Arbitration: Trial Court Has Authority To Consolidate Contractual Arbitration
Arbitration: Client Does Not Waive Right To Challenge Validity Of Binding Arbitration
                     Clause In Fee Agreement
Arbitration: Prior Labor Arbitration Is Collateral Estoppel In Employees' Common Law
                      Fraud Suit
Arbitration: Manifest Disregard Of Law By Arbitrators Is Not Ground For Reversal
ADR Online: Tobacco Arbitration Panel Awards $8.2 Billion
ADR Online: Choice Of Arbitration Forum Unenforceable 'Unreasonable, Excessive' Cost
                        A Deterrent
ADR Online: Second Circuit Decision Heralds Fundamental Changes To Arbitration
ADR Online: The New And Improved Construction Industry Arbitration Rules
ADR Online: The Critical Impact Of Word Choice In Mediation

Arbitration: Client Does Not Waive Right To Challenge Validity Of Binding Arbitration Clause In Fee Agreement
Alternative Systems, Inc. v. Carey (Cal.App. 11/13/98)

Attorney Carey brought action to confirm attorney fee arbitration award entered against client, Alternative Systems, Inc., by the American Arbitration Association (AAA) pursuant to a binding arbitration clause in attorney-client fee agreement.  The trial court confirmed the award and the client appealed.  The Court of Appeals held that: (1) client did not waive right to challenge validity of binding arbitration clause, and (2) client's statutory right to trial de novo under mandatory fee arbitration scheme preempted binding arbitration clause, and thus AAA arbitrator exceeded his powers by purporting to enter an award under authority of that case.
[Full Decision On Westlaw: 79 Cal.Rptr.2d 567]

Arbitration: Prior Labor Arbitration Is Collateral Estoppel In Employees' Common Law Fraud Suit
Kelly v. Vons Companies, Inc (Calif Ct App 11/23/98)

The union grieved the employer's closure of a facility, and the matter went to arbitration under the collective bargaining agreement.  The union's argument in arbitration was that the closure was in bad faith and in breach of the collective agreement, because it was in retaliation for a previous arbitration decision.  The employer's argument was that
the closure was for economic reasons, and the arbitrator ruled in favor of the employer.  Several employees who were laid off by the closure sued the employer for fraud and negligent misrepresentation, claiming the employer had failed to notify them of the dispute involved in the first arbitration.  The trial court granted summary judgment for the employer on the ground of collateral estoppel; the California Court of Appeal affirmed.  Collateral estoppel applies to labor arbitration findings of fact if the arbitration had the elements of an adjudicatory procedure: hearing before a qualified impartial officer, formal recorded testimony under oath, cross examination, compulsory testimony of witnesses, and a written decision.  U S Supreme Court decisions such as Alexander v. Gardner Denver, 415 US 36 (1974) (employee allowed to bring Title VII suit after completing a labor arbitration) do not apply here because these employees brought a common law, not a statutory, claim. Gardner-Denver and similar cases were based on the notions that (a) Congress intended the statutes to be enforced by courts and (b) the interests of unions and employees might not always coincide.  In the present context, (1) there is no "legislative dictate against resolving common law claims by arbitration," (2) arbitration findings will be binding in a later law suit only if the employee was a party to the arbitration or in privity with the union, and (3) it is unlikely that an arbitrator would enforce the collective agreement in a manner that conflicts with the common law.

[Faculty Editor's Comment:  (1)  In this case the court was applying the law of California, and did not feel required to follow the Gardner-Denver line of authority.  However, the court's reasoning could easily be used in a federal statutory case.  Gardner-Denver did no more than allow an employee to proceed in a Title VII case after the employee's collective agreement claim had been arbitrated.  The U S Supreme Court did not hold that the arbitrator's fact findings could not be given preclusive effect in the later court action.  (2) There is a fair argument that the California court was required to apply federal law, Labor Management Relations Act Section 301, assuming that enforcement of the collective agreement is governed by Section 301.  If so, and if a determination of the state claims required the court to interpret the collective agreement (which seemed probable in this case), then the entire claims would be preempted by section 301.]
[Full Decision Online: http://www.courtinfo.ca.gov/opinions/documents/B110631.DOC]

