Federal Cases
Second Circuit Finds That “Perfect Storm” Warrants Vacatur for Manifest Disregard of the Law
Porzig v. Dresdner, Kleinwort, Benson, North America LLC, No. 06-1212-CV, 2007 WL 2241592 (2d Cir. Aug. 7, 2007)
8/7/2007
The Second Circuit Court of Appeals held that a combination of factors created nearly a “perfect storm” and thus warranted the vacatur of an attorney’s fees award for manifest disregard of the law. Specifically, instead of using the “lodestar” method for determining reasonable attorney’s fees, the arbitrators seemingly treated the claimant’s contingency fee agreement as a cap on the attorney’s fees award.
In Porzig v. Dresdner, Kleinwort, Benson, North America LLC, No. 06-1212-CV, 2007 WL 2241592 (2d Cir. Aug. 7, 2007), Porzig was hired by Dresdner and agreed to arbitration as a condition of his employment. When Porzig was fired, he sued Dresdner for age discrimination, and the matter was referred to arbitration in accordance with the parties’ agreement... Full Story
Arbitration Agreements in Health Care Plans Must Be Clear and Prominent Under California Law
Schlegel v. Kaiser Foundation Health Plan, Inc., No. 2:07-CV-00520-MCE-KJM, 2007 WL 2492393 (E.D. Cal. Aug. 30, 2007)
8/30/2007
Under California law, arbitration agreements within health care plans must state that the right to a jury trial is being waived, and must do so in clear language, prominently displayed immediately above the signature line, according to a federal district court in California.
In Schlegel v. Kaiser Foundation Health Plan, Inc., No. 2:07-CV-00520-MCE-KJM, 2007 WL 2492393 (E.D. Cal. Aug. 30, 2007), Schlegel enrolled in Kaiser’s individual health insurance policy plan, which contained an agreement to arbitrate plan disputes. While a member of the plan, Schlegel developed a condition that would eventually require him to undergo a kidney transplant. Kaiser referred Schlegel to an outside provider who placed him on a transplant waiting list... Full Story
Federal Court Finds FAA Inapplicable But Upholds Arbitration Agreement Under California Law
Slaughter v. Stewart Enterprises, Inc., No. C 07-01157 MHP, 2007 WL 2255221 (N.D. Cal. Aug. 3, 2007)
8/3/2007
A federal district court in California found that an employee’s arbitration agreement was not governed by the Federal Arbitration Act (FAA) because of the intrastate nature of the industry – namely, funeral services. Nevertheless, the Court upheld the agreement under California law and thus issued an order compelling arbitration.
In Slaughter v. Stewart Enterprises, Inc., No. C 07-01157 MHP, 2007 WL 2255221 (N.D. Cal. Aug. 3, 2007), Slaughter worked for Stewart Enterprises (Stewart), a funeral services provider. In 2003, the Stewart held an employee meeting where it introduced a binding arbitration process called the Mutual Agreement Process (MAP). Slaughter signed the agreement... Full Story
Credit Card Holder Files Complaint Regarding Arbitration Award on Basis of Alleged Fraud
Kelly v. Wolpoff & Abramson, L.L.P., No. CIVA 07CV00091 EWNKL, 2007 WL 2381536 (D. Colo. Aug. 17, 2007)
8/17/2007
Subsequent to an arbitration in which a credit collector had prevailed, a federal court in Colorado denied the credit collector’s multiple motions to dismiss a cardholder’s Fair Debt Collection Practices Act (FDCPA) claims in light of new allegations of fraud, but granted its motion to dismiss the credit card holder’s Colorado Consumer Protection Act (CCPA) claim.
In Kelly v. Wolpoff & Abramson, L.L.P., No. CIVA 07CV00091 EWNKL, 2007 WL 2381536 (D. Colo. Aug. 17, 2007), Kelly had an allegedly delinquent account with MBNA. MBNA wrote off the alleged debt and then sold the debt to Wolpoff. After purchasing the debt from MBNA, Wolpoff filed for arbitration asserting that MBNA remained the real party in interest... Full Story
FAA Does Not Permit Interlocutory Judicial Review of Arbitrator’s Ruling on Question of Arbitrability
MJCM, LLC v. IntelliShop, LLC, No. 3:07CV01115, 2007 WL 2482081 (N.D. Ohio Aug. 27, 2007)
8/27/2007
An arbitrator’s determination that a particular dispute falls within the scope of an arbitration agreement cannot be subjected to interlocutory court review, according to a federal district court in Ohio.
