The U.S. Supreme Court term is in full swing. Class-wide arbitration agreements have been a hot topic in the courts recently and the trend is continuing with the high court this fall. ADR news to note: Scheduled for November 9, 2010 Oral Argument AT&T Mobility LLC v. Concepcion, 09-893: A class-wide arbitration case from the 9th Circuit asking the Court to consider whether the Federal Arbitration Act (FAA) preempts states from conditioning enforcement of an arbitration agreement on the availability of particular procedures when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims. Certiorari denied on October 4, 2010 Louisiana Safety Association of Timbermen – Self Insurers Fund v. Certain Underwriters at Lloyd’s, London, et. al, 09-945, (No. 06-30262, 5th Circuit, November 9, 2009, unpublished): The Supreme Court was asked to consider whether Chapter 2 of the FAA is an “Act of Congress” subject to the anti-preemption provision of the McCarran-Ferguson Act. The Fifth Circuit held the McCarran–Ferguson Act did not authorize state law to reverse-preempt the Convention on the Recognition and Enforcement of Foreign Arbitral Awards or its implementing legislation, vacated a district court’s order and remanded the case. The denial is not surprising as the U.S. Solicitor General recommended on August 26, 2010 (from Scotus Blog) that the high court deny certiorari and decline to review the issue because the circuits are not in conflict. Zurich American Insurance Company et. al v. Pioneer Natural Resources USA, Inc., 09-1305, (No. 09-31031, 5th Circuit, December 17, 2009, unpublished): The Supreme Court was asked to consider whether, in a case removed under the Convention on the Recognition and Enforcement of Arbitral Awards, 9 U.S.C. § 205, an order denying a motion to compel arbitration and remanding to state court is appealable under the FAA’s express right of interlocutory appeal from such denials, 9 U.S.C. § 16(a)(1)(C), notwithstanding 28 U.S.C. § 1447(d). The Fifth Circuit held that such a decision could not be appealed when issued simultaneously with a remand decision not subject to appeal under 28 U.S.C. § 1447(d). Disputing blogged about both the Zurich and AT&T cases in June here. Technorati Tags: law, ADR, arbitration
Continue reading...The Eastern District Court of California has held a class action arbitration agreement waiver unenforceable and refused to compel arbitration against a former employee seeking class action status. In Mathias v. Rent-A-Center, Inc., No. S-10-1476 (E.D. Cal. Sept. 15, 2010), Ryan Mathias, a former Assistant Manager of a Rent-A-Center (RAC) located in California filed a class action lawsuit in California state court which alleged eight claims related to his employment with RAC, including claims related to unpaid overtime and wages. RAC removed the case to federal court and filed a motion to compel arbitration. RAC relied on an arbitration clause contained in an employment agreement between Mathias and RAC that also included a nonseverable class action waiver provision. While both parties agreed that the Federal Arbitration Act applied, the opinion ultimately hinged on the California Supreme Court’s decision in Gentry v. Sup. Ct., 42 Cal.4th 443 (2008). In Gentry, the California Supreme Court held that a class action waiver may be unenforceable in certain circumstances when it performs as an exculpatory clause. Gentry also stated that wage, hour and overtime cases would similarly have an exculpatory effect which would “frequently if not invariably,” undermine the unwaivable statutory right to overtime pay in California. After noting that it could not categorically hold all class action waivers unenforceable per se in overtime actions, the Gentry court held that a court must determine whether a waiver is in fact exculpatory by considering a number of specific factors. After considering the factors, if a court determines that class proceedings “are significantly more effective and practical and that disallowance of such proceedings will likely lead to less comprehensive enforcement, ‘it must invalidate the class arbitration waiver. . .’” The Gentry court held that a class waiver could also be invalid if it was found to be both procedurally and substantively unconscionable under California law. In support of his case, Mathias argued that his individual recovery was likely to be modest based on his salary at termination, retaliation against members of the putative class was likely and individual class members were unlikely to be aware of their rights. RAC responded by arguing the recent Supreme Court holding in Stolt-Nielsen v. Animalfeeds Int’l, Inc., 130 S.Ct. 1758 (2010) preempted the decision in Gentry. The Eastern District Court was not persuaded by RAC, however, and noted that the decision in Stolt-Nielsen and the subsequent court of appeals opinions interpreting it added weight to its decision to apply California law to evaluate the class action waiver at issue. According to the Eastern District: Nowhere in the opinion did the Court even infer that state law regarding contract interpretation is preempted where the rule of interpretation is based upon policy concerns. In fact, the court specifically held the arbitration panel should rely on state contract law in determining whether to impose class arbitration… This court has not found any decisions of the courts of appeals that interpret Stolt-Nielsen as holding that the FAA preempts state rules of contract interpretation derived from public policy concerns. For this reason, the court applies California law to evaluate the class action waiver at issue in this case. The California court found Mathias successfully demonstrated that a waiver would undermine a statutory right such that the waiver would be exculpatory under the factors set forth in Gentry. Because the arbitration agreement in the employment contract stated the class waiver was not severable, the court held the entire arbitration agreement unenforceable and denied RAC’s motion to compel arbitration. Disputing addressed the recent decision in Stolt-Nielsen v. Animalfeeds Int’l, Inc. many times since it was decided: We blogged on the case itself here; In Professor Stipanowich’s guest post here; In Professor Strong’s guest post here and In an article entitled “Unresolved Questions in the Wake of the U.S. Supreme Court’s Class Arbitration Ruling in Stolt-Nielsen v. AnimalFeeds International,” by Robert E. Crotty here. Technorati Tags: law, ADR, arbitration
