Alternative Dispute Resolution
In McDowell & Walker, Inc. v. Micha, the New York Supreme Court, Appellate Division, Third Department, addressed whether the Supreme Court erred in dismissing the plaintiff’s motion for summary judgment as untimely when the plaintiff filed that motion more than 60 days after filing its note of issue – in violation of the local rules. The plaintiff contended that the court had impliedly vacated the note of issue when it issued a new discovery order more than 60 days after the note of issue was filed. The court held that a note may be deemed to be vacated sua sponte, without explicitly saying so, only where the court’s directives with respect to discovery “clearly evince its intent to do so and have the safe practical effect.” Where no such language exists, the note of issue was not implicitly vacated. (January 23, 2014)
In Ingham v. Thompson, the New York Supreme Court, Appellate Division, First Department, addressed the appropriate grounds for vacating arbitration awards where an arbitration panel approved a settlement involving a dispute in which the plaintiff initially asserted both individual claims against a limited partnership and derivative claims on behalf of that same limited partnership and then settled with one of the defendants on behalf of herself and the limited partnership. Noting that arbitrators are not bound by the principles of substantive law, and that even mistakes of fact and law do not warrant vacatur of an otherwise rational award, the court held that given that the plaintiff withdrew all of its individual claims and that the panel conditioned the settlement award on the plaintiff’s turning over the settlement funds to the limited partnership, the panel’s award was not irrational and should be confirmed. (January 23, 2014)
In McInnes v. LPL Financial, the Supreme Judicial Court of Massachusetts addressed the reach of the Massachusetts rule, that where a consumer executed a valid contract agreeing to arbitrate all disputes, a plaintiff may not be compelled to arbitrate a claim alleging an unfair or deceptive trade practice in violation of the Massachusetts Consumer Protection Statute (Chapter 93A). The Court held that this Massachusetts rule is limited to arbitration agreements in Massachusetts that are governed by the Massachusetts Arbitration Act, but that claims must be referred to arbitration where the contract involves interstate commerce and the agreement to arbitrate is enforceable under the Federal Arbitration Act. (August 12, 2013)
In Pisano v. Extendicare Homes, Inc., the Superior Court of Pennsylvania addressed whether a nursing home arbitration agreement binds a resident’s heirs in a wrongful death action. The court held that the arbitration agreement is not binding because Pennsylvania’s wrongful death statute creates an independent action distinct from a survival claim that, although derived from the same tortious conduct, is not derivative of the rights of the decedent. (August 12, 2013)
In Willingboro Mall, LTD. v. 240/242 Franklin Avenue, LLC., the Supreme Court of New Jersey addressed communications and agreements reached during mediations. The issues in this appeal are (1) whether Rule 1:40-4(i) requires a settlement agreement reached at mediation to be reduced to writing and signed at the time of mediation, and (2) whether plaintiff waived the privilege that protects from disclosure any communication made during the course of mediation. The Supreme Court of New Jersey noted that the plaintiff expressly waived the mediation-communication privilege and disclosed privileged communications and determined that that the oral settlement agreement reached by the parties should be upheld. However, in the future, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable. (August 15, 2013)
In Oxford Health Plans LLC v. Sutter, the United States Supreme Court examined an arbitrator’s power to compel class arbitration under a contract silent as to class actions. The Court reaffirmed that the Federal Arbitration Act (FAA) permits a court to set aside an arbitrator’s decision only where the arbitrator strays from the task of interpreting the contract. The Court concluded that, when an arbitrator determines that the parties to a contract intended to authorize class-wide arbitration, that determination survives judicial review under the FAA, even if wrong, as long as the arbitrator was arguably construing the contract. (June 10, 2013)
In McCutcheon v. Federal Election Commission, the United States Supreme Court agreed to decide the constitutionality of biennial aggregate limits on individual donations made directly to presidential or congressional candidates, political parties, and other political committees. (February 19, 2013)
In Cid v. Erie Insurance Group, the Superior Court of Pennsylvania addressed the procedure for challenging proper venue in response to a petition for an underinsured motorist arbitration. The court held that, in conjunction with the local Philadelphia County rules, improper venue is to be raised in the answer to the petition. The court cautioned litigants to consult local rules to determine whether preliminary objections are, instead, required in other counties. (February 15, 2013)
