Recent Developments - Center for Dispute Resolution- Willamette University College of Law

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January 9 - 15, 2006

1. Arbitration: Third-party bill “related” to contract and therefore arbitrable. (D.C. Cir.)

2. Arbitration: State statute prohibiting arbitration of uninsured motorist coverage disputes fell
within the McCarren-Ferguson Act and preempted the Federal Arbitration Act (5th Cir.).

3. Arbitration: Arbitration award properly vacated where arbitrator displayed evident partiality
through nondisclosure of previous relationship with one party, regardless of whether evident
bias was established (5th Cir).

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January 16 - 22, 2006

1. Arbitration: A foreign arbitration award will not be recognized or enforced by federal courts where
the actions of one party are wholly unilateral and do not constitute an “agreement in writing”.
(District Court of the District of Columbia)

2. Arbitration: A court will vacate an arbitration award if it violates the Bankruptcy Code’s automatic
stay provision by diminishing the party’s bankruptcy estate. (3d Cir.)

3. Mediation: A mediator’s memorandum of understanding may not be used as evidence of settlement
in a court without both parties’ waiver of confidentiality. (NJ App)

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January 23 - 29, 2006

1. Arbitration: An arbitrator’s award must be drawn from the essence of the agreement. (6th Cir)

2. Arbitration: One party to an arbitration clause can not unilaterally modify the agreement.
(Texas Supreme Court)

3. Arbitration: An arbitrator acted beyond the scope of his authority when he ruled on an issue
not raised by either party. (NJ)

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January 30 - February 5, 2006

1. Arbitration: ERISA plan participant was not bound to an arbitration agreement between
employer and investment manager. (9th Cir)

2. Arbitration: Waiver of right to compel arbitration will only be found when the party seeking
arbitration has substantially invoked the judicial process and the party opposing arbitration
suffers actual prejudice as a result. (Tex. App. 11 Dist.)

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February 6 - 12, 2006

1. Mediation: An insurer’s “consent to settle” clause can be enforced when the insurer does not
consent to a mediated agreement, even though the insurer tenders a defense in the mediation
that is subject to the insurer’s right to later deny coverage. (5th Cir)

2. Arbitration: A party cannot seek vacatur based on an arbitration award’s lack of specificity when
the party has agreed to an award that is short of findings and conclusions. (5th Cir)

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February 13 - 20, 2006

1. Arbitration: Before staying proceedings, a court must hold a hearing to determine if an arbitration
clause is procedurally unconscionable taking into account all the relevant circumstances. (Ohio App)

2. Arbitration: State public policy grounds for vacating arbitration award does not contravene the intent
or purposes of FAA when the State has made express the importance of the policy and the parties are
required to re-arbitrate rather than litigate. (Dist. Minn)

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February 21 - 27, 2006

1. Arbitration: Where a contract contains an arbitration clause, a challenge to the validity of
the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator,
regardless of whether the challenge is brought in federal or state court. (US Supreme Court)

2. Arbitration: Party waived right to arbitrate by engaging in discovery. (Miss.)

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February 28 - March 5, 2006

2. Arbitration: Party waived right to arbitrate by engaging in discovery. (Miss.)

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March 6, 2006 - March 19, 2006

1. Arbitration: Arbitrator’s interpretation of contract vacated as manifest disregard of the law. 4th Cir.

2. Arbitration: (1) An arbitrability issue is waived when an employer submits it to arbitration without
reservation. (2) Retiree benefits are presumptively arbitrable when included in CBA unless CBA
expressly provides otherwise. (3) Union must obtain retirees’ consent before arbitration and arbitrator
must establish consent guidelines. (6th Cir)

3. Arbitration: 7th Circuit upheld grant of Rule 11 sanctions against Employer when Employer’s motion
to vacate arbitration award was meritless and unlikely to succeed based on clear case law. (7th Cir.)

