www.ArbitrationAdr.com (Case Names & Citations are in the Text): Subjects addressed below are highlights of 2008, 2009 and 2010. See Summaries below; or Subscribers click on the Change Log in the Text for Recent Cases.

All 2007 cases are included in the text and transferred to Archives (See, below). All other cases summarized below have been incorporated into the text. The text is subscription based.  Following are summaries of these cases.

Arbitration Alert: The Ninth Circuit, whether it has abandoned “manifest disregard" or not, issued an opinion severely limiting challenges to an award pursuant to the grounds of the FAA; 9 U.S.C. 10.

See, Text, Ch.V-F: Manifest Disregard    

Arbitration Alert: The Supreme Court has vacated the Ninth Circuit opinion in Comedy Club, Inc. v. Improv West Assocs., 514 F.3d 833 (9th Cir. 2007) in light of Hall Street Assocs. v. Mattel, Inc. The Ninth Circuit had held the arbitrator applied the wrong California law.

Summaries of cases from July 1, 2008 to July 30, 2010 (next) are incorporated in the Text: Citations for all cases are in the Text.

Administrative Preemption

Alter Ego
Appeal of Arbitration Awards

Appraisals

Arbitrability (3)

Arbitration Class Actions

Arbitration Clauses (Fed. Ct.)

Arbitration Clauses & Judgment

Arbitrator Disclosure

Arbitrator Immunity

Attorney Fees for Petition to Compel Arbitration

Awards & Legal Error

Broad Arbitration Clauses

CC&Rs & Arbitratio;n

Class Wide Arbitration

Classwide Arbitration & Choice of Law Clauses

Class Wide Arbitration & Third Parties

Class Wide Arbitration & Unconscionability

Conditions in Filing Petitions to Compel Arbitation

Confidentiality of Arbitration (Fed.Ct.)

Confidentiality of Mediation

Costs of Arbitration

Disclosure by Arbitrator

Discovery in Arbitration

Finality of Awards

Fraud & Arbitration Clauses

Initiating Arbitrationi

Injunctions

Incorporating Arbitration Rules in Contract

Judicial Intervention in Arbitration

Jurisdiction

Medical Service & Non-Signatories

NASD Rules and Fiduciary Duty

Petitions to Compel & Scope of Arbitrator Authority

Pre Hearing Discovery (Fed. Ct.)

Sanctions

Scope of Arbitration Clause

Settlement Credit

Vacating Awards

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Medical Service & Non-Signatories (9/1/2010

The California Supreme Court discussed whether the wife and heirs were compelled to arbitrate  the deceased husband’s wrongful death claims. Under CCP 1295 a physician can demand arbitration of a claim for medical malpractice with a patient pursuant to an arbitration agreement not statutorily adhesive, and the husband had signed that kind of agreement.   The court held that the surviving heirs claim for a wrongful death of their father is not a derivative claim, and they can be bound to arbitrate despite a collateral statute that requires consolidation of all wrongful death claims; CCP 377.60 et seq. The wife had conceded she was bound by her husband’s agreement and must arbitrate.

See, Text, Ch. XVI-16-C-5

Disclosure by Arbitrator: (8-6-2010)

The California  Supreme Court has summarized the considerations that base a request for disclosure of an arbitrator’s “interests” as required under California law.   The Court concluded an arbitrator who had previously served as a sitting judge, and during his tenure had made disparaging remarks about women, need not have disclosed his censure.  The Court held no relationship exited between a medical malpractice case heard by the judge in arbitration and censure.

See, Text, Ch. XIX-A-1: Disclosure by Arbitrator

CC&Rs and Arbitration Agreements (8-6-2010)

A HOA is not bound by an arbitration clause in declaration of covenants, conditions and restrictions recorded by developer of condo project.

