Category Archives Arbitration

In 2009, Robert Eaton purchased a manufactured home from CMH.  The purchase contract contained a clause required Mr. Eaton to arbitrate all claims for any dispute arising out of the purchase of the home, but contained a clause that specifically reserved the right for CMH to pursue a lawsuit in court to foreclose upon any collateral, to obtain a monetary judgment, or to enforce the security agreement. Furthermore, this reserve clause contained “anti-waiver” language that stated CMH’s right to bring such a lawsuit did not constitute a waiver to compel arbitration regarding any other dispute related to the contract. Several years later, Mr. Eaton filed suit in Lincoln County circuit court, alleging that his manufactured home was defective and that CMH misrepresented the home as new at the time of sale.  CMH moved to dismiss and compel arbitration pursuant to the sale contract, but the trial court overruled CMH's motion to compel arbitration. The…

If there is one topic that has captured the attention of federal courts around the country in the past few years, it's the applicability of mandatory arbitration in putative class actions. (Indeed, during our humble blog's brief existence, we have covered the issue numerous times, most notably here, here and here).  A recent decision from the Tenth Circuit may provide the most entertaining and candid examination of the procedure district courts should take in answering that question. In Howard v. Ferrellgas Partners, L.P., Case No. 13-3061, 2014 WL 1363963 (10th Cir. Apr. 8, 2014), the court admonished all parties involved when it reversed an order from the District of Kansas denying arbitration after a year and a half of discovery on the issue of whether arbitration even applied to the parties dispute.  The time spent on discovery appeared to baffle Judge Gorsuch, who writing for the court, noted that the case seemed to…

Although not arising in either the Eighth or Tenth Circuits, the Fifth Circuit's opinion in D.R. Horton v. NLRB, No. 12-60031 (5th Cir. Dec. 3, 2013) was widely anticipated because of the underlying decision's apparent incongruity with the Supreme Court's decision in AT&T Mobility LLC v. Concepcion.  Our awesome colleagues Bill Martucci and Ashley Schawang from SHB's National Employment Litigation & Policy Practice have provided us with a great snapshot of the decision: The Fifth Circuit Court of Appeals has overruled the National Labor Relations Board’s (NLRB’s) determination that class-arbitration waivers violated the National Labor Relations Act (NLRA). D.R. Horton v. NLRB, No. 12-60031 (5th Cir. Dec. 3, 2013). In upholding the class waiver in D.R. Horton’s arbitration agreement, the Fifth Circuit joined its sister circuits. The issue arose in the context of an employee’s claim that the arbitration agreement’s class-action waiver was an unfair labor practice under the NLRA. The employee and a nationwide class had…

In CMH Homes, Inc. v. Goodner, 2013 WL 4749906 (8th Cir, Sept. 5, 2013), the Eighth Circuit confronted the unresolved question of how district court calculate amount in controversy where a party seeks compelled arbitration under Section 4 of the Federal Arbitration Act: should it follow Advance America Servicing of Arkansas, Inc. v. McGinnis, 526 F.3d 1170 (8th Cir. 2008), and evaluate the amount at stake in the arbitration, or does the U. S. Supreme Court's directive from Vaden v. Discover Bank, 556 U.S. 49 (2009) to look through the arbitration petition to the underlying controversy control? Writing for the panel, Judge Colloton agreed with the district court's decision to follow Vaden, even though Vaden involved federal question jurisdiction rather than diversity jurisdiction.  In doing so, the Court concluded that nothing in either the text of Section 4 of the FAA or the rationale of Vaden suggests that a court…

In Grant v. Convergys Corp., 2013 WL 781898 (E.D. Mo., March 1, 2013), Judge Jackson declined to enforce a class action waiver contained in an employment application because it eliminated the employees' right to engage in collective and class litigation, which is protected concerted activity under Section 7 of the NLRA. In this case, the plaintiff sought to prosecute an FLSA collective action and a MMWL claim under Fed. R. Civ. P. 23. The Defendant moved to strike the class allegations based on the following language contained in the putative class representative's employment application: I further agree that I will pursue any claim or lawsuit relating to my employment with Con-vergys (or any of its subsidiaries or related enti-ties) as an individual, and will not lead, join, or serve as a member of a class or group of persons bringing such a claim or lawsuit. Prior to filing this suit,…

The U.S. Court of Appeals for the Eighth Circuit has enforced an arbitration agreement requiring an employee to arbitrate – on a non-class basis – her wage claims under the Fair Labor Standards Act.  This decision is in line with the decisions of several other federal courts of appeal to consider whether the FLSA’s collective action provisions provide employees a federal right that cannot be waived in the context of an arbitration agreement. In Owen v. Bristol Care, Inc., the Eighth Circuit held that an employee can contractually waive any such “right” to collectively pursue wage claims in court proceedings.  The court based its decision on the strong federal policy favoring arbitration, embodied in the Federal Arbitration Act and highlighted in numerous pro-arbitration decisions from the U.S. Supreme Court and other courts.  The Eighth Circuit distinguished a recent NLRB decision refusing to enforce an arbitration agreement, noting that the NLRB’s…

Going deeper into the post-Concepcion discussion of what arbitration agreements containing class action waivers are enforceable and which are not, Judge Whipple and the Western District of Missouri weigh in with a well-reasoned analysis of another consumer arbitration agreement in another cellular phone contract in Davis v. Sprint Nextel Corp., 2012 WL 5904327 (W.D. Mo. Nov. 26, 2012). As you might recall, the United States Supreme Court in Concepcion forbade the nullification of arbitration agreements simply because they eliminated classwide arbitration.    As you may also recall, the Missouri Supreme Court recognized this new complication in Brewer and Robinson, and grappled with the question of whether the particular arbitration agreements at issue in those cases were in fact unenforceable as unconscionable under generally applicable contract defenses as defined by Missouri law. Based on the Missouri Supreme Court's directive in Brewer, Judge Whipple analyzed the unconscionability issue in terms of its impact on…

Are class action arbitration waiver provisions enforceable under Missouri law?  In other words, can a company contract away a consumer's right to proceed in arbitration on a classwide basis?  In AT&T Mobility LLC. v. Concepcion, 131 S. Ct. 1740 (2011), the United States Supreme Court severely limited the ability of states to declare such class arbitration waivers unenforceable as contrary to public policy.  Writing for the majority, Justice Scalia found that the Federal Arbitration Act preempts California's judicial rule - the Discover Bank Rule -- which classifies most consumer class action arbitration waivers as unconscionable.  Because the purpose of the FAA is to ensure the enforceability of arbitration agreements according to their terms, the FAA's savings clause permits states to invalidate consumer class action arbitration waivers only by "generally accepted contract defenses, such as fraud, duress, or unconscionabilty," but not by defenses applicable only "because arbitration is at issue."  It's important to…

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