A few days ago I shared a reference to this article by John Lewis of Baker Hostetler discussing the Fourth Circuit’s decision in Beckley Oncology Associates, Inc. v. Abumasmah, holding that parties by contract can waive judicial review of an arbitration award. Others, including Andrew Baskin and Linda Jackson of Arent Fox and Michael Wolgin of Carlton Fields, in articles published in JD Supra, and Dave Reif in his insightful blog have also offered their perspectives on this significant appellate decision (see here and here and here).

Christina Kennedy and Emily Beer of Foley & Lardner have this article in Mondaq, discussing the Sixth Circuit’s recent decision in Sevier County Schools Federal Credit Union v. Branch Banking and Trust Company. As the authors explain, the case began when the defendant bank substantially lowered interest rates on certain investments despite an alleged promise that they would “never fall below 6.5%.” The lower court dismissed the plaintiffs’ putative class action, compelling arbitration. As the authors explain, the accounts

“also included a permissive arbitration clause that permitted either party to require that a dispute be resolved by arbitration.  Sixteen years later, in 2017, the Bank sent out notice of a major overhaul to the [accounts], which included replacing the prior permissive arbitration clause with one mandating arbitration and including a broad class action waiver.”

Reversing the district court’s decision finding that the plaintiffs “manifested assent” to the changed arbitration provision by not objecting and and continuing to hold their accounts, the authors explain that the Sixth Circuit

 “found that the new mandatory arbitration clause was not truly a modification of the original contemplated terms – it constituted the addition of an entirely new term.  The court observed that banks do not have carte blanche to unilaterally make this type of change; rather, the subject matter of a modification must have been anticipated when the parties entered into the contract.” 

Nine years ago I served on a National Golf Advisory Committee that issued Recommended Best Practices for the resolution of disputes in the golf industry, urging “golf course owners, course managers, builders, manufacturers, distributors, retailers, instructors, players, media, travel providers, and others … to embrace mediation and arbitration as the preferred methods of dispute resolution for golf-related businesses.”

As I noted at the time, the American Arbitration Association responded by creating “a National Golf Industry Panel of mediators and arbitrators who, in addition to dispute resolution process skills, have demonstrable subject matter expertise with the golf industry.”

Paraphrasing one of my Committee colleagues, the idea appeared to be a long road to a small house, as the ensuing years have brought to traction to the idea that golf, with its protocol and rules predicated on honor, would be particularly well-suited to the use of ADR as an alternative to litigation.

Perhaps there is a glimmer of hope, however. Golf Canada, which is our northern neighbor’s counterpart to the United States Golf Association, has adopted a “Dispute Resolution Policy,” in which it publicly “supports the principles of Alternative Dispute Resolution (ADR) and is committed to the techniques of negotiation, facilitation, and mediation as effective ways to resolve disputes.” As the policy continues,

“Golf Canada encourages all Participants to communicate openly, and to collaborate and use problem-solving and negotiation techniques to resolve their differences. Golf Canada believes that negotiated settlements are most often preferable to arbitrated outcomes. Negotiated resolutions to disputes with and among Participants are strongly encouraged.”

Lexology has published this article from Buckley, discussing the Eleventh Circuit’s decision in Larsen v. Garcia, in which the court affirmed a decision finding arbitrable putative class actions challenging a national bank’s overdraft practices. The opinion is interesting in that the court was tasked with interpreting two versions of a client agreement. One version provided for arbitration under the rules of the American Arbitration Association. The second version contained no such provision, simply providing for arbitration.

As to the first version, the court held that challenges based on unconscionability were to be determined by the arbitrators, since the AAA rules provided for the arbitrators to address questions regarding enforceability of the arbitration provision.

As to the second version of the client agreement, the lower court determined the arbitration provision to be enforceable, and the Eleventh Circuit affirmed.

