A comprehensive weekly ADR overview from the National Arbitration Forum
Week of November 13, 2008

Federal Cases

• Employer Complains Arbitrator Was Not Qualified, Court and AAA Disagree
• Court Refuses Challenge to Choice of Law Provision Where Both Parties Acknowledged Validity of Arbitration Agreement
• Federal Court in California Rejects Unconscionability Challenge to Arbitration Agreement in Motor Vehicle Purchase Contract
• FAA Requires Stay Pending Arbitration Rather Than Dismissal for Improper Venue
• Illinois Federal Court: FAA's One-Year Statute of Limitations for Confirming Awards is Permissive
• Court Preserves Confidentiality of Parties' Contract on Condition That They Proceed to Arbitration
• Limo Drivers Not Exempted Transportation Workers Under the FAA
• Court Vacates Award Issued by Improperly Selected Arbitrator

State Cases

• Alabama Courts Must Compel Mediation Upon Request by Any Party
• Abbreviated Statute of Limitations Renders Employee's Arbitration Agreement Unconscionable Under California Law
• Colorado Mediation Statute Does Not Permit Implied Waiver of Mediation Confidentiality
• I Need More Time" Not Enough for Second Postponement of Arbitration Proceedings
• Daughter of Nursing Home Resident Did Not Have Apparent Authority to Enter Arbitration Agreement Where Resident Did Nothing to Convey That Impression
• Incompetent Patient Cannot Act to Create Apparent Agency
• Vermont Supreme Court Reemphasizes Narrow Judicial Review of Arbitration Awards in Construction Case

Federal Cases

Employer Complains Arbitrator Was Not Qualified, Court and AAA Disagree
Crawford Group, Inc. v. Holekamp, No. 07-3454, 2008 WL 4455550 (8th Cir. Oct. 6, 2008)
10/6/2008 12:00:00 AM

In confirming an arbitration award in favor of an employee, the Eighth Circuit Court of Appeals rejected the employer's contention that one of the arbitrators was not selected in accordance with the arbitration agreement.

In Crawford Group, Inc. v. Holekamp, No. 07-3454, 2008 WL 4455550 (8th Cir. Oct. 6, 2008), Holekamp was an executive vice president of the Crawford Group. As part of his compensation, Holekamp was awarded stock and entered into a Stock Award and Shareholder Agreement with Crawford Group that provided for arbitration of any disputes under the rules of the American Arbitration Association (AAA)...  Full Story

Court Refuses Challenge to Choice of Law Provision Where Both Parties Acknowledged Validity of Arbitration Agreement
Millenium 3 Techs. v. ARINC, Inc., No. CV 08-1257-PHX-JAT, 2008 WL 4737887 (D. Ariz. Oct. 29, 2008)
10/29/2008 12:00:00 AM

An Arizona federal district court has refused to decide whether an arbitration agreement's choice of law provisions violated Arizona public policy, noting that neither party challenged the validity of the arbitration agreement as a whole.

In Millenium 3 Techs. v. ARINC, Inc., No. CV 08-1257-PHX-JAT, 2008 WL 4737887 (D. Ariz. Oct. 29, 2008), ARINC contracted with the City of Phoenix to construct security systems in its airport. Millenium entered into a contract as a subcontractor on the project...  Full Story

Federal Court in California Rejects Unconscionability Challenge to Arbitration Agreement in Motor Vehicle Purchase Contract
Hartung v. J.D. Byrider, Inc., No. 1:08-cv-00960-AWI-GSA, 2008 WL 4615044 (E.D. Cal. Oct. 17, 2008)
10/17/2008 12:00:00 AM

In granting a lender's motion to compel arbitration, a federal court in California upheld an arbitration agreement in the face of several unconscionability challenges, and also clarified that the Federal Arbitration Act (FAA) requires a writing, but does not require that the writing be signed by the parties.

