[Dis-res] RDDR Summary (June 28 - July 2, 2004)

[Kelly J Niemeyer]

Recent Developments in Dispute Resolution
Willamette University, College of Law
Center for Dispute Resolution
June 28 – July 2, 2004
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THIS WEEK:

1.	Arbitration:  Despite a choice-of-law clause in a contract, the Federal
Arbitration Act applies in cases involving interstate commerce where the
choice-of-law clause does not exclude application of federal law. (Tex.
App. – Houston 14 Dist., June 22, 2004)

2.  	  Mediation:  “Offensive use doctrine” used in attorney-client
privilege should apply similarly to mediation confidentiality statutes.
(Tex.App. -Dallas, June 16, 2004)

3.	  Arbitration:  A Field Services Supervisor’s discrimination claim was
not covered by the FAA because her job title qualified the claim as an
exemption under Section 1 of the FAA.  Nevertheless, her agreement to
arbitrate was still enforceable under state law. (3rd Cir., June 18, 2004)

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CASE SUMMARY:

1.	  Arbitration:  Despite a choice-of-law clause in a contract, the
Federal Arbitration Act applies in cases involving interstate commerce
where the choice-of-law clause does not exclude application of federal
law.

Dewey v. Wegner, 2004 WL 1381008 (Tex. App. – Houston 14 Dist., June 22,
2004)

In September 1996, David Wegner entered into a subscription agreement for
investment purposes with Dewey Investment Partnership, Inc.  The
subscription agreement contained an arbitration clause in case of disputes
but did not designate which arbitration act would apply.  In 2001, Wegner
objected to an investment in an internet company and sold his interest in
the partnership after sustaining losses.  He then sued Dewey for
violations of Texas and federal securities laws, fraud, deceit, breach of
fiduciary duty, and rescission.  The trial court denied Dewey’s motion to
compel arbitration and granted Wegner’s motion for summary judgment,
awarding him $43,028.31 plus attorney’s fees and interest.  Dewey appealed
arguing the Federal Arbitration Act (FAA) applied because the contract
involved interstate commerce.  Dewey alternatively argued that the Texas
Arbitration Act (TAA) applied.  The Court of Appeals of Texas, Houston
reversed the trial court and compelled arbitration.  Wegner argued that
the TAA applied because of the Texas choice-of-law clause in the contract.
 The court found that the FAA applied despite the choice-of-law clause
because the choice-of-law clause did not expressly exclude the application
of federal law. The court further held that the FAA preempts applicable
state law including the TAA.  (KSK)

Full Opinion available online at: 
http://www.14thcoa.courts.state.tx.us/opinions/htmlopinion.asp?OpinionId=79750

2.	  Mediation:  “Offensive use doctrine” used in attorney-client
privilege should apply similarly to mediation confidentiality statutes.

Alford v. Bryant, 2004 WL 1345077 (Tex.App. -Dallas, June 16, 2004)

Fredye Long Alford (Long) represented Bryant on a case that reached
settlement during mediation where all claims were settled excluding
attorney fees and costs.  The trial court ruled that each party would pay
for their own costs and attorney fees.  Bryant then filed a legal
malpractice claim against Long for failure to advise her client about the
risks involved with settling through mediation. Specifically, Bryant
alleged that Long did not tell Bryant that the trial court might later
deny Long a payment of attorney fees altogether.  Long tried to have the
mediator testify at trial, but the court refused to let the mediator
testify due to Texas’ ADR confidentiality statutes. The Texas Court of
Appeals used the “offensive use doctrine” to reverse the trial court’s
ruling.  A party cannot be offensive in asking for affirmative relief
while denying the opposing party the benefit of evidence that “would
materially weaken or defeat their claims.”  Without the mediator’s
testimony, Long could not fully outline evidence of her defense. The court
ruled that Bryant waived mediation confidentiality because she used the
statutes offensively. (CF)

Full opinion available online at:
http://courtstuff.com/cgi-bin/as_web.exe?c05_04.ask+D+7709230

3.	  Arbitration:  A Field Services Supervisor’s discrimination claim was
not covered by the FAA because her job title qualified the claim as an
exemption under Section 1 of the FAA.  Nevertheless, her agreement to
arbitrate was still enforceable under State law.

Palcko v. Airborne Express, Inc., U.S. App. LEXIS 12025 (3rd Cir., June
18, 2004)

Margaret Palcko (Palcko) worked for Airborne Express Inc. (Airborne) as a
Field Services Supervisor.  Palcko sued Airborne for discrimination and
Airborne attempted to submit the claim to arbitration.  In order to
determine whether the FAA applied, the court had to determine whether
Palcko’s job qualified as a transportation worker under Section 1 of the
FAA.  Section 1 excludes transportation workers engaged in commerce from
coverage of the FAA.  Relying on the original intent and specific language
of Congress used in Section 1, the court concluded that Palcko’s job title
excluded her claim from coverage by the FAA despite Airborne’s argument
asserting her job had no direct relationship to interstate delivery of
packages.  However, the court determined that the inapplicability of the
FAA did not have preclusive effect over Washington state law, which
contained specific language supporting agreements to arbitrate.  There was
thus no reason to release the parties from their original agreement to
arbitrate all employment disputes.  (JB)

Full opinion available online at: 
http://caselaw.lp.findlaw.com/data2/circs/3rd/032227p.pdf
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Editor-in-Chief: Kelly J. Niemeyer

Writers: Katy Kellogg, Cayce Falck, Jarom Bangerter

Faculty Advisor: Richard Birke
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