On June 19, 2009, Texas House Bill 1083 was signed into law.The new provision, effective immediately, prevents courts from ordering mediation in cases subject to the Federal Arbitration Act (excepting cases where the parties have agreed otherwise).The bill, which passed both the House and the Senate without amendment, applies to all actions commencing on or after June 19th. What does this mean for future Texas cases involving the FAA?Fewer reversals, for one.H.B. 1083 codifies In re Heritage Building Systems, Inc., 185 S.W.3d 539 (Tex. App.—Beaumont 2006, no pet.).Though the FAA applied to the claims in that case, the trial court ordered the parties to mediate, citing Texas’s policy in favor of settlement.The appellate court reversed, determining that mediation would result in additional time and expense, and thus frustrate the expectations of the parties and the federal mandate that a case be ordered “to proceed to arbitration in accordance with the terms of the agreement.”Id. at 542 (quoting 9 U.S.C. § 4).(Note that though this new law is only prospective – as it should be – because of In re Heritage, the same rule will apply to pending cases.)This law has the same effect as the holding in In re Heritage, but is applicable state-wide. But the new law will also (likely) result in more litigation.The language of H.B. 1083 is sweeping, covering any action subject to the FAA.Reality is more nuanced, however.Courts regularly deal with cases where some claims are subject to the FAA and others are not.See, e.g., United States v. Medica-Rents Co., 2006 WL 3635416 (N.D. Tex. 2006) (referring the remaining attorneys’ fees question to mediation).What is a court to do when the law requires that mediation be barred as to the entire action?Truth be told, it is unlikely that courts will adopt this wholesale – though literal – interpretation.Rather, one would expect that courts will interpret “action” to mean “claims” or “part of an action.”Such an interpretation would make the law consistent with both the FAA and Texas’s pro-mediation policies. Though the courts’ treatment of this law remains to be seen, we expect that courts will attempt to harmonize this state law – which, interestingly, codifies federal preemption principles – with the FAA and related state policies.
Continue reading...On May 21, 2009 the Loree Reinsurance and Arbitration Law Forum and Disputing announced the formation of a LinkedIn Commercial and Industry Arbitration and Mediation Group. We are pleased to share with you that the group has since grown to 154 members. Discussions have been lively, the group is internationally and professionally diverse, and group members have access to several ADR blogs, as well as articles posted by other group members. It is an excellent networking and learning opportunity for anyone interested in commercial and industry ADR. We welcome new members. Persons who should consider joining this group include arbitrators; mediators; in-house and outside counsel; law professors; dispute-resolution consultants; members of ADR organizations; business entity representatives and principals whose day-to-day responsibilities include dispute resolution; and law students and other students of commercial and industry ADR. If you are already a member of LinkedIn, please click here to apply for membership in the Group. If you are not a LinkedIn member, click here, and you will be guided through the process of creating a LindedIn profile. Joining LinkedIn is free, as is joining the group. We hope you’ll join us and participate in the interesting discussions! Technorati Tags: arbitration, ADR, law, Linkedin,
Continue reading...[Ed. note: This case is a bit old, but an important one. It somehow got lost in the pile of papers sitting on my desk. Thanks to San Antonio arbitrator and mediator Don Philbin for bringing this case to our attention back in April. ] The United States District Court for the Northern District of Texas held that an arbitration clause in Blockbuster’s Online User Agreement is illusory, thus, unenforceable and denied Blockbuster’s motion to compel arbitration in a class-action privacy suit. In Harris v. Blockbuster, Inc., No. 3:09-cv-217-M (N.D. Tex. Apr. 15, 2009), Harris is a customer of Blockbuster’s Online movie rental service. Blockbuster’s “Terms and Conditions” provision in the User Agreement includes an arbitration clause that states that “[a]ll claims, disputes or controversies . . . will be referred to and determined by binding arbitration.” The agreement also purports to waive the right to commence a class-action suit. In order to join the movie rental service, customers were required to click on a box certifying that they had read and agreed to Blockbuster’s Terms and Conditions. The User Agreement also includes the following clause: Blockbuster may at any time, and