This week, a Court of Appeals for the State of Wisconsin decided Sands v. Menard, Inc., No. 2008AP1703, 2009 WI App 70. Sands is a former general counsel for Menard, Inc. Her employment was terminated following a dispute over compensation. Pursuant to a mandatory arbitration agreement, Sands submitted her claims to an arbitration panel. The panel found that Menard violated the Equal Pay Act by paying Sands less than a male employee and also found that Menard retaliated against her for complaining of discrimination. According to Sands’ attorney, the panel awarded Sands with attorney fees and $1.6 million, which included $900,000 in punitive damages. In addition, the panel ordered Menard to reinstate Sands to her position with a salary of $175,000 per year plus a bonus (she previously earned $70,000 per year). Menard refused to reinstate Sands and filed a motion to vacate the award’s reinstatement order on the basis that the arbitrators manifestly disregarded the law allowing clients to choose their attorneys. The circuit court refused to vacate the award and the appellate court affirmed. This opinion is noteworthy for several reasons: The doctrine of “manifest disregard” of the law (discussed here) remains a basis for vacating arbitration awards in Wisconsin. The court concluded that employment discrimination law (reinstatement) trumps the Rules of Professional Conduct (conflicts of interest). The large amount of money awarded by the arbitrators, coupled with the judicial enforcement of the panel’s decision, overshadows the latest criticisms to mandatory arbitration in employment and consumer contracts. Namely, that binding arbitration is unfair to individuals. The court, granting the arbitration panel’s decision great deference, is in accord with the strong federal policy favoring arbitration. See latest Supreme Court case here. As suggested by Martha Neil here, this decision could persuade other courts to follow this court’s holding. Technorati Tags: arbitration, ADR, law, FAA, manifest disregard of the law, Hall Street, Supreme Court, employment discrimination

Hewlett-Packard requested the ICANN an exception to the rule that new domain names must consist of at least three characters. The company wants to register .HP and claims that the rule puts HP in a disadvantaged position against its competitors, like IBM. See: Hewlett-Packard Wants .HP Domain Name at the Domain Wire. Technorati Tags: law, HP, domain name

A public hearing for H.B. 2696 is scheduled to take place today. The bill would, among other things, prohibit one contracting party from requiring the other party to agree to arbitration as a condition of the contract. It also provides that an agreement is unconscionable if its enforceability would violate a right protected by either the U.S. or Texas Constitutions. In addition, an agreement to arbitrate must be displayed prominently in 12-point bold type. The status of this bill can be found here. Technorati Tags: arbitration, ADR, law, H.B. 2696

The U.S. District Court for the Southern District of New York decided recently Fensterstock v. Education Finance Partners, Inc., No. 08-CV-3622, 2009 U.S. Dist. LEXIS 30457 (S.D.N.Y. 2009). Plaintiff Fensterstock claims, on behalf of a class, that defendants Education Finance Partners (“EFP”) and Affiliated Computer Services (“ACS”) improperly applied an undisclosed fee to his law student loans. EFP and ACS filed a motion to compel arbitration, on the basis of the arbitration clause found in the Promissory Note. The court, pursuant to a choice-of-law clause, applied California law to determine whether the arbitration provision is unconscionable. Citing Discover Bank v. Superior Court, 113 P.3d 1100 (2005), the court set out a three prong test to decide when an arbitration clause requires a consumer to waive the right to bring claims on behalf of a class, that waiver is unconscionable: The waiver is found in a contract of adhesion. In a setting in which disputes between the contracting parties predictability involve small amounts of damages. It is alleged that the party with the superior bargaining party has carried out a scheme to deliberately cheat large number of consumers out of individually small sums of money. The court concluded that the arbitration clause is unconscionable under California law, thus, leaving an open door for a class action suit against the student loan providers EFP and ACS. Related Posts: Federal Court Bars Arbitration Over Student Loan Terms, Mark Hamblett, New York Law Journal. Houston Lawyer Loses License Because of Failure to Pay Debts, Debra Cassens Weiss, ABA Journal. Technorati Tags: law, arbitration, ADR