Federal Cases
Arbitration Appropriate When Claim “Touches Matters” Covered by Arbitration Clause
In re NBR Antitrust Litigation v. Crompton Corp.; Uniroyal Chemical Co., Inc., No. 05-4535, 2006 WL 3147328 (3d Cir. Nov. 2, 2006)
11/2/2006
According to the Third Circuit U.S. Court of Appeals, a claim arising under a contract with no arbitration clause may still be arbitrated if the claim’s underlying allegations “touch matters” covered by a separate arbitration agreement.
In In re NBR Antitrust Litigation v. Crompton Corp.; Uniroyal Chemical Co., Inc., No. 05-4535, 2006 WL 3147328 (3d Cir. Nov. 2, 2006), a plaintiff class alleged price fixing by manufacturers of a synthetic rubber product. ParaTec, one of the co-defendants, filed a cross-claim against Uniroyal and Crompton for indemnification. Although the Limited Liability Agreement (LLA) contained no arbitration clause, Uniroyal and Crompton argued that ParaTec’s claims were arbitrable, since the LLA incorporated provisions of a Joint Venture Agreement (JVA) that contained an arbitration provision. The lower court held that ParaTec’s claims were not arbitrable... Full Story
FAA Does Not Apply To Post-Dispute Arbitration Agreement
Brayton Purcell LLP v. Recordon & Recordon, No. C-04-4995 EMC, 2006 WL 3093772 (N.D. Cal. Oct. 31, 2006)
10/31/2006
When parties reach a post-dispute agreement to arbitrate their claims, this agreement is not a “contract evidencing a transaction involving interstate commerce” such that the Federal Arbitration Act (FAA) would be implicated, according to the United States District Court in California.
In Brayton Purcell LLP v. Recordon & Recordon, No. C-04-4995 EMC, 2006 WL 3093772 (N.D. Cal. Oct. 31, 2006), Brayton Purcell filed suit against Recordon & Recordon (Defendants), alleging copyright infringement, unfair competition, and other claims. During a court-connected settlement conference, the parties agreed to submit their dispute to binding arbitration. Brayton Purcell prevailed at arbitration, and Recordon objected to the award... Full Story
Federal Court Upholds Arbitrator’s Award In Face Of Claim Of Fraud On The Arbitrator
Sleeper Farms v. Agway, Inc., No. 02-CV-35-B-S, 2006 WL 3114482 (D. Maine Nov. 1, 2006)
11/1/2006
A federal court in Maine held that a party’s failure to draw an arbitrator’s attention to a document did not amount to fraud on the arbitrator and that the arbitrator did not manifestly disregard the law.
In Sleeper Farms v. Agway, Inc., No. 02-CV-35-B-S, 2006 WL 3114482 (D. Maine Nov. 1, 2006), Sleeper asked the Court to vacate an arbitration award for fraud on the arbitrator and manifest disregard of the law... Full Story
Surety Not Required To Arbitrate, Despite Incorporation Of Contract Containing Arbitration Clause
Liberty Mutual Insurance Co. v. Mandaree Public School District # 36, No. 4:06-cv-56, 2006 WL 3030136 (D. N.D. Oct. 23, 2006)
10/23/2006
A surety is not required to arbitrate, even when the performance bond agreement purports to incorporate an arbitration agreement in the underlying contract, a federal court in North Dakota held.
In Liberty Mutual Insurance Co. v. Mandaree Public School District # 36, No. 4:06-cv-56, 2006 WL 3030136 (D. N.D. Oct. 23, 2006), Mandaree entered into a contract with Tooz Construction for repairs and additions to a school. Liberty Mutual was a surety who issued a performance bond on the project... Full Story
Diversity Jurisdiction Amount in Controversy for Motion to Compel Arbitration Determined by the Underlying Dispute
Castlewood (US), Inc. v. National Indemnity Insurance Company, No. 06-CV-6842(KMK), 2006 WL 3026039 (S.D.N.Y. Oct. 24, 2006)
10/24/2006
Federal courts have subject matter jurisdiction to decide petitions to compel arbitration when the amount in controversy of the underlying cause of action meets the jurisdictional requirements, the Southern District of New York held.
