Hall Street and its progeny may have killed “manifest disregard” but the Second Circuit could have just resuscitated it; well, if you consider zombies as resuscitated beings. In Stolt-Nielsen SA v. Animalfeeds Int’l Corp., the Second Circuit held a court may still review whether an arbitrator manifestly disregarded the law, within Section 10 of the FAA. So is manifest disregard still a standard to be followed by the courts? It appears that if you view it as the Second Circuit did, that is, if you see it contained within Section 10, it is still a ground for reviewing an arbitration award. The Hall Street opinion did keep the terminology of “manifest disregard” alive as long as it is viewed as a term within the scope of Section 10. There is still one major issue that continues to lie cold: whether a court would still not be able to find an arbitrator manifestly disregarded the law if the arbitrator ruled against the parties contemplations but within the realms of Section 10. As Glen Wilkerson noted before in this blog, parties that negotiated their own terms for arbitration may find their expectations thrown out the window if those terms deviated from Section 10. Hall Street’s holding that Section 10 constitutes the exclusive grounds for reviewing an arbitrator’s award would ensure any deviation from the FAA would be barred. So is manifest disregard a mere shell of itself, merely a turn of phrase if you will, or will it continue to live on? We may have to see another case reach the Court in order to fully answer this question, but in the meantime, I happen to think manifest disregard walks around at night feeding off parties’ contemplations and turning them into what courts decide is within Section 10. For more information, please check out these links: http://www.indisputably.org/?p=199 http://www.karlbayer.com/blog/?p=134 http://www.supremecourtus.gov/opinions/07pdf/06-989.pdf

Perry Homes has once again been applied to describe what constitutes an arbitration waiver, except this time no waiver was found. As we have mentioned before in While We Were Out, a post from May, waiver is hard to come by in a Texas Supreme Court opinion. Perry Homes could have moved us into a parallel universe in which claiming waiver of arbitration is a winning argument. But those who criticized the opinion knew we would be making no such move, not because of the particulars involved but because of who the players were. As we wrote about before, Perry Homes was the party seeking waiver and was also a big supporter of many justices of the Court. Many critics of the opinion did not see Perry Homes as precedent for a shift in the court’s policy due to that fact. Well critics, you were probably right. In Fleetwood Homes, the Texas Supreme Court applied Perry Homes, but decided that waiting eight months to compel arbitration, during which time the parties engaged in some discovery and set a trial date (or in this case, postponed it), did not waive arbitration. “[A] party waives an arbitration clause by substantially invoking the judicial process to the other party’s detriment or prejudice.” This quote from Perry Homes sums up the standard that will now be applied by the court in these matters. Gulf in Fleetwood relied on Vesta Ins. Group’s precedent that a party would waive its right to arbitrate when it engaged in “full discovery,” filed motions going to the merits of the case, and sought arbitration “only on the eve of trial.” The court did not, however, agree with Gulf that Fleetwood fit that description. Moreover, the court focused on a party’s detriment as the dispositive issue in cases of arbitration waiver. Because no detriment was found to have befallen Gulf by Fleetwood’s pretrial activities, the court found no waiver. Fleetwood made it clear that unless a party truly waits to the very last minute before trial to compel arbitration, having already engaged in full discovery, no waiver will be found. The fact that Fleetwood had taken no depositions (although it noticed one after canceling it) may have had an impact on the court but the decision hinged on the detriment to Gulf. The court found that Gulf suffered no detriment by trading emails with Fleetwood regarding a trial date. The opinion also pointed out that those emails did not constitute an implied waiver, much less sufficed as evidence for an express waiver as Gulf claimed. Apart from the implications on arbitration waivers, this opinion seriously impacts fee-shifting clauses. The agreement between Fleetwood and Gulf contained a fee-shifting clause which allowed for a prevailing defendant’s attorney fees. Gulf attempted to throw out the arbitration agreement on unconscionability grounds based on this fee-shifting clause, but to no avail. The court found that even though Texas law only allows for prevailing plaintiff’s attorney fees, an arbitration clause that would allow for a prevailing defendant to get attorney’s fees would not make such agreement unconscionable; in fact, it would make it more fair. This statement leaves us to wonder whether we can expect more resistance against arbitration clauses from here on out… Posted by A.C. Vieira For more information, please check out these links: http://www.karlbayer.com/blog/?p=135 http://www.supreme.courts.state.tx.us/historical/2008/jun/060943.pdf http://www.scotxblog.com/orders/order-list-for-6-20-2008/#more-224

