Recent Developments in Dispute Resolution
Willamette University, College of Law
Center for Dispute Resolution

January 28, 2007 - February 3, 2007
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THIS WEEK:

1. Arbitration: When a district court denies a stay pending arbitration, there may be an abuse of discretion if the pending
arbitration is likely to resolve issues material to the lawsuit. (7th Cir.).

2. Arbitration: When a party expressly limits their motion to compel arbitration to the issue of arbitrability, the trial court’s
determination is a final judgment that cannot be appealed. (Cal.App. 2 Dist.).

3. Arbitration: A party’s attempt to withdraw from a collective bargaining agreement does not necessarily invalidate the
arbitration clause that is part of that agreement. (8th Cir.).

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Arbitration: When a district court denies a stay pending arbitration, there may be an abuse of discretion if the pending
arbitration is likely to resolve issues material to the lawsuit. (7th Cir.).

Volkswagen of America v. Sud’s of Peoria, WL 209983 (7th Cir. (Ill) Jan. 29, 2007).

Volkswagen of America (Volkswagen) and Sud’s of Peoria (Sud) signed a construction agreement containing an arbitration
clause, a loan agreement, and an incentive agreement to facilitate the opening of an authorized Volkswagen dealership.
Volkswagen filed suit in district court against Sud alleging breach of both the construction and loan agreements. Sud
moved to stay the action pending arbitration of the construction agreement because the two agrements were interrelated.
The district court granted the motion to compel but denied the motion to stay. The United States Court of Appeals for the
Seventh Circuit reviewed the district court’s ruling for abuse of discretion. The Court held that a district court possibly abuses
its discretion when denying a stay of the action pending arbitration. By staying the action, the court risks inconsistent rulings,
wastes judicial resources and may prejudice one or both of the parties. The district court did not abuse its discretion in this
case because it found independent grounds to hold Sud in breach of the loan agreement. (TH).

Full opinion available online at Westlaw.

Arbitration: When a party expressly limits their motion to compel arbitration to the issue of arbitrability, the trial court’s
determination is a final judgment that cannot be appealed. (Cal.App. 2 Dist.).

Vivid Video, Inc. v. Playboy Entertainment Group, Inc., WL 274366 (Cal.App. 2 Dist.) Feb. 1, 2007)

Plaintiffs Vivid Video, Inc. filed an action in district court for breach of contract to which Defendants Playboy Entertainment
Group, Inc (PEG) filed a motion to compel arbitration arguing only that arbitrability was for the arbitrators, not the courts, to
decide. The trial court denied the motion to compel arbitration of arbitrability based on the language of the parties’ agreement,
and PEG appealed. The court of appeals held that a trial court’s ruling as to who decides arbitrability is a final determination that
does not give rise to an appeal and therefore dismissed PEG’s appeal. (MS).

Full opinion available online at Westlaw.

Arbitration: A party’s attempt to withdraw from a collective bargaining agreement does not necessarily invalidate the
arbitration clause that is part of that agreement. (8th Cir.).

Intl Brotherhood of Electrical Workers v. Smart Cabling Solutions, 2007 WL 268896 (8th Cir.(MO), Feb. 1, 2007).

Smart Cabling Solutions (“ Smart Cabling”) had a collective bargaining agreement with International Brotherhood of Electrical
Workers (“Union”) that required that any disputes would be resolved through binding arbitration. Smart Cabling indicated that
it intended to withdraw from the agreement upon its expiration. Regardless of subsequent negotiations, the parties failed to
renew the agreement before it expired. The Union submitted the remaining issues to arbitration and, although Smart Cabling
was aware of it, they choose not to participate. The arbitrator ordered Smart Cabling to renew the original agreement and the
Union attempted to enforce the award. The trial court affirmed the arbitration award. On appeal, Smart Cabling argued that it
withdrew from the arbitration clause when it withdrew from the rest of the agreement and that the arbitrator thus did not have
jurisdiction to grant an award. The Court found that an arbitration clause can survive the termination of an agreement as long
as the arbitration did not create a series of agreements. The Court dismissed the objections to jurisdiction of the arbitrator
without serious consideration. (TR).

Full opinion available online at: http://caselaw.findlaw.com/data2/ circs/8th/061881P.pdf

Spring Editor: Myah Osher
Writers: Todd Heideman, Theodore Reuter, Megan Smith
Faculty Advisors: Richard Birke/A. Lee Jordan

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