Federal Cases
Supreme Court Holds That FAA Grounds for Vacatur Are Exclusive
Hall Street Associates, L.L.C. v. Mattel, Inc., No. 06-989, 2008 WL 762537 (Mar. 25, 2008)
3/25/2008
The United States Supreme Court has held that the statutory grounds for vacating or modifying an arbitration award under the Federal Arbitration Act (FAA) are exclusive. Accordingly, parties cannot obtain heightened judicial review under the FAA by drafting an arbitration agreement that supplements the statutory grounds for vacatur. However, the Court allowed for the possibility that heightened review of arbitration awards may be available outside of the FAA.
In Hall Street Associates, L.L.C. v. Mattel, Inc., No. 06-989, 2008 WL 762537 (Mar. 25, 2008), Mattel leased a manufacturing site from Hall Street. Following the discovery of environmental contamination, Mattel notified Hall Street of its intent to terminate the lease... Full Story
Failure to Comply With Notice Requirements Leads to Award Vacatur of for Not Drawing Its Essence from the Agreement
Choice Hotels Intern., Inc. v. SM Property Management, LLC, Nos. 05-1979, 06-1698, 06-1812, 2008 WL 518807 (4th Cir. Feb. 28, 2008)
2/28/2008
An arbitration award may be vacated because it does not "draw its essence" from the underlying agreement if a party is not afforded proper notice of the proceedings in accordance with the agreement and controlling rules, according to the Fourth Circuit Court of Appeals.
In Choice Hotels Intern., Inc. v. SM Property Management, LLC, Nos. 05-1979, 06-1698, 06-1812, 2008 WL 518807 (4th Cir. Feb. 28, 2008), hotel franchisor Choice executed a contract with franchisee SM. This contract contained an agreement to arbitrate disputes between the parties... Full Story
Court Orders Arbitration of Claims Arising Out of Terminated Contract
Strasburg-Jarvis Inc. v. Radiant Systems, Inc., (No. 06-2552-CM), 2008 WL 627486 (D. Kan. Mar. 4, 2008)
3/4/2008
A Kansas federal court has enforced an arbitration agreement within a terminated contract, finding that the claims arose out of the prior contract and that the parties expressed no intent to terminate the arbitration agreement.
In Strasburg-Jarvis Inc. v. Radiant Systems, Inc., (No. 06-2552-CM), 2008 WL 627486 (D. Kan. Mar. 4, 2008), clothing company Strasburg-Jarvis entered into a contract to purchase a license for certain software. Synchronics held certain trademarks and other assets related to the software. A dispute arose over the software, and the contracts between Strasburg and the owners of the software – including Synchronics – were terminated... Full Story
Debtor's Demand for Property Declared a Non-Arbitrable "Core Proceeding" by North Carolina Bankruptcy Court
In re Blanchard Transportation Services, Inc., No. 07-01830-8-JRL, 2008 WL 619379 (Bankr. E.D.N.C. Feb. 29, 2008)
3/29/2008
A North Carolina bankruptcy court has held that a debtor's demand for property is not an arbitrable dispute because the matter is considered a "core proceeding" under the Bankruptcy Code.
In In re Blanchard Transportation Services, Inc., No. 07-01830-8-JRL, 2008 WL 619379 (Bankr. E.D.N.C. Feb. 29, 2008), Blanchard performed certain trucking services for Paschall. Blanchard alleged that it was not paid in full for its services... Full Story
Federal District Court in Texas Compels Arbitration of Claims Against Employer Allegedly Arising During Employment in Iraq
Barker v. Halliburton Co., No. Civ. A. H-07-2677, 2008 WL 276390 (S.D. Tex. Jan. 30, 2008)
1/30/2008
A federal district court in Texas has compelled arbitration of a former employee's intentional tort and statutory claims against Halliburton for incidents allegedly arising while she was employed in Iraq.
In Barker v. Halliburton Co., No. Civ. A. H-07-2677, 2008 WL 276390 (S.D. Tex. Jan. 30, 2008), Halliburton and Barker entered into an employment contract that included an arbitration agreement. Later, Barker alleged that she had been subjected to sexual harassment and other oppressive and abusive working conditions while employed with Halliburton in Iraq... Full Story
State Cases
Remedy for Arbitrator's Failure to Disclose Grounds for Potential Bias Once Interim Award Is Issued is Vacatur, Not Disqualification
Advantage Medical Services, LLC v. Hoffman, No. G037634, 2008 WL 555724 (Cal. Ct. App. Mar. 3, 2008)
3/3/2008
The proper remedy for an arbitrator's failure to disclose grounds for bias under a California statute after an interim award has already been issued is vacatur of the award, not disqualification of the arbitrator, according to the California Court of Appeal.
