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Texas: Vacatur Based Upon Arbitrator’s “Fraudulent Non-Disclosure of Information”

In Builders First Source-South Texas LP v. Ortiz, the Fourteenth Court of Appeals addressed the consequences of an arbitrator’s “fraudulent non-disclosure of information.”  The Court appears to be the first appellate court in Texas to adopt the phrase “fraudulent non-disclosure” in addressing vacatur of an arbitrator’s ruling because of the following circumstances. An individual employed by a company that was a non-subscriber to Texas workers compensation laws signed an agreement to participate in the company’s injury benefit Plan.  The Plan contained a clause requiring arbitration of any dispute over benefits.  When the individual was later injured on-the-job and the parties could not resolve the issue of benefits, an arbitration ensued.  The American Arbitration Association presented to the parties an individual as a candidate to be appointed as arbitrator, and the candidate submitted a required sworn disclosure stating, among other things, ...

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U.S. DOJ's Report on ADR Success

The United States Department of Justice, Office of Legal Policy's Office of Dispute Resolution released its "Fiscal Year 2016 Annual Report."  The report shows the effects of alternative dispute resolution processes as reported by DOJ attorneys. Among the findings: DOJ attorneys estimate they avoided litigation expenses of more than $70 million; Settlements were better than the expected value of trial in 72% of settled cases; Additional benefits--such as the resolution of discovery disputes--occurred even when cases did not ultimately settle. The DOJ's statistical summary shows that DOJ attorneys and staff saved 26,388 days of trial preparation, avoided 2,733 months of litigation (the amount of time cases would have remained on a docket), and saved 2,460 months of actual trial time in 2016 because of ADR. In those cases that did not resolve through ADR, DOJ attorneys reported that ADR was still beneficial: Improved understanding of issues--44% Pr ...

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What's in a name? Law schools settle naming dispute in mediation

The Houston Chronicle reports that the University of Houston and South Texas College of Law Houston settled a trademark dispute involving STCL-H's change of name to Houston College of Law. The mediation was conducted by U.S. Magistrate Judge Dena Hanovice Palermo, and according to the Houston Chronicle, lasted two days.

Additional background on this matter is found at the Houston Business Journal (here) and at TaxProf Blog (here).

Fifth Circuit: Court-Appointed Receiver may Avoid Arbitration

In Janvey v. Alguire, et al., the United States Court of Appeals for the Fifth Circuit held that the district court correctly denied motions to compel arbitration filed by employees of an alleged Stanford Ponzi scheme as to the receiver for the entities involved in the scheme. According to the court, in an effort to unwind the alleged Ponzi scheme, a receiver was appointed for Stanford-related entities to "preserve corporate resources and recover corporate assets that had been transferred in fraudulent conveyances." The receiver sued individuals employed by the entities to recover funds transferred by the entities to the employees. The employees moved for arbitration, relying upon arbitration agreements between the entities and the former employees. The receiver argued that (1) he (more specifically, a Stanford-related bank) did not agree to arbitrate; (2) the arbitration agreements should be rejected as part of the alleged fraudulent scheme; and (3) there is a conflict between arbitratio ...

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Texas: Arbitration provision did not confer personal jurisdiction

In Guam Industrial Services, Inc. v. Dresser-Rand Co., the First District Court of Appeals consdiered an accelerated interlocutory appeal from an order denying GIS's special appearance. Dresser-Rand and GIS had a contract for repair and restoration work, with Dresser-Rand suing GIS in district court. Dresser-Rand contended that the trial court had jurisdiction because the arbitration provision in the contract operated as a forum-selection clause where GIS consented to personal jurisdiction in Houston. In response, GIS filed a special appearance, which was denied. The First Court of Appeals reversed the trial court's order and rendered judgment granting the special appearance. The arbitration provision in the contract stated that "Judgment upon the award may be entered in any court having jurisdiction...The site of such arbitration shall be either in Buffalo, New York or Houston, Texas." In its opinion, the First Court of Appeals held that "an arbitration agreement is a typ ...

