Seek Arbitration
Unity Communications Corp. v. Cingular Wireless, No. 06-60692, 2007 WL 4232973 (5th Cir. Dec. 03, 2007)
12/3/2007
The Fifth Circuit Court of Appeals has held that a party waived its right to arbitrate by substantially litigating a dispute for three years before notifying the adverse party of its intention to seek arbitration.
In Unity Communications Corp. v. Cingular Wireless, No. 06-60692, 2007 WL 4232973 (5th Cir. Dec. 03, 2007), Unity resold wireless phone services provided by Cingular to businesses in Mississippi under a reseller agreement containing an arbitration clause. In 2001, the parties had a dispute and later entered into a letter agreement, which did not contain an arbitration clause. Unity later sued Cingular, alleging it had breached the original reseller agreement... Full Story
California Federal Court Upholds Mutually Binding Arbitration Agreement Against Unconscionability Challenge
Smith v. Sara Lee Fresh, Inc., No. Civ. S0701374WBSEFB, 2007 WL 4356725 (E.D. Cal. Dec. 11, 2007)
12/11/2007
Granting a motion to compel arbitration of a commercial dispute, a California federal court rejected arguments alleging an arbitration agreement was unconscionable. The court upheld the agreement, finding it mutually bound both parties and established procedures equally applicable to both sides.
In Smith v. Sara Lee Fresh, Inc., No. Civ. S0701374WBSEFB, 2007 WL 4356725 (E.D. Cal. Dec. 11, 2007), Smith became a distributor of Sara Lee's baked products for Sacramento County in 2001. The parties' distribution agreement contained an arbitration provision. In February 2003, Sara Lee sent Smith a letter informing him that he was breaching the agreement and asking him to cure the breach. After Smith allegedly failed to cure the breach, Sara Lee terminated Smith's distribution rights... Full Story
Litigation Over Enforceability and Existence of Arbitration Agreement Equal for Purposes of Res Judicata
Kayne v. Thomas Kinkade Co., No. C 07-4721-SI, 2007 WL 4287364 (N.D. Cal. Dec. 05, 2007)
12/5/2007
A federal court in California held that a gallery owner's claims against his franchisor were barred by res judicata; and found no unconscionability in the arbitration agreement between the franchisor and gallery owner.
In Kayne v. Thomas Kinkade Co., No. C 07-4721-SI, 2007 WL 4287364 (N.D. Cal. Dec. 05, 2007), David Kayne owned several galleries which showed Kinkade's work. Kayne had entered into several contracts with Thomas Kinkade Co. (TKC), including a personal guaranty on an application for credit, which contained an arbitration agreement... Full Story
Court Orders Arbitration of Loan Dispute Despite Borrower's Claims of Forgery and Fraud
Madura v. Countrywide Home Loans, Inc., No. 8:06-cv-2703-T-24-TBM, 2007 WL 4336094 (M.D. Fla. Dec. 7, 2007)
12/7/2007
Granting a motion to compel arbitration of a loan dispute, a Florida federal court rejected the borrower's claim that he had not agreed to arbitrate any loan disputes because the borrower acknowledged signing an arbitration agreement.
In Madura v. Countrywide Home Loans, Inc., No. 8:06-cv-2703-T-24-TBM, 2007 WL 4336094 (M.D. Fla. Dec. 7, 2007), Madura obtained a loan from Full Spectrum. The loan documents included an arbitration agreement. After closing, Full Spectrum assigned the loan to Countrywide. Madura sued Full Spectrum and Countrywide for Truth in Lending Act violations and sought rescission and damages on various state law claims... Full Story
FAA Preempts North Carolina Law That Invalidates Arbitral Forum Selection Clauses
Aspen Spa Properties, LLC v. International Design Concepts, LLC, No. 5:07-CV-371-D, 2007 WL 4355523 (E.D.N.C. Dec. 12, 2007)
12/12/2007
A North Carolina federal court held that the Federal Arbitration Act (FAA) preempted a North Carolina arbitration law which restricts choice of venue.
In Aspen Spa Properties, LLC v. International Design Concepts, LLC, No. 5:07-CV-371-D, 2007 WL 4355523 (E.D.N.C. Dec. 12, 2007), Aspen hired IDC to design its spa and plastic surgery facility in North Carolina. Aspen became unhappy with IDC's work and filed suit in state court. IDC moved to dismiss or, alternatively, to transfer the action based on a forum selection clause in the arbitration agreement between the parties to the United States District Court for the Western District of Washington... Full Story
Participation in Small Claims Court Does Not Result In Waiver of Arbitration Rights, Rules New York Federal Court
Haenel v. Washington Mut. Bank, No. CV 07-2320, 2007 WL 4326828 (E.D.N.Y. Dec. 06, 2007)
12/6/2007
Granting a motion to compel arbitration of a bank account dispute, a New York federal court held that a bank's participation in small claims litigation did not estop it from seeking arbitration nor amount to a waiver of arbitration rights.