Continue reading...Will Pryor has once again written an annual survey of alternative dispute resolution (ADR) law in Texas for the SMU Law Review. This is the third year ADR was included in Law Review’s Annual Survey of Texas Law issue and also the third time Pryor has provided his expertise and insight. In “Alternative Dispute Resolution,” 63 SMU Law Review 275 (2010), Pryors’s article largely concerns developments in Texas arbitration law. He notes the shake-up caused by the U.S. Supreme Court’s 2008 decision in Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008), led “appellate courts everywhere. . . to reevaluate and reverse decades of appellate law. . . ” After touching upon Moore v. Altra Energy Technologies, Inc., 295 S.W.3d 404 (2009), and its contribution to Texas mediation law, the remainder of the article is focused on arbitration. The bulk of arbitration cases discussed in the article were sub-divided into one of four sets: cases where an arbitration agreement was enforced; cases where an arbitration agreement was not enforced; cases where an arbitration award was confirmed; and cases where arbitration award was set aside. As in his previous surveys, Pryor’s summaries provide a convenient overview of the past year’s developments in alternative dispute resolution law. Disputing has blogged on several of the cases discussed in Pryor’s article: Hall Street Associates, L.L.C. v. Mattel, Inc. was blogged about many times including here, here and here. In re Labatt Food Service, L.P. was discussed here, here and here. Graves v. B.P. America, Inc. here, here and here. Perry Homes v. Cull here. In re Poly-America, L.P. was described here and here. Technorati Tags: arbitration, ADR, law
Continue reading...The Fort Worth Appeals Court has held in a memorandum opinion that an arbitration clause does not constitute a jury waiver. In In re Professional Pharmacy II, No. 2-10-163-CV, (Tex. App. – Fort Worth, September 23, 2010) the relator (Professional Pharmacy) sought a writ of mandamus from a district court’s March 8, 2010 order granting JP Morgan Chase Bank, NA’s (JP Morgan’s) motion to strike Professional Pharmacy’s jury demand and enforce a contractual waiver of jury trial. In 2008, Professional Pharmacy filed a suit against JP Morgan which alleged breach of a depository contract, sought declaratory relief and requested a jury trial. For more than eighteen months, the parties conducted discovery, filed motions and filed a joint motion for continuance. In February 2010, JP Morgan filed a motion to strike Professional Pharmacy’s jury demand and enforce a contractual waiver of jury trial allegedly contained within a “master account agreement.” The complete provision stated: Most disputes arising under this Agreement related to accounts or services hereunder are subject to mandatory binding arbitration. Rights to trial by judge or jury are waived hereby. Bank must be notified by depositor of claims and proceedings to enforce any such claims must be brought, within the time requirements established in the Account Disclosures and Regulations. Professional Pharmacy responded: “JP Morgan had failed to meet its burden to prove the existence of a valid and enforceable jury waiver and that the provision relied upon by JP Morgan was not a jury waiver but rather an unenforceable arbitration provision that had been waived by JP Morgan’s actions.” According to Professional Pharmacy, the arbitration clause was unenforceable because JP Morgan filed the motion eighteen months after Professional Pharmacy filed its jury demand and a mere forty-six days before trial. A trial court granted JP Morgan’s motion on March 8, 2010. The next day, Professional Pharmacy paid a jury fee. Professional Pharmacy then filed a petition for a writ of mandamus. According to the Appeals Court, “’[A] difference exists between a jury trial waiver and an agreement to arbitrate disputes.’ See Chambers v. O’Quinn, 305 S.W.3d 141, 149 (Tex. App.—Houston [1st Dist.] 2009, no pet.).” The court applied basic rules of contract construction in an effort to ascertain the intent of the parties and stated: The first sentence in the provision at issue clearly relates to arbitration as the method that has been selected for resolving disputes. The sentence waiving trial by judge or jury also clearly contemplates arbitration as it attempts to take the dispute resolution out of the court system altogether. “Judge” and “jury” are mentioned in the same sentence, and there is nothing to indicate the waiver of jury standing alone. Accordingly, JP Morgan’s contention that the provision is a valid jury waiver fails. See Chambers, 305 S.W.3d at 149. Moreover, even if this provision was meant to serve as a jury waiver, it would fail because it is not conspicuous. See In re Bank of America, 278 S.W.3d 342, 344–45 (Tex. 2009) (per curiam); Prudential, 148 S.W.3d at 134. The Court of Appeals conditionally granted Professional Pharmacy’s writ of mandamus and instructed the lower court to vacate its earlier order granting JP Morgan’s motion to strike. Disputing discussed jury waivers in the context of In re Bank of America last year here and here. Technorati Tags: ADR, law, arbitration
Continue reading...Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.
Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.