State Cases:
Arbitration: Dispute about entity mentioned within, but not a party to, collective bargaining agreement still bound to arbitration clause.
Arbitration: Res judicata and collateral estoppel issues are for arbitrator.
Arbitration: Insurer must negotiate in good faith and disclose all information without waiting for suit compelling the information.
ADR Online:
Conflict Resolution Summaries

In Rintin Corp. v. Domar, Ltd., (Fla.App. 3 Dist. Aug. 16, 2000)

A shareholders' agreement that included a "choice of law" provision and required disputes to be submitted to arbitration was challenged by a plaintiff corporation. Plaintiff, a Dominican Republic cement factory sought privitization with a Bermuda corporation that was to operate the factory. In the course of business operations, however, in the midst of allegations of fraud a dispute arose regarding investments and the arbitration clause was invoked to resolve issues. Whether the issues regarding the corporation's investments were subject to arbitrability were raised, and a court reviewing the matter determined that the shareholders' arbitration agreement required for an arbitrator to determine whether the issues in dispute were arbitrable.

Full decision on Westlaw: 2000 WL 1153156

In National Union Fire Ins. Co. of Pittsburgh, Pa. v. Holt Cargo Systems, Inc., (S.D.N.Y. Mar 28, 2000)

A union's efforts to challenge its employer's choice of arbitrator owing to issues raised regarding the weight of an adverse expert witness in earlier cases was brought to a halt. Calling the union's request to preemptively remove the arbitrator's chosen umpire (and then the arbitrator himself) 'an end run around the established case law in this Circuit', the district court wrote a strongly worded opinion directing parties to choose their arbitrators and umpire quickly or the efforts would be viewed as a lapse under section 5 of the FAA. In so deciding, the court affirmed the tenet that courts will not readily remove arbitrators or examine them for partiality prior to the granting of an award and arbitration which involves an arbitrator knowledgeable in the parties' trade.

Full decision on Westlaw: 2000 WL 328802

Diagnostic Radiology Associates, P.C. v. Jeffrey M. Brown, Inc., --- F.R.D. ---- (S.D.N.Y., May 10, 2000).

Parties to a construction contract shared a mutual friend, a federal court judge. Unbeknownst to the judge, however, the parties incorporated him as the named arbitrator to any prospective disputes in their construction contract. When a dispute did erupt between parties, one party sought to have the dispute submitted before the named arbitrator. The court held that, while there are no controlling statutory provisions, Canon 5E of the Code of Conduct for United States Judges advises judges to provide judicial functions in such a private fashion. Thus, the same language acts to bar a named judge from naming a successor because he or she would essentially decide an issue not properly before him or her. The court resolved the immediate issue by transferring the case to the named judge's District, allowing the district to name a successor arbitrator properly.

Full decision on Westlaw: 2000 WL 573127

Landis v. Finova Capital Corp., (S.D.N.Y., May 3, 2000).

Defendant corporation acquired plaintiff's employer and subsequently contracted with plaintiff directly to retain his continued employment services. That contract contained an arbitration and termination-only-for-cause clause. Over the course of employment, the defendant eventually terminated plaintiff and cited the plaintiff's misrepresentations of quality of work (fraudulent inducement) as grounds to declare the employment contract void. Plaintiff sued for breach of contract and defamation, and the defendant sought to compel arbitration. Plaintiff objected, arguing that the defendant waived the arbitration clause when it alleged that the contract was void. Under review, however, the court held that an arbitration clause may only be avoided for reasons of fraud if the issue deals directly with the arbitration clause and not the contract as a whole. Additionally, although some of the alleged defamation events occurred before the contract, since the language was broad, the inducement of arbitration was interpreted broadly as well. Thus, the court mandated arbitration.

Full decision on Westlaw: 2000 WL 546985

In re Richfield Springs Cent. School Dist., 705 N.Y.S.2d 709, 164 L.R.R.M. (BNA) 2383, 143 Ed. Law Rep. 339, 2000 N.Y. Slip Op. 02690 (Mar. 23, 2000)

Two litigants - a school district and its employee association-were parties to a collective bargaining agreement (cba) that provided for arbitration of disputes and health benefits. Association members' health benefits are typically administered by an outside plan that was changing its provider of prescription drug benefits. Anticipating a decline in benefits, the employee association demanded that the issue be submitted to arbitration. The School District, however, objected on grounds that the dispute was not subject to the cba arbitration clause because it dealt with a third party to the health benefit plan instead of the health benefit plan itself. The NY Appellate Division reversed the NY Supreme Court that found the issue of a third party was not determinative. Citing strong policy in favor of arbitration where parties have 'broadly agreed to arbitrate any alleged violation' and to refrain from adjudging the merits of the claim, the court sent the issues to arbitration.

Full text of decision
Full decision on Westlaw: 2000 WL 298641

Town of Newburgh v. Civil Service Employees Ass'n, Inc.; --- N.Y.S.2d ----; Supreme Court, Appellate Division, Second Department, New York (May 8, 2000)

A public employee was suspended due to allegations of drug use. An initial arbitration regarding the allegation took place. Due to the length of that procedure, a second arbitration ensued that arose out of the employee's suspension that elapsed for more than 30 days. The first arbitration was resolved in favor of the employee, and he attempted to have the court apply collateral estoppel to prevent the employer from defending the second arbitration on the merits. The employer brought suit in an attempt to allow its defense. The court decided, however, that any application of collateral estoppel or res judicata is for the arbitrator and not the court to decide.

Full decision on Westlaw: 2000 WL 563097

Danner v. Auto-Owners Ins., --- N.W.2d ---, (Wis. App. May 2, 2000)

An insured driver was hit by an uninsured driver and accordingly filed an underinsured driver's claim with his insurance carrier. Both the insurer and insured could not agree as to the amount of benefits that were in line and a dispute arose. The insured invoked his right to arbitrate the matter. In response to the request to arbitrate, the insurer began withholding information and deliberately paid less than the insured was due on his benefit claims. After an arbitration of the issues took place, the insured brought a bad faith action against the insurer on the grounds that "no bad faith can arise when the parties exercise a contractual right to arbitrate legal entitlement to recovery." Acknowledging that there is legal entitlement to a resolution which inures when a settlement has been reached, the court held that an insurer has a fiduciary duty to not await an arbitrator's decision to begin acting in good faith. Thus, insurers must engage in a 'fair debate' of disputed issues prior to, and during, arbitration.

Full text of decision
Full decision on Westlaw: 2000 WL 523759