In Tera Knoll v. City of Allentown, the United States Court of Appeals for the Third Circuit addressed the standard of review applicable to the dismissal of a post-trial motion as a sanction for noncompliance with procedural rules. The court refused to extend the standard applicable to dismissals prior to an adjudication on the merits to the post-trial context where the litigant has already had his day in court. Instead, the court held that dismissal of a post-trial motion as a sanction is reviewable for a mere abuse of discretion. (February 21, 2013)
In Residences at Cape Ann Heights Condominium Association v. Halupowski, the Appeals Court of Massachusetts addressed whether an action to enforce a statutory lien of $3,759.55 on a condominium unit was within the Superior Court’s jurisdiction, which requires a $25,000 minimum amount in controversy. Noting that the $25,000 minimum only applies to actions for money damages, the court held that the remedy sought was forced sale of a condominium unit worth over $150,000, and thus the suit was not the type the legislature had sought to remove from Superior Court jurisdiction through the minimum amount in controversy requirement. (February 21, 2013)
In Massachusetts Housing Opportunities Corporation v. Whitman & Bingham Associates, the Appeals Court of Massachusetts addressed whether time for filing tort and contract claims arising from a dispute regarding a bid for a contract for a wastewater treatment plant had been tolled under the discovery rule until the full actual cost of the wastewater treatment plant was known. The court determined that the statute of limitations was not tolled because the property development authority reasonably should have known that the original design was not feasible and that costs of the system design were escalating. (February 21, 2013)
In Chambers v. Gold Medal Bakery, the Appeals Court of Massachusetts addressed whether a contract containing an arbitration clause compelled arbitration notwithstanding a subsequent agreement between the same parties, regarding the same issues, and containing standard integration language. The court concluded that the later agreement's standard integration language was ambiguous, and that there was sufficient evidence that the parties did not intend to supersede the prior agreement. (February 5, 2013)
In Jersey Central Power & Light Co. v. Melcar Utility Co., the Supreme Court of New Jersey addressed the constitutionality of a provision in the Underground Facility Protection Act, N.J.S.A. 48:2-80(d), which compels mandatory arbitration of claims for monetary relief, if valued under a specified amount, before the Office of Dispute Settlement. The court found the mandatory arbitration provision constitutionally flawed because it does not preserve the right to a trial de novo. (January 24, 2013)
In Massachusetts Highway Department v. Perini, the Appeals Court of Massachusetts addressed, in the context of arbitral awards to contractors who had worked on Boston’s Central Artery/Tunnel Project, in what circumstances an arbitrator may decide issues of arbitrability. The court concluded that while questions of arbitrability are generally for the courts, the court determined that an arbitrator may issue a non-binding recommendation of arbitrability where, as here, such a determination is required by the dispute resolution process established in the contract. (January 17, 2013)
In Zavodnick, Perlmutter & Boccia, L.L.C. v. Zavodnick, the Superior Court of New Jersey, Appellate Division, addressed whether an arbitrator exceeded her authority and made an award that contravened the express provisions of a law firm’s operating agreement. The Court held that the request for arbitration encompassed the issue of whether the defendant's cessation of professional service constituted a withdrawal event, and the operating agreement's plain terms required arbitration of that issue. (August 2, 2012)
In Northland Investment Corporation v. Goodwin Proctor LLP, the Appeals Court of Massachusetts addressed whether an arbitration award may be vacated by a court as a result of an arbitrator’s decision on the admissibility of evidence. The court determined that the statutory authorization to vacate an arbitral award where an arbitrator refused to hear evidence material to the controversy was not intended to apply to a reasoned decision, made after a proffer and opportunity for argument, that the evidence was not relevant. (July 25, 2012)
In Bolman v. Plymouth Rock Assurance Corporation, the Appeals Court of Massachusetts addressed whether an arbitrator has the authority to award pre-award interest on an insurance contract, and whether the arbitrator may reserve the issue of interest for the court. The court determined that an arbitrator does have authority to determine pre-award interest, but may reserve the issue for a judge if both parties unambiguously agree. (July 12, 2012)
In Merrill Lynch v. Cantone Research, Inc., the Superior Court of New Jersey, Appellate Division, addressed whether, in the absence of a written agreement to arbitrate, membership with the Financial Industry Regulatory Authority, Inc. (FINRA) gave rise to an agreement to FINRA arbitration of a dispute stemming from a transaction unrelated to exchange activities. The court held that, because there was no written agreement or exchange-related transaction at issue, membership with FINRA did not create an agreement to FINRA arbitration. (June 27, 2012)
In In re Bott, the Supreme Judicial Court of Massachusetts addressed whether an attorney who resigned from the practice of law while subject to a disciplinary investigation may serve as a mediator. The court concluded that the propriety of a former attorney serving as a mediator would require consideration of the type of mediation, including whether lawyers customarily perform such mediation. (June 5, 2012)