In MJCM, LLC v. IntelliShop, LLC, No. 3:07CV01115, 2007 WL 2482081 (N.D. Ohio Aug. 27, 2007), two competing corporations had a business dispute and entered into a settlement agreement that contained an arbitration clause. A disagreement arose as to whether a particular aspect of the dispute fell within the scope of the arbitration clause. The arbitrator determined that the arbitration clause applied to that aspect of the dispute... Full Story
Oregon Court Compels Arbitration of Canadian Car Accident Controversy
Clow v. Insurance Corp. of British Columbia, Civil No. 07-0403-ST, 2007 WL 2292689 (D. Or. Aug. 3, 2007)
8/3/2007
Compelling arbitration of an automobile insurance coverage dispute, a federal court held that the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Award mandated enforcement of an arbitration provision between a Canadian citizen and a Canadian insurer.
In Clow v. Insurance Corp. of British Columbia, Civil No. 07-0403-ST, 2007 WL 2292689 (D. Or. Aug. 3, 2007), Clow suffered an injury after a stolen vehicle operated by a driver who was fleeing the police hit Clow’s vehicle while he was in Oregon. Being a Canadian citizen, Clow registered his vehicle in British Columbia. British Columbia law requires drivers to purchase automobile insurance through Insurance Corporation of British Columbia (ICBC)... Full Story
Arbitration Provisions Need Not Use Standard “Broad Language” To Encompass Broad Scope of Disputes
Innerwireless, Inc. v. Johnson Controls, Inc., Civ. A. No. 3:07-CV-312-M, 2007 WL 2428591 (N.D. Tex. Aug. 27, 2007)
8/27/2007
Standard “broad language,” such as “arising out of,” is not required for an arbitration provision to be construed as broad in scope, according to a federal district court in Texas.
In Innerwireless, Inc. v. Johnson Controls, Inc., Civ. A. No. 3:07-CV-312-M, 2007 WL 2428591 (N.D. Tex. Aug. 27, 2007), Johnson entered into an agreement with Innerwireless to market Innerwireless’s products to Johnson’s customers. The agreement included a provision stating that “all disputes” were to be subject to arbitration. Innerwireless later suspected that Johnson was marketing competing products in violation of the agreement... Full Story
State Cases
Arbitrator’s Membership in Health Care Plan Does Not Create Impression of Bias in Arbitration Involving Physician Covered By Same Health Care Plan
Eckstein v. Kaiser Foundation Health Plan, Inc., No. A114315, 2007 WL 2433151 (Cal. Ct. App. 1 Dist. Aug. 29, 2007)
8/29/2007
In rejecting the argument that an arbitrator was obligated to disclose his membership in a health plan that was not a party to the dispute, a California appeals court stated: “Our review of the cases addressing judge recusal and jury disqualification demonstrate that mere membership in a health plan is insufficient to cause a reasonable person to doubt the member’s ability to be impartial.”
In Eckstein v. Kaiser Foundation Health Plan, Inc., No. A114315, 2007 WL 2433151 (Cal. Ct. App. 1 Dist. Aug. 29, 2007), Bushra and David Eckstein (“the Ecksteins”) filed a medical malpractice claim against Kaiser, claiming negligence of a Kaiser physician... Full Story
Unconfirmed Arbitration Awards Subject to Garnishment Under Florida Law
Capital Factors, Inc. v. Alba Rent-A-Car, Inc., No. 4D06-4330, 2007 WL 2428538 (Fla. Dist. Ct. App. Aug. 29, 2007)
8/29/2007
According to a Florida district court of appeal, both confirmed and unconfirmed arbitration awards are subject to garnishment, because all such awards are final at the time they are rendered.
In Capital Factors, Inc. v. Alba Rent-A-Car, Inc., No. 4D06-4330, 2007 WL 2428538 (Fla. Dist. Ct. App. Aug. 29, 2007), Alba and Avalon arbitrated deceptive trade practice and breach of contract disputes, resulting in an award entered in favor of Alba. Capital, which had an uncollected judgment in its favor against Alba from an unrelated lawsuit, sought to garnish Alba’s award from Avalon. Avalon and Alba argued that the award was not garnishable, because the award had only been rendered and not confirmed by the court... Full Story
Party Making Claim, Not Party Seeking Arbitration, Must Pay Filing Fee Under AAA Rules
ProSpec, L.L.C. v. Mazzei, No. 4D-07-364, 2007 WL 2481009 (Fla. Dist. Ct. App. Sept. 5, 2007)
9/5/2007
A Florida appellate court has ruled that a trial court erred in requiring the party seeking arbitration, rather than the party bringing the claim, to pay the filing fee charged by the American Arbitration Association (AAA). As the Court noted, the AAA rules require “the party pursuing the claim” to pay the filing fee.