In Haenel v. Washington Mut. Bank, No. CV 07-2320, 2007 WL 4326828 (E.D.N.Y. Dec. 06, 2007), the Haenels obtained a checking account with Dime Savings Bank, which transferred the account to Washington Mutual in 2002. In May 2005, Washington Mutual froze the Haenels' account, resulting in non-payment of their monthly bills... Full Story
Inclusion of Arbitration Agreement Not a Material Alteration Under the UCC Absent Surprise or Hardship
Colorado-Arkansas-Texas Distributing, L.L.C. v. American Eagle Food Products, Inc., No. 06 Civ.1937, 2007 WL 4233010 (S.D.N.Y. Nov. 30, 2007)
11/30/2007
A federal district court in New York held that the inclusion of an arbitration agreement was not a material alteration under the UCC "battle of the forms" test where there is no indication of surprise or hardship because the party opposing arbitration was aware of the agreement and had not objected to it before.
In Colorado-Arkansas-Texas Distributing, L.L.C. v. American Eagle Food Products, Inc., No. 06 Civ.1937, 2007 WL 4233010 (S.D.N.Y. Nov. 30, 2007), Colorado-Arkansas-Texas Distributing (CAT) regularly purchased nuts from American Eagle Food Products (AEF) by oral agreement, as is common in the industry. These oral agreements were confirmed in written sales orders containing an arbitration agreement. CAT sometimes signed the sales orders and returned them to AEF, although it did not always do so. At issue in this case were several orders from February... Full Story
Time Limitation for Challenging Arbitration Award Not Tolled By Requests for Interpretation or Reconsideration
Oberwager v. McKechnie Ltd., Civ. A. No. 06-2685, 2007 WL 4322982 (E.D. Pa. Oct. 10, 2007)
10/10/2007
According to a federal district court in Pennsylvania, the time limit for challenging an arbitration award under the Federal Arbitration Act (FAA) is not tolled by a rejected request for interpretation or reconsideration of the award.
In Oberwager v. McKechnie Ltd., Civ. A. No. 06-2685, 2007 WL 4322982 (E.D. Pa. Oct. 10, 2007), McKechnie and Oberwager entered into a stock purchase contract containing an arbitration agreement. The parties submitted a dispute over escrowed funds to arbitration... Full Story
Utah Federal Court Dismisses Disappointed Party's Appeal of a State Court's Arbitration Award Confirmation
Forte v. Chase Manhattan Banks USA, No. 2:07-CV-669 TS, 2007 WL 4210258 (D. Utah Nov. 27, 2007)
11/27/2007
Under the Rooker-Feldman doctrine, a federal district court cannot entertain appeals of state court default judgments confirming arbitration awards, according to a federal district court in Utah.
In Forte v. Chase Manhattan Banks USA, No. 2:07-CV-669 TS, 2007 WL 4210258 (D. Utah Nov. 27, 2007), Forte and Chase agreed by contract to arbitrate disputes between the parties regarding a consumer credit account. Chase submitted a dispute to the National Arbitration Forum, and the arbitrator entered an award in favor of Chase. Chase then confirmed the arbitration award in a Utah state court, obtaining a default judgment against Forte... Full Story
State Cases
California Court of Appeal Overturns Trial Court Fee Attorney Fee Award Due to Arbitrator's Finding That No Party Prevailed
Velasquez v. Khushf, No. A114773, 2007 WL 3409394 (Cal. Ct. App. Nov. 16, 2007)
11/16/2007
According to a California appellate court, a California court abused its statutory discretion to independently award attorney fees to a "prevailing" party in arbitration when the arbitrator explicitly found that no party prevailed in the matter and when the only other basis for the court's award was the opposing party's voluntary dismissal of the arbitration demand.
