Arbitration News
September 2013
In This Issue
Upcoming Events
Quick Links
Class Action Waivers
Court affirms arbitrator's decision to preclude party from defending against claim as sanction
Can an Arbitrator Conduct Independent Legal Research?
Illinois Supreme Court Determines Arbitration Award Ordering Reinstatement of a Paraprofessional was...
Amex seeks Supreme Court review of class arbitration waiver decision..
Court severs invalid forum selection clause and compels arbitratio
Upcoming Events
View the American Arbitration University Course Calendar

 CLICK HERE!  

 

 

 

Oct. 18 - 20,  2013
National Academy of Arbitrators
 Fall Education       Conference
St. Louis, MO

  SAVE THE DATE
   April 2-5, 2014
 2014 ABA Annual     Section of Dispute Resolution Spring    Conference
Hyatt  Regency Miami
Miami, Florida
 

Quick Links


Valenti Law

 

 Just Appease Me (Blog)

 

 Chicago Mediator Daily

 

 Valenti Law Daily

 

 

Join Our Mailing List

    

Class Action Waivers: American Express Company, et al. v. Italian Colors Restaurant, et al.

 

Holding: The Federal Arbitration Act does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff's cost of individually arbitrating a federal statutory claim exceeds the potential recovery.

 

Judgment: Reversed, 5-3, in an opinion by Justice Scalia on June 20, 2013. Justice Kagain filed a dissenting opinion in which Justice Ginsburg and Justice Breyer joined. Justice Sotomayor took no part in the consideration or decision of this case.


 

To Read Cornell University Law School Law Institute discussion of the opinion click here 

Notice 12-30 Click Here 

Court affirms arbitrator's decision to preclude party from defending against claim as sanction for fabricating evidence

In a decision that confirms arbitrators' broad discretion to not only fashion remedies, but also fashion sanctions, the Minnesota Court of Appeals held that an arbitrator did not exceed his power by issuing a severe sanction: denying one party the right to defend against certain claims after finding that party had fabricated evidence relating to those claims. Seagate Technology, LLC v. Western Digital Corp., __N.W.2d __, 2013 WL 3779231 (Minn. Ct. App. July 22  , 2013).Liz Kramer

 

The case involved Seagate's claims that one of its former employees had taken multiple trade secrets to a competitor, Western Digital Corporation. The arbitrator found that after the employee went to Western Digital, he had added slides to old PowerPoint files he had created at Seagate in order to falsely suggest that three of the trade secrets at issue had been publicly disclosed during his time at Seagate. Because the arbitrator concluded that Western Digital was complicit in the fabrication of evidence, the arbitrator determined that "severe sanctions" were in order. The arbitrator precluded Western Digital and the employee from presenting any defense to Seagate's claims about those three trade secrets and entered judgment against them for misappropriation and use of the trade secrets. As a result of that judgment on the three trade secrets, and his conclusion that the employee breached his employment contract, the arbitrator awarded Seagate $634 million (including $109 million in interest).

 

 


 

  

Can an Arbitrator Conduct Independent Legal Research? If Not, Why Not?
Abstract:
    
Do arbitrators have authority to undertake independent legal research without authorization by the parties? Or, are they prohibited from doing so, as many arbitrators believe? These are vexing questions. For answers, this
Paul Bennett Marrow
article looks for guidance in the Federal Arbitration Act (FAA), state arbitration statutes, case law, and the rules of several arbitration institutions, as well as the Code of Ethics for Arbitrators in Commercial Disputes. The takeaway is that if an arbitrator wants an award that will withstand an attack based on "evident partiality," "misconduct" or the "exceeding of powers," there are good reasons to refrain from unauthorized legal research. This may seem counter intuitive. Arbitration is a creature of contract and the implications that flow from that conclusion heavily impact the answers to the questions being proposed.  