In Advantage Medical Services, LLC v. Hoffman, No. G037634, 2008 WL 555724 (Cal. Ct. App. Mar. 3, 2008), employee Hoffman and employer Advantage asserted various claims against each other stemming from a prior employment relationship. An arbitrator issued an interim award in favor of Advantage... Full Story
"Confusing" Arbitration Agreement Within an Instrument Resembling a Grievance Report Held Invalid
Metters v. Ralphs Grocery Co., No. G038380, 2008 WL 542838, (Cal. Ct. App. Feb. 29, 2008)
2/29/2008
According to a California appellate court, the "confusing" and "legalistic" inclusion of an arbitration agreement within an instrument that appears to be no more than a required grievance report form is ineffective in binding an employee to arbitrate disputes.
In Metters v. Ralphs Grocery Co., No. G038380, 2008 WL 542838, (Cal. Ct. App. Feb. 29, 2008), Metters brought claims of employment discrimination and harassment against Ralphs. Ralphs moved to compel arbitration of the claims, alleging that Metters had agreed to arbitration by submitting a "Notice of Dispute & Request for Resolution Form" to report his claims to the company... Full Story
Statutory Deadline for Challenging Award Does Not Apply Where Party Challenged Existence of Arbitration Agreement
MBNA America Bank, N.A. v. Christianson, No. 4349, 2008 WL 648695 (S.C. Ct. App. March 4, 2008)
3/4/2008
In affirming vacatur of an arbitration award entered in a credit card dispute, the South Carolina Court of Appeals held that the statutory deadline for filing a motion to vacate an arbitration award does not apply where (1) the motion for vacatur is premised on the lack of an arbitration agreement and (2) the aggrieved party objected to the arbitration by disputing the existence of an arbitration agreement.
In, MBNA America Bank, N.A. v. Christianson, No. 4349, 2008 WL 648695 (S.C. Ct. App. March 4, 2008), MBNA filed an arbitration claim against Christianson, alleging that Christianson had defaulted on a credit card agreement. Christianson responded that he never agreed to arbitrate. The arbitration proceeded, and the arbitrator issued an award in MBNA's favor... Full Story
AAA's Interpretation of its Bias Rules as Applied to a Party-Selected Arbitrator Stands Up Against Vacatur Challenge
McGrath v. FSI Holdings, Inc., NO. 05-06-01432-CV, 2008 WL 499255 (Tex. App.-Dallas Feb. 26, 2008)
2/26/2008
A Texas appellate court held that the trial court properly denied a vacatur motion premised on the American Arbitration Association's (AAA) application of its bias rule to disqualify a party-selected arbitrator.
In McGrath v. FSI Holdings, Inc., NO. 05-06-01432-CV, 2008 WL 499255 (Tex. App.-Dallas Feb. 26, 2008), an arbitration award was issued against Kieran McGrath and Daniel Roehrs (collectively "McGrath"). FSI filed suit to confirm the award... Full Story
Extensive Litigation Activities During Nineteen Month Delay Before Moving to Compel Results in Waiver of Right to Arbitrate
Northwest Const. Co., Inc. v. Oak Partners, L.P., No. 2-07-293-CV, 2008 WL 623238 (Tex. Ct. App. Mar. 6, 2008)
3/6/2008
A Texas state appellate court has found waiver of a party's right to arbitrate, where the party engaged in extensive discovery requests and other litigation activities during a nineteen month delay before moving to compel arbitration.
In Northwest Const. Co., Inc. v. Oak Partners, L.P., No. 2-07-293-CV, 2008 WL 623238 (Tex. Ct. App. Mar. 6, 2008), Northwest and Oak Partners entered into a construction contract. After the completed project failed inspection, Oak Partners and Northwest filed suit against each other for breach of contract and related claims... Full Story
ADR Legislation & Regulation
LEGISLATION
CT H 5154
INTRODUCER: Joint Insurance and Real Estate
TITLE: Dispute Resolution Mechanism
DISPOSITION: Failed
LOCATION: Died
Commentary: Establishes a mediation mechanism for homeowners following major catastrophes.