In Velasquez v. Khushf, No. A114773, 2007 WL 3409394 (Cal. Ct. App. Nov. 16, 2007), a dispute arose between the parties, and Khushf obtained a court order compelling arbitration. After limited discovery, Khushf voluntarily withdrew her arbitration claim. In response, Velasquez requested that the arbitrator award her attorney fees, which the arbitrator denied, finding that the merits of the dispute had not been heard and no party had prevailed. According to the arbitrator, the lack of a prevailing party precluded any award of attorney fees... Full Story
Arbitrator's Determination of Prevailing Party Only Reviewable Under Limited Grounds for Vacating or Modifying the Award
Daher v. Nazer, No. B190271, 2007 WL 4201303 (Cal. Ct. App. Nov. 29, 2007)
11/29/2007
According to a California state appellate court, prevailing party determinations by arbitrators are not subject to judicial review, unless the narrow statutory grounds for vacating or correcting an award are present.
In Daher v. Nazer, No. B190271, 2007 WL 4201303 (Cal. Ct. App. Nov. 29, 2007), Daher and Nazer reached a settlement agreement which contained a provision for arbitration of disputes related to the agreement. A dispute arose, was arbitrated, and resulted in an award in favor of the respondent Nazer. The award included attorney fees for Nazer as the prevailing party... Full Story
Trial Testimony Referencing Confidential Mediation Not Grounds For New Trial
Butler v. Ingersoll Rand, No. D049201, 2007 WL 4217157 (Cal. Ct. App. Nov. 30, 2007)
11/30/2007
Affirming a lower court's denial of a motion for a new trial, a California appellate court held that a reference to a confidential mediation agreement during a trial over a products liability dispute did not provide sufficient grounds for granting a new trial, as it did not prejudice the losing party.
In Butler v. Ingersoll Rand, No. D049201, 2007 WL 4217157 (Cal. Ct. App. Nov. 30, 2007), Butler worked as a heavy machine mechanic doing maintenance and repair work on an Ingersoll Rand DM-45 blasthole drill. While performing routine maintenance work, Butler lost his balance and fell to the ground suffering knee and neck injuries... Full Story
Handbook's Recitation of Company Policy Requiring Arbitration Agreements With Employees Is Not Itself an Arbitration Agreement
Mitri v. Arnel Management Co., No. G038003, 2007 WL 4328443 (Cal. Ct. App. Dec. 12, 2007)
12/12/2007
An employee handbook stating a company policy requiring employees to sign an arbitration agreement does not constitute an enforceable arbitration agreement on its own, even if signed by the employee, according to a California state appellate court.
In Mitri v. Arnel Management Co., No. G038003, 2007 WL 4328443 (Cal. Ct. App. Dec. 12, 2007), Arnel Management sought to compel arbitration of former employees' sexual discrimination and harassment claims. In its declarations, the company noted that the employees had received a handbook stating the company's arbitration policy and the employees subsequently acknowledged receiving the handbook by their signatures. The employees opposed the motion, denying that they entered into an arbitration agreement with Arnel, or that they had ever been asked to do so... Full Story
Stay Pending Appeal of Unsuccessful Motion to Compel Arbitration Is "Discretionary" Under Florida Law
Open MRI Of Okeechobee, LLC v. Aldana, No. 4D07-3532, 2007 WL 4322778 (Fla. Ct. App. Dec. 12, 2007)
12/12/2007
Under Florida law, a trial court may refuse to stay an underlying court action after refusing to compel the matter to arbitration, according to a Florida state appellate court.
In Open MRI Of Okeechobee, LLC v. Aldana, No. 4D07-3532, 2007 WL 4322778 (Fla. Ct. App. Dec. 12, 2007), Open MRI moved to compel arbitration of a dispute with Aldana. The trial court denied the motion to compel and denied a motion to stay the action pending an appeal of the motion's denial... Full Story
Idaho Law Permits Modification of Arbitration Award for Mathematical Errors But Not Legal Errors
Cranney v. Mutual of Enumclaw Ins. Co., No. 33501, 2007 WL 4472242 (Idaho Dec. 24, 2007)
12/24/2007
Affirming a district court's confirmation of an arbitration award, the Idaho Supreme Court held that an arbitrator's award of prejudgment interest, though improper, was not a "miscalculation of figures" and thus not grounds for modifying an arbitration award under Idaho law.
In Cranney v. Mutual of Enumclaw Ins. Co., No. 33501, 2007 WL 4472242 (Idaho Dec. 24, 2007), the Cranneys were involved in a car accident. They were unable to reach an agreement with their insurer about coverage and sued. Mutual of Enumclaw moved to compel arbitration, as the insurance contract contained an arbitration agreement. The district court granted the motion and stayed judicial proceedings... Full Story
Employer Waives Right to Arbitration by Participating in Extensive Discovery
Grella v. Prebon Yamane (USA) Inc., 2007 WL 4302083 (N.J. Super. Ct. App. Div. Dec. 11, 2007)
12/11/2007
A New Jersey appellate court determined that an employer waived its right to compel arbitration because it engaged in extensive discovery prior to filing its motion to compel arbitration.
