Case Briefs Arbitration

Brouhaha 10/3/2011

Ferguson v. Countrywide Credit Industries, Inc. (2002) – Court concluded that Countrywide’s arbitration agreement was substantively unconscionable because it simply gave too many advantages to the company including the type of claims that could be arbitrated, discovery limitations, and a prohibitive fee arrangement. Carter v. Countrywide Credit Industries, Inc. (2004) – Court affirmed nearly the same arbitration agreement as was denied in Ferguson. The court enforced the agreements in all respects with the exception of severing the fees provision using a severability clause in the agreement. However, the court refused to invalidate the agreement based purely on the need to sever that one provision. Court would not bundle multiple unfairly onerous elements together to determine that the agreement was unconscionable and should therefore not be enforced. Ferguson v. Writers Guild of America, West (1991) – A writer challenged using arbitration to determine screenplay and story credit decisions. The court essentially gave deference to the writers guild and held that it did not have reason to question the method used in the profession and probably would have lacked competence to understand and rule on the issue before it. AT&T Mobility LLC v. Concepcion (2011) – Customers attempted to bring a class-action suit against AT&T for charging sales tax on supposedly free phones. AT&T wanted to enforce its arbitration clause but California has a state law which renders arbitration clauses that waive class action possibilities unconscionable. SCOTUS ruled that the FAA preempts CA law because it goes against the congressional intent of promoting arbitration. Green Tree Financial Corp. v. Randolph (2000) – A district court ordering parties to arbitrate and dismissing all claims is a final order and is immediately appealable. Additionally, if a party seeks to prove an agreement is unconscionable due to costs then that party bears the burden of proving the likelihood of incurring those costs. First Options of Chicago, Inc. v. Kaplan (1995) – The courts can independently review the arbitratability of a dispute if it is not clear that both parties agreed to submit to arbitration in the first place. Here the Kaplans never signed any form agreeing to arbitrate possible disputes. Not fair to have an arbitrator determine if the issue can be arbitrated. Vaden v. Discover Bank (2009) – The FAA only authorizes a district court to see a petition to compel arbitration if that court would have jurisdiction in the first place. Court essentially extended Holmes v. Vornado to arbitration petitions in ruling that a federal court may look through the petition to determine if it has jurisdiction. Preston v. Ferrer (2008) – The FAA preempts California Law regarding a contract dispute and its arbitration clause even though an administrative agency had exclusive jurisdiction over the disputed issue (basically a freedom of contract case). Rent-a-Center, West, Inc. v. Jackson (2010) – Is an employment discrimination suit in which RAC seeks to compel arbitration. If a party challenges the provision of an arbitration agreement which says that an arbitrator will decide the enforceability of an agreement then the district court can consider that challenge. However, if the party challenges the entire agreement then the case will go to an arbitrator. Stolt-Nielson S.A. v. Animalfeeds International Corp. (2010) – Under the FAA class-action arbitration will not be permitted unless a provision in the arbitration agreement specifically permits it. (interesting procedurally because the class-action plaintiffs used arbitration to determine if class-action arbitration would be allowed resulting in arbitration within arbitration?)

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