Arbitration: Manifest Disregard Of Law By Arbitrators Is Not Ground For Reversal
Siegel v. The Prudential Insurance Co (Calif Ct App 11/20/98)

Siegel took his wrongful discharge claim to arbitration under the rules of the National Association of Securities Dealers.  The arbitration panel awarded $113,016 in actual damages, $225,000 in general damages, and $1,000,000 in punitive damages.  The employer sued to vacate the arbitration award on the grounds that the arbitration panel (1) exceeded its authority because not all the arbitrators heard all the evidence; (2) allowed into evidence a secretly recorded  conversation, in violation of public policy and in disregard of law; (3) acted in manifest disregard of law by awarding emotional distress damages without evidence of severe mental injury; and (4) acted in manifest disregard of law by awarding $1 million in punitive damages without any evidence to support the award.  The trial court confirmed the award and denied the employer's petition to vacate the award; the California Court of Appeal affirmed.  The court held that the case should be decided under the law of California, and the California Arbitration Act does not allow judicial review of an arbitration award, even when it is argued that the arbitrators acted "in manifest disregard of the law."  Although the arbitration agreement is covered by the Federal Arbitration Act (FAA), and many courts have taken the position that they can review an arbitration award for "manifest disregard of the law," none of this preempts the California rule which prevents re-weighing the merits of an arbitrator's decision.

[Faculty Editor's Comment:  Most courts deciding the issue have decided that an arbitration award which is governed by the FAA can be vacated if the arbitrator acted "in manifest disregard of the law."  These results themselves are curious in light of the fact that the FAA does not state this as a ground for vacating an award.  This judicially-created standard might be precarious because of its lack of statutory foundation.  Even if the standard is rooted in the FAA, it would be rooted in Sections 10 and 12 which are written for federal courts, and say nothing about state courts.]
[Full Decision Online: http://www.courtinfo.ca.gov/opinions/documents/B115350.DOC]

ADR Online: Tobacco Arbitration Panel Awards $8.2 Billion

Tobacco arbitration panel awarded attorneys in Florida, Texas, and Mississippi a $8.2 billion settlement.  Attorneys in eight other states that shunned arbitration were only awarded $221 million.

Details: http://www.ljx.com/LJXfiles/tobaccosettle_firstaward.html

ADR Online: Choice Of Arbitration Forum Unenforceable 'Unreasonable, Excessive' Cost A Deterrent
By Cerisse Anderson

An arbitration clause in a contract shipped with a mail-order computer is valid, but the requirement that buyers arbitrate disputes with the seller under the rules of the International Chamber of Commerce is unenforceable because such proceedings are too expensive for most consumers. Brower v. Gateway 2000 Inc.

Details: http://www.ljx.com/practice/arbitration/0814arbforum.html

ADR Online: Second Circuit Decision Heralds Fundamental Changes To Arbitration
By Carroll E. Neesemann

The Second Circuit seems to have at least somewhat clarified and may have fundamentally changed arbitration as we have known it in Halligan v. Piper Jaffray Inc., 1998 U.S. App. LEXIS 15193 (2d Cir July 9, 1998).  The court addressed the basic issues of (1) whether an arbitration award may be overturned for manifest disregard of evidence, (2) whether arbitrators need to write reasoned awards justifying their decisions and (3) whether arbitrators must follow the law. On each of these points the case seems to represent a departure from the past.

Details: http://www.ljx.com/practice/arbitration/0724arbherald.html

ADR Online: The New And Improved Construction Industry Arbitration Rules
By Steven A. Arbittier

This article outlines the various changes in the new rules, including speed, discovery, conduct of the hearing and the scope and form of the award.  This will be an article of great interest for those participating in construction arbitration.

Details: http://www.adr.org/pl/arbittier.html

ADR Online: The Critical Impact Of Word Choice In Mediation
By Gregg F. Relyea

This article focuses on the constructive impact of effective word choice by a mediator and identifies some common speech patterns that can be destructive to the mediation process.

Details: http://www.cpradr.org/alt_scrn.htm#current