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California: Equity Arbitration OK!
June 9, 2008
SACRAMENTO, CA -- The California Supreme Court today, in effect approved net-ARB's use of equity arbitration. Equity arbitration guidelines allow arbitrators to decide cases based on fairness and to excuse technicalites when not doing so would produce an unfair result. (see » net-ARB's Arbitrator Guidlines)
The case of Gueyffier v. Ann Summers, Ltd., 43 Cal. 4th 1179 (2008) pitted a lingerie and "adult accessory" store franchisor against a failed franchisee whose store went belly-up immediately after his grand opening was greeted by a hoard of angry neighbors pelting the store with tomatoes.
The original case was a routine breach of contract and was decided in arbitration. In reaching his decision, the arbitrator let slide a technicality that would have caused the decision to go the other way, an inequitable result in the arbitrator's eyes..
The appellant argued that the arbitrator's "equitable excusal" exceeded his power. The Court disagreed, defining the enormous magnitude of an arbitrator's power to restore equity.
"Absent an express and unambiguous limitation in the contract or the submission to arbitration, an arbitrator has the authority to find the facts, interpret the contract,
and award any relief rationally related to his or her factual findings and contractual interpretation."
You can read the entire opinion here » California Supreme Court.
No Lawyers, Please
April 5, 2008
WASHINGTON, D.C. -- Confident that a lawsuit will not produce a fair result, most Americans do not want their day in court. When asked in a newly released poll conducted on behalf of the U.S. Chamber of Commerce how they'd like to settle a dispute with a company, 82% chose arbitration, saying they preferred the cheaper, faster method. Only 15% preferred litigation. These latest findings support earlier findings by the American Bar Association showing that 78% of lawyers "believe that arbitration is generally timelier than litigation, and 56% feel it is more cost effective."
Despite the overwhelming evidence supporting arbitration, the ABA trial bar is asking Congress to prohibit Americans from agreeing at the start of a business relationship to submit disputes to arbitration. Representative Hank Johnson (D., Georgia) and Senator Russ Feingold (D., Wisconsin) have introduced legislation to do just that. Their bill goes a step further in fact, retroactively invalidating tens of millions of contracts nationwide. Even trial lawyers can dream.
71 percent of respondents say they oppose efforts in Congress to remove binding arbitration agreements from consumer contracts. Catholic University professor Peter Rutledge believes that the elimination of arbitration clauses in this manner "unravels the quilt of dispute resolution." Citing numerous categories of arbitration in which consumers already win a majority of cases, Rutledge suggested that the demise of arbitration clauses in consumer contracts would lead to a pandemic of class action lawsuits, making lawyers once again the big winners.
Another lost benefit if these special interest groups get their way is lower consumer prices which come about as a result of stripping out the cost of lawyering. "Recognition of this [benefit] has been standard in the law-and-economics literature for at least a quarter of a century," notes esteemed University of Kansas law professor Stephen J. Ware.
Larry Akey, spokesman for the U.S. Chamber of Commerce's Institute for Legal Reform, maintains that arbitration has proven to be a fair venue for consumers and businesses to resolve disputes. "The downside obviously to eliminating arbitration is that because so many of these claims are small-dollar claims, (so) claimants would find themselves in a situation where they would be hard pressed to find an attorney to take their case."
Arbitrator Amputates $9M from Healthcare Insurer
February 22, 2008
LOS ANGELES -- Arbitrator Sam Cianchetti found that Health Net Inc., a major California health insurance group, should pay more than $9 million to a client for canceling her insurance policy after she was diagnosed with breast cancer. The arbitrator's award went so far as to criticize Health Net for rewarding its employees for saving insurance funds and canceling insurance claims like the one in question.
The insurance company quickly announced it would start using a third-party review process before canceling policyholders in the future, and would implement other changes to avoid potential problems in the future.
U.S. Supreme Court Rules "Judge Alex" Must Arbitrate
February 20, 2008
WASHINGTON -- Alex "Judge Alex" Ferrer lost his case at the Supreme Court today when the justices ruled that the star of the syndicated TV show must go before an arbitrator to resolve his agent/manager's claim to 12% of his earnings.
In an 8-1 ruling, the high Court rejected the notion that there was a special rule for the entertainment industry in California that allowed actors to bypass arbitration. Instead, the Court said those who signed contracts agreeing to arbitrate must honor that deal and go to arbitration.
"We hold today that when parties agree to arbitrate, all questions arising under a contract, state laws lodging primary jurisdiction in another forum, whether judicial or administrative, are superseded by the FAA," Justice Ruth Bader Ginsburg said.
"Now the dispute goes back to where it should have been from the beginning," Arnold Preston, Ferrer's talent agent, said. "This case is a good example of why arbitration is favored. You don't have all this drawn-out litigation."
This case reaffirms the strong federal policy favoring arbitration as a cost-effective and expeditious alternative to court.
Halliburton Sex Assault Case Goes To Arbitration
February 6, 2008
HOUSTON -- Demonstrating the strength of contract arbitration clauses, federal District Judge Gray Miller threw out a lawsuit against Halliburton filed by a former employee alleging she was sexually assaulted by her co-workers, sending it to arbitration according to the terms of her employment contract.
Referring to recent decisions by the Supreme Court and the Fifth Circuit Court of Appeals, Judge Miller wrote in his order that "whether it is wise to send this type of claim to arbitration is not a question for this court to decide."
Chef Ramsay Stews After Judge Dismisses Suit
August 10, 2007
NEW YORK -- In yet another decision upholding arbitration clauses, a federal judge in New York dismissed a lawsuit against celebrity chef Gordon Ramsay over the reality show "Kitchen Nightmares".
U.S. Judge Shira Scheindlin tossed the suit filed by Martin Hyde, a former New York restaurant manager who claimed Ramsay faked kitchen disasters and the program was a sham. Scheindlin ordered both sides to enter arbitration as required by their contract, allowing Ramsay to go ahead with a new season of the reality show.
Stevie Wonder Wins Web Domain Fight
January 25, 2006
MINNEAPOLIS -- The National Arbitration Forum granted award-winning singer Stevie Wonder the rights to the Internet domain name stevie-wonder.com.
Wonder had filed a complaint with the Minneapolis-based regulatory body saying someone identified only as "Lad" was using stevie-wonder.com for a Web page featuring information about musicians with links to various commercial Web pages.
An arbitrator ruled the artist had common law rights to the Stevie Wonder trademark and found the Web address to be confusingly similar. He also said "Lad" registered and used the domain name in bad faith by not seeking Wonder's permission or consent. The arbitrator further ruled "Lad" had no legitimate right to the domain name and ordered it transferred to Wonder.