In ProSpec, L.L.C. v. Mazzei, No. 4D-07-364, 2007 WL 2481009 (Fla. Dist. Ct. App. Sept. 5, 2007), Mazzei hired ProSpec to perform a home inspection. The pre-inspection agreement provided for arbitration in accordance with the AAA rules... Full Story
Actual Notice of Rescheduled Arbitration Hearing Sufficient Despite Lack of Statutory Notice
Damrow v. Murdoch, No. A-05-1200, 2007 WL 2471470 (Neb. Ct. App. Sept. 4, 2007)
9/4/2007
Actual notice of a rescheduled arbitration hearing is sufficient to afford parties a “reasonable opportunity to be heard,” even if the notice does not comply with statutory requirements, according to a Nebraska appellate court.
In Damrow v. Murdoch, No. A-05-1200, 2007 WL 2471470 (Neb. Ct. App. Sept. 4, 2007), Damrow managed a feedlot in which he, Murdoch, and others were shareholders. The shareholders executed a repayment agreement in order to determine the amounts owed by individual shareholders to the feedlot’s corporation, CFI. The repayment agreement contained a provision that required arbitration of disputes over any shareholder’s individual liability should the shareholders fail to reach such an agreement amongst themselves... Full Story
Writ of Mandamus Denied, No Clear Abuse of Discretion in Denying Arbitration
AXA Financial, Inc. v. Roberts, No. 03-07-00079-CV, 2007 WL 2403210 (Tex. App.-Austin Aug. 23, 2007)
8/23/2007
An appellate court in Texas denied a petition for writ of mandamus, holding that the trial court had not abused its discretion by denying a motion to compel arbitration and a motion to reconsider, because the necessary evidence had not been demonstrated by the moving party.
In AXA Financial, Inc. v. Roberts, No. 03-07-00079-CV, 2007 WL 2403210 (Tex. App.-Austin Aug. 23, 2007), C. Daniel Roberts, the Chapter 7 bankruptcy trustee for the estate of L. Kent Abney, brought suit against AXA alleging various claims in relation to Abney’s employment with AXA... Full Story
Texas Appellate Court Rejects “Fundamental Rationality” As an Independent Basis for Vacatur
Myer v. Americo Life, Inc., No. 05-06-01013-CV, 2007 WL 2447237 (Tex. App.-Dallas Aug. 30, 2007)
8/30/2007
In upholding an arbitration award entered in a commercial dispute, a Texas appellate court held that the “fundamental rationality” test is not an independent basis for vacatur but is instead an inquiry into whether the arbitrators exceeded their powers.
In Myer v. Americo Life, Inc., No. 05-06-01013-CV, 2007 WL 2447237 (Tex. App.-Dallas Aug. 30, 2007), Myer entered into a consulting agreement with Americo in connection with Myer’s sale of insurance-related companies to Americo. The consulting agreement contained an arbitration clause and non-compete provision... Full Story
California Supreme Court Questions Enforceability of Class Action Waiver on Public Policy Grounds
Gentry v. Superior Court, No. S141502, 2007 WL 2445122 (Cal. Aug. 30, 2007)
8/30/2007
By a 4-3 majority, the California Supreme Court reversed an order compelling arbitration and remanded the case to the trial court with instructions to use a multi-factor test in determining the enforceability of a class action waiver. The ultimate question for the trial court is whether class-wide proceedings would be “a significantly more effective practical means of vindicating the [statutory] rights” of the employees who belong to the putative class. Parties who prefer the simplicity of one-on-one arbitration should not be overly concerned by the majority holding because this decision has no application outside of the employment context.
In Gentry v. Superior Court, No. S141502, 2007 WL 2445122 (Cal. Aug. 30, 2007), Gentry filed a class action against Circuit City, his former employer, alleging that Circuit City improperly classified him as an exempt employee and thus deprived him of his statutory right to overtime pay... Full Story
ADR Legislation & Regulation
LEGISLATION
CA A 467
AUTHOR: Feuer [D]
TITLE: Courts: Access to Justice
INTRODUCED: 02/20/2007
DISPOSITION: To Governor
Commentary:
If a party in a civil case whose trial court fees and costs were initially waived recovers ten thousand dollars ($10,000) or more in value by way of settlement, compromise, arbitration award, mediation settlement, or other recovery, the waived fees and costs shall be paid to the court out of the settlement, compromise, award, or other recovery. Imposes a lien against any settlement, compromise or award or other recovery in excess of $10,000 to repay the court costs.