See, Text, Ch. XVII-C-5-i: Common Interest Development

Arbitrator Immunity  (8-4-2010)

Arbitrators are immune under common law, contract law and statute to the same extent as judges because they are analogous. Sponsoring arbitration organizations are equally immune. To remedy allegations of bias, conflict of interest or absence of subject matter jurisdiction, a party can appeal under relevant statutes; Cal.App.

See, Text, Ch. XX-L: Arbitrator Immunity (7/25/2010)

Arbitrability & Formation of Contract (7/5/2010)

The Supreme Court agains struggled with determining “when” the contract was formed, i.e. ratified by a labor union, and concluded the court-not the arbitrator- should decide this issue.   In a footnote the court said the FAA applies equally in commercial arbitration and labor arbitration.

See, Text, Ch. IV-F-1: Existence of Contract/Clause 

Arbitrability and Scope of Powers (7/3/20/10)

The California Court of Appeal has held that the arbitration agreement can be supplemented by the submission to arbitration, incorporation of an arbitration service provider Rules, or the pleadings.  This"arbitrability" determination relates to the issue  of the arbitrator's powers in determining whether the court should vacate the award.

See, Text, Ch. XVI-F-6: Scope of Issues

Alter Ego (7/3/2010)

The California Court of Appeal has held the Rules of an arbitration service provider may allow an arbitrator to find alter ego.  Even in the absence of Rules this finding is within substantive law and subject to a finding by the arbitrator.

See, Text, Ch. XVI-F-5-k; Alter Ego

Injunctions (6/25/2010)

The Ninth Circuit has held that a federal court does have the power under the FAA to issue an injunction prior to arbitration if the plaintiff conforms to basic rules applicable to injunctive relief, and the interim relief is necessary to preserve the status quo and the meaningfulness of the arbitration process.  

See, Text, Ch. IV-I-1-b0 (1)

Arbitrability (6/24/2010)

The Supreme Court granted cert. and reversed the Ninth Circuit on the issue of arbitrability. The Court explained that arguments over the arbitration clause, its formation and enforcement, were judicial issues, but if the plaintiff argues the contract as a whole (which includes the arbitration clause) is unconscionable or unenforceable, the arbitrator decides the clause and the contract.  If the contract explicitly assigns enforcement of the arbitration clause to the arbitrator, that term will be enforced.

See, Text, Ch. IV-E-1 Objections to Arbitrability

Class Wide Arbitration & Unconscionability (5/17/2010)

Discover Bank v. Sup.Ct., a consumer case, and Gentry v. Sup.Ct., an employee case, are analyzed differently despite their similarity.  The former is an "unconscionability" case, the latter is an unwaivable statutory rights case.  In some instances the two cases overlap but the genesis of employment arbitration is in the Armendariz factors whereas inability to vindicate statutory rights is a Discover Bank analysis; Citation in Text.

See, Text,

Arbitration Class Actions (5/3/2010)

The Supreme Court has decided that the FAA requires the parties to agree to participate in class wide  arbitration. The Court distinguished bilateral arbitration as distinct from class action arbitration. This decision is likely to significantly affect the ability of one party to require another party to seek class action status in the absence of a clause in the arbitration agreement or a stipulation. Citation in Text.

See Text, Ch.IV-H-8: Class Arbitration

Confidentiality Agreements (4/30/2010)

The Ninth Circuit has refused to enforce an arbitration clause containing an agreement for a “business owner” not to disclose the “substance of the claims, the content of the testimony or other evidence presented at the arbitration, or the terms of the award;” Citation;n in Text. This decision is in conflict with other Circuits.

See, Text, Ch. IV-G-2-a-(2)

Vacating Awards (4/27 2010)

The Supreme Court and the California courts have repeatedly refused to hear appeals based on arbitrator error.  But the California Supreme Court has allowed review of an award on grounds the employee was deprived of the opportunity to vindicate his statutory rights under FEHA when the arbitrator ruled he failed to timely file within the prescribed time.  According to to the court, this is an exception to the general rule. Citation in Text).