In Castlewood (US), Inc. v. National Indemnity Insurance Company, No. 06-CV-6842(KMK), 2006 WL 3026039 (S.D.N.Y. Oct. 24, 2006), Castlewood asked the court for a preliminary injunction to prevent National Indemnity Insurance Company (NICO) from joining Castlewood to an arbitration proceeding... Full Story
Arbitration Panel’s Finding That Insurance Policy Was Not Ambiguous Does Not Amount To Manifest Disregard Of The Law
Sempra Energy v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania, No. 06 Civ. 6107(HB), 2006 WL 3147155 (S.D.N.Y. Oct. 31, 2006)
10/31/2006
The United States District Court for the Southern District of New York held that an arbitration panel did not manifestly disregard the law when it found in favor of an insurance company, despite arguments from the insurer that the applicable contract language was ambiguous and should have been construed in favor of providing coverage.
In Sempra Energy v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania, No. 06 Civ. 6107(HB), 2006 WL 3147155 (S.D.N.Y. Oct. 31, 2006), Sempra held an insurance policy through National Union. The policy covered “expropriatory acts” by the Government, but contained an exclusion for loss caused by “currency fluctuation or devaluation” by the Government... Full Story
Company Policy To Provide Customers With Arbitration Agreement Not Sufficient To Prove That The Customer Had Actual Notice Of The Agreement
Schwartz v. Comcast Corp., No. 05-2340, 2006 WL 3251092 (E.D. Pa. Nov. 8, 2006)
11/8/2006
A party seeking a court order compelling arbitration must offer evidence that the other party had actual notice of the arbitration agreement, and a company policy to provide customers with the agreement is not sufficient to show actual notice, a federal district court in Pennsylvania held.
In Schwartz v. Comcast Corp., No. 05-2340, 2006 WL 3251092 (E.D. Pa. Nov. 8, 2006), Schwartz brought a class action against Comcast, claiming that Comcast breached its contract to provide uninterrupted high-speed internet service... Full Story
Agreement that Parties “May” Arbitrate Disputes Requires Arbitration Once One Party Pursues Arbitration
Zars, Inc. v. LTS Lohmann Therapy Systems Corp., No. 2:05-CV-198 TC, 2006 WL 2992719 (D. Utah Oct. 18, 2006)
10/18/2006
An arbitration agreement stating that parties “may” submit a dispute to arbitration mandates arbitration once one of the parties indicates a desire to arbitrate a dispute, a federal court in Utah held.
In Zars, Inc. v. LTS Lohmann Therapy Systems Corp., No. 2:05-CV-198 TC, 2006 WL 2992719 (D. Utah Oct. 18, 2006), Zars and LTS entered into a Memorandum of Understanding (MOU) regarding the development, manufacture and sale of a self-adhesive pain reliever patch... Full Story
State Cases
South Dakota Supreme Court Upholds Accepted, But Unsigned, Settlement Agreement
Melstad v. Kovac, No. 23891, 2006 WL 3056313 (S.D. Oct. 25, 2006)
10/25/2006
The South Dakota Supreme Court held that a trial court properly enforced a settlement agreement that the plaintiff refused to sign where the record supported a finding that the plaintiff expressly authorized her attorney to accept the settlement offer.
In Melstad v. Kovac, No. 23891, 2006 WL 3056313 (S.D. Oct. 25, 2006), Melstad sued Kovac for personal injuries suffered in a motor vehicle accident. After extensive negotiations, the parties settled the case on the eve of trial for $325,000. Melstad later refused to sign the written settlement agreement, claiming she had not authorized her attorney to settle for that amount... Full Story
Arbitrator Exceeds His Powers by Committing Legal Error
KeyClick Outsourcing, Inc. v. Ochsner Health Plan, Inc., No. 06-CA-359, 2006 WL 3094077 (La. Ct. App. Oct. 31, 2006)
10/31/2006
A Louisiana Court of Appeals has affirmed a ruling that an arbitrator exceeded his powers by committing legal error because the arbitration agreement expressly prohibited arbitrators from making errors of law.
In KeyClick Outsourcing, Inc. v. Ochsner Health Plan, Inc., No. 06-CA-359, 2006 WL 3094077 (La. Ct. App. Oct. 31, 2006), Ochsner Health Plan (Ochsner) contracted American Medical Systems (AMS) to provide data entry services. KeyClick Outsourcing (KeyClick) later provided those services as AMS’ successor.