In American Federation of State, County, and Municipal Employees, Council 93, AFL-CIO v. School Dept. of Burlington, the Supreme Judicial Court of Massachusetts addressed whether an arbitration award could be vacated because it was unsupported by the evidence. The court concluded that the award must stand because a court is bound by the arbitrator’s findings even if they are unsupported by the record at the arbitration hearing. (May 22, 2012)
In Melone v. Department of Utilities, the Supreme Judicial Court of Massachusetts addressed whether the plaintiff’s status as a National Grid ratepayer gave him standing to intervene in a proceeding before the Department of Public Utilities regarding the Cape Wind project. The court concluded that the Department of Public Utilities acted within its discretion in denying the plaintiff’s motion to intervene. (May 9, 2012)
In Marcus v. City of Newton, the Supreme Judicial Court of Massachusetts addressed whether the city was immune from suit under the recreational use statute. The court determined that the statute merely provides an exemption from liability for negligence, and does not provide immunity from suit. (May 7, 2012)
In Marmet Health Care Center, Inc. v. Brown, the United States Supreme Court addressed whether the Supreme Court of Appeals of West Virginia misread and failed to follow precedent interpreting the Federal Arbitration Act (FAA) and federal law implementing the principle that state and federal courts must enforce the FAA with respect to all arbitration agreements covered by the statute. The Court held that the West Virginia court erred when it interpreted the FAA as rendering all predispute arbitration agreements that applied to claims alleging personal injury or wrongful death against nursing homes to be unenforceable. (February 21, 2012)
In CTC Demolition Company Inc. v. GMH AETC Management/Development, L.L.C., the New Jersey Superior Court, Appellate Division, applied the first-filed rule of comity—by which, absent special equities, the court that first acquires jurisdiction has precedence over another court later acquiring jurisdiction. The court held that a demand for mediation or arbitration constituted the first-filed action. As a result, the court held that the trial court was not required to defer to a later-filed Pennsylvania suit, which sought a declaratory judgment regarding the applicability of mediation or arbitration. (January 27, 2012)
In Khan v. Dell, Inc., the United States Court of Appeals for the Third Circuit addressed Section 5 of the Federal Arbitration Act (FAA). The court held that, when parties have agreed contractually to resolve their differences through arbitration, and the parties’ pre-selected arbitrator is unavailable, then Section 5 of the FAA requires the court to appoint a substitute arbitrator unless the parties’ intent not to arbitrate if the arbitrator is unavailable is unambiguously set forth in the contract. (January 20, 2012)
In Bell Tower Condominium Association v. Haffert, the Superior Court of New Jersey addressed whether a dispute over the refusal of condominium residents to pay a special assessment is required to be submitted to arbitration or another means of alternative dispute resolution. The court found that such a refusal constituted a “housing-related dispute” under the New Jersey Condominium Act. Due to the Condominium Act’s requirement that housing-related disputes be brought to some form of alternative dispute resolution, and considering New Jersey law’s strong public policy of favoring arbitration as a mechanism for resolving disputes, the court held that the use of alternative dispute resolution was required. (January 12, 2012)
In Norcia v. High Point Insurance Company, the Superior Court of New Jersey, Appellate Division, addressed whether the courts had jurisdiction to address an appeal of a PIP arbitration award. The court held that lacked jurisdiction pursuant to New Jersey’s Alternative Procedure for Dispute Resolution Act (APDRA). (December 23, 2011)
In KPMG LLP v. Robert Cocchi, the Supreme Court of the United States vacated a judgment to compel arbitration of certain claims because two of the four claims were not arbitrable. The Court held that under the Federal Arbitration Act, 9 U.S.C. § 1, et seq., arbitrable claims must be separated from non-arbitrable claims even though it may lead to piecemeal litigation. Thus, federal and state courts must examine complaints carefully to separate arbitrable claims from non-arbitrable claims. (November 7, 2011)
In Fastuca v. L.W. Molnar & Assoc., the Supreme Court of Pennsylvania addressed whether a trial court has the authority to end an arbitration proceeding before the arbitrator has made a final award under the Uniform Arbitration Act. The court held that a trial court does not have inherent equitable authority to end the arbitration proceedings before an arbitrator's final award. (January 18, 2011)
In GMAC v. Pittella, the Supreme Court of New Jersey granted a Petition for Certification of Appeal to address a question related to the finality of arbitration orders. The question that the court agreed to consider is as follows: "Pursuant to Rule 2:2-3(a) and Wein v. Morris, 194 N.J. 364 (2008), is an order compelling arbitration as to some but not all parties a "final judgment" for appeal purposes? (September 30, 2010)
