Federal Cases
Arbitration Agreement Does Not Apply Retroactively; Lack of Mutuality Not a Bar to Enforcement Where only Employee May Bring Discrimination Claim
Shelton v. The Ritz Carlton Hotel Co., LLC, No. CIV.A.07-2171, 2008 WL 1976556 (D.D.C. May 8, 2008)
5/8/2008 12:00:00 AM
A federal court in the District of Columbia found that an arbitration agreement did not apply retroactively to a pre-existing claim of employment discrimination, that a lack of mutuality is not a bar to enforcement because only the employee may bring discrimination claims, and that the arbitrator, not the court, should decide the course of discovery despite existing case law requiring some access to discovery.
In Shelton v. The Ritz Carlton Hotel Co., LLC, No. CIV.A.07-2171, 2008 WL 1976556 (D.D.C. May 8, 2008), Shelton sued the Ritz for discrimination based on its failure to promote her in either May or September 2005. In response, the Ritz moved for dismissal based on an arbitration agreement signed by Shelton in June 2005... Full Story
FAA Does Not Provide for Review of Interim Awards According to Federal Court in California
In re Pacific Gas & Electric Co., No. CV-08-1211 CW, 2008 WL 2004275 (N.D. Ca. May 5, 2008)
5/5/2008 12:00:00 AM
A federal district court in California determined that under the Federal Arbitration Act (FAA), judicial review of interim arbitration awards is only permitted in the most extreme cases, because to permit interim awards to be reviewed contravenes federal arbitration policy.
In In re Pacific Gas & Electric Co., No. CV-08-1211 CW, 2008 WL 2004275 (N.D. Ca. May 5, 2008), Knowles was an employee at a Pacific Gas & Electric (PG&E) power plant. Subsequently, PG&E sold the plant and negotiated with the local union for benefits packages for certain employees laid off due the sale of the plant. The agreement granted qualified employees preferential re-employment rights up to thirty months after a layoff... Full Story
Allegation of Unauthorized Use of Computer Account Leads Court to Order Trial on Existence of Arbitration Agreement
Kerr v. Dillard Store Services, Inc., No. Civ. A. 07-2604-KHV, 2008 WL 2152046 (D. Kan. May 21, 2008)
5/21/2008 12:00:00 AM
A federal district court in Kansas has denied a department store's motion to compel arbitration, finding a former employee's assertion that a company secretary compromised her work account and affixed an electronic signature to the agreement was sufficient to raise an issue of material fact, thus requiring a trial on the existence of the agreement.
In Kerr v. Dillard Store Services, Inc., No. Civ. A. 07-2604-KHV, 2008 WL 2152046 (D. Kan. May 21, 2008), Kerr was employed by Dillard. During the course of her employment, Dillard asked Kerr to execute an arbitration agreement through the use of an electronic signature on a password-protected computer system. According to Kerr, she was repeatedly asked by a company secretary to execute the agreement, but she refused. As part of additional training with the computer system, the secretary accessed Kerr's account in Kerr's presence and accessed several screens that Kerr claimed she had not seen before... Full Story
Party's Opposition to Motion to Vacate Award Treated As Motion to Confirm
Sanluis Developments, L.L.C. v. CCP Sanluis, L.L.C., No. 06 Civ. 11531 (RJH), 2008 WL 2253060 (S.D.N.Y. June 3, 2008)
6/3/2008 12:00:00 AM
A federal district court in New York held that where a party moves to dismiss a motion to vacate an arbitration award, the court may treat the motion to dismiss as a motion to confirm the award. If the Court then denies the motion to vacate, the parties cannot subsequently relitigate the validity of the award.
In Sanluis Developments, L.L.C. v. CCP Sanluis, L.L.C., No. 06 Civ. 11531 (RJH), 2008 WL 2253060 (S.D.N.Y. June 3, 2008), Sanluis Developments (SD) moved to vacate an arbitration award that was rendered July 16, 2006. CCP Sanluis (CCP) moved to dismiss SD's motion to vacate on November 22, 2006, and after the court granted the motion to dismiss, CCP moved to modify the judgment and confirm the award August 17, 2007... Full Story
Court Upholds Arbitrator's Determination That Class Waiver is Unenforceable Under Oregon Law
Labor Ready Northwest, Inc. v. Crawford, Civil No. 07-1060-HA, 2008 WL 1840749 (D. Or. Apr. 21, 2008)
4/21/2008 12:00:00 AM
Faced with a manifest disregard challenge in an employment dispute, a federal district court in Oregon confirmed a clause construction award whereby the arbitrator found that an earlier arbitration agreement governed the dispute and that a class waiver in the subsequent arbitration agreement was unenforceable under Oregon law.