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March 20, 2006 - March 26, 2006

1. Mediation: A mediation agreement exists when the parties agree upon the essential terms of the agreement
even though the agreement is partly ambiguous. (Fla App)

2. Arbitration: The scope of an arbitrator’s jurisdiction is not limited to those issues that are explicitly brought
before him, but may also include issues that are implicitly raised by the parties. (9th Cir)

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March 27, 2006 - April 2, 2006

1. Arbitration: 7th Circuit upheld grant of Rule 11 sanctions against Employer when Employer’s
motion to vacate arbitration award was meritless and unlikely to succeed based on clear case
law. (7th Cir.)

2. Arbitration: A court will not overturn an arbitration award solely on the basis that the arbitrator’s
fact-finding did not warrant the award. (S.D. Ohio)

3. Arbitration: Party Seeking to Compel Arbitration Must Safeguard Arbitration Right (Fla App)

4. Mediation: Presumption of undue influence of spouse favored in a divorce settlement agreement
does not apply when the agreement was the product of mediation. (Cal App)

5. Mediation: Minors do not have the legal capacity to enter into truancy mediation agreements and
cannot be subject to criminal offenses when violating such agreements. (Iowa App)

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May 7, 2006 - May 14, 2006

1. Arbitration: The Uniformed Services Employment and Reemployment Rights Act, which protects the employment
rights of members of the armed forces, does not preclude enforcement of private agreements to arbitrate employment
disputes. 5th Cir.

2. Arbitration: Though a partnership agreement included a valid arbitration agreement in a small business investment
company, related subscription agreements were not sufficiently related to partnership agreement for the arbitration
clause to bind subscribers. 3rd Cir. MDR

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May 14, 2006 - May 21, 2006

1. ARBITRATION: After successfully compelling arbitration, a defendant may not then constructively stop
the arbitration process by not paying AAA fees based on a claim that the arbitration was proceeding “wastefully.”
(S.D.N.Y.)

2. ARBITRATION: When an arbitration panel volunteers a short explanation for its award, without more evidence
than arguably ambiguous language: the challenger may not erroneously interpret the award to be unfair, then
accuse the arbitrators of being unfair. (N.D. Ill.)

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May 21, 2006 - May 27, 2006

1. ARBITRATION. An arbitrator’s award will not be overturned for abuse of discretion unless the award is
against explicit public policy even when the award included discharging 63 nurses, and when the arbitrator
has misread the CBA/contract. (8th Cir.)

2. ARBITRATION. Unless a party has entered a valid arbitration agreement, theories of third party beneficiary,
alter ego, and agency will not serve to compel a party to arbitrate. (Mo.)

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May 28, 2006 - June 3, 2006

1. ARBITRATION: When an arbitration agreement gives the National Association of Securities Dealers
authority to determine a “non-public” arbitrator’s qualifications, an award shall not be vacated for being
outside the scope of the arbitrators’ authority when the loser alleges that the panel was improperly
constituted due to an allegedly unqualified non-public panel member. (5th Cir.)

2. ARBITRATION: Equitable estoppel will not be grounds for binding a party to a contract to arbitrate
when the court finds that there are no signatories to the agreement who may be compelled to arbitrate. (5th Cir.)

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June 4, 2006 - June 10, 2006

1. ARBITRATION: If an issue in a class action suit “relates to” an arbitration clause in a contract
with a foreign insurance company, such as a question of coverage, under the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, a state action may be removed to
federal court where the insurance company may move to compel arbitration. (5th Cir.)

2. ARBITRATION: Vacatur for summary judgment in favor of securities company will not be granted
where an investor knew his broker was no longer an agent for the principle securities company,
even when the securities company presented no evidence and the panel gave no explanation of its
award. (7th Cir.)

3. ARBITRATION: Vacatur will not be granted on the basis of arbitrator misconduct where the panel
denied motion for continuance filed on the eve of arbitration, because the discovery the plaintiff
received the day before was neither complicated nor voluminous. (5th Cir.)

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June 11, 2006 - June 17, 2006

1. ARBITRATION: An employer-employee arbitration agreement will be binding if the agreement provides
that by virtue of accepting or continuing employment, the employee agrees to arbitration terms, even if a
current employee refuses to sign the agreement when it is offered to her. (8th Cir.)

