[Dis-res] WLO-DR (Mar. 31 - Apr. 4, 2003)

[James A Papachristopoulos]

Willamette Law Online - Dispute Resolution
Willamette University, College of Law
Center for Dispute Resolution
March 31 - April 4, 2003

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THIS WEEK:

1.  Arbitration:  Court gives arbitration panel discretion in deciding
    discovery issues.

2.  Arbitration:  A mere fee-shifting provision in arbitration agreement
    for Title VII claims, does not automatically render the agreement
    unenforceable.

3.  Mediation:  Mediated settlement is unenforceable because there is no
    “pending litigation.”

4.  Mediation:  Court erred by issuing a decree that conflicted with a
    mediated settlement agreement.
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CASE SUMMARIES:

Arbitration:  Court gives arbitration panel discretion in deciding
discovery issues. Prestige Ford v. Ford Dealer Computer Services Inc.,
2003 WL 940629 (5th Cir. (Tex.) Mar. 25, 2003).

Prestige Ford entered into an agreement with Ford Dealer Computer Services
(DCS) in which DCS was to provide Prestige with various computer related
products and services.  Prestige announced its intention to terminate the
agreement citing faulty equipment provided by DCS and DCS’s failure to
timely maintain the system.  In response, DCS filed an arbitration claim
alleging breach of contract pursuant to the arbitration clause in the
contract.  Prior to the arbitration hearing, Prestige moved for the
production of certain DCS documents.  The three-member arbitration panel
denied Prestige’s motions.  After hearing the case, the arbitration panel
found that Prestige’s letter, indicating intention to terminate the
agreement, was a breach of contract and awarded DCS $101,752.32 in
damages.  Prestige unsuccessfully appealed the panel’s decision to the
United States District Court for the Western District of Texas.  Prestige
claimed the decision to deny the discovery of certain documents
constituted a deprivation of justice; specifically claiming that it was
unable to properly defend itself or prove its counterclaims against DCS.
The United States Court of Appeals for the Fifth Circuit upheld the
district court’s decision.  The Fifth Circuit, giving much discretion to
the arbitration panel, held that there was no statutory or public policy
basis, nor any manifest disregard of the law, that necessitated
overturning the arbitration panel’s decision.  (MG)

Available online at: http://www.ca5.uscourts.gov/opinions/OpinHome.cfm

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Arbitration: A mere fee-shifting provision in an arbitration agreement for
Title VII claims does not render the agreement unenforceable. Musnick v.
King Motor Company of Fort Lauderdale; 2003 WL 1591270 (11th Cir.
(Florida) 2003).

Russell Musnick signed an agreement to arbitrate any discrimination claim
he might bring against his employer King Motor Company. The agreement
included some fee shifting provisions like attorney fees, filing gees,
service and witness fees, and similar expenses. Musnick sued King claiming
religious discrimination in violation of Title VII and state law. King
filed a motion to compel that the district court denied, because the
“loser pays” provision of the agreement rendered the agreement
unenforceable. The Eleventh Circuit Court reversed and remanded holding
that such a provision, on its own, does not render an arbitration agreement
unenforceable. The Court held that although in prior cases, the Eleventh
Circuit, along with a few other circuits, refused to enforce such
agreements because they denied the Title VII plaintiff the proper forum to
litigate their claim. However, the Supreme Court held in Green Tree
Financial Corp. v. Randolph (a case where the Eleventh Cir. was reversed)
such provisions should be upheld whenever possible because of the strong
federal preference for arbitration, exemplified through the FAA. The
Supreme Court made clear, and  the Eleventh Cir. followed, that the party
seeking to avoid arbitration has the burden to show the likelihood of
prohibitive costs, and the production of such evidence may shift the
burden to the party seeking arbitration to counter that showing. In this
case the Court held Musnick did offer adequate evidence to prove the
amount of fees he is likely to incur. On remand the Court prohibited
Musnick from attempting to make another showing of “prohibitive costs,”
finding Musnick could have made the argument before the district court in
the first hearing.  (DH)

Available online at: http://www.ca11.uscourts.gov/ops/200212648.pdf

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Mediation:  Court erred by issuing a decree that conflicted with a mediated
settlement agreement. Casper v. Preston 2003 WL 1563985 (Tex. App. 1st
Dist 2003).

Timothy Casper filed for divorce from Gae Preston, and in mediation the
parties reached an agreement, including a visitation schedule for the
couple’s two children.  Subsequently, the trial court rendered a divorce
decree that also covered visitation.  Casper appealed this decree by
arguing the terms were materially different from the parties’ mediated
settlement.  Capser claimed, pursuant to Texas family law, if a mediated
settlement agreement includes separate paragraph stating it is not subject
to revocation and is signed by the parties and attorneys, a party is
entitled to a judgment on the agreement.  The Court of Appeals found
Casper and Preston’s agreement satisfied these requirements, and the trial
courts decree provided materially different terms regarding visitation.
Therefore, the Court of Appeals modified the trial court’s decree to
conform to the terms of the mediated settlement agreement.  (KA)

Full opinion available at Westlaw: 2003 WL 1563985

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Mediation:  Mediated settlement unenforceable because there was no
“pending litigation.” Earl Anthony Bowling, Inc. v. Corrie Development
Corp, Dublin Land Co.  2003 WL 1605803 (Cal. App. 1st Dist 2003).

Earl Anthony Bowling (Anthony) leased a piece of property from Dublin Land
(DLC), and the lease contained a right-of-first-refusal provision. In
spite of this provision, DLC sold the property to Corrie Development Corp
(Corrie). Anthony opposed the sale, but settled with DLC through private
mediation, without filing a complaint in court.  Their agreement provided
that Corrie would pay certain expenses, and contained a provision that any
party may enforce the agreement under California Code of Civil Procedure
§664.6 or any other procedure permitted by law.  Corrie did not pay the
designated expenses. DLC filed a motion to enforce the settlement pursuant
of section 664.6. Corrie opposed the motion, and claimed enforcement of a
settlement under section 664.6 requires “pending litigation” between the
parties. At the time of settlement, there was no “pending litigation”
between Anthony and DLC.  The court held the statutory language of
“pending litigation” is to be construed literally.  There was no
unresolved dispute between the parties at the time of mediation;
therefore, the enforcement provision in the mediated agreement was
ineffective. (KA)

Full opinion available on Westlaw: 2003 WL 1605803

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Editor-in-Chief:  Demetri Papachristopoulos
Writers:          David Hannon, Michael Greene, Kyle Abraham
Faculty Advisor:  Richard Birke