In Hartung v. J.D. Byrider, Inc., No. 1:08-cv-00960-AWI-GSA, 2008 WL 4615044 (E.D. Cal. Oct. 17, 2008), Hartung bought a used car and obtained financing for the car from J.D. Byrider. After falling behind on payments, Byrider assigned Hartung's debt to John Anderson for collection. Hartung later sued Byrider and Anderson, alleging that Anderson contacted Hartung's phone company and pretended to be Hartung's father, gleaning personal information that Anderson then used to begin unlawful and harassing collection attempts that ultimately caused Hartung to surrender her car...  Full Story

FAA Requires Stay Pending Arbitration Rather Than Dismissal for Improper Venue
General Electric Co. v. Guiney Delivery Service, Inc., No. 08-CV-1618, 2008 WL 4790391 (N.D. Ill. Oct. 23, 2008)
10/23/2008 12:00:00 AM

In granting a motion to stay litigation pending the arbitration of a case, an Illinois federal district court held that according to Seventh Circuit precedent, section three of the Federal Arbitration Act (FAA) requires courts to issue a stay pending the outcome of arbitration instead of ordering an outright dismissal of the case for improper venue.

In General Electric Co. v. Guiney Delivery Service, Inc., No. 08-CV-1618, 2008 WL 4790391 (N.D. Ill. Oct. 23, 2008), General Electric (GE) and Guiney Delivery Service (Guiney) entered into a contract that contained an arbitration agreement. GE later sued Guiney for breach of contract, and Guiney moved to dismiss, transfer venue, or stay the litigation pending arbitration...  Full Story

Illinois Federal Court: FAA's One-Year Statute of Limitations for Confirming Awards is Permissive
Kolowski v. Blatt, Hasenmiller, Leibsker & Moore, LLC, No. 07 C 4964, 2008 WL 4372711 (N.D. Ill. Mar 20, 2008)
3/20/2008 12:00:00 AM

In a debt collection case, a federal court in Illinois held that the Federal Arbitration Act's (FAA) one-year statute of limitations for confirming awards is permissive rather than mandatory. Thus, a debt collector's motion to confirm brought more than one year after entry of the award was not a violation of the Fair Debt Collection Practices Act (FDCPA).

In Kolowski v. Blatt, Hasenmiller, Leibsker & Moore, LLC, No. 07 C 4964, 2008 WL 4372711 (N.D. Ill. Mar 20, 2008), the law firm Blatt, Hasenmiller, Leibsker & Moore, LLC (Blatt) sought to collect a credit card debt from Kolowski on behalf of a credit card company. Blatt obtained a favorable arbitration award, and after Kolowski failed to pay, Blatt filed an action to confirm the award in court, nearly two years after the award was entered...  Full Story

Court Preserves Confidentiality of Parties' Contract on Condition That They Proceed to Arbitration
Walker v. Gore, No. 1:08-cv-0549-DFH-WTL, 2008 WL 4649091 (S.D. Ind. Oct. 20, 2008)
10/20/2008 12:00:00 AM

A federal district court in Indiana has held that court filings may remain under confidential seal in accordance with the parties' arbitration agreement, pending immediate resolution of the matter through either dismissal of the court action or a motion to compel arbitration.

In Walker v. Gore, No. 1:08-cv-0549-DFH-WTL, 2008 WL 4649091 (S.D. Ind. Oct. 20, 2008), Walker and Gore had a contractual business relationship involving automobile racing. Walker sued Gore for breach of contract, but asked the Court to keep the parties' contracts and arbitration agreement under seal lest Walker violate the contracts' confidentiality provisions...  Full Story

Limo Drivers Not Exempted Transportation Workers Under the FAA
Kowalewski v. Samandarov, No. 07 Civ. 6706 (RJS), 2008 WL 4694610 (S.D.N.Y. Oct. 23, 2008)
10/23/2008 12:00:00 AM

A federal district court in New York has held that limousine drivers are not within the narrow class of transportation workers exempted from the scope of the Federal Arbitration Act (FAA), noting that such drivers are not dedicated to the interstate transport of physical goods.