In Ario v. The Underwriting Members of Syndicate 53 at Lloyds for the 1998 Year of Account, the United States Court of Appeals for the Third Circuit Court addressed the interplay between the Convention of the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act (FAA). The parties-reinsurers and primary insurers-entered into four reinsurance treaties. Later disputes about the treaties went to arbitration, and the arbitration panel, in an unreasoned award, rescinded three of the four treaties, relieving the reinsurers of any obligation to pay losses. The primary insurers sought to vacate the award, arguing that the panel improperly applied the FAA despite the parties having opted out of the FAA. The Third Circuit held that "while parties may opt out of the FAA's default rules, they cannot 'opt out' of FAA coverage in its entirety because it is the FAA itself that authorizes parties to choose different rules in the first place." (August 18, 2010)
In Policemen's Benevolent Ass'n, Local No. 11 v. City of Trenton, the Supreme Court of New Jersey granted a Petition for Certification in an arbitration matter, agreeing to decide the following question: "Is the arbitrator's conclusion that officers must be compensated for reporting for roll call ten minutes prior to their shifts entitled to deference as a 'reasonably debatable' interpretation of the parties' collective bargaining agreement?" (August 12, 2010)
In Moore v. Woman to Woman Obstetrics & Gynecology, L.L.C., et al., the New Jersey Superior Court, Appellate Division, considered whether pre-dispute agreements to submit medical malpractice claims to binding arbitration are enforceable. As a threshold matter, the court declined to impose an absolute bar to the enforcement of agreements to arbitrate medical malpractice claims. With respect to the agreement entered into here, however, the court held that the agreement was procedurally and substantively unconscionable because the plaintiff was not informed that the contract waived the rights of her husband and child, who were not parties to the agreement. Therefore, the court reversed the trial court's decision enforcing the agreement. (August 18, 2010)
In Nino v. The Jewelry Exchange, Inc., an employment discrimination case, the United States Court of Appeals for the Third Circuit addressed issues concerning the enforceability of an arbitration agreement in the face of unconscionable provisions contained within the agreement. In reversing the decision of the District Court, the Third Circuit held that the lower court erred when it held that it could simply sever those portions of the agreement deemed unconscionable and enforce the remaining provisions. According to the Third Circuit, although there are instances where unconscionable or otherwise unenforceable provisions can be severed from an arbitration agreement, "it [was] not appropriate [in this case], in the face of such pervasive one-sidedness, to sever the unconscionable provisions from the remainder of the arbitration agreement." The Third Circuit also held that the employer, by engaging in protracted litigation before seeking to arbitrate the matter, waived its right to compel arbitration. (June 15, 2010)
In M3 Healthcare Solutions v. Family Practice Assocs., P.A., the Supreme Court of Delaware considered whether an answer to a complaint to confirm an arbitration award is a sufficient request to vacate, modify, or correct the award. In M3 Healthcare Solutions, the parties submitted their dispute, pursuant to their agreement, to an arbitrator with the American Arbitration Association. After the arbitrator entered an award in favor of the claimant, the claimant filed a complaint to confirm the arbitration award. The respondent filed an answer, asserting, among other things, that the award should be vacated and/or modified. The claimant then moved for summary judgment, arguing that the respondent failed to file a timely motion or application to vacate the arbitration award and that its answer to the complaint was not sufficient to otherwise preserve the issue. The court held that, under the Uniform Arbitration Act (UAA), a party is required to file a complaint or application to vacate, modify, or correct an arbitration award within 90 days and that such application "may be raised in an answer to a complaint to confirm an award." Thus, so long as the answer is filed within the requisite 90-day period set forth in the UAA, a party may raise its challenge to an arbitration award in an answer to a complaint to confirm the award. A separate motion or application is not required. (May 28, 2010)
In Puleo v. Chase Bank USA, N.A., the United States Court of Appeals for the Third Circuit, en banc, addressed a challenge to the enforceability of an arbitration agreement containing a ban against class actions. Although there is a liberal federal policy favoring arbitration agreements, the question of whether the parties have submitted a particular dispute to arbitration is an issue for the court to decide unless the parties clearly and unmistakably provide otherwise. The ban barring class actions was contained in a cardmember agreement that read "'the arbitrator shall have no authority to proceed' on a class or representative basis." The plaintiffs argued that the ban was unconscionable. The district court disagreed and held that the enforceability of the class action waiver was a question of arbitrability for the court to decide. The Third Circuit affirmed the District Court's decision, reasoning that Courts of Appeals are unanimous in recognizing that an unconscionability challenge to the provisions of an arbitration agreement is a question for the court to decide. The Third Circuit also affirmed the district court's order compelling the parties to arbitrate their claims on an individual basis. (May 10, 2010)