2. ARBITRATION: In a claim against insurance company for failure to cure reimbursement errors, 1) an
arbitration agreement will not be found to be adhesionary if the parties have freely negotiated over other
terms of the contract, 2) the arbitration agreement will not be unconscionable for precluding remedies if
it does not do so expressly, even when the arbitrator said punitive damages were prohibited, and 3) the
“clear and unmistakable” standard for waiving the arbitration requirement of statutory claims does not
apply to individuals, but only to collective bargaining agreements.

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June 18, 2006 - June 24, 2006

1. ARBITRATION: Section 12 of the FAA applies only to a statute of limitations for providing “notice,”
not “filing” of a petition to vacate. Hence, state law governing statute of limitations for petitions to
vacate an arbitration award would apply. (2nd Cir.)

2. ARBITRATION: Whether a Defendant could deduct an initial setoff payment from an arbitral award
came down to the language in the arbitration agreement. If the agreement gives the arbitration panel
the authority to determine “damages,” then the Defendant can deduct. If, however, the agreement gives
the authority to determine the “payment,” then the Defendant must raise the issue of the initial setoff
payment in the arbitration itself; after the arbitration decides the award, the court will find that the
arbitration panel either already took into account the payment in its award, or that the Defendant missed
the opportunity to raise the issue. (7th Cir.)

3. MEDIATION: A local rule required the Plaintiff to file a Demand for Jury Trial after being served with a
Notice of Removal. The court found that ongoing settlement efforts, including mediation, would not justify
procedural delays unless specifically requested by the parties.

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June 25, 2006 - July 1, 2006

1. ARBITRATION: The issue of whether a trade association has standing to sue in federal court is not
the same as whether the association, as a non-signatory to the arbitration agreement its members
signed, may bring arbitral claims as an agent on behalf of its members, which thus, will not provide
collateral estoppel. (4th Cir.)

2. ARBITRATION: If the same issues are at issue in a case filed in federal court as have been previously
arbitrated, there may be an opportunity for the Court or the trier of fact to attach persuasive significance,
if not preclusive effect, to that finding. (D. Conn.).

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July 2, 2006 - July 8, 2006

1. ARBITRATION: If a third party files a motion to compel arbitration and/or mediation, and the underlying
arbitration agreement specifies distinct amounts of liability when the dispute will be arbitrated versus
mediated, then the court will not grant the motion until the amounts of potential liability are sufficiently
ascertainable. (N.D. Ohio)

2. ARBITRATION: A malpractice suit against attorneys seeking to recover fees through arbitration will be
stayed pending the arbitration. Furthermore, attorneys representing a party suing former attorneys for
malpractice will be sanctioned if they know the suit is a “complete sham.”

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July 9, 2006 - July 15, 2006

1. ARBITRATION: Parties can expand the scope of their original arbitration agreement by stipulation.
If parties stipulate that the arbitrator may consider “any issues of mitigation,” the arbitrator may
consider a broad range of issue, not just mitigating factors relevant to the particular incident giving
rise to the arbitration. Hence, in a labor dispute, the arbitrator may look at such factors as length of
employment, previous work experience, lack of incidents of discipline, etc. (OH Court of Appeals)

2. ARBITRATION: A State law prohibiting limiting judicial remedies in insurance contracts is not preempted
by the FAA because the McCarran Ferguson Act states that no act of Congress shal l preempt a law created
by a State for the purpose of regulating the business of insurance. (WA Supreme Court)

3. ARBITRATION: Although there is an arbitration clause in the contract, a party waives the right to arbitrate
by participating in litigation. A party who first raises the arbitration clause in appeal will be deemed to have
participated in the litigation. (New York Supreme Court Appellate Term)

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July 23, 2006 - July 29, 2006

1. ARBITRATION/CONTRACTUAL DISPUTE RESOLUTION: Although Due Process normally requires an unbiased
hearing, an employee who contracts for a different kind of hearing will be bound by the contract. (7th Cir.)