In Kowalewski v. Samandarov, No. 07 Civ. 6706 (RJS), 2008 WL 4694610 (S.D.N.Y. Oct. 23, 2008), Americar entered into contracts with Kowalewski and other drivers to lease and operate limousines. The contracts contained an arbitration agreement. A dispute arose, and the drivers sued Americar for RICO violations, deceptive trade practices, fraudulent inducement, breach of contract, and fraud. Americar moved to compel arbitration of the claims...  Full Story

Court Vacates Award Issued by Improperly Selected Arbitrator
McKnight v. Dillard's, Inc., No. 3:08-00153, 2008 WL 4329221 (M. D. Tenn. Sept. 16, 2008)
9/16/2008 12:00:00 AM

A federal district court in Tennessee has held that an arbitration award must be vacated if it is issued by an arbitrator improperly selected through a procedure that does not comply with the parties' agreement.

In McKnight v. Dillard's, Inc., No. 3:08-00153, 2008 WL 4329221 (M. D. Tenn. Sept. 16, 2008), McKnight and Dillard's, his employer, entered into a dispute resolution plan. After his employment was terminated, McKnight sued Dillard's for retaliatory discharge and racial discrimination. Pursuant to the dispute resolution plan, the parties submitted their dispute to arbitration. The arbitrator found in favor of Dillard's on all claims...  Full Story

 

State Cases

Alabama Courts Must Compel Mediation Upon Request by Any Party
Ex parte Morgan County Commission, No. 1071545, 2008 WL 4531793 (Ala. Oct. 10, 2008)
10/10/2008 12:00:00 AM

Under the relevant Alabama statutes and court rules, a trial court must order mediation of a dispute upon a party's motion, according to the Alabama Supreme Court.

In Ex parte Morgan County Commission, No. 1071545, 2008 WL 4531793 (Ala. Oct. 10, 2008), Eckles filed suit against an insurer as the beneficiary of a life insurance policy. The insurer then filed a third-party complaint against Morgan County for damages that Eckles might recover against the insurer. Morgan County then filed a motion asking that the matter be referred to mediation. The trial court denied the motion, deciding that mediation between Morgan County and the insurer was not yet "appropriate" at such an early stage...  Full Story

Abbreviated Statute of Limitations Renders Employee's Arbitration Agreement Unconscionable Under California Law
Flores v. Prime Time Products, Inc., No. D052205, 2008 WL 4616801 (Cal. Ct. App. Oct. 20, 2008)
10/20/2008 12:00:00 AM

In reversing a trial court's decision to confirm an arbitration award, a California appellate court held that an employment arbitration agreement is unconscionable and thus unenforceable where it lacks mutuality and also shortens to thirty days an employee's statutory time period for bringing a claim.

In Flores v. Prime Time Products, Inc., No. D052205, 2008 WL 4616801 (Cal. Ct. App. Oct. 20, 2008), Flores was hired by Prime Time Products (PT), and PT later adopted a 158-page employment manual that contained an arbitration agreement on page 49. Flores never expressly signed or agreed to the terms in the manual...  Full Story

Colorado Mediation Statute Does Not Permit Implied Waiver of Mediation Confidentiality
GLN Compliance Group, Inc. v. Aviation Manual Solutions, LLC, No. 07CA1563, 2008 WL 4592371 (Colo. Ct. App. Oct. 16, 2008)
10/16/2008 12:00:00 AM

Analogizing its statute with a similar scheme in California, a Colorado appellate court has held that mediation confidentiality cannot be impliedly waived under Colorado law, and any waiver must be express through compliance with statutory exceptions to the mediation privilege.

