Federal Cases
Tenth Circuit: Federal Courts Have Authority to Order Arbitration Outside Their District
1mage Software, Inc. v. Reynolds and Reynolds Co., 2006 WL 2424782 (10th Cir. Aug. 23, 2006)
8/23/2006
The Tenth Circuit Court of Appeals held that section 4 of the Federal Arbitration Act (“FAA”), which limits courts to ordering arbitration “within the district,” is a waivable venue provision, not a jurisdictional prerequisite. This empowers court to order arbitration in another district unless the parties object and raise venue as a defense.
In 1mage Software, Inc. v. Reynolds and Reynolds Co., 2006 WL 2424782 (10th Cir. Aug. 23, 2006), 1mage licensed imaging software to Reynolds. The licensing agreement contained an arbitration clause specifying Ohio as the venue... Full Story
In Auto Dealer Case, Second Circuit Affirms that Arbitration Benefits Both Individuals and Businesses
Arciniaga v. General Motors Corp., No. 05-6299-CV, 2006 WL 2260872 (2nd Cir. Aug. 8, 2006)
8/8/2006
The Second Circuit Court of Appeals held that a federal statute limiting the enforcement of arbitration clauses in motor vehicle franchise contracts did not apply to a stockholders agreement between an automobile manufacturer and an individual investor. In so holding, the Court highlighted the strong federal policy in favor of arbitration for all parties, small and large.
In Arciniaga v. General Motors Corp., No. 05-6299-CV, 2006 WL 2260872 (2nd Cir. Aug. 8, 2006), General Motors (GM) financed Arciniaga’s acquisition of a GM dealership by contributing capital in exchange for stock in the dealership... Full Story
Fifth Circuit Says Federal Policy Favoring Arbitration Outweighs Interest in Avoiding Piecemeal Litigation
Brown v. Pacific Life Insurance Co., No. 05-30090, 2006 WL 2424749 (5th Cir. Aug. 23, 2006)
8/23/2006
In deciding whether to apply the abstention doctrine, the Fifth Circuit Court of Appeals held that the federal policy favoring arbitration outweighs the interest in avoiding piecemeal litigation.
In Brown v. Pacific Life Insurance Co., No. 05-30090, 2006 WL 2424749 (5th Cir. Aug. 23, 2006), the Browns sued Pacific Life for fraud and negligence. Pacific Life removed the case to federal court, but the federal district court later remanded the entire case except for Pacific Life’s motion to compel arbitration. The district court granted that motion... Full Story
California Federal Court Says Procedural Issues, Including Putative Class Status, Reserved For Arbitrator
Barragan v. Washington Mutual Bank, No. C 06-01646-CRB, 2006 WL 2479125 (N.D. Cal. Aug. 28, 2006)
8/28/2006
In Barragan v. Washington Mutual Bank, No. C 06-01646-CRB, 2006 WL 2479125 (N.D. Cal. Aug. 28, 2006), a United States district court in California held that an employment dispute was within the scope of an arbitration clause, even if the plaintiff fashioned the proceedings as a putative class action. Washington Mutual Bank (WMB) opposed arbitration of Barragan’s claims for unpaid overtime, but the Court noted the limited role of the judiciary in interpreting arbitration agreements, and compelled arbitration of the remaining “procedural” issues... Full Story
Illinois Federal Court Says Non-Signatories Are Bound to Arbitrate When Seeking a Direct Benefit of a Contract Containing an Arbitration Clause
Gersten v. Intrinsic Technologies, LLP, No. 05 C 5403, 2006 WL 2347787 (N.D. Ill. Aug. 14, 2006)
8/14/2006
A non-signatory to an agreement containing an arbitration clause is bound to arbitrate claims when seeking a direct benefit from the contract, the United States District Court for the Northern District of Illinois held.
In Gersten v. Intrinsic Technologies, LLP, No. 05 C 5403, 2006 WL 2347787 (N.D. Ill. Aug. 14, 2006), Gersten claimed to have acquired an interest in Intrinsic from his son and brought claims against Intrinsic, seeking to enforce rights under the “Operating Agreement” that his son had signed... Full Story
Anxiety or Fear About Arbitration Process Does not Render Employment Arbitration Agreement Invalid
Lamb v. General Electric Consumer & Industrial, No. 1:06-CV-216, 2006 WL 2228962 (N.D. Ind. Aug. 3, 2006)
8/3/2006
In ordering arbitration of an employment dispute, a federal district court in Indiana noted that an employee’s fear or anxiety about the arbitration process does not render an arbitration agreement invalid.