See, Text, Ch. XXI-F-8-c.

Appeal of Arbitration Awards (3/24/2010)

A clause in the contract requiring the arbitrator to apply “California law” is insufficient to preserve the right to appeal the judgment confirming an award (Citation in Text).  That direction is only a forum selection clause and Cable Connection v. DIRECTV permits judicial review of an award only if the parties specifically so provided in the arbitration agreement

A California Court of Appeal has held that a clause in the contract that “[t]he arbitrator shall have the authority of a Superior Court judge . . . "does not authorize the right to appeal. Citation in Text. The right to appeal an award must be explicit.

See, Text,Ch. XXIX-F: Arbitrator Exceeds Powers

Appeal of Arbitration Awards (3/8/2010)

If the parties elect to provide for appellate review of the arbitration award, the terms of the arbitration clause must be "explicit and unambiguous" to avoid the general rule of non appeal; Cable Connection v. DIRECTV, 44 Cal.4th 1334 (2008).  Moreover, an arbitration clause mandating  the arbitrator to “apply” or rule “in accord”  with substantive law is insufficient to serve as a right to appeal the award; Citation in Text.

See, Text, Ch. XXIX-F: Arbitrator Exceeds Powers

Conditions in Filing Petition to Compel Arbitration (2/3/2010)

A Complaint against a builder, contractor or developer must be preceded by a meet and confer provision and a dispute resolution facilitator; CC 1375. Under the terms of the general arbitration statute (CCP 1281.2) the moving party must file evidence of a demand for arbitration and refusal by the other party as a condition of obtaining a court ordered arbitration; Citation in Text.

See, Text, Ch. XVII: Statutorily Ordered Arbitration

Arbitrability (1/18/2010)

The Supreme Court has granted Cert. in Jackson v. Rent-A-Center West, Inc.  See, 2010 WL 144073 (U.S.).

In First Options of Chicago v. Kaplan the Supreme Court held that the court should resolve enforcement of the arbitration clause and the arbitrator should decide the merits of the dispute.  The issue is characterized as one of "arbitrability." The Ninth Circuit held that the court must initially decide "who" should resolve "arbitrability;"Jackson v. Rent-A-Center West, Inc., 2009 WL 2871247.  In making that decision, the court must determine whether the arbitration clause itself is unconscionable.

See, Text, Ch. IV-E-1: Arbitrability

Appraisals (12/21/2009)

Standard fire insurance policy appraisal language is equivalent to an arbitration clause; Coopers & Lybrand; Ins. Code 2071; Rubin v. Western Mutual Ins. Co., 71 Cal.App.4th 1539 (1999). Appraisers are held to the same standards as umpires; Michael v. Aetna Life & Casualty Ins. Co., 88 Cal.App.4th 925 (2001); Appalachian Ins. Co. v . Rivcom Corp., 130 Cal.App.3d 818 (1982).

The California Court of Appeal (citation in Text)t held that legislative amendment to Ins. Code 2071 rejected the Michael case, and appraisers are not subject to an automatic and unlimited right to disqualification. Disclosure  statutes CCP 1281.9 and 1289.91 do not apply  to appraisers.  The court also held that party selected appraisers  are still subject to general disclosure requirements under the “general impression of bias” standard (citing cases).

See, Text, Ch. IX-N: Appraisers

Costs of Arbitration (9/6/2009)

The California Court of Appeal (citation in Text)refused to enforce an arbitration clause requiring a three person arbitration panel on grounds of substantive arbitrability. The court held the fees for a multiple arbitration panel, and the potential high cost to plaintiffs, prevented their vindication of statutory rights.  The court criticized other aspects of the clause prohibiting consolidation of claims and the plaintiff’s financial costs despite any findings of costs or fees by the trial court.
The court also  refused to enforce an arbitration clause specifically authorizing the arbitrator to decide arbitrability.