In Stolt-Nielsen S.A., et. al. v. Animal Feeds International Corp., the Supreme Court of the United States addressed whether imposing class arbitration on parties whose arbitration clauses are "silent" on that issue is consistent with the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq. In this case, Animal Feeds International Corp. (Animal Feeds) brought a class action antitrust suit against shipping companies, including Stolt-Neilson S.A., for price fixing. Animal Feed's action was consolidated with other actions against the shipping companies. Based upon subsequent rulings in the consolidated actions, the parties agreed that they must arbitrate their antitrust dispute. The parties further agreed to submit the question of whether their arbitration agreement allowed for class arbitration to a panel of arbitrators, who would be bound by rules developed by the American Arbitration Association. The parties selected an arbitration panel in New York City, and stipulated that their arbitration clause was "silent" on the class arbitration issue. The arbitration panel determined that the arbitration clause allowed for class arbitration. The shipping companies filed a petition to vacate the arbitrators' decision in the District Court for the Southern District of New York. Ultimately, the case was appealed to the Supreme Court. The Supreme Court held that the arbitration panel exceeded its powers because instead of identifying and applying a rule of decision derived from the FAA or either maritime or New York law, the arbitration panel imposed its own policy choice, developing "what it viewed as the best rule for such a situation" as if it had common law authority. In addition, the Court held that imposing class arbitration on parties who have not agreed to authorize class arbitration is inconsistent with the Federal Arbitration Act, 9 U. S. C. §1 et seq. (April 27, 2010)
In Fort Lee Surgery Center, Inc. v. Performance Ins. Co., the Superior Court of New Jersey, Appellate Division, addressed whether the court had jurisdiction to review an arbitration award pursuant to New Jersey's Alternative Procedure for Dispute Resolution Act (APDRA). The arbitrator in this case issued an award in the defendant's favor, finding that the procedures the insured had undergone were not medically necessary. On the plaintiff's appeal, the trial court reversed the arbitrator's decision and issued a written opinion explaining how the arbitrator had prejudicially erred. The Appellate Division held that the APDRA limits the scope of appellate review to determinations as to whether the judge acted within the APDRA's bounds. In addition, the Appellate Division held that, because the trial judge provided a rational explanation for how the arbitrator committed prejudicial error, N.J.S.A. 2A:23A-18(b) required that the appeal be dismissed. (February 22, 2010)
In Kaneff v. Delaware Title Loans, Inc., the United States Court of Appeals for the Third Circuit addressed the validity of arbitration clauses in lending agreements where the borrower has waived her right to file suit in court. The borrower filed suit alleging that the arbitration clause was unconscionable for various reasons, including that it required the borrower to pay a $125 filing fee to arbitrate. The lender filed a motion to compel arbitration, which the District Court granted. The Third Circuit, applying Pennsylvania law, affirmed. The Third Circuit reasoned that Pennsylvania law favors the enforcement of arbitration agreements, and held that the clause could not be considered unconscionable under Pennsylvania law. (November 24, 2009)
In EPIX Holdings Corp. v. Marsh and McLennan Companies, et al., the Superior Court of New Jersey, Appellate Division issued a decision addressing: (1) whether a parent company could enforce an arbitration agreement signed by its subsidiary; (2) whether claims of wrongful conduct that preceded the arbitration agreement were within the scope of the agreement and, therefore, arbitrable; and (3) whether statutory claims, such as anti-trust claims, were arbitrable. As to the first issue, the Appellate Division held that, based on the principle of equitable estoppel, a non-signatory parent company may compel a signatory to arbitrate. Regarding the second issue, the Appellate Division held that phrases such as "arising under" and "arising out of," will be given a broad construction in an arbitration agreement, and include conduct that preceded the arbitration agreement - provided the claim was related or connected to the transaction. With respect to the third issue, the Appellate Division held that statutory claims may be arbitrated, provided that neither the statute at issue nor its legislative history show an intention to preclude alternative dispute resolution. (November 17, 2009)
In D.R. Horton v. J.J. DeLuca, the Superior Court of New Jersey, Appellate Division addressed whether an arbitrator had the authority to consolidate two related arbitrations between a general contractor and a construction manager. The court held that the judiciary does not have exclusive jurisdiction to decide consolidation motions. (October 21, 2009)