In Lamb v. General Electric Consumer & Industrial, No. 1:06-CV-216, 2006 WL 2228962 (N.D. Ind. Aug. 3, 2006), Lamb sued GE, her former employee, alleging sex discrimination, after the EEOC gave her a right to sue letter. GE moved to compel arbitration... Full Story
Federal Court Says National Arbitration Forum’s Arbitral Procedures Ensure the Selection of a Neutral Arbitrator
Miller v. Equifirst Corp. of WV, No. 2:00-0335, 2006 WL 2571634 (S.D.W. Va. Sep. 5, 2006)
9/5/2006
In ordering parties to arbitrate a loan dispute, a federal district court in West Virginia found that the National Arbitration Forum (FORUM) rules chosen by the parties ensured the selection of a neutral arbitrator. The FORUM rules involve both parties in the selection process, provide them with background information about the arbitrators, and allow them to remove or challenge arbitrators.
In Miller v. Equifirst Corp. of WV, No. 2:00-0335, 2006 WL 2571634 (S.D.W. Va. Sep. 5, 2006), Equifirst issued a mortgage loan to the Millers. As part of the loan transaction, Equifirst and the Millers entered into an arbitration agreement that provided for arbitration in accordance with the FORUM Code of Procedure... Full Story
Resistance is “Frivolous”: Court Sanctions Attorney for Filing Suit on Arbitrable Claims
Parrott v. Corley, No. 05-74552, 2006 WL 2471943 (E.D. Mich. Aug. 24, 2006)
8/24/2006
A federal district court in Michigan sanctioned an attorney for bringing a lawsuit and initially opposing a motion to compel arbitration when he should have known that the underlying claims were arbitrable.
In Parrott v. Corley, No. 05-74552, 2006 WL 2471943 (E.D. Mich. Aug. 24, 2006), Corley agreed to write material for Corley’s travel guides. The parties’ written agreement contained an arbitration clause... Full Story
Ample Consideration to Arbitrate Disputes Can Trump Mutuality Requirement
Cook v. All State Homes Mortgage, Inc., No. 1:06 CV 1206, 2006 WL 2252538 (N.D. Ohio Aug. 7, 2006)
8/4/2006
Mutuality of obligation to arbitrate is required unless a contract is supported by ample consideration, a federal court in Ohio held.
In Cook v. All State Homes Mortgage, Inc., No. 1:06 CV 1206, 2006 WL 2252538 (N.D. Ohio Aug. 7, 2006), Cook brought Fair Labor Standards Act complaints against All State, his former employer. All State petitioned the Court to compel arbitration of the claims, pursuant to an arbitration agreement in the employment contract... Full Story
Rule of Construction Prevents Debt Collector from Invoking Arbitration Agreement That Extends to Creditor’s Agents
Karnette v. Wolpoff & Abramson, L.L.P., No. 3:06cv44, 2006 WL 2222673 (E.D. Va. Aug. 2, 2006)
8/2/2006
A collections law firm doing work for a bank tried to invoke an arbitration agreement between the bank and a debtor, but a federal court in Virginia held that the law firm could not invoke the agreement unless the bank were also sued.
In Karnette v. Wolpoff & Abramson, L.L.P., No. 3:06cv44, 2006 WL 2222673 (E.D. Va. Aug. 2, 2006), Karnette filed a putative class action lawsuit against Wolpoff & Abramson (W&A), a collections law firm, alleging several illegal collections practices. W&A filed a motion to compel arbitration pursuant to an arbitration agreement... Full Story
Party That Brings Court Action may not Then Demand Arbitration When Agreement Allows Court Action “In Lieu Of” Arbitration
Shainin II, LLC v. Allen, No. C06-420P, 2006 WL 2473495 (W.D. Wash. Aug. 28, 2006)
8/28/2006
A party cannot arbitrate its claims when it brings a claim in court and the arbitration agreement provides that a court action is available as a remedy in lieu of arbitration, and a party does not waive its right to arbitrate unless the other party is prejudiced, a federal court in Washington state held.
In Shainin II, LLC v. Allen, No. C06-420P, 2006 WL 2473495 (W.D. Wash. Aug. 28, 2006), Shainin brought breach of contract claims and motions for preliminary injunctions against ex-employees Allen and Hartshorne... Full Story
State Cases
California Law Authorizes Arbitration and Predispute Judicial Reference Agreements
Woodside Homes of California v. Wheeler, C052432, 2006 WL 2398672 (Cal. Ct. App. Aug. 21, 2006)
8/21/2006
The California Court of Appeal rejected an argument that a predispute agreement to submit all disputes to judicial reference violates California’s prohibition against non-statutory predispute jury trial waivers.