See, Text, Ch. VII, F-10: Arbitration Costs

Attorney Fees for Petition to Compel Arbitration (7/23/2009)

The California Court of Appeal (citation in Text) allowed attorney fees to a party who prevailed on a motion to compel arbitration based upon the language of the contract between the parties specifically providing for a fee award against any party who opposes arbitration.

In an earlier Court of Appeal case which included similar language in the contract, the appellate court majority held the trial court had jurisdiction to award fees as an interim award; Acosta v. Kerrigan, 150 Cal.App.4th 1124 (2007).

See, Text, Ch. XVI-F-14.

The court in Otay River Constructors v. San Diego Expressway, 158 Cal.App.4th 443 (2008) upheld the right of an attorney fee award to the prevailing party who had successfully moved to deny the petition to compel arbitration. The court also held the motion to award fees qualified as an appealable order; CCP 1294 (e) [special order after final judgment].
See, Ch. XXII-C-6: Special Order After Judgment

Third Party Issues (7/18/2009)

The California Court of Appeal (citation in Text) discussed whether the wife and heirs were compelled to arbitrate the deceased husband’s wrongful death claims against a physician. Under CCP 1295 a physician can demand arbitration of a claim for medical malpractice with a patient pursuant to an arbitration agreement not statutorily adhesive, and the husband had signed that kind of agreement.   The court held that the surviving heirs' claim for a wrongful death of their father is not a derivative claim, and they cannot be compelled to arbitrate despite a collateral statute that requires consolidation of all wrongful death claims against the estate; CCP 377.60 et seq. The wife had conceded she was bound by her husband’s agreement and must arbitrate.

Result:  the claims of the husband  for wrongful death, and the claims of the wife, will be arbitrated; the heirs will try the same case in court.

See, Text, Ch. XVI-F-5: Arbitrable Parties & Issues

Incorporating Arbitration Rules in Contract (7/1/2009)

The parties may incorporate arbitration service provider Rules into an arbitration agreement. JAMS and AAA have prepared extensive rules applicable to their respective organizations. These Rules will apply unless overridden (trumped) by a specific statute; Dream Theater, Inc. v. Dream Theater, 124 Cal.App.4th 547 (2005); Rodriguez v. American Techs., Inc. 136 Cal.App.4th 1110 (2006).

But in a recent California Court of Appeal case, (citation in Text) an arbitration clause provided the parties would abide by AAA Rules “existing at the date of [an arbitration]” in the event of a dispute.  At the time the parties executed the contract, the AAA had no rule providing that arbitrators had jurisdiction to rule on their own jurisdiction. In later amended rules, AAA inserted a Rule that the arbitrators had jurisdiction to determine their jurisdiction.

At the time the dispute occurred in the case, subsequent to the amended Rule, the moving party demanded that the arbitrator-not the court-determine jurisdiction of the dispute pursuant to the amended AAA Rules. Ordinarily the court, not the arbitrator, jurisdictionally determines whether a dispute is arbitrable unless the parties specifically assign that task to the arbitrator. The Court of Appeal held that parties cannot incorporate arbitration Rules not in existence at the time they executed the contract and therefore the arbitrator lacked jurisdiction. 

See, Text, Ch. XVI-F-!6: Hearing on Petition to Compel

Preemption of Administrative Regulations (6/30/2009)

The Federal Arbitration Act (FAA) preempts State anti-arbitraation decisional law or administrative agency regulations which displace an arbitral forum for dispute resolution. Under  California law, an employee cannot invoke the so-called "Berman" waiver providing for administrative resolution of labor claims in lieu of an arbitral forum (citation in Text).

See, Text, Ch. IX-F-3: Administrative Preemption

Scope of Arbitration Clause (5/29/2009

The courts have drawn a distinction between "broad" arbitration clauses and "narrow clauses." This categorization is fact specific and contingent on the language of the clause and its scope.