In Labor Ready Northwest, Inc. v. Crawford, Civil No. 07-1060-HA, 2008 WL 1840749 (D. Or. Apr. 21, 2008), Crawford worked for two subsidiaries of Labor Ready: (1) Labor Ready Northwest (LRNW) and (2) Labor Ready Mid-Atlantic (LRMA). His arbitration agreement with LRNW, signed in 2001, was silent on the permissibility of class arbitration. His arbitration agreement with LRMA, signed in 2005, barred class arbitration... Full Story
Parties Cannot Contract for Expanded Scope of Judicial Review Under FAA or Texas Law
Ascension Orthopedics, Inc. v. Curasan, AG, No. H-07-4033, 2008 WL 2074058 (S.D. Tex. May 14, 2008)
5/14/2008 12:00:00 AM
In confirming an arbitration award, a Texas federal court held that regardless of whether a federal, state, or common law standard of vacatur is used, parties cannot expand the scope of judicial review of an arbitration award.
In Ascension Orthopedics, Inc. v. Curasan, AG, No. H-07-4033, 2008 WL 2074058 (S.D. Tex. May 14, 2008), Ascension breached an exclusive distributorship agreement that it had with Curasan. An arbitration award was issued in favor of Curasan, and Ascension moved to vacate the award under the language of the agreement, which expanded the applicable scope of judicial review of the award... Full Story
State Cases
Court Rejects Allegation of Repeat Player Effect and Upholds Arbitration Award
Moreno v. Kaiser Foundation Health Plan, Inc., No. B196789, 2008 WL 2222947 (Cal. Ct. App. May 30, 2008)
5/30/2008 12:00:00 AM
A California appellate court held that a party waives a claim by not raising it at arbitration, and rejected an allegation that the "repeat player effect" made the arbitrator biased.
In Moreno v. Kaiser Foundation Health Plan, Inc., No. B196789, 2008 WL 2222947 (Cal. Ct. App. May 30, 2008), Moreno sued Kaiser for medical malpractice. The parties agreed to go to arbitration, so the trial court ordered them to binding arbitration. The arbitrator dismissed all but one of Moreno's claims, and issued an award in favor of Kaiser on the final claim... Full Story
Kentucky Supreme Court Holds Waiver Issue Should Normally Be Decided By Court, Not an Arbitrator
American General Home Equity, Inc. v. Kestel, No. 2006-SC-000830-DG, 2008 WL 2169405 (Ky. May 22, 2008)
5/22/2008 12:00:00 AM
According to the Kentucky Supreme Court, the court, not the arbitrator, should normally decide the issue of whether a party had waived its right to arbitrate.
In American General Home Equity, Inc. v. Kestel, No. 2006-SC-000830-DG, 2008 WL 2169405 (Ky. May 22, 2008), Kestel took out a mortgage on her home with American General. The mortgage contract contained an arbitration agreement. After Kestel defaulted on the loan, American General initiated foreclosure proceedings and filed them with the court. Kestel counterclaimed, alleging fraud and various statutory claims... Full Story
No Patient Incapacity and No Agent Authority Lead Mississippi Supreme Court to Affirm Denial of Nursing Home's Motion to Compel Arbitration
Compere's Nursing Home, Inc. v. Estate of Farish ex rel. Lewis, No. 2007-CA-00326-SCT, 2008 WL 2139548 (Miss. May 22, 2008)
5/22/2008 12:00:00 AM
Finding no evidence that the patient lacked capacity at admission or that the signatory possessed any authority as a surrogate or agent at admission, the Mississippi Supreme Court has affirmed a trial court's denial of a nursing home's motion to compel arbitration.
