[Dis-Res] RDDR week 27

[Brook B Reinhard]

Dear subscribers:

Last week, an unprecedented number of new subscribers contacted us to
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To our new subscribers in the mediation field: We hope you enjoy the
newsletter. Good mediation cases are rare, but we'll try to include them
as much as we possibly can.


HEADLINES:
ALTERNATIVE DISPUTE RESOLUTION
** Federal ADEA claims subject to binding arbitration when agreed to under
a collective bargaining agreement. (US).

SETTLEMENT
** Settlement must be in good faith in order to deny potential
contribution to other co-defendants.  (Cal.App., 2 Dist.)

ARBITRATION
** Incorporation of AAA rules governs the question of arbitrability. (8th
Cir.)

** Agreement to arbitrate may not arise by implication. (3rd Cir. (Pa.))

** A class action waiver in an arbitration clause is unconscionable and
not severable; rendering entire arbitration clause unenforceable. (9th
Cir. (Or.))


CASES

** Alternative Dispute Resolution: Federal ADEA claims subject to binding
arbitration when agreed to under a collective bargaining agreement. (US).

//14 Penn Plaza LLC v. Pyett//, 129 S. Ct. 1456 (U.S., April 1, 2009)

Steven Pyett, a member of the Service Employees International Union, was
subcontracted to work at 14 Penn Plaza LLC as a night lobby watchman. Penn
and the Union were bound by a CBA which required union members to submit
all claims of employment discrimination to binding arbitration, including
claims made under the federal Age Discrimination in Employment Act. Penn
hired a new subcontractor for its security needs and reassigned Pyett to
work as a night porter and light duty cleaner. Pyett filed a complaint
with the Equal Employment Opportunity Commission based on violations of
the ADEA. The EEOC issued Pyett a right-to-sue letter and he sued Penn in
federal Court based on the ADEA violations. Penn moved to compel
arbitration under the CBA, but the trial court denied the motion.  Penn
appealed to the Second Circuit, which affirmed. The Second Circuit ruled
that under //Alexander v. Gardner-Denver Co.//, (decided by the Supreme
Court in 1974) a CBA could not waive rights to a judicial forum created by
Congress.  Penn appealed to the Supreme Court of the United States. The
Court reversed. Justice Thomas, writing in a 5-4 opinion of the Court,
held that the CBA allowed all claims -- including claims brought under the
ADEA – to be arbitrated. The Court ruled that the CBA was not waiving
rights to a judicial forum created by Congress. As the Court stated,

"the voluntary decision to collectively bargain for arbitration does not
deny those statutory antidiscrimination rights the full protection they
are due."

The Court distinguished any contrary holdings of //Gardner-Denver// as
dicta and extended its holding in //Gilmer v. Interstate/Johnson Lane
Corp.// to cover ADEA claims in the collective bargaining setting. (BR)

Full opinion available on Westlaw or at the Supreme Court's web site in
.pdf form at http://www.supremecourtus.gov/opinions/08pdf/07-581.pdf


** Settlement: Settlement must be in good faith in order to deny potential
contribution to other co-defendants.  (Cal.App., 2 Dist.)

//Long Beach Memorial Medical Center v. Superior Court//, 2009 WL 782897
(Cal.App. 2 Dist., Mar. 26, 2009).

Makya Connors was born with brain damage. His guardian sued Long Beach
Memorial Medical Center, nursing support company Fastaff, Inc. and
attending physician Tamerou Asrat, alleging negligent care during his
birth.  The parties agreed to explore a global settlement, in which the
parties would agree to a single dollar figure to settle all of the claims,
and then the co-defendants would distribute the liability amongst
themselves.  Connors' guardian agreed to a settlement with the Medical
Center and Fastaff exceeding $8 million.  Asrat then settled with Connors'
guardian for an additional $200,000.  Asrat asked the trial court for a
determination that the settlement was in good faith.  The trial court
granted Asrat's motion, finding that the settlement was made in good
faith.  The Medical Center appealed to the California Court of Appeals for
the Second District.  The Court reversed, and held the settlement was made
in bad faith.  In determining that the settlement was not made in good
faith, the Court looked at a number of factors. For instance, the amount
to be paid by Asrat represented only two percent of the potential damages,
where the merits of the case supported a significantly higher settlement
amount.
The Court also noted that Asrat had $2 million in insurance coverage, plus
additional coverage against potential claims by the co-defendants. The
Court concluded the settlement was designed to benefit Asrat at the
expense of the other defendants, and therefore, the settlement was in bad
faith. (DP)

Opinion available from Westlaw or online from the California Courts
website at: http://www.courtinfo.ca.gov/opinions/documents/B210470.PDF


** Arbitration: Incorporation of AAA rules governs the question of
arbitrability. (8th Cir.)

//Fallo v. High-Tech. Institute//, 2009 WL 749809, (8th Cir., March 24,
2009).