Although a "broad form" arbitration clause includes torts "arising out of the contract," not every dispute clearly outside the contemplation of the parties and their intention in contracting is covered. The California Court of Appeal illustrates this distinction in a case involving a securities transaction (Citation in Text).  The parties disputed the scope of the clause based on the accurate definition of their contractual relationship.

See, Text, Ch. XVI-F-7: Broad Form Arbitration Clauses

Jurisdiction 4/1/2009

The Supreme Court has held the FAA authorizes a federal court to "look through" the pleadings to determine jurisdiction, i.e., whether a claim "arises under" federal law; FAA U.S.C.4 (Citation in Text). A cross claim, regardless of its federal or state nature, may not be considered in determining jurisdiction.

In Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987) the well-pleaded complaint doctrine is also discussed.

See, Text, Ch. II: Jurisdiction

Class Wide Arbitration (3/2/2009)

The Third Circuit has refused to enforce class wide arbitration waiver clauses in small amount consumer cases (citation in Text).  Although the court decided the case on the pleadings (requiring an appellate court to accept allegation in the Complaint) the panel clearly evidences its displeasure with class wide waivers.

See, Text, Ch IV-H-8: Class Wide Arbitration

Sanctions (2/5/2009)_

The California Court of Appeal has held that the arbitration panel had the power to impose sanctions on counsel for conduct committed during the arbitration (copying privileged documents) and without any statutory authority on grounds he had submitted to the jurisdiction of the arbitrators by representing a party (citation in Text).

See, Text, Ch. XX-J: Sanctions

Judicial Intervention in Arbitration  (1/26/2009)

In California, after a court orders an action to arbitration its jurisdiction ends and it cannot intervene except to name an arbitrator if the parties cannot agree; entertain injunctive relief under certain conditions; and confirm, correct or vacate an award.  As one court said, "arbitration takes on a life of its own (citation in Text).

See, Text, Ch. XII-C: Judicial Jurisdiction in Arbitration

Settlement Credit (1/26/2009)

When one or more tortfeasors settle with the plaintiff, that amount is offset against the judgment of a non settling defendant. This litigation tool is available in arbitration and asserted in conjunction with confirmation of the award (citation in Text).

See, Text, Ch. XI-C: Settlement

NASD Rules & Fiduciary Duty (1/26/2009) NASD Arbitration Rules are not substantively unconscionable per se but under some circumstances the parties may be in a fiduciary relationship and a breach of that duty my occur in an action for fraud (citation in Text).

See, Text, Ch. IX-O: Self Regulating Organizations

Arbitrator Disclosure (1/26/2009)

The California Court of Appeals writes another opinion on the issue of arbitrator disclosure.  CCP 1291 & CRC 7 do not require disclosure of an arbitrator's legal representation of a third party with interests adverse to a party in arbitration citation in Text).

See, Text, Ch. XIX-a-1: Disclosure by Arbitrator

Broad Arbitration Clauses (1/6/2009)

The Third Circuit explains the difficulty in distinguishing between the terms of a pre dispute agreement (in this case a licensing agreement) and ongoing business relationships as applicable to a particular dispute (collecting cases) [citation in Text].

See, Text, Ch. XVIII-F-7: Broad Arbitration Clauses0

Finality of Awards (1/6/2009)

In a non published opinion the Third Circuit held that the doctrine of “functus officio” of the arbitrator is subject to exceptions if the award is ambiguous: (1) an arbitrator can correct a mistake apparent on the face of the award; (2) the award does not adjudicate a submitted issue, and therefore the arbitrator has not exhausted his function; (3) the award leaves doubt whether the submission has been clearly  executed.
The First Circuit agrees that the doctrine of “functus officio” is moribund, and the arbitrator can “clarify”an award as long as there is no fundamental change in the original award. (citations in Text),

See, Text, Ch. 5-A-2: Finality of Awards (1/4/2009)

Note: California permits the arbitrator to correct an award under certain conditions; CCP 1284.

oad Clauses:(1/6/2009)

Petitions to Compel & Scope of Arbitrator Authority (12/27/2008)

In a non published (and non cited) case the California Court of Appeal reminds counsel the scope of arbitrator authority is outlined in the pre litigation agreement, not the petition to compel arbitration.  Arbitration is governed by contract.