In Compere's Nursing Home, Inc. v. Estate of Farish ex rel. Lewis, No. 2007-CA-00326-SCT, 2008 WL 2139548 (Miss. May 22, 2008), Farish was admitted to Compere's nursing home facility by her nephew. During the admission process, the nephew signed an arbitration agreement... Full Story
New York Appellate Division: No Public Policy Grounds for Vacatur on Face of the Award
Metrobuild Associates, Inc. v. Nahoum, No. 2831, 602211/06, 2008 WL 2130431 (N.Y. App. Div. May 22, 2008)
5/22/2008 12:00:00 AM
A court cannot vacate an award on public policy grounds that are not discernible on the face of the award, according to a New York state appellate court.
In Metrobuild Associates, Inc. v. Nahoum, No. 2831, 602211/06, 2008 WL 2130431 (N.Y. App. Div. May 22, 2008), Nahoum and Metrobuild entered into a construction contract for residential remodeling. The contract contained an arbitration agreement. After the contract was signed, Nahoum assigned it to his wholly-owned business... Full Story
Unconscionable Clause Limiting Attorney's Fees Severed and Arbitration Compelled
Security Service Federal Credit Union v. Sanders, No. 04-07-00540-CV, 2008 WL 2038826 (Tex. Ct. App. May 14, 2008)
5/14/2008 12:00:00 AM
The Texas Court of Appeals held that a provision in an arbitration agreement that improperly limits a consumer's right to recover attorney fees under state law is unconscionable, but if the agreement contains a severability clause, the unconscionable attorney fees provision should be severed and arbitration can then be compelled.
In Security Service Federal Credit Union v. Sanders, No. 04-07-00540-CV, 2008 WL 2038826 (Tex. Ct. App. May 14, 2008), Sanders sued Security Service Federal Credit Union (SSFCU) for mishandling loan and deposit accounts. SSFCU moved to compel arbitration pursuant to the arbitration agreement in the parties' contract... Full Story
Appellant Had Duty to Provide a Record on Appeal Showing the Alleged Error in the Lower Court's Rulings
FIA Card Services, N.A. v. Richards, No. 07-1513, 2008 WL 2200101 (Iowa Ct. App. May 29, 2008)
5/29/2008 12:00:00 AM
An Iowa appellate court affirmed a lower court's decision to vacate an arbitration award because the appellant failed to fulfill its duty to provide a record on appeal showing the alleged error in the rulings.
In FIA Card Services, N.A. v. Richards, No. 07-1513, 2008 WL 2200101 (Iowa Ct. App. May 29, 2008), an arbitrator entered an award against Richards and in favor of FIA. FIA filed an application in district court to confirm the arbitration award... Full Story
ADR Legislation & Regulation
LEGISLATION
CA A 567
AUTHOR: Saldana [D]
TITLE: Common Interest Development: Bureau
DISPOSITION: Pending
LOCATION: Senate Business, Professions & Economic Development Committee
Commentary: Legislature intends to create an ombudsperson position to provide a neutral, non-judicial forum for resolution of common interest development disputes. Withdrawn from Senate Committee on Rules and re-referred to Senate Committee on Business, Professions and Economic Development and Judiciary as of 6/19/2008.
CA A 2220
AUTHOR: Jones [D]
TITLE: Health Care Service Plan: Physician Contracts
DISPOSITION: Pending
LOCATION: Senate Judiciary Committee
Commentary: This bill would state, "It is the intent of the Legislature to advance the efficient and equitable resolution of billing disputes between non-contracting hospitals and health care service plans." Would require that impediments in reaching acceptable contract terms for contracts between specified hospital based physicians or hospital based physician groups and health care service plans or their contracting payers be resolved through binding arbitration. Amended on 6/22/2008 to require binding arbitration of any "remaining" impediments after "significant progress has been made toward a mutually agreeable contract."
CA A 2359
AUTHOR: Jones [D]
TITLE: Loans
DISPOSITION: Pending
LOCATION: Senate Banking, Finance and Insurance Committee
Commentary: A bill to prohibit most forms of arbitration in non-traditional, subprime, and high cost mortgage agreements. The bill, which previously contained no ADR provisions, was amended March 28, 2008 to include: "The Legislature finds and declares that involuntary contractual waiver provisions with respect to a high cost loan, subprime loan, or nontraditional mortgage, including, but not limited to, an agreement to arbitrate a dispute, that limit or purport to limit a borrower's or applicant's access to any administrative complaint or dispute resolution procedure of the State of California or any other public agency, including, but not limited to, the right to file and pursue a complaint against a licensed person or entity, to file and pursue a civil action, or to limit the authority of the State of California or other public agency to investigate and pursue claims alleging violation of law or regulations, imposed as a condition of a loan, are against the public policy of this state." It was also amended to add propose modifying the general California Arbitration Act to state: "1281. (a) Except as provided in subdivision (b), a written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable, and irrevocable, except upon those grounds that exist for the revocation of any contract. b) Subdivision (a) does not apply to any arbitration agreement that is involuntary, unconscionable, against public policy, or otherwise unenforceable." Failed passage in committee, but granted reconsideration on 6/18/2008.
