Federal Cases
Federal Court Upholds Bar on Class-Wide Arbitration Proceedings and Permits Award of Attorneys’ Fees in Arbitration
Chalk v. T-Mobile USA, Inc., No. 06-CV-158-BR, 2006 WL 2599506 (D. Or. Sep. 7, 2006)
9/7/2006
A federal district court in Oregon upheld a bar on class-wide proceedings but severed an arbitration rule that would have prevented the arbitrator from awarding attorney fees to the claimant.
In Chalk v. T-Mobile USA, Inc., No. 06-CV-158-BR, 2006 WL 2599506 (D. Or. Sep. 7, 2006), Chalk bought a wireless internet plan and card from T-Mobile. The service agreement provided for arbitration under the American Arbitration Association’s Wireless Industry Arbitration Rules (AAA’s Wireless Rules). The arbitration clause barred class-wide proceedings... Full Story
Confidentiality Agreement Protects Statement Made at Mediation
Deluca v. Allied Domecq Quick Service Restaurants, No. 03CV5142(JFB)(AKT), 2006 WL 2713944 (E.D.N.Y. Sep. 22, 2006)
9/22/2006
A federal district court in New York ruled that a statement made during mediation, though key to plaintiff’s case, was inadmissible because the parties’ confidentiality agreement provided that none of the matters discussed during mediation could be used as evidence.
In Deluca v. Allied Domecq Quick Service Restaurants, No. 03CV5142(JFB)(AKT), 2006 WL 2713944 (E.D.N.Y. Sep. 22, 2006), Deluca filed an age discrimination complaint with the EEOC against his former employer, Allied Domecq Quick Service Restaurants, the owner of Dunkin’ Donuts. After filing the complaint, Deluca applied to be a Dunkin’ Donuts franchisee. His application was denied... Full Story
Parties Seek Arbitration in Different Forums; Court Chooses Employer’s Forum
Luafau v. Affiliated Computer Services, Inc., No. C 06-00347 CW, 2006 WL 2619365 (N.D. Cal. Sept. 12, 2006)
9/12/2006
In Luafau v. Affiliated Computer Services, Inc., No. C 06-00347 CW, 2006 WL 2619365 (N.D. Cal. Sept. 12, 2006), Luafau sought to bring a series of employment claims as representative of a putative class against her employer, Affiliated Computer Services, Inc. (Affiliated). The United States District Court for the Northern District of California denied Luafau’s motion to compel arbitration, since only Affiliated followed the proper procedure, as agreed to by the parties... Full Story
Court Upholds Arbitration Award Entitling Former Employee to Severance Pay
Bradley v. Louisville Communications, LLC, No. 3:05CV-734-H, 2006 WL 2620183 (W.D. Ky. Sep. 11, 2006)
9/11/2006
A federal district court in Kentucky confirmed an arbitration award that entitled a former employee to severance pay, rejecting the employer’s challenge to the arbitrator’s factual findings.
In Bradley v. Louisville Communications, LLC, No. 3:05CV-734-H, 2006 WL 2620183 (W.D. Ky. Sep. 11, 2006), Bradley moved for confirmation of an arbitration award that required his former employer, Louisville Communications (the Company), to give him severance pay totaling $195,700. In opposing the motion, the Company argued that the arbitrator “made mistakes of undisputed fact” and failed to make some necessary factual determinations... Full Story
Federal Court Dismisses Disgruntled Party’s Declaratory Judgment Act Suit Against Arbitrator
Prim Securities, Inc. v. NASD Dispute Resolution, No. 1:06 CV 323, 2006 WL 2612897 (N.D. Ohio Sept. 8, 2006)
9/8/2006
An action brought against an arbitration organization and an arbitrator seeking damages and injunctive relief, and purporting to be brought under the Declaratory Judgment Act (DJA), is an impermissible collateral attack on an arbitration award and does not constitute an actual case or controversy, a federal court in Ohio held.