The court also cites a recent California Supreme Court case that an appeal from a judgment confirming an award does not permit vacatur if the court disagrees with or believes the award is erroneous.

Note: these rules were included in the Text from previous cases.

Arbitration Clauses & Judgment (12/7/2008)

The Eighth Circuit requires an arbitration agreement to specifically require an entry of judgment-an extremely narrow interpretation although statutorily required (9 U.S.C. 9); PVI, Inc. v. Ratiopharm GMBH, 135 F.3d.1252 (8th Cir. 1998); Carter v. Health Net of Cal., Inc., 374 F.3d 830 (9th Cir. 2004); Perpetual Securities, Inc. v. Tang, 290 F.3d 292 (2d Cir. 2002); Greenberg v. Bear, Stearns & Co., 200 F.3d 20 (2d Cir. 2000).

These are older cases and the The Second Circuit disagrees as long as the parties agree to arbitrate and subsequently conduct an arbitration; Orvis Communications L.L.C. v. Wilson, 2008 WL 5077823 (2d Cir. 2008). 

See, Text, Ch. III-A-1: Finality of Award

Pre Hearing Discovery (Fed. Ct.) (12/7/2008)

The Second Circuit has held that 9 U.S.C. 7 permitting an arbitrator to issue subpoenas to witnesses does not extend to entities not parties to the arbitration. The court acknowledges a Circuit split but concludes the statute is unambiguous.  The court also suggests alternatives to seek production from third parties (citation in Text).

See, Text, Ch. III-B-12-a: Discovery; & Ch. III-B-12-b; Collateral Discovery

Fraud & Arbitration Clauses (12/3/2008)

In filing a fraud complaint, plaintiff can allege two different theories.  Fraud in the inducement alleges the defendant intentionally or negligently misrepresented certain facts relied on to the detriment of plaintiffs.  Fraud in the execution alleges plaintiffs signed a document deceiving them as to its nature and unaware of its content. A contract fraudulently induced is voidable; a contract fraudulently executed is void.

When a contract includes an arbitration clause, its terms are jurisdictionally separate from the contractual terms.  Federal and state courts judges examine only the arbitration clause for enforcement or revocation. If the plaintiff alleges fraud in the inducement of the contract, the court orders arbitration for a decision on the merits.  If the complaint alleges fraud in the execution of the contract, the court decides that issue because the entire contract is void, including the arbitration clause, and cannot be enforced.

Fraud in the inducement of the arbitration clause alone is an issue resolved by the court.

These rules are well established and failure of a party to read the contract is not a defense unless the parties are in a fiduciary relationship.

See, Text, Ch. IX-O: Fraud

Appeal of Arbitration Awards (11/22/2008)

The California Supreme Court has authorized parties to include a right to appeal arbitrator legal error in arbitration clauses and the Supreme Court has denied

the right to appeal outside the parameters of the FAA.  This jurisdictional conflict is likely to be the subject of considerable confusion and litigation.

See, Text, Ch. VI-Appeal; Ch. XXI-F-8-c

Classwide Arbitration & Choice of Law Clauses (10/19/2008)

An arbitration clause contains a choice of law clause forbidding classwide arbitration and identifying South Dakota as the applicable state law for resolution of disputes between a consumer and a bank. South Dakota enforces classwide waivers. California prohibits waiver of classwide arbitration and the plaintiff files in a California court.  The defendant removes to federal court.  Which state law applies?  The Ninth Circuit remands to the district court to determine applicable law.

See, Ch. IV-F-8: Classwide Arbitration