ADR Case Updates
ADR Recent Case Update, 05/11/06
In case you have not seen them, attached are two recent Ninth Circuit cases dealing with arbitration. The first is Patel v. Del Taco, Inc., filed May 2, 2006 (2006 DJDAR 5272), a case involving a franchise agreement with an arbitration provision. The franchisor, Del Taco, claimed that the franchisees, the Patels, breached the agreement, and sought to arbitrate the dispute. The Patels failed to appear at the hearing and, predictably, the arbitrators issued an award in favor of Del Taco, which filed a petition in state court to confirm the award. The Patels then filed a civil rights complaint in federal court, and sought to remove Del Taco's confirmation petition to federal court. The federal district court remanded Del Taco's petition back to the state court and the Ninth Circuit affirmed. The Patels failed to establish that they could not enforce their civil rights in state court, an essential requirement in their removal petition. Therefore, Del Taco's petition to confirm the arbitration award was not removable.
The second case is Schoenduve Corporation v. Lucent Technologies, Inc., filed March 22, 2006 (2006 DJDAR 3411), upholding another arbitration award. The demand for arbitration filed by Schoenduve sought to recover commissions against Lucent under a manufacturer's representative agreement that included an arbitration clause. The arbitrator concluded that the agreement did not cover the commissions at issue but, nevertheless, rendered an award in favor in Schoenduve under a quasi-contract theory. The district court confirmed the award and the Ninth Circuit affirmed. The arbitrator did not exceed his authority because a quasi- contract remedy was implicit in the submission agreement.
Both decisions underscore the judicial tendency to confirm arbitration awards in the commercial context so long as minimal due process requirements are met.
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