In Prim Securities, Inc. v. NASD Dispute Resolution, No. 1:06 CV 323, 2006 WL 2612897 (N.D. Ohio Sept. 8, 2006), Prim brought an action against NASD and Edward Siegel, a NASD arbitrator, seeking damages as a result of an arbitration award issued by Siegel and injunctive relief prohibiting Siegel from serving as an arbitrator in any future arbitrations involving Prim... Full Story
Continued Employment Constitutes Consideration for Arbitration Agreement
Baker v. Science Applications Int’l Corp., No. Civ. 06-4096, 2006 WL 2708546 (D. S.D. Sept. 21, 2006)
9/21/2006
In a case of first impression in South Dakota, a United States District Court has held that continued employment constitutes adequate consideration to support an employment arbitration agreement. Baker v. Science Applications Int’l Corp., No. Civ. 06-4096, 2006 WL 2708546 (D. S.D. Sept. 21, 2006).
Baker reached an employment agreement with Science Applications International Corporation (Science Applications), after that company was awarded a contract to operate the U.S. Geological Survey Earth Resources Observation and Science Data Center (EROS). For over two decades prior to this agreement, Baker was employed as a software engineer at EROS. Science Applications was required by contract to retain all current EROS employees at the facility, but was free to alter the terms and conditions of their employment. Baker agreed to such a change by signing a two-page arbitration agreement in October 2002... Full Story
State Cases
Florida Courts Still Divided on Whether Courts or Arbitrators Decide the Enforceability of Remedial Limitations
Alterra Healthcare Corp. v. Bryant, No. 4D05-4409, 2006 WL 2612769 (Fla. Dist. Ct. App. Sep. 13, 2006)
9/13/2006
There remains a split of authority among Florida courts on the issue of whether the court or arbitrator should decide the enforceability of remedial limitations in an arbitration agreement. On the heels of SA-PG-Ocala, LLC v. Stokes, Nos. 5D05-3776, 5D05-3777, 2006 WL 2347369 (Fla. Dist. Ct. App. Aug 11, 2006), another Florida District Court of Appeal decided the enforceability question by ruling that remedial limitations in an assisted living facility’s arbitration agreement were void as contrary to public policy.
In Alterra Healthcare Corp. v. Bryant, No. 4D05-4409, 2006 WL 2612769 (Fla. Dist. Ct. App. Sep. 13, 2006), Bryant, a resident in one of Alterra’s assisted living facilities, sued Alterra, claiming negligence and violations of the Assisted Living Facilities Act (ALFA)... Full Story
California Courts Split on Whether Parties to an Arbitration Agreement May Contract for Heightened Judicial Review
Cable Connection, Inc. v. DIRECTV, Inc., No. B188278, 2006 WL 2709407 (Cal. Ct. App. Sep. 22, 2006)
9/22/2006
Less than a month after one California Court of Appeal found that parties to an arbitration agreement may contract for heightened judicial review, another California Court of Appeal has refused to honor an arbitration agreement’s express provision for heightened judicial review.
In Cable Connection, Inc. v. DIRECTV, Inc., No. B188278, 2006 WL 2709407 (Cal. Ct. App. Sep. 22, 2006), Cable Connection sold and installed DIRECTV’s goods and services pursuant to a sales agency agreement. The sales agency agreement provided for arbitration in accordance with the rules of the American Arbitration Association (AAA)... Full Story
New Mexico Rejects Public Policy Exception to Finality of Arbitration Awards
K.R. Swerdfeger Construction, Inc. v. Board of Regents, No. 25,085, 2006 WL 2742316 (N.M. Ct. App. July 28, 2006)
7/28/2006
In affirming confirmation of an arbitration award, the New Mexico Court of Appeals held that the Uniform Arbitration Act (UAA) does not permit a court to vacate an arbitration award on public policy grounds.
In K.R. Swerdfeger Construction, Inc. v. Board of Regents, No. 25,085, 2006 WL 2742316 (N.M. Ct. App. July 28, 2006), the University of New Mexico (the University) and K.R. Swerdfeger Construction (KRSC) entered into a contract for the construction of a new water-line loop on the University campus. The contract contained an arbitration clause... Full Story
California Court Applies Discover Bank, Invalidates Consumer Class Waiver
Cohen v. DirecTV, Inc., No. B184630, 2006 WL 2664199 (Cal. App. 2 Dist. Sept. 18, 2006)
9/18/2006
A California Court of Appeal found class waiver language unconscionable under the Discover Bank standard—reasoning that the claim sizes were small enough that consumers would be precluded from bringing individual arbitration claims—even though each plaintiff’s damages potentially exceeded $1000.