2. ARBITRATION: An arbitrator may properly find that the issue of severance is a “monetary matter” within the
scope of an agreement to arbitrate granting authority to decide monetary remedies. Furthermore, an arbitrator
may make a factual finding that a purchasing company’s decision to substitute a new employment contract that
differs substantially from a Union’s previous employment contract is a termination such that severance is
appropriate. (E.D. PA)

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August 27, 2006 - September 2, 2006

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September 3, 2006 - September 9, 2006

1. ARBITRATION: To vacate an arbitration award, the award, on its face, must implement an erroneous
rule or apply the law incorrectly (Wash. App.).

2. ARBITRATION: District Court upheld arbitration clause that was silent as to arbitrators prejudice when
each party chose an arbitrator, and the arbitrators chose the third. The arbitrators were fair even if each
party’s chosen arbitrator was slightly biased towards that party (E.D. Ark.)

3. ARBITRATION: Cause of action arising out of the Florida Deceptive and Unfair Trade Practices Act not
exempt from arbitration (Fla.App. 5 Dist.).

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September 10, 2006 - September 16, 2006

1. Arbitration: Trial court grants Macy’s Department Stores’ motion to compel arbitration when the Macy’s
employer failed twice to opt out of the arbitration clause that was implemented with a new dispute resolution
program. (N.D. Cal.)

2. Arbitration: Designation of an attorney as the sole recipient of all proceeding notices satisfies sufficient
notice for an arbitration hearing, even if the attorney withdraws his appearance. In addition, to waive the
right to arbitrate, a party must contradict their desire to avoid the court system by actively participating in
litigation (Mich. App.).

3. Arbitration: An appeal of an arbitration award on grounds of gross mistake was denied when there was
no record of the arbitration (Tex.App.).

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September 17, 2006 - September 23, 2006

1. Arbitration: An independent basis for federal question jurisdiction must exist in order for a federal court
to overturn an arbitration decision. (E.D. Wis.)

2. Arbitration: District Court granted motion to compel arbitration even though not all parties signed the
arbitration agreement because a majority of defendants were related parties and thus could stand in the
shoes of the parties that did sign. (E.D. Ky.)

3. Arbitration: Unilaterally selected arbitrator lacks authority to issue binding award.

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September 24, 2006 - September 30, 2006

1. Arbitration: District Court held that when unequal bargaining power is intentionally used to reap small amounts
of money from a large group of customers, a bar against class action arbitration is unconscionable. (N.D. Cal.)

2. Arbitration: Parties are bound by choice of law provision in arbitration agreement.

3. Arbitration: Parties may not defeat an arbitration clause merely by adding fraudulent claims or by adding a
defendant who was not a party to the agreement if the actions still fall within the scope of the arbitration agreement (Pa. Super.).

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October 1, 2006 - October 7, 2006

1. Arbitration: An arbitrator may sever provisions of an arbitration agreement deemed unconscionable and enforce the
remainder of the agreement. (3rd Cir.)

2. Arbitration: The California Court of Appeal upheld an arbitration award even though the arbitrator failed to fully disclose
in a timely manner because all parties gave consent upon learning of the conflict of interest. (Second D. Cal.)

3. Mediation: Doctor may not revoke consent after insurer has settled the claim.

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October 8, 2006 - October 14, 2006

1. Arbitration: Under Maryland law, a remedy provision prohibits alternative remedies unless a party can
establish intentional fraud or gross negligence. (Ky.App.)

2. Arbitration: Error can invalidate an arbitration clause if the court finds that one party unilaterally added
the clause without the other party’s consent or knowledge and if the error relates to the cause or motive
for making the agreement. (La.App. 3rd Cir.)

3. Arbitration: Court reasonable in denying motion to compel arbitration based upon the length of time another
motion was before the court. (5th Cir., Oct. 9 2006)

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October 15, 2006 - October 21, 2006

1. Arbitration: Trial court only decides if claim is wholly groundless prior to ordering arbitration when
arbitrator is to decide whether the arbitration clause applies to the dispute. (Fed.Cir.(Cal.))