Tomorrow is November 4th. Many have voted early, and more have not yet voted. This post goes out to the undecided voters out there (although, I have no idea how you are still undecided), as well as the open-minded decided ones. This is the most important issue for me in the upcoming election, and the candidates have very different perspectives on it. First, let’s all agree how vital the internet is to modern culture. I don’t think I’m too far out on a limb when I say that the internet is one of the, if not the, most important technological and social development, ever. It is our printing press, if you will. Untold depths of information and cultural expression exist within the four corners of your browser window, and all you need is access. For $10 per month paid to a local internet service provider (“ISP”), anyone in the world can take free courses online from MIT. And what did we do before the catharsis of spewing our personalities to the world on myspace? Turn-by-turn directions?! Such content! Even more than all that, the internet is single-handedly defining an entire global generation, and its affects on the world have been and will hopefully continue to be as innumerable and limitless as the net itself. Net neutrality. In my experience, very few people actually know what it is, and fewer truly get how profoundly important it is. Perhaps the best way to explain it is by explaining what it isn’t. Right now, with net neutrality, Time Warner/AT&T/etc. charge different prices based on speed (i.e.: $10/mo. for dial-up, $60/mo. for high-speed). Without net neutrality, Time Warner/AT&T/etc. will be able to additionally charge different prices based on content. Right now, the government regulates ISPs such that they cannot do this sort of thing – their services must remain content-neutral (thus “net neutrality”). Abolishing this regulation would allow the free market to take over, and ISPs could immediately being charging for whatever they are able, including the content itself. This is one area of my life I do not trust to the market, just because of the potential consequences, pictured below. In my opinion, something like this could actually move cultural and technological advancement backwards. This system will destroy the limitlessness of the internet by handing over content to private companies, giving them the power to mete that content to end-users according to who can pay for it. Will a poor student in Arizona be able to take those free MIT courses online? Maybe, if he can afford the internet package that allows access to the site. At the core of the internet – the thing that makes it so revolutionary – is the at-my-fingertip accessibility of unfathomable amounts of content. We already have accessibility issues (generally, you still need to pay someone for access and find a computer), which people are working hard to overcome with projects like city-wide wifi and the One Laptop Per Child initiative. Do we really need content issues as well? I would advise anyone voting tomorrow to research where the candidates stand on this important issue, and consider it in deciding where to place your vote. More about the wonderful image above at boingboing. (It’s by echobucket of the somethingawful forums.) http://www.boingboing.net/2007/09/22/how-a-nonneutral-isp.html A much more fleshed-out version by one of my favorite speakers, Lawrence Lessig. (Heads up: it’s very pro-Obama.) http://lessig.org/blog/2008/08/me_on_mccain_on_technology.html

Apple and Psystar have agreed to a private ADR session to attempt a resolution to the ongoing lawsuit filed by Apple. It appears they opted out of the court-provided ADR options for a private mediation service. Psystar is a Florida corporation that has received some level of attention over a recent website that sold custom-built computers with Apple’s OS X operating system installed. Such setups, PCs running Macintosh operating systems, are often dubbed “Mac Clones.” Apple places legal restrictions on its software with a license agreement stating that OS X should only be run on its proprietary hardware. Psystar argues that such restrictions are unenforceable and countersued. It does strike me as strange that anyone can walk into an Apple Store and purchase a copy of OS X, but then would be restricted from installing it on their PC. Indeed, that’s what Psystar was doing – telling its customers that if they purchased OS X, Psystar would install it on the PC for free. They argue their process was an end-around the license agreement. This is a great look at the advantages of ADR, and a classic case for its usefulness. Psystar is a small company that probably doesn’t want to engage in a drawn out litigation with a monster like Apple, and the last thing Apple wants is a court opinion holding its user license agreement unenforceable. By choosing private mediation, the parties may be able to reach a private settlement that would allow Psystar to cut its losses (or even take home some winnings), and let Apple resolve the issue without showing a chink in its armor. This should be interesting as it develops. The initial report: http://www.macobserver.com/article/2008/10/16.9.shtml Another article, which contains a link to the full ADR agreement: http://news.cnet.com/8301-13579_3-10068824-37.html?part=rss A few more articles on the suit: (July) http://news.cnet.com/8301-13860_3-9991572-56.html?tag=mncol;txt (May) http://news.cnet.com/8301-13579_3-9933896-37.html?tag=mncol;txt