CA A 2947
AUTHOR: Eng [D]
TITLE: Elder and Dependent Adult Abuse: Waiver of Rights
DISPOSITION: Pending
LOCATION: Senate Judiciary Committee
Commentary: As originally introduced, "This bill would prohibit a long term care facility, as defined, that provides care to an elder or dependent adult from requiring, as a condition of admission to, or of continued care at, the facility that an elder or dependent adult, or his or her representative waive any right afforded under the act, including the right to file a complaint with the State Department of Public Health, or a law enforcement agency, or to pursue a civil action." A 6/19/2008 amendment eliminated the provision that would ban predispute binding arbitration provisions in long-term care facility agreements, and instead was amended to state that, "[t]he bill would provide that it is not intended to affect existing law relating to the enforceability or unenforceability of an arbitration agreement." The bill now only prohibits waiver of "any legal rights, duties, remedies, forums, or procedures under the act," presumably meaning that parties can still contract for arbitration.
CA S 981
AUTHOR: Perata [D]
TITLE: Health Care Coverage: Non-contracting Physician Claims
DISPOSITION: Pending
LOCATION: Assembly Health Committee
Commentary: This bill would prohibit "balance billing" by non contracting physicians against patients. It also establishes an independent dispute resolution process by which non contracting physicians could seek review of such billing disputes over non contracted services. The bill requires that an independent dispute resolution organization administer the process, and that the organization would be "contracted with or appointed by the department."
FL H 601
COMPARE: FL H 415, FL H 1249, FL H 1349, FL S 996, FL S 2086, FL S 2470
AUTHOR: Jobs and Entrepreneurship Council Cmt
TITLE: Condominium Associations
LOCATION: To Governor
Commentary: Relates to the Department of Business and Professional Regulation. Provides for mediation and non binding arbitration of disputes by the Department of Business and Professional Regulation; Division of Florida Land Sales, Condominiums, and Mobile Homes to the Division of Florida Condominiums, Timeshares, and Mobile Homes. To Governor as of 6/18/2008.
FL H 679
COMPARE: FL H 963, FL H 1185, FL S 1580, FL S 2330
SIMILAR: FL S 2504
AUTHOR: Policy and Budget Council Cmt
TITLE: Community Associations
LOCATION: To Governor
Commentary: Provides for pre-suit mediation and arbitration of certain disputes regarding homeowner association swimming pools. Indicates cost sharing provisions, service requirements, etc. To Governor as of 6/18/2008.
OH H 499
SPONSOR: Oelslager [R]
TITLE: Ohio Trust Code
DISPOSITION: Enacted
LOCATION: Chaptered
Commentary: Enacts an act modifying the State Trust Code and Fiduciary Law. As it relates to ADR, "If an agreement entered into under this section contains a provision requiring binding arbitration of any disputes arising under the agreement, the provision is enforceable." The act further gives the trustee the right to "(W) Resolve a dispute concerning the interpretation of the trust or its administration by mediation, arbitration, or other procedure for alternative dispute resolution."
RI S 2446
AUTHOR: Walaska [D]
TITLE: Insurance
DISPOSITION: To Governor
LOCATION: To Governor
Commentary: Creates the Market Conduct Surveillance Act in order to establish a framework for insurance market conduct actions. Includes a requirement that there be written protocol to: "(iv) [e]stablish and utilize a dispute resolution or arbitration mechanism to resolve conflicts with insurers regarding examination costs and fees". To Governor as of 6/17/2008.
RI S 2592
AUTHOR: Connors [D]
TITLE: Fair Dealership Act
DISPOSITION: To Governor
LOCATION: Eligible for Governor
Commentary: Amends provisions of the Fair Dealership Act. Removes "or substantial change of competitive circumstances" as one of the reasons for an application to arbitrate disputes. Passed the House on 6/19/2008.
REGULATIONS
No new regulations.
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