ADR Case Updates
U.S. Supreme Court Backs Arbitration (Again), 03/10/2012
In Marmet Health Care Center, Inc., v. Brown, ___ U.S. ___, 132 S. Ct. 1201 (2012), Clayton Brown signed an agreement with an arbitration clause on behalf of a family member, a patient at Marmet Health Care Center, Inc., a West Virginia nursing home. The patient later died prompting a wrongful death claim.
The trial court held that West Virginia state law prohibited arbitration clauses involving personal injury or wrongful death claims as a matter of public policy. The state appellate court affirmed, concluding that the Federal Arbitration Act did not preempt state law. The nursing home appealed to the U.S. Supreme Court.
Vacated and Remanded. The FAA provides that a written arbitration provision in a contract is valid, irrevocable, and enforceable, unless grounds exist in law or equity for revocation of the contract. Here, no such grounds exist. Whenever state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward in that the conflicting rule is preempted by the FAA. Thus, the subject arbitration provision was enforceable.
InCompuCredit Corp. v. Greenwood, ___ U.S. ___, 132 S. Ct. 665 (2012), CompuCredit Corp. issued a credit card to Wanda Greenwood. Her application contained a binding arbitration provision. When she and others filed a class-action against CompuCredit for violation of the Credit Repair Organizations Act (CROA), CompuCredit moved to compel arbitration. Concluding that CROA claims were intended to be nonarbitrable, the district court denied the motion and the Ninth Circuit affirmed.
Reverse and remanded. The FAA provides that arbitration clauses in contracts are to be valid, irrevocable, and enforceable, unless there exists a reason in law or equity for the contract to be revoked. While the FAA can be overridden by a contrary Congressional mandate, the CROA contains no such directive. The statute requires credit organizations to include a sentence in their disclosure statements that consumers have a "right to sue" credit repair organizations for violation of the CROA. However, the majority opinion concluded that the disclosure requirement merely required credit repair organizations to provide consumers with that specific statement, rather than providing them with a nonwaivable right to bring judicial proceeding. Thus, binding arbitration agreements can be enforced even for claims of violation of the CROA.
IN ADDITION, THE FOLLOWING CASES HOLD:
Kilgore v. KeyBank National Association, 673 F. 3rd 947 (Ninth Cir., 2012) (Arbitration clause in lender's promissory note is enforceable because California's rule against arbitration of public injunctive relief claims is preempted by Federal Arbitration Act);
Hotels Nevada v. LA Pacific Center, Inc., (2012) 203 Cal. App. 4th 336 (Court properly compels arbitration where party agreed to arbitrate dispute if it failed to prove its affirmative defenses to arbitration);
Maaso v. Signer, (2012) 203 Cal. App. 4th 362 (Arbitration award is properly vacated where one party arbitrator sent ex parte post-arbitration brief without allowing opponent opportunity to respond);
Biller v. Toyota Motor Corporation, 668 F. 3rd 655 (Ninth Cir., 2012) (Arbitrator's final award is valid because arbitrator did not manifestly disregard law by implicitly addressing and denying defendant's affirmative defenses);
Continental Insurance Co. v. Thorpe Insulation Co., 671 F. 3rd 1011 (Ninth Cir., 2012) (Bankruptcy Court may refuse to enforce arbitration provision if it conflicts with underlying purposes of Bankruptcy Code, even in core proceedings);
Reyes v. Macy's, Inc., (2012) 202 Cal. App. 4th 1119 (Defendant may not appeal order granting its own motion to compel arbitration of Plaintiff's claim under Private Attorneys General Act of 2004);
Wisdom v. AccentCare, Inc., (2012) 202 Cal. App. 4th 591 (Employer's binding arbitration agreement is unenforceable where employer presented it as condition of employment and it lacked mutuality of obligation);
Greenberg Glusker Fields Claman & Machtinger LLP v. Rosenson (2012) 203 Cal. App. 4th 688 (Attorney with binding arbitration provision in retainer agreement may effectively reject a nonbinding Mandatory Fee Arbitration Act award in favor of client by demanding arbitration within 30 days of the award - petition to compel arbitration not required); and
Mayers v. Volt Management Corp. (2012) 137 Cal. Rptr. 3d 657 (Arbitration provisions within employment agreement and application are unenforceable because employer failed to provide employee with copy of controlling rules).
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