In Cohen v. DirecTV, Inc., No. B184630, 2006 WL 2664199 (Cal. App. 2 Dist. Sept. 18, 2006), a California Court of Appeal refused to compel arbitration of a subscriber’s claims against DirecTV, his satellite television provider. DirecTV requested arbitration after Cohen sued on behalf of a putative class, alleging that DirecTV violated California law by broadcasting a poorer quality signal than advertised... Full Story
California Court Enforces Arbitration Agreement in Employment Contract Calling for Arbitration of Statutory Claims
Minassian v. Shoe City, Inc., No. B184622, 2006 WL 2664275 (Cal.App. 2 Dist. Sept. 18, 2006)
9/18/2006
An arbitration agreement in an employment contract that requires arbitration of common law and statutory claims is enforceable if both parties are required to arbitrate all claims and the agreement provides for certain other safeguards, a California Court of Appeal held.
In Minassian v. Shoe City, Inc., No. B184622, 2006 WL 2664275 (Cal.App. 2 Dist. Sept. 18, 2006), Minassian brought employment discrimination and wrongful termination claims against Shoe City. Pursuant to an arbitration agreement in the employment contract, the parties proceeded to arbitration. The arbitrator found in Shoe City’s favor, and Minassian then proceeded to challenge the enforceability of the arbitration agreement... Full Story
Florida Court Upholds Arbitration Panel’s Determination of Prevailing Party
R.M. Stark & Co. v. Noddle, No. 4D05-4107, 2006 WL 2683210 (Fla. App. Sept. 20, 2006)
9/20/2006
An arbitration panel does not exceed its authority by determining which party was the prevailing party in a dispute where the issue of attorney’s fees was not submitted to arbitration, a state court in Florida held.
In R.M. Stark & Co. v. Noddle, No. 4D05-4107, 2006 WL 2683210 (Fla. App. Sept. 20, 2006), Noddle sued Stark for breach of fiduciary duty, and the parties arbitrated the dispute. Although Noddle’s claims were denied, the arbitration panel awarded costs in favor of Noodle and included an award clarification letter stating that Stark was not the prevailing party... Full Story
Arbitration Agreement Held not Applicable When Underlying Employment Contract has Expired
Silverman Wender Koonin Epstein Garcia Rosencwaig, P.A. v. Dennis, No. 3D06-985, 2006 WL 2683646, (Fla. App. 3 Dist., Sep 20, 2006)
9/20/2006
According to a Florida appellate court, when an employment contract containing an arbitration agreement expires, so does the agreement to arbitrate, even if the employee continues to work on an at-will basis.
In Silverman Wender Koonin Epstein Garcia Rosencwaig, P.A. v. Dennis, No. 3D06-985, 2006 WL 2683646, (Fla. App. 3 Dist., Sep 20, 2006), Dennis, a doctor employed to perform hand surgeries under a two-year contract, continued working on an at-will basis after the contract expired. He later sued for remuneration for work allegedly performed... Full Story
Party’s Tardiness does not Constitute a Failure to be Present at Arbitration Hearing
Nix v. Whitehead, No. 1-05-1412, 2006 WL 2547336 (Ill. Ct. App. Sep. 5, 2006)
9/5/2006
A party who is slightly tardy to an arbitration hearing but arrives before the proceedings have concluded does not “fail to be present” under Illinois Court Rules, the Illinois Court of Appeals held.