FL S 2548
COMPARE: FL H 239, FL S 454
AUTHOR: Villalobos [R]
TITLE: Workers Compensation
DISPOSITION: Pending
LOCATION: Senate Banking and Insurance Committee
Commentary: Relates to workers' compensation; requires an insurance carrier to give an employee more than one opportunity to change physicians for medical treatment; provides for all parties involved in a workers' compensation case to have access to medical information provided by an authorized health care provider; revises requirements for obtaining an independent medical examination; provides requirements for entitlement to supplemental benefits. Allows employer to request mediation conference to resolve disputes over payment of supplemental benefits.
FL S 2846
COMPARE: FL H 381, FL H 979
AUTHOR: Deutch [D]
TITLE: Subprime Loans
DISPOSITION: Pending
LOCATION: Senate Banking and Insurance Committee
Commentary: Relates to subprime loans; prohibits specified terms in subprime loan agreements; requires a certificate of completion for lender to make payments to contractor under a home improvement contract; requires lenders to provide payoff balances within a specified period upon request; requires a lender to disclose to the borrower the terms and costs associated with a fixed rate loan; prohibits charging points and fees in certain refinancing. Precludes enforcement of mandatory arbitration clauses for subprime home loan transactions.
GA H 470
AUTHOR: Parrish [D]
TITLE: Lemon Law
DISPOSITION: Pending- favorably reported out of committee
LOCATION: SENATE
Commentary: Substitute for Georgia Lemon Law, creates motor vehicle arbitration panel, empowers administrator to contract with "public or private entities" to conduct arbitrations.
HI H 2795
AUTHOR: Green [D]
TITLE: Federally Qualified Health Centers
DISPOSITION: Pending
LOCATION: Senate Ways and Means Committee
Commentary: Amends a bill establishing a timeline by which the department of health shall reconcile managed care supplemental payments and for other reasons. A 3/17/2008 amendment to the bill removed any reference to arbitration.
HI S 2542
AUTHOR: Ige [D]
TITLE: Primary Care for Uninsured
DISPOSITION: Pending
LOCATION: House Finance Committee
Commentary: Amends an act to ensure continued community-based primary care for the uninsured, underinsured, or Medicaid recipients by helping the community health center system to remain financially viable and stable in the face of the increasing needs of these populations; relates to public health. A 3/14/08 amendment removed any mention of arbitration.
IA H 2653
AUTHOR: Commerce, Regulation and Labor Cmt
TITLE: Foreclosure Consultants
DISPOSITION: Pending
LOCATION: HOUSE
Commentary: Relates to foreclosure consultants and foreclosure reconveyances. The bill provides that any provision of a foreclosure consultant contract that attempts or purports to require arbitration of a dispute that arises under the bill is void at the option of the homeowner.
ID S 1350
AUTHOR: Judiciary and Rules Cmt
TITLE: Limited Liability Companies
DISPOSITION: Pending
LOCATION: Chaptered
Commentary: Repeals, amends and adds to existing law to enact the state Uniform Limited Liability Company Act. Bill includes the following ADR provision: "(2) In winding up its activities, a limited liability company: may (v) Settle disputes by mediation or arbitration"
IN S 159
AUTHOR: Gard [R]
TITLE: Third Party Health Service Agreements
DISPOSITION: Enacted
LOCATION: Chaptered
Commentary: Specifies terms under which a third party may obtain a contractor's rights and responsibilities concerning a provider's delivery of health care services. As it relates to arbitration, a health care contract may provide for arbitration of disputes arising under the bill.
KS S 379
AUTHOR: Ways and Means Cmt
TITLE: Construction Contracts
DISPOSITION: Pending
LOCATION: HOUSE
Commentary: A bill concerning construction contracts. Amended on 3/20/08 to include: "Any litigation, arbitration or other dispute resolution proceeding arising from such contract shall be conducted in this state. Any provision, covenant or clause in such contract that conflicts with the provisions of this subsection shall be void and unenforceable."
MD H 1330
AUTHOR: Rosenberg [D]
TITLE: Circuit Courts
DISPOSITION: 3/17/08 Reported unfavorably from committee
LOCATION: HOUSE
Commentary: Specifies a $25 fee for filing a petition in a circuit court for an order confirming an arbitration award; provides for specified procedures concerning a petition for an order confirming an arbitration award; applies the Act prospectively.
