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Fifth Circuit: District Court erred in vacating contingency fee award as unconscionable

In Campbell Harrison & Dagley, LLP v. Hill, the Fifth Circuit Court of Appeals analyzed the trial court's order that vacated most of an arbitration award. The arbitrators awarded the law firms their fees, based upon a hybrid hourly-rate fee (approximately $3.15 million) and a contingency fee (approximately $25 million). The district court vacated the arbitrators' award of the contingency fee, which was challenged on appeal to the Fifth Circuit. The Fifth Circuit Court of Appeals examined the Texas General Arbitration Act, as well as Hill's claim that the contingency award was unconscionable. Concluding that the district court substituted its judgment for that of the arbitrators, the Fifth Circuit upheld the hourly-rate fee and reversed and rendered the contingency fee award in favor of the law firms.

Our 50th Blog Post

Launched in July, 2014, we've now reached our 50th blog post on mediation and arbitration.

Though relatively new, the Texas Bar Today recognized one of our blogs as a "Top 10 Blog Posts".

This blog was created to keep our members and the public informed of important developments in the area of mediation, arbitration, and other ADR-related matters. We don't blog about every court decision that is issued, but we try to blog about the important ones. We also blog about interesting developments from practitioners so that arbitrations, mediations, and other ADR-related procedures can continue to develop.

If you know of an important case, or a topical blog that we should know about, please send a summary (with a link) to our blog editor, Gene Roberts.

Texas: Supreme Court will not force parties to arbitrate unless there's an agreement

In G.T. Leach Builders, LLC v. Sapphire V.P., LP, the Texas Supreme Court examined whether a property developer must arbitrate its claims against several defendants involved in a construction project. The trial court denied all of the defendants' motions to compel arbitration and that decision was affirmed by the court of appeals. The Texas Supreme Court held that the developer must arbitrate its claims against the general contractor, but not against the other defendants because there was an arbitration agreement between the general and the developer, but not with the other defendants. This decision discusses the law on waiver of the right to arbitrate, as well as an analysis relating to the deadline for arbitration.

Blog: Is the facilitative approach useful in mediating commercial disputes?

In this article by Thomas I. Elkind, a partner at Foley & Lardner LLP, the question of a facilitative versus evaluative mediation is discussed, with the author concluding that a facilitative approach can help break impasses. The article also provides value by providing a glimpse into what the commercial clients of mediation are looking for in a mediator.

California: Unconscionable to provide arbitration agreement to dancers while "mostly naked"

Sean Pon, an attorney with Hinshaw & Culbertson LLP, writes in JDSupra that a California federal court recently held that an arbitration agreement was unenforceable because of procedural and substantive unconscionablilty concerns. The opinion, Roe v. SFBSC Management, LLC, No. 14-03616 (N.D. Cal. March 2, 2015), holds that the parties had unequal bargaining power and that exotic dancers had no real chance to negotiate the agreement and had no meaningful choice but to sign the agreement. The dancers, according to the court, were presented the contracts "while mostly naked" and they were rushed, or felt rushed, to sign the agreement. The court also found that the arbitration agreement was unconscionable because of a one-way ban on collective actions and cost-shifting clauses of the agreement. Ultimately, the court struck the entire contract. Mr. Pon suggests that arbitration agreements must contain mutual provisions, must be fairly presented to employees, and the employees must have the opportunity to ...

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Texas: Published advertisement isn't a sanctionable violation of the ADR statute

In The Orchards on the Brazos, LLC v. Stinson, the Fort Worth Court of Appeals was asked to decide whether an advertisement placed in a local newspaper that outlined a settlement offer violated the Texas ADR statute. According to the court's opinion, after mediation and a trial, one of the parties took out an ad in a local newspaper that included statements about the settlement negotiations, including language that "At one point we turned down an offer of 100k from the developer." The other party filed a motion for sanctions, arguing that the settlement offer was a confidential communication defined by the Texas ADR statute. The trial court agreed to sanctions and awarded $5,000.00. The advertisement was not made during mediation nor in the presence of a third-party facilitator. According to the Court of Appeals, the advertisement was not subject to the confidentiality requirements of the Texas ADR statute, and, accordingly, wasn't sanctionable. H/T to Ronnie Hornberger for informing us of this opinion. ...

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Texas: Arbitration Clause Survives Termination or Repudiation of Contract

The Fort Worth Court of Appeals, in BBVA Compass Investment Solutions, Inc. v. Brooks, held that an agreement to arbitrate contained within a contract survives the termination or repudiation of the contract as a whole. The arbitration agreement within a written contract is separable from the entire contract. After finding that the arbitration provision survived, the Court then examined the scope of the arbitration provision, focusing on the factual allegations in the complaint, rather than the legal causes of action asserted. Determining the scope of the arbitration agreement is a question of law for the court. Here, the arbitration provision applied to "all controversies" with the Court analyzing the use of the conjunctive "or" in the arbitration agreement.

H/T to Ronnie Hornberger for informing us of this opinion.

Fifth Circuit: Arbitration panel's interpretation holds "however good, bad, or ugly"

In BNSF Railway Co. v. Alstom Transportation, Inc., the Fifth Circuit Court of Appeals vacated the district court's order which had vacated an arbitration panel's award. The Fifth Circuit held that BNSF failed to carry its burden to show that the arbitration panel was not "even arguably interpreting" a maintenance agreement with Alstom, holding that the arbitration's panel's construction of the agreement holds "however good, bad, or ugly."

H/T to Ronnie Hornberger for alerting us to this decision.


California: Employee's electronic signature may not be an "act" of the employee; arbitration agreement not enforced

Gary Gansle and Nisha Patel, attorneys at Patton Boggs, recently summarized a decision from the California Court of Appeal, holding that an employee's electronic signature to an arbitration agreement may not have been sufficient evidence that the signature was the act of the employee. The court then refused to enforce the arbitration agreement. The California's court's decision is here. The decision is worth reading because it discusses how the company should have authenticated the employee's electronic signature, with the court finding that the company's business manager did not explain how the employee's electronic signature could only be placed on the document by the employee.

How to Win a China Arbitration

Dan Harris, an attorney at Harris Moure, recently published an article titled "How to Win a China Arbitration." Harris writes that "Chinese companies are increasingly requiring commercial contracts with American companies" to have disputes resolved by arbitration in China. Harris' 5 tips on how to prepare and win an arbitration in China are here.
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  1. Re: Welcome to the SBOT ADR Section's Blog.

    Great job to all on this blog, I think it will be a great resource for the latest developments for the...

    -- Bre Binder