So much has been said lately about the “evils” of arbitration, but so little attention has been given to studies regarding arbitration. In this article, from the Vol. 18, No. 1 of the Alternative Resolutions newsletter, John Allen Chalk, Sr. summarizes recent studies on the subject of arbitration, including studies on arbitration participants, attorney surveys, employment arbitration, and consumer arbitration. The article concludes that the findings do not support the current criticisms of the arbitration process. Similarly, this ABA Journal post, this Wall Street Journal post, and this National Arbitration Forum Blog post comment on an arbitration study by the Northwestern Law School. The study concluded that consumers won more than half of the arbitrations. The full report is here. Interestingly, some critics have questioned the forum partiality and methodology of these studies. For example, the Northwestern School of Law study refers to only one arbitration firm. Technorati Tags: arbitration, ADR, law, studies on arbitration
Continue reading...Following is a list of recent bills related to Alternative Dispute Resolution filed during the 81st Texas Legislature. H.B. 2256. Relating to mediation of out-of-network health benefit claim disputes concerning enrollees, facility-based physicians, and certain health benefit plans; imposing an administrative penalty. The bills history is here. H.B. 2095. Filed by Rep. Farrar, relating to the regulation of claims against residential home builders. This bill would, among other things, prohibit charging homeowners with fees in connection with a state-sponsored inspection or dispute resolution process and arbitration required under the same title. Status: referred to subcommittee on 03/16/2009. H.B. 2896. Filed by Rep. Leibowitz, relating to forms to be used by builders in contracts for the sale or construction of a new home. This bill provides that a contract form requiring the parties to submit to binding arbitration can not be adopted. Status: referred to the Committee on Business & Industry on 03/17/2009. H.B. 3426. Filed by Rep. Hernandez, relating to the notice required by certain mortgage servicers before foreclosing on real property. This bill provides mediation rules for foreclosure disputes. Status: referred to the Committee on Pensions, Investments & Financial Services on 03/19/2009. H.B. 3482. Filed by Rep. Coleman, relating to the notice required by mortgage servicers before foreclosing on real property. This bill is similar to H.B. 3426. Status: referred to the Committee on Business and Industry on 03/19/2009. S.B. 1475. Filed by Senators Ellis, Van de Putte, and Watson, relating to the notice required by mortgage servicers before foreclosing on real property. This bill is identical to H.B. 3426 and similar to H.B. 3482. Status: referred to the Committee on Business & Commerce on 03/17/2009. Technorati Tags: arbitration, ADR, law,
Continue reading...Last week we blogged about the U.S. Supreme Court ruling on Vaden V. Discover Bank, No. 07-773, (U.S. Mar. 9, 2009). Justice Ginsburg delivered the opinion of the Court, joined by Scalia, Kennedy, Souter, and Thomas. Chief Justice Roberts concurred in part and dissented in part and was joined by Stevens, Breyer, and Alito. Here is a summary of the case. Discover Bank sued cardholder Vaden in Maryland state court to recover past due charges ($10,610.74 plus interest and attorneys fees). Discover’s pleading raised only state law issues and the parties did not qualify for diversity-of-citizenship jurisdiction (the amount in controversy did not exceed $75,000). Vaden answered with the affirmative defense of usury and filed several class-action styled counterclaims. Right after, Discover filed to compel arbitration in federal court, based on a clause in the credit card agreement providing for arbitration. The district court granted Discover’s request for arbitration and Vaden appealed. The Fourth Circuit remanded the case for determination on whether the controversy presented “a properly invoked federal question.” On remand, the district court held that the controversy presented a federal-question jurisdiction and ordered arbitration once again. The case was appealed to the Fourth Circuit for the second time and the Fourth Circuit affirmed. Now the U.S. Supreme Court granted certiorari and examined two questions concerning subject-matter jurisdiction over a petition under section 4 of the FAA: Whether a district court, if asked to compel arbitration, should “look through” the petition and grant the relief if the court would have federal-question jurisdiction of the controversy. The Court held that a court may “look through” a section 4 petition to make this determination. Whether a district court should exercise jurisdiction over the petition when the petitioner’s complaint rests on state law but an actual or potential counterclaim rests on federal law. Here, the Court held that a federal court may not entertain a section 4 petition based on the contents of a counterclaim, when the whole controversy between the parties does not qualify for federal-court adjudication. Thus, the Court refused to compel arbitration because the federal court did not have jurisdiction over the whole controversy. However, the Court noted that Discover may still petition a Maryland state court to enforce the arbitration agreement. The dissent argued that the “controversy” to be decided by the Court should be the subject matter of the arbitration. Whether Discover Bank charged illegal finance charges, interest, and late fees, which is controlled by the Federal Deposit Insurance Act. Not the complaint based on state law that Discover filed initially. It is worth noting an issue barely discussed on footnote 13. It was Discover who first sought court adjudication of the dispute, and it was not until Vaden countered with class-action allegations, when Discover invoked the arbitration clause contained in the cardholders’ agreement. Usually, it is the defendant party the one who files to compel arbitration to avoid litigating the dispute. Generally, courts find “forum-shopping” distasteful and some courts have held that a party has waived its right to arbitrate based on their invocation of the judicial process. See a recent case here. Technorati Tags: arbitration, ADR, law, U.S. Supreme Court, Vaden v. Discover Bank, federal question jurisdiction, arbitration jurisdiction, well-pleaded complaint
Continue reading...In Credigy Receivables, Inc., v. Holt, No. 05-07-01577-CV, (Tex. App.–Dallas March 17, 2009), a Texas appellate court did not confirm an arbitral award because of invalid service of process. In July 2007, Credigy sued Barbara Holt to recover the balance due on Holt’s credit card account, after an arbitrator awarded Credigy $10,558.36. However, Credigy’s petition served to Holt was not verified and Holt did not answer the lawsuit. On September 19, 2007, Credigy moved for default judgment, however, the trial court returned the unsigned motion citing “several substantive deficiencies.” In addition, the trial court returned the proposed judgment confirming the award, for “various deficiencies” including lack of showing jurisdiction. On October 12, 2007, the trial court dismissed the case. Credigy appealed and the Court of Appeals for the Fifth District of Texas at Dallas affirmed. The appellate court concluded that the service of process to Holt was invalid, thus the court did not have personal jurisdiction over Holt.
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.