2. Arbitration: Although the general rule says that arbitrators have broad power to determine all disputes
submitted to them pursuant to the parties’ agreement, there is a recognized exception that a court may
overturn an arbitrator’s award pursuant to public policy grounds. (N.Y.A.D. 3 Dept.)

3. Arbitration: The arbitrator determines questions of arbitrability when the contracts specifies as such. (8th Cir.)

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October 22, 2006 - October 28, 2006

1. Arbitration: The right to review a determination as allowed under Employee Retirement Income Act of 1974 is
not a prerequisite for filing a timely arbitration. (N.D. Ohio)

2. Arbitration: Factual dissimilarity between disputes prevents prior arbitration award from applying to new
dispute. (1st Cir. (Mass))

3. Arbitration: To establish grounds for vacating an arbitration award, the party attacking the award must show
the arbitrator’s decision was irrational, arbitrary, or without adequate evidentiary support. (N.Y.A.D. 3 Dept.)

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October 29, 2006 - November 4, 2006

1. Arbitration: The right to review a determination as allowed under Employee Retirement Income Act of 1974 is
not a prerequisite for filing a timely arbitration. (N.D. Ohio)

2. Arbitration: Factual dissimilarity between disputes prevents prior arbitration award from applying to new
dispute. (1st Cir. (Mass))

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November 5, 2006 - November 11, 2006

1. Arbitration: Absent contradicting evidence of the material facts, a trial court may summarily decide whether to
compel arbitration based on limited discovery if doing so is in accord with the goals of arbitration and provides
an expedited and less expensive disposition of a dispute. (Tex.App.-El Paso)

2. Arbitration: Court will vacate an arbitration award only when written opinion shows arbitrator obviously exceeded
authority. (E.D. PA)

3. Arbitration: Homeowners may not avoid arbitration of disputes with a general contractor by suing a subcontractor. (N.J.Super.A.D)

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November 12, 2006 - November 18, 2006

1. Arbitration: A nonsignatory can move to stay proceedings pursuant to an arbitration agreement if the claims of the
nonsignatory and the parties to the agreement are inseparably intertwined. (E.D. Mich)

2. Arbitration: Employee must exhaust grievance procedures prior to pursuing a separate cause of action. (Alaska)

3. Arbitration: Federal court may refuse jurisdiction over a suit under the principle of res judicata where state court
affirmed arbitration award with the same issues and parties. (8th Cir.).

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December 3, 2006 - December 9, 2006

1. Arbitration: Court holds that a motion to stay litigation must be brought in a timely manner at the inception of a dispute. (S.D. Fl.)

2. Arbitration: Daughter of plaintiff not required to arbitrate her claim because she did not consent to arbitration and was
not a third-party beneficiary of the contract. (Miss.)

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December 10, 2006 - December 16, 2006

1. Arbitration: When a contract does not specify how damages shall be determined, damages are determined
by the court. (11th Cir.)

2. Arbitration: Upon finding that an arbitrator erred in determining jurisdictional issues, the court should remand
the issues back to the arbitrator. (Fla.App. 2 Dist.)

3. Arbitration: A party may waive their right to arbitration by failing to move to stay judicial proceedings in a timely
manner. (Ohio App. 6 Dist.)

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December 17, 2006 - December 23, 2006

1. Arbitration: Because the breadth of coverage under the Insurance Code may not be restricted by contract, the determination of
whether a party is an “insured” must be arbitrated. (Cal.App. 4th Dist.)

2. Arbitration: An employment contract provision waiving class actions suits is enforceable, even if the waiver is part of an arbitration
provision. (Cal.App. 2nd Dist.)

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December 24, 2006 - December 30, 2006

1. Arbitration: When a court order affirming an arbitration award fails to set a specific date for compliance and the award itself is
ambiguous , an order for contempt is inappropriate (U.S. Dist. Court, Dist. of Columbia).

2. Civil dispute: A lack of pre-litigation demand can prevent a party from recouping attorney’s fees (Or. App.).

3. Arbitration: When arbitration awards are not contrary to the plain language of the contract, taken as a whole, the courts should
not disrupt the arbitration award (1st Cir. Me.).

Updated by Julie K. Gehring
Willamette University College of Law