The year of of 2009 has seen no shortage of changes in the area of consumer and employment arbitration. I. The Arbitration Fairness Act of 2009 A general sense seems to be emerging, among some at least, that arbitration may be going too far, and a legislative movement at the federal level has emerged that promotes the so-called Arbitration Fairness Act of 2009, which, if passed, would limit the use of binding arbitration in consumer, employment, franchise, and civil rights disputes. (Senate version: S. 931; Status. House version: H.R. 1020; Status) The American Bar Association (ABA) passed some resolutions with respect to the Arbitration Fairness Act as it relates to international commercial arbitration. (read more here) II. Consumer Arbitration: The National Arbitration Forum In a surprising move, the National Arbitration Forum (NAF) —the country’s largest administrator of credit card and consumer collections arbitrations— has agreed to step aside from the credit card and consumer debt arbitration business. (read more here and here) This agreement came only a few days after Minnesota’s Attorney General sued NAF on July14 alleging consumer, deceptive trade practices, and false advertisement. (read more here). Also, the law firm of Milberg LLP filed a class action suit against NAF. The Complaint alleges that NAF misrepresented its services as neutral. (read more here) Following a U.S. Congressional Hearing on consumer arbitration held on July 22, (testimonies are here; videos are here) the American Arbitration Association (AAA) said (read more here) that it will not initiate arbitrations to collect from consumers until new guidelines are established. Soon after, JPMorgan Chase (read more here) and Bank of America (read more here) announced that they will no longer require mandatory arbitration on customers’ credit card disputes. In addition, Congress held a hearing on September 15th, titled “Mandatory Binding Arbitration – Is it Fair and Voluntary?” (testimonies are here) III. Employment Arbitration: Jones v. Halliburton Jones v. Halliburton Co. is an employment arbitration case with tragic facts that made the national headlines, including a story by the National Public Radio (NPR). (read more here) In this case, the Fifth Circuit held that claims for (1) assault and battery; (2) intentional infliction of emotional distress; (3) negligent hiring, retention and supervision of employees involved in a sexual assault; and (4) false imprisonment are not related to the plaintiff’s employment contract and refused to compel arbitration. (the case summary is here) The Halliburton case prompted the U.S. Senate to pass the “Franken Amendment” to H.R. 3326, which bars funds to defense contractors who require workers to arbitrate “any claim under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” (Senator Franken’s video is here) H.R. 3326 was signed by President Barack Obama and became law on December 19, 2009. (final version is here; major actions are here) Technorati Tags: law, ADR, arbitration
Continue reading...This month, the United States Supreme Court handed down Union Pacific v. Brotherhood of Locomotive Engineers, 558 U.S. ___(Dec. 8, 2009). Justice Ginsburg delivered the opinion for a unanimous Court. The Railway Labor Act (RLA) as amended, provides for arbitration of “minor disputes” of railroad employees before a panels at the National Railroad Adjustment Board (NRAB or Board). These panels are composed of two representatives of labor and two of industry, with a neutral referee as tiebreaker. Before proceeding to arbitration, employees and carriers must exhaust all procedures (also known as “on-property” proceedings) stated in their Collective Bargaining Agreement (CBA). Then, a pre-arbitration “conference” is required in which the parties must attempt to settle the dispute. In the present case, Union Pacific Railroad Co. (the Carrier) charged five of its employees with disciplinary violations. Dissatisfied with the outcome of the “on-property” procedures, Locomotive Engineers and Trainmen (the Union) filed for arbitration before the NRAB. However, the parties did not submit timely proof of pre-arbitration conferences and NRAB dismissed the petitions for want of jurisdiction. The panel reasoned that it could not consider de novo evidence. The district court affirmed the NRAB’s decision and the Seventh Circuit reversed. The U.S. Supreme Court noted that Court of Appeals are divided on whether in addition to the statutory grounds for judicial review provided by the RLA, courts may review NRAB proceedings for due process violations. However, the Court clarified that the satisfaction of the pre-arbitration conference “does not condition the adjudicatory authority of the Board.” The Court held that the Seventh Circuit erred in resolving the case under a constitutional, rather than a statutory issue. Accordingly, the Court affirmed that the panel did not lack jurisdiction over the employees’ claims. Technorati Tags: law, ADR, arbitration
