From: khorn@willamette.edu
Reply-to: ksimons@willamette.edu
To: dis-res@willamette.edu
Sent: 26/11/2007 17:55:16 Est
Subj: [Dis-res] RDDR November 26 - December 3, 2007
Recent Developments in Dispute Resolution
Willamette University College of Law
Center for Dispute Resolution
November 26, 2007 through December 3, 2007
Arbitration: Employee agreed to arbitration clause by continuing
employment with firm, binding on both parties constitutes consideration.
(6th Cir.)
Arbitration: The right to pursue binding arbitration does not extend to
third parties unless the contract unambiguously expresses that intent.
(Miss.)
Arbitration: Service of suit/consent to jurisdiction provision in contract
does not override contractual agreement to arbitrate. (Pa. Super)
Arbitration: Party must object to an arbitration clause before or during
the arbitration, not after; objection only on appeal to vacate is not
sufficient. (Conn. App.)
Seawright v. American General Financial Services, Inc.,
2007 WL 3341692 (6th Cir., November 13, 2007)
American General Financial Services (“AGF”) instituted an Employee Dispute
Resolution Program. AGF circulated a brochure, which explained the program
was the sole means of resolving all employee-employer disputes. The
brochure declared that continuing employment with AGF constituted
acceptance of the agreement. Seawright was fired, after which she filed a
claim for wrongful termination, and the trial court held Seawright was not
required to arbitrated. AGF appealed, and Seawright argued that she had
not assented to arbitration; that there was no bargained-for exchange; and
the agreement was adhesionary and unconscionable. The 6th Circuit held 1)
Tennessee law recognized acceptance through action and thus continuing
employment was sufficient to indicate that assent, 2) the requirement to
arbitrate was binding on both parties and this constituted valuable
consideration, 3) where Seawright showed no evidence that she’d be unable
to find comparable employment the contract was not adhesionary, and 4)
mere unequal bargaining power does not constitute procedural
unconscionability. (DA).
Full text of the opinion available on Westlaw
Qualcomm v. American Wireless License Group, LLC, 2007 WL 3378563 (Miss.,
Nov. 15, 2007)
Leap, a subsidiary of Qualcomm, agreed to give American Wireless License
Group (AWG) 1.9 million shares of stock in exchange for wireless telephone
licenses. The agreement contained a clause providing that either the
buyer (AWG) or seller (Leap) could elect to resolve disputes through
binding arbitration. After the transfer, AWG began selling the stock on
the public market. The shareholders who purchased the stock sued Leap and
Qualcomm alleging failure to disclose material facts that adversely
affected the value of the stock. Qualcomm moved to compel arbitration,
but was denied, and subsequently appealed. The Court held that the
language of the arbitration provision extended only to Leap and AWG as
corporate entities. The parties to the contract did not agree to extend
to third parties the benefit of the arbitration clause. Neither Leap nor
Qualcomm sold stock to the shareholders. The contract between Leap and AWG
did not extend to the shareholders who bought stock from AWG. (AH)
The full text of the opinion may be found on Westlaw.
Gaffer Ins. Co. v. Discover Reinsurance Co., 2007 WL 3408637 (Pa. Super.,
Nov. 16, 2007)
Gaffer Ins. Co. (Gaffer) and Discover Reinsurance Co. (Discover) agreed to
an insurance contract. The contract contained a mandatory arbitration
clause and, because Gaffer was a foreign company, a service of
suit/consent to jurisdiction provision. The arbitration clause called for
any disputes between the parties to be settled by arbitration, “unless
both parties agreed otherwise”. Gaffer and Discover had a disagreement
over money and Gaffer sued Discover in the Lackawanna County,
Pennsylvania. Discover moved for the court to compel arbitration under the
contract. The court denied Discover’s motion and the company appealed. The
Pennsylvania Superior Court reversed rejecting Gaffer’s argument that the
service of suit clause was precisely why the arbitration clause stated
that “both parties could agree otherwise” instead of arbitrating. The
Court reasoned that the contract should be interpreted broadly to give
meaning to all its clauses, and found the service of suit provision was
simply to provide a means of service for court issues that might arise
under the contract. The provision did not negate the arbitration clause,
the Court said, because doing so would have made the arbitration clause
ineffectual. (BR)
Full text of the opinion is available online at Westlaw.
MBNA America Bank v. Bailey, 2007 WL 3355482 (Conn.App., November 20, 2007).
Defendant Bailey received an MBNA credit card, and after beginning use, an
arbitration clause amending the contract was included in papers
accompanying a bill. Bailey never signed the amendment but did continue to
use the card, which was considered assent. Bailey charged $8500.00 on his
MBNA credit card and failed to make payments. MBNA sent notice to Bailey
and initiated arbitration proceedings for default on the debt. Bailey
never challenged the arbitration or presented any objection. Arbitrator
found for MBNA, and MBNA filed for judgment in Connecticut Superior Court.
Bailey then challenged MBNA’s course of action ( months after the judgment
of the arbitrator). The court affirmed after denying Bailey’s motion to
dismiss for lack of subject matter jurisdiction. The trial court held the
time to raise a contract’s arbitrable quality is before or during
arbitration in order to preserve the ability of the court to hear the
dispute. Appellate court affirmed the lower court’s decision and affirmed
the award to MBNA. (JS)
Full text of the opinion may be found online at Westlaw.
Fall Editor: Kattarina Simons
Faculty Advisors: Richard Birke/A. Lee Jordan
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