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Texas: Trial court did not abuse discretion in denying motion to strike; summary judgment affirmed

In Didmon v. American Arbitration Association, Inc. et al., the First Court of Appeals held that the trial court correctly acted within its discretion. Here, Didmond sued Frontier Drilling, USA, Inc. for personal injuries sustained in Singapore. Frontier removed the state suit to federal district court and Didmond moved to remand. In the federal court, Didmon argued that an arbitration agreement was not enforcible. Agreeing with Didmon, the federal court remanded the suit. After remand, Frontier moved to compel arbitration under another arbitration cluse found in Didmon's employment agreement. The trial court denied the motion, there was an appeal, and the appeallate court reversed and remanded. The trial court then dismissed Didmon's suit without prejudice, ordering that the defendants could raise limitations defenses if Didmon did not initiate arbitration within 60 days. Didmon did initiate arbitration proceedings in Singapore, where he demanded arbitration with the AAA, relying upon the arb ...

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Texas: Did arbitration agreement expand judicial review of award?

In Denbury Onshore, LLC v. Texcal Energy South Texas LP, et al., the Fourteenth Court of Appeals was asked whether the parties contracted to expand judicial review of the arbitration award under conventional appeal standards from a final judgment, instead of the limited grounds for reversal under the Federal or Texas arbitration acts. Relying upon the U.S. Supreme Court's decision in Hall St. Assocs., LLC v. Mattel, Inc, the Fourteenth Court of Appeals held that parties to an arbitration agreement governed by the FAA, but not the TAA, may not contractually supplement the statutory bases for vacatur denied in the statute. In Nafta Traders, Inc. v. Quinn, however, the Texas Supreme Court held that when only the TAA applies, or when both the TAA and the FAA apply, parties may contract for expanded court review of the arbitration award by agreeing that the arbitrators do or do not have the power or authity to reach a decision based on reversible error. Here, the Court of Appeals held presumed that both ...

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Massachusetts: Mediation Confidentiality Upheld

In his blog post for Nutter McClennen & Fish, John G. Loughnane writes that the Massachusetts Appeals Court recently refused to override the terms of a mediated agreement. According to Loughnane, the opinion is noteworthy because it confirms mediation confidentiality and encourages parties dealing with distressed situations to have a careful strategy, including a strategy for agreements that are reached in mediation. The court notes that the statute: "gives broad confidentiality protection to mediation communications, barring disclosure in any judicial or administrative proceeding, and creating only one express exception for the mediation of labor disputes. Significantly, the statute does not include an exception for fraud. In light of that omission, we would be hard pressed to find that such an exception exists in the circumstances of this case, where there is a confidentiality agreement, negotiated between sophisticated business people with the assistance of legal counsel, that is even broade ...

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Trade Secrets Troubles are Well-Suited for Early Mediation

In her article in the Los Angeles Daily Journal, Lizbeth Hasse, a JAMS neutral, suggests that trade secret cases "present concerns that generally motivate early ADR efforts."  The author discusses the intersection of ADR procedures and the Defend Trade Secrets Act. In summary, the author concludes that trade secrets cases are expensive, need to move quickly, and the parties may not want the publicity associated with a trial, making these disputes appropriate for early mediation.

ADR Section Roadshow at St. Mary's Law School

The Alternative Dispute Resolution Section is pleased to announce the State Bar of Texas ADR Section Roadshow: Mediation, Arbitration, Ethics, and More at St. Mary's University!

St. Mary's Law School - Room LC105

September 19, 2016

Noon-2:15 p.m.

Lunch will be provided. Sponsored by the ADR Section of the State Bar of Texas along with the San Antonio Bar Association's Alternative Dispute Resolution Section. Presented by Co-Chairs: Lionel Schooler and Jerry King, Chair of the San Antonio ADR section. Law students are welcome! Attendees will receive State Bar CLE ethics credit.

Please confirm your attendance by RSVP to Linda McLain. The sooner you RSVP, the better! This will allow us to get an accurate headcount for lunch.

 

We hope to see you there!


Lionel Schooler, Chair
Alternative Dispute Resolution Section
State Bar of Texas

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