When a payment dispute arose, KeyClick initiated arbitration pursuant to a clause in Ochsner’s contract with AMS. Ochsner opposed arbitration on the ground that KeyClick was not a party to the contract. Ochsner sought a court order enjoining the arbitration, but the trial court denied Ochsner’s request for injunctive relief. On appeal, the Court affirmed the trial court’s ruling, holding that AMS’ contract with Ochsner applied to KeyClick’s relationship with Ochsner... Full Story
Lack of Evidence Is Fatal to Motion to Vacate an Arbitration Award
Citibank South Dakota, N.A. v. Wood, No. 2005-CA-120, 2006 WL 3095744 (Ohio Ct. App. Oct. 27, 2006)
10/27/2006
The Ohio Court of Appeals reversed vacatur of an alleged sham arbitration award because the party challenging the award submitted no evidence in support of its motion.
In Citibank South Dakota, N.A. v. Wood, No. 2005-CA-120, 2006 WL 3095744 (Ohio Ct. App. Oct. 27, 2006), Wood initiated arbitration before an entity known as BlueRidge Arbitration (BlueRidge). The arbitrator issued an award finding that Wood and Citibank had fully settled Wood’s credit card account... Full Story
Court Rejects Collateral Attack on Insurance Arbitration Award
Cundiff v. State Farm Mutual Automobile Ins. Co., No. 2 CA-CV 2005-0209, 2006 WL 3042829 (Ariz. Ct. App. Oct. 27, 2006)
10/27/2006
The Court of Appeals of Arizona upheld the dismissal of an impermissible collateral attack on an arbitration award, which awarded an injured motorist an amount of underinsured motorist insurance (UIM) benefits offset by workers’ compensation benefits.
In Cundiff v. State Farm Mutual Automobile Ins. Co., No. 2 CA-CV 2005-0209, 2006 WL 3042829 (Ariz. Ct. App. Oct. 27, 2006), Cundiff, a former police officer, was injured when her vehicle was struck from behind by an underinsured motorist. Since the other driver’s insurance policy was capped at $15,000, Cundiff sought payment of her $25,000 UIM benefits through insurer State Farm. State Farm refused to pay, since it believed it was entitled to offset workers’ compensation benefits against Cundiff’s UIM coverage... Full Story
Accusations Alone Insufficient to Prove Arbitrator Bias In Med Mal Case
Woo-Ming v. Kaiser Foundation Health Plan, Inc., No. C050767, 2006 WL 3240100 (Cal. App. Nov. 9, 2006)
11/9/2006
California state courts will not vacate an arbitration award for arbitrator bias when the party alleging bias offers no support for its accusation.
In Woo-Ming v. Kaiser Foundation Health Plan, Inc., No. C050767, 2006 WL 3240100 (Cal. App. Nov. 9, 2006), Woo-Ming brought a medical malpractice action against Kaiser, alleging that physicians employed by Kaiser negligently prescribed medications... Full Story
Due Process Protections Not Violated When Party Voluntarily Submits Claim To ADR Forum
Baycare Health System, Inc. v. Agency for Health Care Administration, --- So.2d ---, 2006 WL 3040661 (Fla. Dist. Ct. App. Oct. 27, 2006)
10/27/2006
A state court in Florida held that a party who voluntarily submits its claims for resolution in a state-sponsored alternative dispute resolution forum, knowing that the particular process offers few of arbitration’s traditional procedural safeguards, does not have a valid due process claim.
In Baycare Health System, Inc. v. Agency for Health Care Administration, --- So.2d ---, 2006 WL 3040661 (Fla. Dist. Ct. App. Oct. 27, 2006), Baycare and Health Options disputed over the payment of certain hospital bills. Baycare had provided care for patients insured by Health Options for a period of time after a contract between the parties had expired, and Health Options paid an amount significantly less than the amount Baycare billed for these patients... Full Story
Confidential Mediation Documents Remain Confidential During Arbitration Phase of Med-Arb Procedure
Town of Clinton v. Geological Services Corp., No. 04-0462A, 2006 WL 3246464 (Mass. Super. Nov. 8, 2006)
11/8/2006
The Superior Court of Massachusetts has held that evidence protected by the State’s mediation confidentiality statute does not lose its protected status in a subsequent arbitration hearing, even if the mediation and arbitration are conducted by the same neutral as part of a “med-arb” process.
