Arbitration Can Be Compelled by Non-Parties to Agreement

The Supreme Court has once again firmly planted itself on the side of enforceability of arbitration agreements. We have previously written about this tendency (here) -- prohibiting parties from changing the scope of review of awards, allowing arbitration of claims based on statutory rights, and allowing arbitrators to determine the scope of arbitration agreements. Now, the Supreme Court has gone one step farther, writing about the ability of non-parties to the arbitration agreement to insist on arbitration of claims asserted by and against it. In this case,

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Class Action Waivers Redux -- American Express Loses Again

It has been a few bad weeks for American Express. We wrote a couple of weeks ago about the Second Circuit's decision invalidating class action waivers in arbitration agreements with it merchants. Now the Third Circuit has piled on. In a decision earlier this week it held that class actions waivers in arbitration agreements between American Express and its customers are unenforceable under New Jersey Law, where individual actions would be uneconomical to pursue. The latest decision,

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COBRA ARRA TARP YIKES

   In the lagniappe within the in the Stimulus Package passed last week in the American Recovery and Reinvestment Act (with the pork, the special causes, the non-stimulating stimuli), was something employment and benefit lawyers will have some fun with.  It provides that qualifying employees who  are  involuntarily terminated have the right to have their ex-employer subsidize 65 percent of the cost of their health care continuation coverage under COBRA for nine months (actually, the employer will get an offset for this expense for payroll taxes due, so it's the rest of the taxpaying public who will bear the cost).

   Qualifying employees include those with less than $125,000 in income (or family income of less than $250,000), who were laid off between September 1, 2008, and December 31, 2008, and who were participants in a employer-sponsored group.  And, the law requires a reopener for a COBRA election, even for those who rejected COBRA coverage before the law passed.

   There is sure to be uncertainty about a few terms (is a constructive discharge an involuntary termination, for example).   The Department of Labor is apparently working on regulations. 

   More extensive reviews of this legislation abound on the internet.  A couple of useful ones are here and here.

Class Action Waivers in Arbitration Agreements Held Unenforceable by Second Circuit

The strong policy in favor of arbitration has made it virtually impossible to resist enforcement of arbitration agreements over the last couple of decades. Arbitration is now generally favored in a vast array of cases, including those asserting statutory rights protected by special legislation (Gilmer v. Interstate, 500 U.S. 20(1991)). The viability of arbitration agreements is generally a decision by arbitrators, not courts (Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395 (1967)). And, courts have even disallowed parties to change by agreement the standard for reviewing arbitration awards (Hall Street Asso. v. Mattell, U.S. (2008)), all making it more difficult to challenge the enforceability of an arbitration agreement or the enforcement of an award rendered by an arbitrator. Despite this, one fertile defense to arbitration recently gaining ground is the claim that arbitration, because of its expense or other procedural complexity, makes it too difficult for consumers to vindicate important rights. This theory was recently given new support by the decision in

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Arbitration Agreement Must Provide for Arbitration in Kentucky – Otherwise Not Enforceable.

The Supreme Court has held that an arbitration agreement that does not provide for arbitration to occur in Kentucky cannot be enforced by a Kentucky court. Therefore, drafters of contracts providing for arbitration must be sure to recite that the arbitration must occur in Kentucky, or a Kentucky court will not enforce it, and the parties will be left to their traditional judicial remedies. In its decision a couple of weeks ago

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