Justia Arbitration & Mediation Opinion Summaries

In this dispute between a law firm and the party it previously represented, the Supreme Court affirmed the judgment of the Court of Appeal insofar as it reversed the superior court’s judgment entered on an arbitration award but reversed the Court of Appeal’s judgment insofar as it ordered disgorgement of all fees collected, holding that the law firm's conduct rendered the parties' arbitration agreement unenforceable but that the ethical violation did not categorically disentitle the law firm from recovering the value of services it rendered to the opposing party.A law firm agreed to represent a manufacturing company in a federal qui tam action. The law firm was later disqualified, and the parties disagreed as to the manufacturer’s outstanding law firm bills. The dispute was sent to arbitration in accordance with the arbitration clause in the parties’ engagement agreement, and the arbitrators ruled in favor of the law firm. The superior court confirmed the award. The Court of Appeal reversed, concluding (1) the law firm committed an ethical violation that rendered the parties’ agreement, including the arbitration clause, unenforceable in its entirety; and (2) the law firm was disentitled from receiving any compensation for the work it performed for the manufacturer. The Supreme Court agreed that the law firm’s conduct rendered the parties’ agreement unenforceable but concluded that the ethical violation did not categorically disentitle the law firm from recovering the value of the services it rendered to the manufacturer. View "Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co." on Justia Law

The Eighth Circuit affirmed the district court's judgment confirming an arbitrator's award of attorney's fees and expenses to Beumer. The court held that the arbitrator acted within the scope of his authority and did not violate the arbitration agreement's provision when he determined that attorneys' fees were "costs" and not "loss" under Missouri law. Therefore, these costs were not subject to the limitation of liability. The court held that ProEnergy failed to demonstrate grounds to vacate the arbitration award under 9 U.S.C. 10, and denied Beumer's motion for sanctions. View "Beumer Corp. v. ProEnergy Services, LLC" on Justia Law

The Court of Appeal reversed the trial court's order denying a petition to vacate an arbitration award and granting a petition to confirm it. In this case, the arbitrator did not comply with several applicable disclosure requirements, which gave rise to multiple grounds for disqualification. The court held that the arbitrator was actually aware of at least one of the grounds for disqualification, and thus the resulting arbitration award was subject to vacatur. The court held that, by not disclosing the four pending arbitration with counsel for Chase, the arbitrator violated the continuing disclosure duties under Ethics standard 7(d). View "Honeycutt v. JPMorgan Chase Bank, N.A." on Justia Law

The Court of Appeal vacated an arbitration award in favor of a client against a law firm because the award was procured by "undue means" as that term was used in Code of Civil Procedure section 1286.2. As an initial matter, the court held that the law firm did not waive its right to appeal. On the merits, the court held that the trial court erred in confirming the arbitration award that took into consideration claims not made in the arbitration demand and to which the law firm was not given an adequate or meaningful opportunity to respond. View "Baker Marquart LLP v. Kantor" on Justia Law

To vacate an arbitration award on the ground that the award was fraudulently procured, the petitioner must demonstrate the fraud was material to the award. There must be a nexus between the alleged fraud and the decision made by the arbitrators. The petitioner, however, need not demonstrate that the arbitrators would have reached a different result. In this case, Odeon brought a petition to vacate an arbitral award involving claims arising out of the termination of one of its employees. Odeon alleged that the arbitrators engaged in misconduct and acted in manifest disregard of the law, and then sought to amend its petition to assert fraud as an additional ground for vacatur. The Second Circuit held that Odeon failed to establish that the employee's alleged perjury had any impact on the arbitration award. The court also held that the district court applied the wrong legal standard in denying the employee's request for attorneys' fees where New York law provided statutory authority for the fee request. Accordingly, the court affirmed in part, vacated in part, and remanded. View "Odeon Capital Group LLC v. Ackerman" on Justia Law

Hunt worked as a truck driver. In 2010, he signed an Independent Contractor Operating Agreement with Moore Brothers, a small Norfolk, Nebraska company. Three years later, Hunt and Moore renewed the Agreement. Before the second term expired, however, relations between the parties soured. Hunt hired Attorney Rine. Rine filed suit in federal court, although the Agreements contained arbitration clauses. Rine resisted arbitration, arguing that the clause was unenforceable as a matter of Nebraska law. Tired of what it regarded as a flood of frivolous arguments and motions, the district court granted Moore’s motion for sanctions under 28 U.S.C. 1927 and ordered Rine to pay Moore about $7,500. The court later dismissed the action without prejudice. The Seventh Circuit affirmed. It was within the district court’s broad discretion, in light of all the circumstances, to impose a calibrated sanction on Rine for her conduct of the litigation, culminating in the objectively baseless motion she filed in opposition to arbitration. View "James Hunt v. Moore Brothers, Inc." on Justia Law