Continue reading...Recent opinions from the U.S. Supreme Court, the Texas Supreme Court, and the U.S. Court of Appeals for the Fifth Circuit demonstrate that it is quite possible for an agreement to arbitrate to exist in the absence of an actual written agreement signed by both purportedly bound parties to the litigation. I. U.S. Supreme Court In March 2009, the U.S. Supreme Court held in Arthur Anderson that a non-party to an arbitration agreement could appeal a trial court ruling that rejected the third party’s motion to compel arbitration. Arthur Anderson LLP v. Carlisle, 129 S.Ct. 1896 (2009). (post available here) II. Texas Supreme Court Texas courts have employed different and unusual theories in order to find that an agreement to arbitrate exists in the absence of a traditional written agreement: direct-benefits estoppel, incorporation by reference, assumption, agency, alter ego, and third-party beneficiary. In re Kellogg Brown & Root, 166 S.W.3d 732 (Tex. 2005). These theories stem from contract law, since an agreement to arbitrate is a contract. In Labatt, the Texas Supreme Court resolved the issue of whether non-signatories to an arbitration agreement should be compelled to arbitrate claims when the decedent’s claims would have to be arbitrated. In re Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009). Plaintiffs in this case are family members who brought a wrongful death action against the employer Labatt Food Service, L.P. The Texas Supreme Court stated that “is well established that statutory wrongful death beneficiaries’ claims place them [the family members] in the exact ‘legal shoes’ of the decedent, and they are subject to the same defenses to which the decedent’s claims would have been subject.” The court reasoned that if the employee had not died from his injuries, his claims would have been arbitrated. Similarly, in Jindal, the Texas Supreme Court held that an arbitration agreement between a decedent and his employer required the non-signatories beneficiaries to arbitrate their claims against the employer. In re Jindal Saw Ltd., 2009 WL 490082, 52 Tex. Sup. Ct. J. 407 (Tex. Feb. 27, 2009) III. Fifth Circuit Finally, the Fifth Circuit held in Graves that non-signatories plaintiffs were bound by the arbitration agreement between the decedent and his employer. Plaintiffs in Graves are the surviving relatives of an employee of defendant JV Industrial Companies, who died in a work-related accident at a BP facility in Texas. Graves v. BP America, Inc., 568 F.3d 221 (5th Cir. 2009). (post available here) Technorati Tags: law, ADR, arbitration
Continue reading...by Holly Hayes In light of the subprime mortgage crisis, several states have adopted mediation programs to assist homeowners and lenders reach a solution to a mortgage foreclosure action. Keith Seat, at Mediate.com posted recently an update on foreclosure mediation across the United States. Highlights include the introduction of federal legislation that would encourage state and local governments to create strong foreclosure mediation programs. The Preserving Homes and Communities Act of 2009, (S. 1731 and Status) calls for federal matching funds of $80 million for mandatory mediation programs. [Update:] In addition, on December 18, the Foreclosure Mandatory Mediation Act of 2009 was introduced. The bill would require lenders of loans with Federal guarantees or Federal insurance to consent to mandatory mediation. (S. 2912 and Status) Connecticut, which made foreclosure mediation mandatory in July, is mediating less than 40% of the eligible foreclosure cases. The low percentage of mediations is because the program only applies to homeowners who file an appearance in court. When mediation does occur, 75% of cases are settled. In 62% of the cases, homeowners stayed in their homes and 13% moved without foreclosure. In the last three months, about 2,000 cases in Connecticut have been mediated with a team of 24 full-time mediators. Indiana passed legislation that requires creditors to inform homeowners of their right to a settlement conference prior to foreclosure. The Indiana Supreme Court and a number of other government and non-profit agencies completed a training program for over 1,000 judges, attorneys and mediators in how to handle foreclosure cases. In Nevada, workshops are being held to teach homeowners to effectively represent themselves so they can get the most out of a foreclosure mediation. On the other hand, the National Consumer Law Center (NCLC) just released a report claiming that existing foreclosure mediation programs do not place enough obligations on mortgage lenders to fully participate in the mediation process. The report looked at 25 foreclosure mediation programs around the country, including court-related mediation programs in Connecticut, Florida, Indiana, Kentucky, Maine, Nevada, New Jersey, Ohio, and Pennsylvania. The study found that programs are often lacking mandatory rules and that programs with minimal rules fail to impose sanctions for non-compliance. For example, the programs do not require lenders to provide communication substantiating a right to foreclose, they do not mandate consideration of loan modification alternatives and many set procedural barriers that restrict a large numbers of homeowners from participating in mediation. Geoffry Walsh, staff attorney for the NCLC and author of the study states that “if the programs continue to demand little or no accountability from servicers, they will likely go the way of other efforts to control foreclosures that relied on voluntary compliance by the lending industry.” The report suggests a variety of ways to engage lenders in the mediation process, including: requiring lenders to participate in good faith, documenting and enforcing compliance with all participation obligations and allowing requests for mediation to be made up to the time of a foreclosure sale. Technorati Tags: Healthcare, ADR, law, mediation Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at: holly@karlbayer.com.
Continue reading...Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.
Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.