MN S 833
COMPANION: MN H 635
AUTHOR: Olson M [DFL]
TITLE: Telecommunications
DISPOSITION: Pending
Commentary: Enacts the Minnesota Wireless Telephone Consumer Protection Act. The bill was amended on March 17 to remove the following: "Subd. 6. Consumer remedies may not be limited. A wireless carrier may not limit by contract the right of a subscriber to bring complaints or the rights and remedies available to a subscriber by law, including class actions, in any state or federal court or agency of competent jurisdiction. A wireless carrier may not by contract hold subscribers liable for carrier legal costs resulting from complaints before the commission, the courts, or another agency. A contract between a wireless carrier and a customer may not require that disputes under the contract be submitted to arbitration."
OH H 125
SPONSOR: Huffman [R]
TITLE: Health Care Provider Contract Provisions
DISPOSITION: To Governor
LOCATION: To Governor
Commentary: Adds ADR provisions for health care provider (third party payer) contract disputes, which are "subject to a mutually agreed upon arbitration mechanism, which is binding on all parties. The arbitrator may award reasonable attorney's fees and costs for arbitration relating to the enforcement of this section to the prevailing party. The limitation to reasonable attorney's fees and costs shall not apply to disputes regarding breach of contract."
OK S 2122
AUTHOR: Sparks [D]
TITLE: Insurance Business Crimes
DISPOSITION: Passed Senate 3/12/2008
LOCATION: House Economic Development and Financial Services Committee
Commentary: Relates to regulation of receivers under the Uniform Insurers Liquidation Act. As it relates to arbitration, the bill states that the receiver has the power "[t]o enter into contracts, and to assume or reject any executory contract or unexpired lease to which the insurer is a party; provided, however, notwithstanding anything which may appear to the contrary in this act, any statute of this state or of any other state, or of the United States, receiver shall not be bound by any provision of any contract of or by the insurer which requires arbitration."
UT H 79
AUTHOR: Clark D [R]
TITLE: Sunset Reauthorizations and Amendments
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary: Reauthorizes state entities and programs that would otherwise sunset before the 2009 Annual General Session of the Utah Legislature. Section 78 14 17, regarding medical malpractice arbitration agreements, was not extended and is repealed July 1, 2009. This section lists many requirements that need to be fulfilled to create a valid medical malpractice arbitration agreement.
UT H 467
AUTHOR: Urquhart [R]
TITLE: Motor Vehicle Arbitration Amendments
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary: This bill modifies the Insurance Code by amending provisions relating to the use of arbitration in third-party motor vehicle accident cases.
UT S 143
AUTHOR: VanTassell [R]
TITLE: Insurance Code
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary: Modifies the Insurance Code to address financial requirements related to insurers or insurance products. As it relates to arbitration, amendment states that Utah law doesn't override parties' agreement to arbitrate.
WA H 2902
AUTHOR: Wood [D]
TITLE: Collection of the Lemon Law Arbitration Condition
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary: Conditions the collection of the lemon law arbitration fee upon initial registration of new motor vehicles in Washington state; provides if the new motor vehicle will be initially registered in the state of Washington, a three dollar arbitration fee shall be collected by either the new motor vehicle dealer or vehicle lessor from the consumer upon execution of a retail sale or lease agreement.
REGULATIONS
Maryland 08-075
AGENCY: Department of Labor, Licensing and Regulation/Commissioner of Financial Regulation
TITLE: Credit and Other Regulation
Commentary: Requires certain regulated persons to report to the Commissioner acts of, suspected acts of, and convictions for fraud, theft, and forgery committed by regulated persons or certain individuals related to regulated persons. Requires specific disclosures in the case of mortgage loans that include mandatory binding arbitration provisions. Specifically, certain mortgage loans would require the following disclosure in 10-point font: "MANDATORY BINDING ARBITRATION: The mortgage loan you have applied for contains a mandatory binding arbitration provision. This means that, as to the matters covered by the arbitration provision, you are giving up your right to a jury or court trial if you have a dispute with us. Read your mortgage loan documents carefully to understand how mandatory binding arbitration will impact your rights to resolve disputes."
Ohio OAC 1301: 8-3-03 thru -09, -11 thru -19, -22 thru -24
AGENCY: Department of Commerce/Division of Financial Institutions
TITLE: Second Mortgage Loans
Commentary: Amends rules regarding second mortgage loans. Amendments include a provision that "[t]he registrant may in addition to, or as part of, its loan modification process offer the borrower the option to have the matters under dispute submitted for mediation before an unbiased private third party."
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