In Grella v. Prebon Yamane (USA) Inc., 2007 WL 4302083 (N.J. Super. Ct. App. Div. Dec. 11, 2007), Grella began working for Prebon in 1989. Grella was terminated in 2004. Grella filed a complaint against Prebon alleging violations of the New Jersey Conscientious Employee Protections Act (CEPA)... Full Story
New Jersey Appellate Court Holds That Employees Must "Clearly and Unmistakably" Agree to Arbitrate Statutory Discrimination Claims
Peters v. DPT Lakewood, Inc., No. A-5607-06T3, 2007 WL 4335440 (N.J. Super. Ct. App. Div. Dec. 13, 2007)
12/13/2007
Affirming a trial court's denial of a motion to compel arbitration of an employment dispute, a New Jersey appellate court held that an employee must "clearly and unmistakably" agree to arbitrate claims arising under the Law Against Discrimination (LAD).
In Peters v. DPT Lakewood, Inc., No. A-5607-06T3, 2007 WL 4335440 (N.J. Super. Ct. App. Div. Dec. 13, 2007), DPT required Peters to sign a form acknowledging she read and understood DPT's "Dispute Resolution and Arbitration Policy" after it had acquired Peters' former employer in 2001. In 2006, DPT terminated Peters... Full Story
Court Cites Policy of Protecting Infants in Vacating Uninsured Motorist Arbitration Award as Irrational
Allstate Insurance Co. v. Dandan, No. 3384/06, 2007 WL 4303765 (N.Y. Sup. Ct. Dec. 5, 2007)
12/5/2007
A New York trial court vacated an award made to an infant in an uninsured motorist arbitration on the grounds that the award was inconsistent with the arbitrator's findings and deviated materially from what could be considered reasonable compensation.
In Allstate Insurance Co. v. Dandan, No. 3384/06, 2007 WL 4303765 (N.Y. Sup. Ct. Dec. 5, 2007), Nadine and Amir Dandan, both infants, were injured in an automobile accident with an unknown motorist. Following the accident, the infants' claims for uninsured motorist benefits were submitted to arbitration... Full Story
New York Court Grants Preliminary Injunction to Preserve Efficacy of Arbitration Award
Witham v. VFinance Investments, Inc., No. 603378/07, 2007 WL 4244698 (N.Y. Sup. Nov. 21, 2007)
11/21/2007
Granting a preliminary injunction in aid of arbitration to a party seeking to avoid premature sale of his stock, a New York court found that failing to grant the preliminary injunction would render an arbitration award ineffective.
In Witham v. VFinance Investments, Inc., No. 603378/07, 2007 WL 4244698 (N.Y. Sup. Nov. 21, 2007), Witham filed an arbitration claim against brokerage firm VFinance, Thompson, NFS, and Cucchia, alleging they fraudulently induced him to margin his AquaCell stock and make a loan to Somerset... Full Story
New York Appellate Court Finds Arbitration Challenge is Time Barred
In re Colonial Co-op. Ins. Co (Muehlbauer)., --- N.Y.S.2d ---, 2007 WL 4259970 (N.Y. App. Div. Dec. 06, 2007)
12/6/2007
Affirming a trial court's denial of a motion to stay arbitration proceedings, a New York appellate court held that CLPR 7503(c) precludes a party from challenging an arbitration agreement's scope if it does not do so within the twenty day required period.
In In re Colonial Co-op. Ins. Co (Muehlbauer)., --- N.Y.S.2d ---, 2007 WL 4259970 (N.Y. App. Div. Dec. 06, 2007), York Claim Service began providing claim adjusting services for Colonial Co-op. Ins. Co (CCIC). In 2004, the parties memorialized their arrangement by entering into a written contract containing an arbitration clause. In 2006, CCIC attempted to terminate its relationship with York... Full Story
Agreements to Arbitrate Survival Claims Do Not Encompass Distinct and Independent Wrongful Death Claims Under Ohio Law
Peters v. Columbus Steel Castings Co., No. 2006-0507, 2007 WL 2809958, (Ohio Sept. 20, 2007)
9/20/2007
Under Ohio law, wrongful death claims are not considered derivative of survival claims, but are distinct and independent. Therefore, a decedent cannot bind his or her beneficiaries to arbitrate wrongful death claims by consenting to arbitration of survival claims, according to the Ohio Supreme Court.