at its sole discretion, modify these Terms and Conditions of Use, including without limitation the Privacy Policy, with or without notice. Such modifications will be effective immediately upon posting. You agree to review these Terms and Conditions of Use periodically and your continued use of this Site following such modifications will indicate your acceptance of these modified Terms and Conditions of Use. If you do not agree to any modification of these Terms and Conditions of Use, you must immediately stop using this Site. On the other hand, Blockbuster has an agreement with Facebook, in which Facebook displays Blockbuster’s customers movie rental choices in the customers’ Facebook profile and then broadcasts the rental choice to the customers’ Facebook “friends.” Harris filed a class-action lawsuit claiming that the release of the movie rental records by Blockbuster violates the Video Privacy Protection Act, which prohibits a videotape service from providing personal identifiable information without the customer’s consent. The Act provides for liquidated damages of $2,500 for each violation. Blockbuster filed a motion to compel arbitration. Addressing the plaintiffs allegations that the arbitration provision is unenforceable because it is illusory (not supported by consideration), the court highlighted the legal standard articulated by the Fifth Circuit in Morrison v. Amway Corp. 517 F.3d 248 (5th Cir. 2008); The Morrison court held that the provision was illusory because “[t]here is no express exemption of the arbitration provisions from Amway’s ability to unilaterally modify all rules, and the only express limitation on that unilateral right is published notice. While it is inferable that an amendment thus unilaterally made by Amway to the arbitration provision would not become effective until published, there is nothing to suggest that once published the amendment would be inapplicable to disputes arising, or arising out of events occurring, before such publication. After discussing Morrison at length, the court held that Blockbuster’s arbitration agreement is illusory because Blockbuster has sole discretion to unilaterally amend the arbitration provision and the arbitration agreement contains no clause limiting the application of the amendment to disputes occurring after the date of the amendment. Finally, because the court concluded that the arbitration provision is illusory, the court did not discuss the issue of unconscionability. Accordingly, the court denied Blockbuster’s motion to compel arbitration. Technorati Tags: arbitration, ADR, law, Harris v. Blockbuster
Continue reading...The One Hundred Eleventh United States Congress began on January 3, 2009 and will last till January 3, 2011. Following is a summary of some alternative dispute resolution bills currently being considered during this session. Click on the bill number for its text and on the status link to find the bill’s most recent legislative action. Stay tuned to Disputing for more legislative updates! The Arbitration Fairness Act of 2009 would ban mandatory pre-dispute arbitration in employment, consumer, and franchise contracts. Senate version: S. 931 and Status. House version: H.R. 1020 and Status. The Employee Free Choice Act of 2009 would amend the National Labor Relations Act to require first mediation and then binding arbitration if both parties are unable to reach an agreement within a certain time frame. Senate version: S. 560 and Status. House version: H.R. 1409 and Status. The Payday Loan Reform Act of 2009 would amend the Truth in Lending Act to establish additional payday loan requirements to protect consumers. This bill prohibits a mandatory arbitration clause that is “oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers.” H.R. 1214 and Status. The Fairness in Nursing Home Arbitration Act of 2009 would render pre-dispute arbitration clauses in nursing home contracts unenforceable. S. 512 and Status. The Mortgage Reform and Anti-Predatory Lending Act of 2009 would amend the Truth in Lending Act of 1968. The bill provides that “[n]o residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, other than a reverse mortgage may include terms which require arbitration of any other nonjudicial procedure as the method for resolving any controversy.” H.R. 1728 and Status. The Labor Relations First Contract Negotiations Act of 2009 would amend the National Labor Relations Act to require the arbitration of initial contract negotiation disputes. H.R. 243 and Status. The Consumer Fairness Act of 2009 would treat arbitration clauses which are unilaterally imposed on consumers as an unfair and deceptive trade practice and prohibit their use in consumer transactions. H.R. 991 and Status. Technorati Tags: arbitration, ADR, law, legislation,
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.