In Town of Clinton v. Geological Services Corp., No. 04-0462A, 2006 WL 3246464 (Mass. Super. Nov. 8, 2006), defendant Garrett Engineering P.C. (Garrett) participated in a failed mediation with the Town of Clinton, pursuant to a post-dispute med-arb agreement. The parties proceeded to arbitration, but the Town of Clinton refused to produce evidence from the mediation protected by Mass. Gen. Law ch. 233 §23C, which provides a statutory privilege for all communications and submissions made during mediation. Garrett argued that the requested documents were “related” to the subsequent arbitration, and that any statutory privilege had thus been waived... Full Story
Broad Arbitration Clause Between General Contractor And Home Owner Encompasses Disputes Between Home Owner And Subcontractor
Bruno v. Mark MaGrann Associates, Inc., No. L-2659-04, 2006 WL 3228596 (N.J. Super. Nov. 9, 2006)
11/9/2006
A New Jersey state court held that a broad arbitration agreement between a general contractor and a homeowner requires the homeowner to also arbitrate disputes against subcontractors when the contract between the general contractor and subcontractor also contains a broad arbitration clause and the general contractor is an indispensable party to the action.
In Bruno v. Mark MaGrann Associates, Inc., No. L-2659-04, 2006 WL 3228596 (N.J. Super. Nov. 9, 2006), Bruno purchased a home from U.S. Homes, the general contractor. When Bruno became dissatisfied with the heating system, he brought suit against U.S. Homes... Full Story
Certified Mail Receipt Proves Notice of Arbitration
Fodor v. MBNA America Bank, N.A., 2006 WL 3234235 (N.Y. App. Div. Nov. 8, 2006)
11/8/2006
The Appellate Division of the Supreme Court of New York held that a certified mail receipt created a presumption of notice, which could not be rebutted merely by a party’s claim that he never received notice of the arbitration proceedings.
In Fodor v. MBNA America Bank, N.A., 2006 WL 3234235 (N.Y. App. Div. Nov. 8, 2006), MBNA used certified mail to notify one of its customers, Fodor, of its intent to initiate arbitration. Fodor signed the certified mail receipt card but later claimed he was never notified of the arbitration proceeding... Full Story
Attorney Allowed to Pursue Vacatur of Overreaching Fee Dispute Arbitration Award
Crain v. Chambers, No. M2005-01236-COA-R3-CV, 2006 WL 3093227 (Tenn. Ct. App. Oct. 31, 2006)
10/31/2006
The Court of Appeals of Tennessee permitted an attorney to seek vacatur of an arbitral award where the arbitrators allegedly exceeded their powers by deciding separate issues not authorized by the arbitration agreement.
In Crain v. Chambers, No. M2005-01236-COA-R3-CV, 2006 WL 3093227 (Tenn. Ct. App. Oct. 31, 2006), Chambers retained attorney Crain to nullify a prenuptial agreement and collect an elective share of her deceased husband’s estate. Chambers agreed to pay a contingency fee for all of Crain’s services, except for those related to collection of a promissory note. When Chambers settled her claim with the estate, she argued that Crain should be compensated by an hourly rate, rather than the 33 percent contingency fee. Crain and Chambers submitted their dispute to arbitration before the Fee Dispute Committee of the Nashville Bar Association (Committee)... Full Story
Texas Court Upholds Award Issued By Arbitrator Who Deferred To Special Master’s Findings Of Fact
Chambers v. O'Quinn, No. 01-05-00635-CV, 2006 WL 2974318 (Tex. Ct. App. Oct. 19, 2006)
10/19/2006
An arbitrator who defers to the factual findings of a court-appointed special master does not commit a gross mistake, a state court in Texas held.
In Chambers v. O’Quinn, No. 01-05-00635-CV, 2006 WL 2974318 (Tex. Ct. App. Oct. 19, 2006), Chambers brought an action against O’Quinn, claiming that O’Quinn committed legal malpractice. The trial court compelled arbitration of the dispute, and the arbitrator found in O’Quinn’s favor... Full Story
Texas Court Deems a Failure to Compel Arbitration an "Abuse of Discretion"
D.R. Horton, Inc. v. Brooks, Nos. 14-06-00099-CV, 14-06-00152-CV, 2006 WL 3091457 (Tex.App. Nov. 2, 2006)
11/2/2006
The Court of Appeals of Texas issued a conditional writ of mandamus ordering a lower court to compel arbitration of an employment dispute.