In Woodside Homes of California v. Wheeler, C052432, 2006 WL 2398672 (Cal. Ct. App. Aug. 21, 2006), Wheeler bought a new house from Woodside Homes. Her purchase agreement contained a clause providing for all disputes to be submitted to general judicial reference pursuant to the California Civil Code of Procedure. When Wheeler sued for construction defects, Woodside Homes filed a motion for appointment of a referee, which the trial court initially granted... Full Story
Arbitrators With Specific Authority Can Issue Supplemental Awards, Says NJ Court
Kimm v. Blisset, LLC, 2006 WL 2465393 (N.J. Super. Ct. App. Div. Aug. 28, 2006)
8/28/2006
The Appellate Division of the New Jersey Supreme Court, in a case of first impression, held that an arbitrator lacked authority to issue a supplemental award, finding that the entry of a final award terminated the arbitrator’s power except for his limited statutory authority to modify, but not reconsider, the award.
In Kimm v. Blisset, LLC, 2006 WL 2465393 (N.J. Super. Ct. App. Div. Aug. 28, 2006), Kimm, an attorney, sued Blisset, claiming that Blisset was liable for unpaid attorney fees as the successor in interest to Kimm’s former client, On Set. Under his retainer agreement with On Set, Kimm was entitled to compensation for any time expended in a fee dispute or collection action... Full Story
In California, Parties Can Contract for Judicial Review of Arbitrator’s Misapplication of the Law by Using “Magic Words”
In Baize v. Eastridge Cos., Nos. B185823, B188433, 2006 WL 2457952 (Cal. Ct. App. Aug. 25, 2006)
8/25/2006
The California Court of Appeal determined that parties can contract for judicial review of an arbitrator’s misapplication of the law but found a choice-of-law provision insufficient to demonstrate such intent
In Baize v. Eastridge Cos., Nos. B185823, B188433, 2006 WL 2457952 (Cal. Ct. App. Aug. 25, 2006), Baize and his former employer, Eastridge, submitted Baize’s wrongful termination claim to arbitration. The arbitration agreement required the arbitrator to “apply the substantive law (and the law of remedies, if applicable) of the state of California.” After Baize prevailed at arbitration, Eastridge moved to vacate the award, arguing that the arbitrator misapplied California law. In denying the motion, the trial court concluded that it lacked authority to review the arbitrator’s decision for errors of law. Eastridge appealed... Full Story
California Court Enforces Employment Arbitration Agreement but Severs Provision Allowing Recovery of Fees and Costs
Matthews-Deaton v. El Torito Restaurants, Inc., No. B180881, 2006 WL 2349557 (Cal. App. Aug. 15, 2006)
8/15/2006
Under California law, an arbitration agreement that allows an employer to recover arbitration costs and fees is unconscionable; however, the unconscionable provision may be severed and the remaining arbitration agreement enforced, a California state court held.
In Matthews-Deaton v. El Torito Restaurants, Inc., No. B180881, 2006 WL 2349557 (Cal. App. Aug. 15, 2006), Matthews-Deaton, an employee of El Torito, brought claims against El Torito and one of its managing agents for sexual harassment and related claims... Full Story
In Florida, Courts Should not Confirm Awards for Amounts That Have Already Been Paid
Federated National Insurance Co. v. Esposito, No. 4D05-4480, 2006 WL 2419114 (Fla. App. Aug. 23, 2006)
8/23/2006
A court should not confirm an award, and thereby open the door for an award of attorney’s fees, when the insurer did not contest coverage, followed the dispute resolution procedures outlined in the parties’ agreement, and paid the appraisal award promptly, a Florida state court held.
In Federated National Insurance Co. v. Esposito, No. 4D05-4480, 2006 WL 2419114 (Fla. App. Aug. 23, 2006), Esposito motioned the court to confirm an appraisal award and enter a judgment, even though Federated had already paid the award in full. Federated claimed that Esposito only sought confirmation to seek an award of attorney’s fees... Full Story
Allegations of High Arbitral Costs not Enough to Invalidate Agreement to Arbitrate
Roddie v. North American Manufactured Homes, Inc., 851 N.E.2d 1281 (Ind. Ct. App. 2006)
8/11/2006
According to an Indiana state court, the allegedly prohibitive cost of arbitration must be shown conclusively, free of speculation, in order to render an arbitration provision unconscionable.