 

To Download the Complete Article Click Here 

Illinois Supreme Court Determines Arbitration Award Ordering Reinstatement of a Paraprofessional was Binding Because the Award "Drew Its Essence" from the CBA
Analyzing the scope and enforceability of an arbitration award, the Illinois Supreme Court in Griggsville-Perry Unit School Dist. No. 4 v. The Illinois Educational Labor Relations Bd., et al., 2013 IL 113721 (Feb. 22, 2013), opined that the award was binding on the parties because the arbitrator applied a standard of arbitrariness to the District's decision to non-renew a paraprofessional, which drew its Catherine R. Localloessence from the negotiated contract language.

 

Brief Fact Summary

 

The School District was party to a collective bargaining agreement ("CBA") with its paraprofessional staff. The CBA did not have a "just cause" termination provision, but did include certain due process procedures if an employee was required to appear before the Board of Education concerning a disciplinary matter.

 

Paraprofessional, Angela Hires' ("Hires"), was verbally counseled by the Building Principal about her negative attitude and interaction with students. These concerns were noted in the Principal's personal notebook and, unbeknownst to Hires, in her personnel file. Ultimately, the Board of Education (the "Board") voted to non-renew Hires' employment based upon the Principal's noted concerns. Hires addressed the Board regarding the non-renewal recommendation.


Significance of the Court's Opinion

 

The Court's decision reminds parties of the scope of an arbitrator's authority when addressing a contract dispute involving interpretation of a specific contract provision. That said, it is clear that the decision of the arbitrator, IELRB, and Illinois Supreme Court was based on the alleged lack of notice and opportunity to respond to the reasons identified by the District for Hires' non-renewal and to the documents placed in her personnel file, and the timing of the Board's initial decision in support of non-renewal. As such, it is important to ensure that fundamental due process is afforded to employees before termination.



Amex seeks Supreme Court review of class arbitration waiver decision
S Jeanine Conley American Express Co. ("AMEX") filed a petition for certiorari on July 30, 2012 after a Second Circuit panel ruled for the third time that the company could not enforce an arbitration agreement containing a class action waiver against a putative class of merchants who pursued antitrust claims.  American Express Co. v. Italian Colors Restaurant, No. 12-133.  The Second Circuit had held that the class action waiver contained in AMEX's Card Acceptance Agreement-which tied the acceptance of its credit card to its higher-rate charge card-was unenforceable because it "would effectively preclude any action seeking to vindicate the statutory rights asserted by the plaintiffs," whose antitrust claims would not be economically rational to pursue individually. The Second Circuit had based its holding on an affidavit from plaintiffs' expert showing that the several hundred thousand dollars of costs would far exceed the $5,000 anticipated recovery for each plaintiff.  The Circuit, though divided, declined to hear the case en banc.  (See our blog posts from April 4 and June 5, 2012.)

Court severs invalid forum selection clause and compels arbitration

When a forum selection clause is invalid because the forum Howard Suskin organization that was designated does not exist, the forum selection clause may be severed  from the rest of the arbitration agreement and arbitration can be compelled. Control Screening LLC v. Technological Application and Prod. Co., 687 F.3d 163 (3d Cir. 2012). The parties' mutual mistake as to the non-existent forum rendered the forum selection clause null and void; as a result, the arbitration agreement was treated as if it did not select a forum. Pursuant to Section 4 of the Federal Arbitration Act, a district court is empowered to compel arbitration only within its own district; accordingly, the new forum for the arbitration was required to be in the forum in which the petition to compel arbitration was filed.

To See full article on Lexology, Click here

In an effort to recognize the specialization in the ADR community, we are creating 3 separate newsletters broadly covering these areas:  Mediation - Arbitration - International ADR.   

 

A newsletter focused in one of those areas will be sent out bi-monthly.  In order for you to subscribe to as many types of newsletters that fit your particular practice/interests, please click on the Update Profile/Email Address link at the bottom of this email. From there you will be able to select which newsletters you wish to receive or if you would like to opt out all together.

 

Thank you for reading my newsletter, and as always, if you have any questions on any of the articles listed, do not hesitate to contact me.

 

Sincerely,

 

Thomas Valenti 
Attorney, Arbitrator (ACIArb), Mediator 
Thomas P. Valenti, P.C.

300 N. LaSalle St., Suite 4925

Chicago, IL 60654-3406
T: 312-803-0472
F: 888-667-2485