In D.R. Horton, Inc. v. Brooks, Nos. 14-06-00099-CV, 14-06-00152-CV, 2006 WL 3091457 (Tex.App. Nov. 2, 2006), Brooks attempted to file suit against D.R. Horton, her at-will employer, following Brooks’ termination from employment. D.R. Horton filed a motion to compel arbitration, but the trial court denied the motion without explanation... Full Story
Texas Trial Court Abused its Discretion by Failing to Rule on Motion to Compel Arbitration
In re Shredder Company, L.L.C., No. 08-06-00179-CV, 2006 WL 3234186 (Tex. Ct. App. Nov. 9, 2006)
11/9/2006
The Texas Court of Appeals held that a trial court abused its discretion when it failed to rule on a motion to compel arbitration despite six months of repeated requests for a ruling.
In In re Shredder Company, L.L.C., No. 08-06-00179-CV, 2006 WL 3234186 (Tex. Ct. App. Nov. 9, 2006), Cuevas sued Shredder, his employer, seeking recovery for work-related injuries. Shredder filed a motion to compel arbitration pursuant to an arbitration agreement that Cuevas allegedly signed. In opposing the motion, Cuevas denied signing the arbitration agreement... Full Story
Cable Act does not Preempt State Law Governing Contract Modification That Added Arbitration Clause
Martin v. Comcast of California/Colorado/Florida/Oregon, Inc., A127818, 2006 WL 3086188 (Or. Ct. App. Nov. 1, 2006)
11/1/2006
In affirming a trial court order denying a motion to compel arbitration, the Oregon Court of Appeals held that the Cable Television Consumer Protection Act of 1992 did not preempt the application of Oregon law, which required unequivocal assent to a contract modification that would have added an arbitration clause.
In Martin v. Comcast of California/Colorado/Florida/Oregon, Inc., A127818, 2006 WL 3086188 (Or. Ct. App. Nov. 1, 2006), Martin and two other cable television subscribers brought a putative class action against Comcast, alleging unlawful billing practices... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new federal legislation.
STATE LEGISLATION
Georgia HB 2/ HB 1243 (Prefiled 11/15/2006)
Subjects: Land Annexation, Arbitration
A bill relating to annexation of territory; to establish state policy regarding annexation; to provide that a municipal corporation having an independent school system may not annex property located in a county without the consent of the county governing authority; to provide for binding arbitration; to provide that, if a municipality proposes to annex property in which certain services are provided by the county or which is included in the county's comprehensive zoning plan, the county may demand arbitration; to provide for an injunction; to provide for binding arbitration; to provide for the applicability of general law; to provide for considerations; to provide an effective date; to repeal conflicting laws; and for other purposes.
Michigan HB6456 (Introduced 09/12/2006)
Subjects: Dispute Resolution, Cable
Cable television regulation bill, which, among other things, establishes the following dispute resolution requirements for cable service providers: “(1) Each video service provider shall establish a dispute resolution process for its customers. Each provider shall maintain a local or toll-free telephone number for customer service contact. (2) The commission shall establish a process to review disputes which are not resolved under subsection (1), disputes between a provider and a franchising entity, and disputes between providers. (3) Each provider shall notify its customers of the dispute resolution process created under this section.” Complete text of the bill.
Michigan HB6657 (Introduced 11/14/2006)
Subject: Dispute Resolution
Requires disputes arising out of the Great Lakes-St. Lawrence River Basin Water Resources Compact to go through an alternative dispute resolution process.
Montana SB 19 (Introduced 11/16/2006)
Subjects: Mediation, Oil and Gas
A bill to revise the laws governing oil and gas operations, including a clarification that a surface owner and oil and gas developer or operator may use dispute resolution processes.
Montana MD 499 (Introduced 11/16/2006)
Subjects: Mediation, Workers’ Compensation
Bill to generally revise workers’ compensation law, to include making minor modifications to the compulsory mediation and dispute resolution procedures pertaining to independent contractor status and certification.
New Hampshire LSR 262 (Introduced 11/15/2006)
Subjects: Arbitration, Mediation
Establishes within the judicial branch an office of mediation/arbitration.
Utah EO 11 (Signed 11/08/2006)
Subjects: ADR, State Government
Executive Order entitled “Integrating Dispute Resolution into State Government.” The Order recognizes ADR as “the as the preferred option of preventing and resolving conflicts, reducing litigation costs, and resolving disputes.” Requires each state agency with more than 50 FTE’s to appoint an ADR coordinator. These coordinators will serve on a council tasked with developing new ways to incorporate ADR into government to resolve various disputes. Complete text of the Order (Westlaw registration required).
REGULATIONS
No new regulations.
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