Internet Research

www.ArbitrationAdr.com (Case Names & Citations are in the Text): Subjects addressed below are highlights of 2008. See Summaries below; or click on the ChangeLog in the Text

On April 15, 2008, all 2007 cases were included in the text and transferred to Archives (above). All 2008 cases below have been incorporated into the text.

Arbitration Alert: The Supreme Court has granted cert. in Discover Bank v. Vaden, 489 F.3d 594 (4th Cir. 2007). This case has significant jurisdictional issues for arbitration and arbitrators.  Discover Bank is discussed in the Text.

See, Ch. II-Jurisdiction

Arbitration Alert: Hall Street Assocs. v. Mattel, Inc., 128 S. Ct. 1396 (2008) on remand to the Ninth Circuit after the Supreme Court reversed their decision wrote this: "This court, having concluded that Hall Street Assocs. has preserved the issue of sources of authority, other than the FAA, through which a court may enforce an arbitration award, the cause is remanded to the district court to make such determinations and conduct such hearings as may be consistent with the Supreme Court's decision.

Arbitration Alert: The Supreme Court has also 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.

Case Summaries for 2008 after July 1, 2008 (below)

Broad Arbitration Clauses

Finality of Awards

Petitions to Compel & Scope of Arbitrator Authority

Arbitration Clauses & Judgment

Pre Hearing Discovery (Fed. Ct.)

Fraud & Arbitration Clauses

Appeal of Arbitration Awards

Classwide Arbitration & Choice of Law Clauses

Confidentiality of Arbitration

Awards & Legal Error

Initiating Arbitration

Confidentiality of Mediation
Discovery in Arbitration

Arbitration Clauses

Confidentiality in Arbitration Agreements

The following cases from January 1, 2008 to July 1, 2008 have been archived:

Employment Arbitration

Non Arbitrable Parties & Incorporation

Summary Judgments

Illegal Contracts

Incorporation of Documents

Arbitrator Disclosure

Expired Contracts & Arbitration Agreements

Motions to Vacate, Modify of Confirm Award

Pleading & Proving the Arbitration Clause

"Existence" of the Contract

Arbitrability

Waiver

Arbitrator Exceeds Powers

Unilateral Terms in Arbitration Clauses

Arbitration Awards (2008)

Collateral Estoppel & Res Judicata (2008)

Multiple Issues Between Same Parties (2008)

Attorney Fees: Prevailing on Petition to Compel (2008)

Summary Judgment (2008)

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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).

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,

See, Text, Ch. 5-A-2: Finality of Awards

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.

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

Confidentiality of Arbitration (9/25/2008)

Critics of arbitration dislike the confidentiality of arbitration but the Fifth Circuit has upheld the right of the parties to contract for, or stipulate to, confidentiality.

See, Ch. IV-G-2-a-2): Confidentiality Agreements

Awards & Legal Error (9/25/2008)
The California Supreme Court has ruled that parties to a contract can agree to judicial review of arbitration awards for legal error on appeal.  This case overrules several Court of Appeals cases and is inconsistent with Ninth Circuit and Supreme Court law on this subject.

The same case also discusses arbitrator authority in class actions when the contract is silent on this subject.

See, Ch. XXI-F-8-c: Arbitrator Exceeds Powers

Initiating Arbitration (8/15/2008)

Despite efforts by the Supreme Court to analytically separate the arbitration clause from the terms of the contract, determining who resolves what issue remains.  The Ninth Circuit decided waiver of the right to arbitrate, and the right to determine whether a party initiated arbitration, remain a judicial function.

See, Text, Ch. IV-F-1-b: Objections to Arbitrability

Confidentiality of Mediation (7/24/2008)  
The California Supreme Court has enforced the confidentiality provisions of mediation statutes and disapproved of implied waiver or estoppel to carve out exceptions despite questionable conduct by one of the parties.

See, Text, Ch. XI-B-2-a: Confidentiality

Discovery in Arbitration (7/24/2008)
The California Supreme Court has held that non parties must first object to discovery requests in the arbitration forum.  If the ruling is unfavorable, the moving non party may appeal to the Superior Court.

See, Text, Ch. XX-H; Discovery

Arbitration Clauses (7/24/2008)

In another example of distinguishing broad form arbitration clauses to include torts, the 11th Circuit held a clause requiring arbitration of "claims arising out of the contract" included those caused by a breach (of the contract) as distinct from claims arising out of the existence of the arbitration clause itself.

See, Text, Ch. IV-F-3-a; Broad Form Arbitration Clauses

Confidentiality in Arbitration Agreements (7/10/2008)

With the exception of the Ninth Circuit, Federal Circuit Courts of Appeal have enforced confidentiality clauses in arbitration agreements as not violative of public policy. The Fifth Circuit confirmed this rationale in a class action lawsuit in which the plaintiff wanted the results of a prior arbitration award available to other members of an educational facility who had sought to file suit (or arbitrate). The defendant filed declaratory relief and sought an injunction to prevent disclosure. The court agreed.

See, Text, IV-G-2-a-2.): Confidentiality Agreements

The court also noted that a discovery provision in the arbitration clause could be enforced under the FAA.

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.

o correct an award under certain conditions; CCP 1284