Welcome to Disputing‘s 2011 Year-End Highlights. During this year, the U.S. Supreme Court decided several cases related to arbitration: On April 27, 2011, in a 5-4 decision, the United States Supreme Court ruled that the the Federal Arbitration Act preempted California law with regard to class arbitration in AT&T Mobility, LLC v. Concepcion, 09-893, (April 27, 2011). Read James Gaitis guest-posts about the case here and here. On May 17, 2011, the U.S. Supreme Court denied certiorari (No. 10-1213) to Trustmark Ins. Co. v. John Hancock Life Ins. Co., 631 F.3d 869 ( 7th Cir. 2011). The Seventh Circuit had held that an arbitration panel has authority to determine what a confidentiality agreement requires, when the agreement was closely related to an insurance arbitration that was already underway. On June 14, 2011, the U.S. Supreme Court granted certiorari to Affiliated Computer Services, Inc. v. Fensterstock, No. 09-1562-cv. In Fensterstock v. Education Finance Partners, Inc., No. 08-CV-3622, 2009 U.S. Dist. LEXIS 30457 (S.D.N.Y. 2009) the U.S. District Court for the Southern District of New York had held that an arbitration agreement containing a class action waiver within a student loan promissory note is unconscionable and unenforceable as a matter of California law. Read more here. In October, 2011, the U.S. Supreme Court denied cert to Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011). In Nafta Traders, the Texas Supreme Court had held that the Federal Arbitration Act (“FAA”) did not preempt enforcement of an agreement for expanded judicial review of an arbitration award enforceable under the Texas Arbitration Act (“TAA”). Such enforcement was consistent with the FAA’s purpose of ensuring that private arbitration agreements were enforced according to their terms. See Texas Supreme Court Declines to Follow Hall Street in Arbitration Case: Nafta Traders, Inc. v. Quinn, May 13, 2011. On November 7, 2011, the U.S. Supreme Court held that courts must enforce arbitration agreements even if the plaintiff’s Complaint contains nonarbitrable claims. In KPMG LLP v. Cocchi, 565 U.S. ___ ( 2011) the Fourth District Court of Appeal of the State of Florida upheld a trial court’s refusal to compel arbitration in a lawsuit involving claims brought against the auditing firm KPMG LLP (“KPMG”) by investors owners of a limited partnership (“Respondents”) who were defrauded by Bernie Madoff. Respondents alleged four causes of action: negligent misrepresentation; violation of the Florida Deceptive and Unfair Trade Practices Act; professional malpractice; and aiding and abetting a breach of fiduciary duty. Read more here. On November 14, 2011 the U.S. Supreme Court remanded Branch Banking and Trust v. Gordon for the Eleventh Circuit to reconsider its decision in light of AT&T Mobility LLC v. Concepcion, 563 U. S. ___ (2011). In Gordon v. Branch Banking & Trust, 419 Fed. Appx. 920 (11th Cir. Fla. 2011) the Eleventh Circuit had ruled that an arbitration provision in a consumer checking account agreement was unenforceable because the arbitration provision’s non-severable waiver of the right to a class action was substantively unconscionable under Georgia law. Technorati Tags: arbitration, ADR, law

Disputing is pleased to announce its 2011 Year-End Highlights series. During the upcoming weeks, we will discuss 2011 developments in case law and legislation regarding arbitration and mediation as well as other interesting topics. Stay tuned!  

In November, consumer advocate group Public Citizen petitioned Starbucks to revise its Gift Cards Terms of Service. Public Citizen’s letter to Starbucks says that terms of service on Starbucks gift cards make customers settle any legal claims that may arise when using the cards in a private arbitration rather than a court of law. The terms also ban class actions. Public Citizen is asking Starbucks to amend the terms of use on the gift cards immediately. You may read the letter here. Stay tuned. Technorati Tags: law, ADR, arbitration

The New York Court of Appeals affirmed an arbitration award arising out of a breach of contract dispute. See U.S. Electronics, Inc. v. Sirius Satellite Radio, Inc. 2011 NY Slip Op 8179 (N.Y. Nov. 15, 2011). In the present case, United States Electronics, Inc. (“USE”) sought to vacate an arbitration award in favor of Sirius Satellite Radio, Inc. (“Sirius”). USE claimed that the chairman of the arbitration panel’s son, a member of Congress, had publicly advocated a merger between Sirius and XM Satellite Radio, Inc. and was a close political ally of Congressman Darrell Issa, the founder and director of a competitor of U.S. Electronics in radio receiver distribution. The Court adopted the Second Circuit’s reasonable person standard and applied it to consider the federal evident partiality standard of the Federal Arbitration Act 9 USC § 10. The Court concluded that evident partiality is not shown “premised on attenuated matters and relationships” and stated that, “Chairman Sessions’ son publicly endorsed the Sirius-XM merger had no impact on the merits of the separate and distinct breach of contract matter. Moreover, the purported connection between Chairman Sessions and Congressman Issa through his son’s political relationship is too tenuous to impute partiality to the chairman…” The Court also noted that “This would be a far different case if USE could allude to a personal or business relationship between Chairman Sessions and Congressman Issa; or if his son had a prominent role at Sirius or DEI.” Accordingly, the Court affirmed confirmation of the arbitral award, with costs. Technorati Tags: law, ADR, arbitration