In Roddie v. North American Manufactured Homes, Inc., 851 N.E.2d 1281 (Ind. Ct. App. 2006), the Roddies purchased a manufactured home from North American Manufactured Homes (NAMH). The purchase agreement included an arbitration provision, and when the Roddies filed suit for breach of contract, NAMH moved to compel arbitration... Full Story
Ohio Court Says Arbitration Agreement Presumed Fair When One Party Has Option to Reject
Hanson v. Valley View Nursing & Rehabilitation Center, No. 23001, 2006 WL 2060575 (Ohio Ct. App. July 26, 2006)
7/26/2006
The Ohio Court of Appeals held that a nursing home’s arbitration agreement was not procedurally unconscionable because the agreement clearly stated that it was optional and not a condition of admission.
In Hanson v. Valley View Nursing & Rehabilitation Center, No. 23001, 2006 WL 2060575 (Ohio Ct. App. July 26, 2006), Hanson brought a medical malpractice action against Valley View, where his mother had been a resident. Valley View moved to compel arbitration pursuant to an arbitration agreement that Hanson signed on behalf of his mother. The trial court granted the motion... Full Story
Provision for Alternate Arbitration Rules Saves Arbitration Agreement
Sloan v. McQueen, Nos. 1041893, 1041906, 1050068, 2006 WL 2383256 (Ala. Aug. 18, 2006)
8/18/2006
The Alabama Supreme Court held that an arbitration clause naming multiple arbitration providers is enforceable even if the rules of one provider are unconscionable under state law.
In Sloan v. McQueen, Nos. 1041893, 1041906, 1050068, 2006 WL 2383256 (Ala. Aug. 18, 2006), McQueen contracted with Sloan to build a home. The construction contract required all disputes to be submitted to arbitration under the rules of the Better Business Bureau... Full Story
Tennessee Court Follows “Vast Majority of State and Federal Courts” by Upholding Waiver of Class-Wide Proceedings
Spann v. American Express Travel Related Services Co., No. M2004-02786-COA-R3-CV, 2006 WL 2516431 (Tenn. Ct. App. Aug. 30, 2006)
8/30/2006
Applying Utah law, the Tennessee Court of Appeals joined the “vast majority of state and federal courts” in upholding an arbitration agreement’s exclusion of class-wide proceedings. The Court concluded that consumers can successfully pursue their individual claims and that the lack of a class action proceeding does not prevent them from pursuing their legal remedies.
In Spann v. American Express Travel Related Services Co., No. M2004-02786-COA-R3-CV, 2006 WL 2516431 (Tenn. Ct. App. Aug. 30, 2006), Spann and Higgins commenced a putative class action against American Express, alleging that their credit cards had been charged for publications they never agreed to buy. The cardmember agreement contained an arbitration provision that prohibited class-wide proceedings... Full Story
ADR Legislation & Regulation
FEDERAL LEGISLATION
No new legislation
STATE LEGISLATION
California SB 678 (Introduced 02/22/2005) Enrolled 09/08/2006
Subjects: Indian Child Welfare, Mediation
This bill proposes amendments to the Indian Child Welfare Act, including a dispute resolution provision. Any conflict related to termination or modification of the post-adoption contract of an Indian child is required to go to good faith mediation, or other type of dispute resolution, before a related action can be filed with the court.
California SB 1847 (Introduced 03/14/2006) Enrolled 09/06/2006
Subjects: Mediation, Insurance
Would amend 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.
California AB 2302 (Introduced 2/22/2006) To Enrollment 08/31/2006
Subject: ADR Interpreters
Existing law requires that in any action or proceeding pursuant to specified provisions of law, an interpreter be provided by the court for a party who is incapable of understanding or speaking the English language to interpret the proceedings in a language that the party understands and to assist communication between the party and his or her attorney. This bill would revise the above provision to specify that in any civil action or proceeding, including, but not limited to, any family court proceeding or service, any juvenile court proceeding, any action involving a traffic or other infraction, any small claims court proceeding, any proceeding to determine the mental competency of a person, or any court-ordered or court-provided alternative dispute resolution, including mediation and arbitration, in which a party does not proficiently speak or understand the English language, an interpreter be present to interpret the proceedings, as specified. The bill would also require a court to provide the interpreter, unless a party has notified the court that he or she has made arrangements for a private interpreter.