CA A 500
AUTHOR: Lieu [D]
TITLE: Civil Actions: Telephonic Appearances
INTRODUCED: 02/20/2007
DISPOSITION: To Governor
Commentary:
Adding and repealing sections to the Code of Civil Procedure relating to appearance by telephone conference in civil actions.
Amendments include: (b) Except as provided in subdivision (c), in all general civil cases, as defined in the California Rules of Court, a party that has provided notice may appear by telephone at the following conferences, hearings, and proceedings: (5) A conference to review the status of an arbitration or mediation.
CA A 709
AUTHOR: Keene [R]
TITLE: Real Estate Appraisers
INTRODUCED: 02/22/2007
LAST AMEND: 09/05/2007
DISPOSITION: To Governor
LOCATION: To enrollment
Commentary:
This bill would provide that when a public agency, including, but not limited to, a city or county, decides that a contract with a designated member of an appraisal organization is necessary to provide an appraisal, as defined, of real property, any designated member of any appraisal organization that is a member of the Appraisal Foundation shall be allowed to submit a proposal if specified criteria are met. The bill would authorize that member to bring a civil action for equitable relief against a public agency that violates this provision, as specified, and would prohibit the office from participating in that action. A September 5, 2007 amendment to the bill, while not prohibiting arbitration, states, "Any waiver by a member, including, but not limited to, an agreement to arbitrate a claim, that is required as a condition of submitting a proposal or doing business with a public agency shall be presumed involuntary, unconscionable, against public policy, and unenforceable. The public agency has the burden of proving that any waiver of rights, including any agreement to arbitrate a claim, was knowing, voluntary, and not made a condition of submitting a proposal or doing business with the agency."
CA A 765
AUTHOR: Evans [D]
TITLE: Horse Racing
INTRODUCED: 02/22/2007
DISPOSITION: To Governor
Commentary:
Requires arbitration of certain horse racing disputes.
CA A 1164
AUTHOR: De Leon [D]
TITLE: Child Care: Provider Organization: Representation
INTRODUCED: 02/23/2007
DISPOSITION: To Governor
Commentary:
This bill formerly related to competition in the video/broadband industry and providing for binding arbitration of grievances was gutted and amended to relate instead to child care. The current bill also provides that, "An agreement pursuant to this section may provide for binding arbitration of grievances."
CA A 1687
AUTHOR: Brownley [D]
TITLE: Confidential Information
INTRODUCED: 02/23/2007
DISPOSITION: To Governor
Commentary:
Mental Health bill: Medical records relating to individuals with developmental disabilities and mental illness are confidential, except that providers shall disclose medical information if the disclosure is compelled by any arbitration hearing.
CA A 1727
AUTHOR: Judiciary Cmt
TITLE: Conservators and Guardians
INTRODUCED: 03/06/2007
DISPOSITION: To Governor
Commentary:
Amendments to a bill regarding powers of guardians. Amendments include allowance for the court to give guardian(p) The power to pay, collect, compromise, arbitrate, or otherwise adjust claims, debts, or demands upon the guardianship or conservatorship described in subdivision (a) of Section 2501, Section 2502 or 2504, or to arbitrate any dispute described in Section 2406 .
CA S 574
AUTHOR: Negrete McLeod [D]
TITLE: Alcoholic Beverages
INTRODUCED: 02/22/2007
DISPOSITION: To Governor
Commentary:
An act amending the Business and Professions Code in relation to alcoholic beverages. (Alcohol Beverage Control Act). Amendments include: "(1) An arbitration held under this subdivision shall be held in California through a private arbitration services provider with at least three offices in California and a statewide roster of at least 70 neutral arbitrators, of which at least 30 have prior experience as a sole arbitrator in franchise, distribution, or related business litigation." Additional amendments outline the arbitration process.
IA S 554
COMPANION: IA S 368
AUTHOR: Ways and Means Cmt
TITLE: Relating To Franchises For The Provision Of Cable
INTRODUCED: 03/15/2007
ENACTED: 05/29/2007
DISPOSITION: Enacted
Commentary:
A bill relating to franchises that provide cable service or video service including. As it relates to ADR, the bill requires the holder of a certificate of franchise authority to implement an informal process for handling inquiries from municipalities and customers concerning billing events, service issues, and other complaints. If an issue is not resolved through this informal process, a municipality may request a confidential nonbinding mediation with the holder of a certificate of franchise authority, with the costs of such mediation to be shared equally between the municipality and the holder of a certificate of franchise authority.