In Nix v. Whitehead, No. 1-05-1412, 2006 WL 2547336 (Ill. Ct. App. Sep. 5, 2006), Nix brought a negligence action against Whitehead, and the court ordered mandatory arbitration. An arbitration hearing was scheduled for 8:30 a.m. When Nix and her attorney did not arrive at the hearing until 8:47 a.m., the arbitrators issued an award in Whitehead’s favor... Full Story
Court Finds no Miscalculation of Damages by Arbitrator, Upholds Award
United Industrial Engineering Corporation v. Fluty, Nos. 260034, 260035, 2006 WL 2683318 (Mich. App. Sept. 19, 2006)
9/19/2006
In United Industrial Engineering Corporation v. Fluty, Nos. 260034, 260035, 2006 WL 2683318 (Mich. App. Sept. 19, 2006), Appellant United Industrial Engineering Corporation (UIE) challenged the lower court’s confirmation of an arbitration award allegedly based on improper calculations. Finding “no clearly apparent error,” the Court of Appeals of Michigan affirmed the arbitral award... Full Story
Arbitration Award Cannot be Challenged as an Extension of a Proposed Award
Vitale v. Bufalino, No. 260603, 2006 WL 2683815 (Mich. Ct. App. Sep. 19, 2006)
9/19/2006
In a legal malpractice dispute, the Michigan Court of Appeals affirmed confirmation of an award, rejecting the argument that a proposed award demonstrated that the arbitrators exceeded their powers in issuing the actual award.
In Vitale v. Bufalino, No. 260603, 2006 WL 2683815 (Mich. Ct. App. Sep. 19, 2006), a legal malpractice dispute was submitted to arbitrators for the limited purpose of determining the total amount of damages and apportioning fault between client and attorney... Full Story
New Jersey Appellate Court Holds Default Judgments not Available in Non-Binding Court-Annexed Arbitration
Robinson v. Ocean Club Bar & Grille, LLC, No. L-702-03, 2006 WL 2660791 (N.J. Super. Ct. App. Div. Sept. 18, 2006)
9/18/2006
Default judgments are not available in non-binding court-annexed arbitration, the New Jersey Superior Court Appellate Division held. However, the opinion does not affect the enforceability of uncontested arbitration awards obtained in binding, contractual arbitration.
In Robinson v. Ocean Club Bar & Grille, LLC, No. L-702-03, 2006 WL 2660791 (N.J. Super. Ct. App. Div. Sept. 18, 2006), the arbitrator imposed no liability against the lone appearing defendant, Ocean Club Bar & Grille; but an award was issued against two defendants in default, Tozer and Sawyer. No party sought to review, or to confirm the award within the allotted time frames... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new federal legislation.
STATE LEGISLATION
California SB 1847 (Introduced 03/14/2006) Adopted 09/22/2006
Subjects: Mediation, Insurance
Amends the reporting requirements of the California Commissioner of Insurance relating to mediation of insurance disputes. Requires the Insurance Department to collect certain information from its mediators at six-month intervals for use in the Department’s annual report. Complete text of the bill.
California AB 3020 (Introduced 04/24/2006) Adopted 09/22/2006
Subjects: Real estate, Time-share developments, Arbitration
A bill modifying disclosure requirements in time-share developments. The amended terms require certain agreements to include an arbitration provision. Buy down subsidy agreements between a developer and an association related to exoneration or release of the security must include an arbitration provision, enforceable by either party. Complete text of the bill.
Virginia HB 5093 (Introduced 09/21/2006)
Subjects: Transportation, Arbitration
Provides for the creation of urban transportation service districts with boundaries to be agreed upon by both the local governing body and the Virginia Department of Transportation. Localities that establish an urban transportation service district shall have expanded impact fee authority that includes both roads and schools. A participating locality must create an ordinance to govern impact fee disputes. The ordinance may provide that such disputes be resolved through arbitration.
CORRECTION
California AB 2482 (Introduced 02/23/2006) Adopted 09/20/2006
Subjects: Arbitration, Out of State Representation
This bill was reported as being passed with the provision that the January 1, 2007 repeal date would be lifted and the provisions of the law would be extended indefinitely. However, a late amendment to the bill removed the indefinite repeal date and extended the law until January 1, 2011:
Existing law, effective until January 1, 2007, permits persons admitted to the bar of any other state to represent a party in an arbitration proceeding in this state, or to render legal services in this state in connection with an arbitration proceeding in another state. Existing law requires out-of-state attorneys representing a party in a California arbitration proceeding to serve upon the arbitrator, the State Bar of California, the parties, and counsel, a certificate containing specified information prior to the first scheduled hearing in the arbitration. Existing law also permits any party to an arbitration arising under certain collective bargaining agreements to be represented by any person. This bill would remove the January 1, 2007, repeal date, thereby extending those provisions indefinitely, and make a related, conforming change.
Complete text of the bill.
REGULATIONS
No new regulations.
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