In GLN Compliance Group, Inc. v. Aviation Manual Solutions, LLC, No. 07CA1563, 2008 WL 4592371 (Colo. Ct. App. Oct. 16, 2008), GLN sued Aviation Manual Solutions (AMS) for allegedly misappropriating trade secrets. The trial court ordered the parties to mediation. During mediation, the parties seemed to reach a settlement agreement, and the attorneys expressed their sense that the agreement would be reduced to a writing that the parties would eventually sign...  Full Story

I Need More Time" Not Enough for Second Postponement of Arbitration Proceedings
Dicorte v. Landrieu, No. 2008-CA-0249, 2008 WL 4191135 (La. Ct. App. Sept. 10, 2008)
9/10/2008 12:00:00 AM

A Louisiana appellate court determined that an arbitrator did not engage in misconduct when he denied a party's second request for extension of the hearing because the party did not show sufficient cause for such a delay.

In Dicorte v. Landrieu, No. 2008-CA-0249, 2008 WL 4191135 (La. Ct. App. Sept. 10, 2008), Dicorte's house was damaged by Hurricane Katrina. Dicorte entered into a contract with Landrieu to make repairs to her home. When Dicorte raised questions as to the quality and timeliness of the repairs, the parties voluntarily agreed to submit their dispute to arbitration administered by the Better Business Bureau (BBB). The initial hearing was scheduled for June 25, 2007. At Landrieu's request for an extension, the hearing was continued until July 10, 2007...  Full Story

Daughter of Nursing Home Resident Did Not Have Apparent Authority to Enter Arbitration Agreement Where Resident Did Nothing to Convey That Impression
Hearn v. Quince Nursing & Rehabilitation Ctr., LLC, No. W2007-02563-COA-R3-CV, 2008 WL 4614265 (Tenn. Ct. App. Oct. 16, 2008)
10/16/2008 12:00:00 AM

The Tennessee Court of Appeals found that the daughter of a nursing home resident did not have apparent authority to enter an arbitration agreement on her father's behalf because he did nothing to convey the impression that his daughter possessed the requisite authority.

In Hearn v. Quince Nursing & Rehabilitation Ctr., LLC, No. W2007-02563-COA-R3-CV, 2008 WL 4614265 (Tenn. Ct. App. Oct. 16, 2008), McClinton was admitted to Quince's nursing home facility. At the time of admission, McClinton was incompetent, so his daughter, Wilson, executed all admission documents, including an arbitration agreement...  Full Story

Incompetent Patient Cannot Act to Create Apparent Agency
Barbee v. Kindred Healthcare Operating, Inc., No. W2007-00517-COA-R3-CV, 2008 WL 4615858 (Tenn. Ct. App. Oct. 20, 2008)
10/20/2008 12:00:00 AM

A Tennessee appellate court has held that apparent agency cannot exist without some predicate act by a competent principal, even in light of alleged "exigent circumstances."

In Barbee v. Kindred Healthcare Operating, Inc., No. W2007-00517-COA-R3-CV, 2008 WL 4615858 (Tenn. Ct. App. Oct. 20, 2008), Barbee admitted his mother, Glenn, to Kindred's nursing home facility. Upon admission, Barbee signed an admission contract containing an arbitration agreement. After Glenn died, Glenn's estate brought various negligence claims against Kindred. Kindred moved to compel arbitration. The trial court granted the motion...  Full Story

Vermont Supreme Court Reemphasizes Narrow Judicial Review of Arbitration Awards in Construction Case
Vermont Built, Inc. v. Krolick, No. 2007-177, 2008 WL 4756892 (Vt. Oct. 31, 2008)
10/31/2008 12:00:00 AM

In reversing a trial court's decision to "modify" an arbitration award, the Vermont Supreme Court held that a court is not authorized to review the legal or factual conclusions of the arbitrator when determining whether an arbitrator exceeded its powers.

In Vermont Built, Inc. v. Krolick, No. 2007-177, 2008 WL 4756892 (Vt. Oct. 31, 2008), homeowner Krolick and Vermont Built (VB) entered into a construction contract containing an arbitration agreement. After a dispute arose between the parties, they commenced arbitration pursuant to the agreement...  Full Story

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