PA S 1063PN: 1366
AUTHOR: Earll [R]
TITLE: Local Tax Enabling Act of 1965
INTRODUCED: 09/10/2007
DISPOSITION: Pending
LOCATION: Senate Finance Committee
Commentary:
Would eliminate arbitration as an option to settle local tax disputes.
US H 1908
SPONSOR: Berman [D]
TITLE: Patent Reform
INTRODUCED: 04/18/2007
LAST AMEND: 09/07/2007
DISPOSITION: Pending
LOCATION: SENATE
Commentary:
Patent Reform Act of 2007. As it relates to arbitration, the bill states, "Parties to a derivation proceeding, within such time as may be specified by the Director by regulation, may determine such contest or any aspect thereof by arbitration."
REGULATION
Arizona 054.00.07
AGENCY: Department of Insurance
TITLE: Annual Audited Financial Reports
PROPOSED: 09/10/2007
Commentary:
Amends rules relating to audited financial reports. As it relates to the dispute resolution, the rules would be amended to allow a qualified independent certified public accountant to enter into an agreement with an insurer to have disputes relating to an audit resolved by mediation or arbitration.
Colorado 4 CCR 801
AGENCY: Department of Personnel and Administration/State Personnel Board
TITLE: Mediation and Settlement- Confidentiality/Disclosure
PROPOSED: 05/21/2007
ADOPTED: 07/17/2007
Commentary:
Clarifies rules relating to confidentiality of mediations for the State Personnel Board. States that mediation is private, confidential, and privileged, and that mediator notes are confidential and must be destroyed after mediation. The clarification continues, stating that a mediator cannot be contacted for information or called as a witness in other later proceedings. Communication during mediation is not discoverable or admissible, except for information that is required to be reported under a specific law. Contains other clarifications
Florida FAC 61B-82.001, .002, .004, through .007
AGENCY: Department of Business and Professional Regulation/Division of Florida Land Sales, Condominiums and Mobile Homes
TITLE: Mediation Programs
PROPOSED: 07/20/2007
ADOPTED: 08/29/2007
Commentary:
Repeals the rules to replace the Homeowners Association mediation program operated by the Division of Land Sales, Condominiums and Mobile Homes with private mediation.
Florida FAC 61B-83.001 through .004
AGENCY: Department of Business and Professional Regulation/Division of Florida Land Sales, Condominiums and Mobile Homes
TITLE: Arbitrators and Mediators
PROPOSED: 07/20/2007
ADOPTED: 08/29/2007
Commentary:
Repeals the rules relating to the Division of Florida Land Sales, Condominiums and Mobile Homes' certification and training program for arbitrators and mediators for the Division.
New Hampshire 2007-98, Arb 200
AGENCY: Department of Safety/Division of Motor Vehicles/New Motor Vehicle Arbitration Board
TITLE: Motor Vehicle Arbitration Board Rules
PROPOSED: 07/06/2007
Commentary:
This regulation would readopt the current motor vehicle arbitration rules set to expire in November of 2007.
Ohio OAC 4901: 1-7-01 thru -14
AGENCY: Public Utilities Commission/Utilities Department
TITLE: Carrier-To-Carrier Services
PROPOSED: 09/05/2007
Commentary:
Relating to telephone utilities. Would provide for arbitration of interconnection agreements and mediation for carrier-to-carrier disputes.
Ohio OAC 4901: 1-7-15 thru -29
AGENCY: Public Utilities Commission/Utilities Department
TITLE: Carrier-To-Carrier Services
PROPOSED: 09/05/2007
Commentary:
Relates to telephone utilities. Provides for arbitration of unbundled network rates, terms and conditions.
Oregon OAR 860-082-0005 to -0080
AGENCY: Public Utility Commission
TITLE: Small Generator Facility Interconnection
PROPOSED: 09/01/2007
Commentary:
Establishes the "Oregon Small Generator Interconnection Rules." Provides for arbitration of disputes arising under the Rules.
South Dakota STATE ID: 34 SDR 11
AGENCY: Public Utilities Commission
TITLE: Telecommunication Rules
PROPOSED: 07/02/2007
ADOPTED: 08/22/2007
CITATION: SDR 20: 10: 24: 02, 04.02, 04.05, 05, 20: 10: 32: 03, 06.01, 10, 29, 31.01, 54, 55, 20: 10: 33: 22, 20: 10: 34: 02.02, 10
Commentary:
Relates to Public Utilities Commission disputes. Any party to negotiations requested pursuant to SDCL 49-31-81 may petition the commission to arbitrate any unresolved issues.
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