Current and former students of High-Tech. Institute brought suit alleging
misrepresentation and negligence.  High-Tech removed the case to federal
court and moved to compel arbitration pursuant to the enrollment
agreements.  High-Tech argued that the question of arbitrability should be
decided by an arbitrator and not by the district court.  The district
court ruled against High-Tech and the case was appealed to the United
States Court of Appeals for the Eight District.  The Court held that the
adoption of the AAA rules contained in the arbitration clause made it
clear that the issue of arbitrability was to be decided by the arbitrator.
 The Court further held that the adoption of the AAA rules supersedes a
choice-of-law provision of an arbitration clause.  (JDS)

Case available on Westlaw or at:  http://www.ca8.uscourts.gov/


** Arbitration:  Agreement to arbitrate may not arise by implication. (3rd
Cir. (Pa.))

//Kirleis v. Dickie, McCamey & Chilcote, P.C.//, 2009 WL 750415, (3rd Cir.
(Pa.), March 24, 2009)

Alyson J. Kirleis was employed as an attorney for the Pennsylvania law
firm of Dickie, McCamey & Chicolte, PC.  She began as a summer law clerk
in 1987, became an associate attorney in 1988 and was made a shareholder
10 years later. In July 2007 Kirleis filed a sexual discrimination and
retaliation suit in federal court against DMC. DMC moved to dismiss for
lack of subject matter jurisdiction or to compel parties to arbitrate
pursuant to the firm's bylaws.  Kirleis filed a sworn affidavit claiming
she had never seen the by-laws, including the bylaws' arbitration
agreement.  DMC argued that as a shareholder, she should have been aware
the bylaws existed and she could have asked for a copy at any time.   The
District Court denied both of DMC's motions.  DMC appealed to the United
States Court of Appeals for the Third Circuit.  The Court affirmed. The
Court found a constructive agreement was not sufficient to show a meeting
of the minds and that, per Pennsylvania state law, an arbitration clause
had to be expressly agreed to in order to be binding.  Since Kirleis had
never seen the clause, it would have been impossible for her to agree to
it.  (LLJ)

Case available on Westlaw or as a .pdf at
http://www.ca3.uscourts.gov/opinarch/073504p.pdf


** Arbitration: Class action waiver in an arbitration clause
unconscionable and not severable, rendering entire arbitration clause
unenforceable. (9th Cir. (Or.))

//Chalk v. T-Mobile USA, Inc.//, 2009 WL 792517 (9th Cir. (Or.), March 27,
2009.)

Paul Stewart and Ellen Chalk purchased a wireless internet card from Sony
and signed a one-year service agreement with T-Mobile. The service
agreement contained a mandatory arbitration clause, a mandatory waiver of
the right to jury trial, and waiver of any ability to participate in a
class action. The card failed to work with Stewart and Chalks' computer,
and the parties filed a class action lawsuit in federal court in Oregon.
T-Mobile moved to dismiss the case or stay proceedings and compel
arbitration under the FAA. The district court concluded that Stewart and
Chalk were required to arbitrate claims.
Stewart and Chalk appealed to the United States Court of Appeals for the
Ninth Circuit. The Court reversed. It held that T-Mobile's service
agreement was a contraction of adhesion and that T-Mobile's class action
waiver was substantively unconscionable as a matter of Oregon law.
Applying Oregon law, the Court ruled that a class action waiver in a
consumer contract involving small claims is substantively unconscionable
and thus unenforceable. Since the arbitration agreement prohibited
severance of the waiver, the agreement as a whole was unenforceable (KSS).

Full case available at:
http://www.ca9.uscourts.gov/opinions/view_subpage.php?pk_id=0000009453 and
on Westlaw.


Brook Reinhard
Student Editor

Contributors:
Lori Jensen
Jeffrey D. Smith
Katherine S Silva
Daniel B Peters
Brook Reinhard

Center for Dispute Resolution
Willamette University, College of Law
The Oregon Civic Justice Center
790 State Street SE
Salem, Oregon 97301
Telephone: 503-375-5369
Fax:  503-370-6998