In Peters v. Columbus Steel Castings Co., No. 2006-0507, 2007 WL 2809958, (Ohio Sept. 20, 2007), Mr. Peters entered into an employment agreement, which included a dispute resolution plan requiring arbitration of any disputes with Columbus. The agreement also stated that it applied to heirs and beneficiaries of the employee... Full Story
Party Waives Right to Compel Arbitration By Not Promptly Seeking Arbitration After Arbitrable Issues Are Raised in Counterclaim
Stanley-Laman Group, Ltd. v. Hyldahl, No. 288 EDA 2007, 2007 WL 4357625 (Pa. Super. Ct. Dec. 14, 2007)
12/4/2007
A Pennsylvania state appellate court has held that a party waives its right to compel arbitration by filing a complaint, seeking an injunction, and filing amended complaints, if that party does not promptly move to compel arbitration after the allegedly arbitrable claims are first raised by the adverse party.
In Stanley-Laman Group, Ltd. v. Hyldahl, No. 288 EDA 2007, 2007 WL 4357625 (Pa. Super. Ct. Dec. 14, 2007), Stanley-Laman Group (SLG) hired Hyldahl as a portfolio manager, and the parties executed a non-solicitation and confidentiality agreement... Full Story
Tennessee Court Finds Revocation Provision in Health Care Arbitration Agreement "Indicative of Reasonableness"
Philpot v. Tennessee Health Management, Inc., No. M2006-01278-COA-R3-CV, 2007 WL 4340874 (Tenn. Ct. App. Dec. 12, 2007)
12/12/2007
Revocation provisions in arbitration agreements within health care contracts are "indicative of the reasonableness of the arbitration agreement," according to the Tennessee Court of Appeals.
In Philpot v. Tennessee Health Management, Inc., No. M2006-01278-COA-R3-CV, 2007 WL 4340874 (Tenn. Ct. App. Dec. 12, 2007), Philpot brought a wrongful death suit against National Healthcare Corporation (NHC). Philpot, as his mother's attorney-in-fact, had signed an admission contract with NHC upon his mother's admission to NHC's health care facility. This contract contained an agreement to arbitrate all disputes and claims under the contract... Full Story
ADR Legislation & Regulation
LEGISLATION
DC B 50
SPONSOR: Mendelson [D]
TITLE: Arbitration Amendments Act of 2007
DISPOSITION: To Governor
LOCATION: To Congress
Commentary: The Act consists of a modified version of the Revised Uniform Arbitration Act ("RUAA") that (1) prohibits consumer and insurance policyholder arbitration; (2) mandates cost disclosures within consumer arbitration agreements; and (3) requires arbitration administrators to publish, free of charge, information regarding the details and outcome of every consumer arbitration.
ME H 1411
LD: 2027
AUTHOR: Flood [R]
TITLE: Ombudsman Services Access
DISPOSITION: Pending
LOCATION: Joint Committee on Education and Cultural Affairs
Commentary: This bill would create an ombudsman program to provide services to children and families regarding special education programs and special education services. The ombudsman would provide information to help families and educators understand state and federal laws, rules and regulations regarding special education services and to access training and support, technical information services and mediation services as appropriate.
NH H 232
AUTHOR: Pilliod [R]
TITLE: Retaliatory Rent Increases
DISPOSITION: Failed
LOCATION: Died
Commentary: Prohibits retaliatory rent increases in manufactured homes; inserts provisions for mediation between a tenant and [manufactured home] park owner.
NH H 1344
AUTHOR: Mickelonis [D]
TITLE: Public Employment Negotiations
DISPOSITION: Pending
Commentary: This bill mandates the use of binding arbitration for failed negotiations between public employees and employers.
REGULATIONS
MISSOURI 32 MOREG 1466, 32 MOREG 1468, 32 MOREG 1472
AGENCY: Department of Labor and Industrial Relations/Division of Labor Standards
TITLE: Hearing Procedures for Arbitration
PROPOSED: 07/19/2007
Commentary: Proposes rules regarding the filing for arbitration for the Department of Labor and Industrial Relations/Division of Labor Standards.
NEW JERSEY 39 NJR 2393
AGENCY: Office of Administrative Law
TITLE: Special Hearing Rules
PROPOSED: 07/02/2007
Commentary: This regulation readopts rules pertaining to special hearing rules, including mediation rules for state agencies that have a mediation program.
TEXAS 32 TEXREG 5235
AGENCY: Real Estate Commission
TITLE: Practice and Procedure
PROPOSED: 08/13/2007
Commentary: This regulation creates an ADR Administrator office within the State Office of Administrative Hearings to oversee and mediate certain real estate disputes.
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