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Fifth Circuit: Authority to Execute Arbitration Agreement

The Fifth Circuit Court of Appeals consolidated two cases that asked similar questions: what level of authority does one need under Mississippi law to execute an arbitration agreement. Both cases involved arbitration agreements relating to nursing homes.

The cases are: Gross v. GGNSC Southaven, LLC and Cotton v. GGNSC Batesville, LLC. In both instances, the trial court denied the nursing homes' motions to compel, reasoning that Mississippi law required an executed power of attorney, or some other "formal legal device" to bind a nursing home resident to confer authority on another to sign an arbitration agreement.

Making an "Erie guess," the Fifth Circuit Court of Appeals remanded the matters back to the district court for a factual finding of whether the son had the express authority to act on his mother's behalf, including executing an arbitration agreement on her behalf.

Thanks to Ronnie Hornberger for bringing these matters to our attention.

Arizona: Mediation Confidentiality and Attorney Malpractice

In Grubaugh v. Bolomo from the Arizona Court of Appeals, a client brought a legal malpractice case against her attorney for allegedly "substandard legal advice given...during a family court mediation." The Arizona Court of Appeals held that any communications "between or among [the client] and her attorney, or the mediator, as a part of the mediation processed are privileged" under state law. Because the privilege was not waived, the communications are neither discoverable nor admissible.

The Arizona mediation statute is located here. The Arizona Court of Appeals held that the statute did not provide as an exception to mediation confidentiality  attorney-client communications.  The Court also provided a summary of the public policy behind the mediation privilege  and the rights that the former husband had to mediation-related confidentiality, in addition to the now former wife.

Thanks to Ronnie Hornberger for bringing this case to our attention. 

Texas: Trial court erred in failing to enforce arbitration agreement in non-subscriber negligence suit

In Lucchese Boot Co. v. Licon, the El Paso Court of Appeals held that the trial court erred when it denied Lucchese's motion to compel arbitration. According to the court's opinion, Licon suffered work-related injuries and filed a non-subscriber negligence suit against Lucchese, his employer. Lucchese attempted to compel arbitration under the terms of its Area Brands Texas Injury Benefit Plan, and that motion was granted. The El Paso Court of Appeals struck down two other orders compelling arbitration against other Lucchese employees under the same plan because that plan was illusory (because the employer retained an unilateral right to terminate the agreement at any time). Licon moved for reconsideration of the trial court's order and that order was vacated. Lucchese then sought to compel arbitration under its Problem Resolution Program. The trial court denied Lucchese's motion to compel arbitration. The El Paso Court of Appeals reversed the trial court's judgment and remanded the matter for further proc ...

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Texas: Rule 11 agreement was enforceable, but fact issues of performance preclude summary judgment

In MKM Engineers, Inc. v. Guzder, the Fourteenth Court of Appeals held that a Rule 11 agreement entered into by the parties was enforceable, but there were issues of fact preventing summary judgment on a breach of contract claim. The Court's 24-page opinion outlines a complex factual and procedural history. The parties attended a mediation and settlement conferences that resulted in a Rule 11 agreement with future duties, such as a side-letter, the drafting and execution of a "final settlement agreement" with mutual releases and payment of the settlement amount. The Court held that the Rule 11 agreement was enforceable, despite one of the party's challenge that the agreement did not contain all of the material terms. The Court noted that Texas law allows courts to enforce "settlement agreements that contemplate additional documentation or leave open certain terms for future negotiation." According to the Court:   The critical issue for determining enforceability when the parties agree that some term ...

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Blog: Eleventh Circuit lacks jurisdiction over arbitration order, but confirms order for award

Jeanne M. Kohler at Carlton Fields recently wrote about a decision by the Eleventh Circuit Court of Appeals where the court held that it lacked jurisdiction over an appeal of an order compelling arbitration because no notice of appeal was filed within 30 days of the order, even though the district court's order stayed the litigation and did not dismiss it. The finality of the order compelling arbitration was not implicated. The Eleventh Circuit Court of Appeals reviewed a separate order in the same case. The challenge to the second order concerned whether the arbitrator exceeded his authority. The Eleventh Circuit Court of Appeals held that the review of an arbitration award is limited to whether it is irrational, fails to draw its essence from the collective bargaining agreement, or exceeds the scope of the arbitrator's authority. According to the court, even if a court disagreed with the arbitrator's interpretation of the agreement, the arbitrator's interpretation did not impermissibly amend or ...