California AB 2511 (Introduced 02/23/2006) To Enrollment 08/31/2006
Subjects: Mediation, Land Use
Existing law authorizes the court to invite the parties involved in specified land use actions before the court to consider resolving their dispute by mediation. Currently, actions filed on or after January 1, 2006, are not subject to this provision. This bill would repeal the provision that makes those actions not subject to the invitation to mediate the dispute.
California AB 2871 (Introduced 02/24/2006) Enrolled 09/05/2006
Subjects: Student Records, Mediation
This bill authorizes parents requesting school records for their children to file a complaint if they do not receive the records within five days of the request. Complaint procedures specify that the complaining party may request mediation of the dispute at any time during the hearing process.
Hawaii SB 2545 (Introduced 01/25/2006) Adopted 07/05/2006
Subjects: Mediation, Condominiums
Extends the pilot program for condominium management dispute resolution by establishing comparable provisions in the new condominium law. If a dispute is not resolved by mediation as provided in section 514B-161, in addition to any other legal remedies that may be available, any party that participated in the mediation may file a request for a hearing with the office of administrative hearings. Full text of the currently available version of the bill.
Hawaii SB 3072 (Introduced 01/25/2006) Adopted 06/14/2006
Subjects: Arbitration, PIP
Clarifies the process of payments for benefits under automobile personal injury protection coverage where the bill for medical services submitted does not conform to the fee schedule or where there is a dispute between the medical provider and insurer on compliance. If the provider and the insurer are unable to resolve the dispute, after a period of sixty days, the provider, insurer, or claimant may submit the dispute to the commissioner, arbitration, or court of competent jurisdiction. The parties shall include documentation of the efforts of the insurer and the provider to reach a negotiated resolution of the dispute. Full text of the currently available version of the bill.
Massachusetts HB 4968 (Introduced 5/17/2006) Adopted 8/02/2006
Subjects: Mediation, Building Permits
Expedited permitting- This bill establishes a single point of contact and an expedited system for issuing building permits. The bill also requires the land court to set up a procedure for the assignment of disputes to mediation. The chief justice of the land court department may approve qualified providers of mediation services. Full text of the Act.
New Jersey SB 1726 (Introduced 03/20/2006) Adopted 09/01/2006
Subjects: Construction Payment, Arbitration
This bill requires that in disputes over public and private construction payment; a party failing to make required payments pursuant to this section may be submitted to a process of alternative dispute resolution. The original version of the bill required all disputes to be submitted to binding arbitration under the rules and guidelines of the American Arbitration Association. Full text of the final version of the bill.
New York AB 10156 substituted with AB 3078A (Introduced 03/03/2006) Enrolled 09/01/2006
Subjects: Arbitration, Court Clerks
Provides for the use of binding arbitration for court clerks or uniformed court officers of the unified court system; the parties shall refer the dispute to a three member public arbitration panel; requires the arbitration panel to hold hearings on all matters within the scope of negotiations related to the dispute; determinations of the panel are final and binding on all parties.
New York AB 10005 (Introduced 02/16/2006) Adopted 07/26/2006
Subjects: Arbitration, Wheelchairs
Extends motorized wheelchair warranty requirements to all wheelchairs; includes health and hospital corporations, HMO’s, governmental agencies and Medicaid programs as "consumers" of wheelchairs for purposes of their ability to enforce wheelchair warranty law provisions. Each consumer shall have the option of submitting any dispute arising under this section upon the payment of a prescribed filing fee to an alternate arbitration mechanism established pursuant to regulations promulgated by the New York state attorney general. Such alternate arbitration shall be conducted by a professional arbitrator or arbitration firm appointed by and under regulations established by the New York state attorney general. Full text of the final version of the bill.
New York AB 10856 substituted with SB 7630 (Introduced 04/26/2006) Enrolled 09/01/2006
Subjects: Arbitration, Farm Equipment
An act to amend the general business law, in relation to the express consumer warranty on farm equipment. Contains detailed amendments to an arbitration program established for hearing disputes related to farm equipment warranties. Allows for appointment of an arbitration firm by the New York Attorney General to hear disputes. Text of the final version of the bill.
REGULATIONS
California Reg. 17337 (Proposed 08/18/2006)
Subjects: Health & Social Services, Dispute Resolution
Amends rules relating to unfair billing patterns, prohibition against billing enrollees for emergency services, and the independent dispute resolution process. Enables the Department to execute its statutory mandate to protect consumers and the stability of the health care delivery system.
Utah Reg. 28923 (Proposed 08/14/2006)
Subject: Alternative Dispute Resolution
Deletes the law/rule examination for applicants for certification as an alternative dispute resolution provider (ADRP).
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