Attorney filed suit, seeking payment of unpaid fees. Client filed an answer and, one year later, asked for arbitration pursuant to his retainer agreement. The court compelled arbitration that resulted in no recovery by either side. Six days after the award, Client asked the arbitrator to award him costs under Code of Civil Procedure section 998 because Attorney’s recovery was less favorable than an offer that Client made two months before demanding arbitration. When the arbitrator responded that he no longer had jurisdiction, Client asked the court to confirm the award, with Section 998 costs. The court confirmed the arbitration award but determined that Client failed to make a timely section 998 claim to the arbitrator and denied Client’s request for costs. The court of appeals reversed, rejecting Attorney’s suggestion that Client should have presented his section 998 request for costs to an arbitrator before the arbitration award was rendered. An offer which is not accepted “cannot be given in evidence upon the trial or arbitration.” In his request to confirm the award, Client established that the arbitrator had refused to hear any evidence of Attorney’s rejection of Client’s section 998 offer; Client timely presented his claim to the arbitrator, who should have reached the merits of that claim. View "Heimlich v. Shivji" on Justia Law

ECC appealed a final arbitration award of almost $7 million against them and in favor of Manatt. ECC argued that the trial court erred in confirming the interim award because the arbitrator violated mandatory disclosure rules, and that the trial court erred in confirming the final award. The court concluded that ECC did not establish that the arbitrator violated mandatory disclosure rules; ECC forfeited its argument that the 2007 engagement agreement was illegal; ECC did not establish that Manatt procured the final award by fraud or undue means; and ECC did not establish that the arbitrator improperly refused to hear evidence. Accordingly, the court affirmed the judgment. View "ECC Capital v. Manatt, Phelps & Phillips" on Justia Law

Tracy and Jose married in 1996. They later separated. Tracy filed a petition for dissolution in 2011. In 2012, the superior court ordered temporary spousal support. The parties decided not to further litigate the case in the superior court and stipulated to the appointment of attorney Perkovich as judge pro tempore, under California Rules of Court 2.830-2.834. After Perkovich had served for two years, Tracy learned that Perkovich had not disclosed “in writing or on the record” professional relationships she had with lawyers in the proceeding, as required by the Rules. Tracy filed in the superior court a statement seeking disqualification. Perkovich failed to respond in accordance with statutory procedure. The presiding judge ordered her disqualified, holding that she was deemed to have consented to disqualification by her failure to file a consent or verified answer. The case was reassigned; discovery proceeded. The court delayed a hearing on Tracy’s motion to set aside orders made by Perkovich. The court of appeal held that Perkovich’s failure to contest the claims means that those factual allegations must be taken as true and that she was automatically disqualified. Her rulings are all void; the settlement agreement signed before her disqualification was tainted and may not be enforced. Perkovich’s conduct did not taint the proceedings before the superior court judge who replaced her. View "Hayward v. Super Court" on Justia Law

JAMS, Inc. provided private alternative dispute resolution services by promoting, arranging and handling the hiring of neutral individuals, such as retired judges, to assist with resolution of disputes. This action arose out of representations made on the JAMS Web site regarding the background of the Honorable Sheila Prell Sonenshine (Retired), and JAMS's operations in offering alternative dispute resolution (ADR) services. Kevin Kinsella alleged he relied upon certain representations made on the Web site when he agreed to stipulate to hire Sonenshine as a privately compensated judge to resolve issues related to his marital dissolution case and later discovered the representations were either untrue or misleading. JAMS and Sonenshine filed an anti-SLAPP motion to strike Kinsella's complaint. The court found the action exempt from the anti-SLAPP procedure under the commercial speech exemption of Code of Civil Procedure section 425.17, subdivision (c). JAMS and Sonenshine filed a petition for writ of mandate or other relief. The Court of Appeal stayed the proceedings and issued an order to show cause why relief should not be granted to allow the Court an opportunity to consider the issues raised in the petition related to the scope of the commercial speech exemption of section 425.17, subdivision (c). After consideration of the matter, the Court of Appeal agreed the commercial speech exemption applied and precluded the use of the anti-SLAPP procedure in this case. The petition was accordingly denied. View "JAMS, Inc. v. Super. Ct." on Justia Law