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Texas: Trial court erred in granting summary judgment to void a mediated settlement agreement

The Thirteenth Court of Appeals, in Flores v. Medline Industries, Inc., held that the trial court erred when it granted a motion for summary judgment to void a mediated settlement agreement. The parties--Flores and Medline Industries, Inc.--attended a mediation after a motion for summary judgment was filed. The trial court had ruled on the MSJ, but the parties were not aware of the ruling at the time of the mediation. The parties resolved the case at mediation, resulting in a mediated settlement agreement. Afterwards, Medline filed a MSJ seeking to void the mediated settlement agreement on the grounds of mutual or unilateral mistake which was granted. In reversing the trial court's summary judgment, the Thirteenth Court of Appeals analyzed whether conclusive evidence was presented on the issue of mistake. Medline's position was that it would not have attended the mediation, or would have settled for a smaller amount, if it knew of the summary judgment. The court of appeals held that Medline "failed to concl ...

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US Supreme Court: Class Arbitration Waivers Valid

On December 14, 2015, the United States Supreme Court issued its opinion in DirectTV, Inc. v. Imburgia. The US Supreme Court held that the Federal Arbitration Act requires the enforcement of an arbitration agreement despite language that the agreement was unenforceable if the "law of your state" made class arbitration waivers unenforceable. DirectTV and its customers entered into service agreements that contained an arbitration provision that also waived class arbitrations. The contract stated that it would be unenforceable if the "law of your state" made class arbitration waivers unenforceable. Any arbitration was governed by the Federal Arbitration Act. At the time that Imburgia entered into the contract with DirectTV, California law made class arbitration waivers unenforceable because they were unconscionable. The trial court denied DirectTV's request to arbitrate and that decision was affirmed by the California Court of Appeal. While California law did invalidate class action arbitration waivers, the ...

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Texas: Arbitration agreement requiring employee to pay own attorney's fees was not substantively unconscionable

In Ophthalmic Consultants of Texas, P.A. v. Morales, the Court of Appeals for the Thirteenth District of Texas reversed the trial court's ruling denying a motion to compel arbitration. The Court of Appeals held that a valid arbitration agreement existed and that the claims fell within the scope of the agreement. Morales, a doctor. was hired by OCT and signed an agreement to arbitrate employment claims. The arbitration agreement provided that OCT would bear all costs and expenses of arbitration, unless Morales instituted arbitration. In that circumstance, Morales would be responsible for paying no more than $100.00 for any AAA administrative fee. Morales filed a claim with the Texas Workforce Commission alleging that OCT engaged in discriminatory practices and later filed a lawsuit. OCT asserted that the suit should be stayed pending arbitration. The Court of Appeals considered whether the agreement to arbitrate was illusory, failed for indefiniteness, or was substantively unconscionable. The Cour ...

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Blog: Inaccurate Translation Invalidates Arbitration Agreement

The Jackson|Lewis California Workplace Law Blog reports on a decision from the California Court of Appeal that held an automobile dealership that translated a sales contract into Spanish, but did not include the arbitration agreement in the translation, could not enforce the agreement. According to the decision, despite signing the English version of the contract (that did contain an arbitration provision), under California law, the arbitration agreement was not enforceable because (1) Spanish was the primary language of the party seeking to invalidate the arbitration agreement; (2) negotiations were conducted in Spanish; and (3) the party seeking to invalidate the arbitration agreement was unaware of the arbitration provision in the Spanish version of the contract.

Texas: No interlocutory appeal from order granting arbitration

In Prophet Ronald Dwayne Whitfield v. Big Star Honda, et al., the Court of Appeals for the First District of Texas held that under the Texas Arbitration Act or the Federal Arbitration Act, there is no interlocutory appeal over an order granting a motion to compel arbitration. An appellate court has no jurisdiction in that instance and must dismiss the appeal. The Court of Appeals noted an exception to that rule, established by the Texas Supreme Court in In re Gulf Exploration, LLC, 289 S.W.3d 836, 840 (Tex. 2009): courts may review an order compelling arbitration if the order also dismisses the underlying litigation so it is final, rather than interlocutory.

Here, the trial court entered no final judgment and the arbitration order stayed the litigation but did not dismiss the case. Accordingly, the court of appeals lacked jurisdiction and the appeal was dismissed.

Thanks to Ronnie Hornberger for bringing this decision to our attention.

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