Jonathan Turner, David M. Gettings & David N. Anthony of Troutman Pepper authored this article, discussing the Eleventh Circuit’s recent decision in Hearn v. Comcast Cable Communications, LLC. As the article describes, Hearn presents a scenario where “the plaintiff obtained services from the defendant in 2016, and signed a subscriber agreement with an arbitration provision stating that ‘[a]ny dispute involving [the customer] and Comcast shall be resolved through individual arbitration.’ The plaintiff terminated his services in 2017, but subsequently called the defendant in 2019 to ‘inquire about pricing and obtaining services’ again.”

Reversing the district court, the Eleventh Circuit held that the arbitration provision was sufficiently brought to encompass claims arising out of this inquiry for renewed service made two years later.

Spoiler alert. Employees seeking to invalidate an agreement to arbitrate employment disputes on grounds that they did not knowingly waive their right to a judicial forum likely will not be happy with an opinion that begins by noting the employee “is a former corporate attorney who became an investment banker.”

Thus, in Zoller v. GCA Advisors, LLC, the Ninth Circuit reversed the lower court and rejected plaintiff’s contention that she had not knowingly waived her right to bring statutory claims against her employer, finding that “employment disputes are encompassed by the arbitration provisions, and she knowingly waived her right to a judicial forum.” As the court explained, the employee “had full access to the various documents with arbitration provisions and was given ‘the opportunity to consult with legal counsel of [her] choice before signing’ both the contract and the employee confidentiality, nonsolicitation and arbitration agreement.” Moreover, as the court explained, the employee “did not sign acknowledgement of receipt forms or a vague U4 form; she signed and accepted multiple documents with parallel arbitration provisions that tied arbitration to employment disputes.”

As the court concluded, the employee’s “alleged subjective misunderstanding of the documents is not dispositive because our analysis rests on the explicit terms of the agreement.”

The Ninth Circuit’s decision in Zoller v. GCA Advisors, LLC is the subject of this Law.com article. The article notes that the court held the the arbitration provision to be enforceable based upon facts demonstrating the employee evidenced her agreement to arbitrate based upon her “access to various documents with the arbitration provisions and the opportunity to consult with legal counsel before signing,” and the fact that she “signed and accepted multiple documents with the arbitration provisions” themselves, rather than signing only acknowledgement of receipt forms.

John Lewis of Baker Hostetler has written this article, available at Lexology, discussing the Fourth Circuit’s recent decision in Beckley Oncology Associates, Inc. v. Abumasmah. The Fourth Circuit dismissed the lower court’s dismissal of a complaint to vacate an arbitration award, because “[t]he employment agreement between BOA and Abumasmah purported to waiveb oth judicial and appellate review of the arbitrator’s decision. Because the waiver of appellate review is enforceable, we dismiss BOA’s appeal.”

Those interested in a quick overview of the AAA’s recently released Discovery Best Practices for Construction Arbitration may find useful this summary by R. Thomas Dunn and David Fitzpatrick at Pierce Atwood, available at JD Supra.

The unmistakable takeaway from the Ohio Court of Appeals Decision in AJZ’s Hauling, L.L.C v. TruNorth Warranty Programs of North America is that the ends justified the means. A small, family-owned business, shortly after purchasing a used truck, “experienced significant engine- and transmission-related issues.” They filed suit against the issuer of a warranty. The warrantor successfully moved to compel arbitration in the absence of a court hearing, and the truck owner filed a notice of dismissal.

The truck owner sued again, and again the warrantor moved to compel arbitration. This time the court, in contravention of its initial ruling and ignoring the warrantor’s request for a hearing to which Ohio law entitled it, denied the motion to compel, making factual findings that:

a voluntary meeting of minds did not occur as the arbitration agreement and forum selection clause were never explained to [AJZ] and [AJZ] did not understand any information regarding arbitration proceedings or the surrendering of certain appellate rights. The language compelling arbitration was inconspicuous and the warranty was provided by a third-party and not signed by [TruNorth]. Further, [AJZ] was not provided a copy of the agreement until four days after taking possession of the vehicle at issue.

The warrantor argued on appeal that the lower court’s initial order finding the arbitration provision enforceable was res judicata, and could not be undercut by the second order contravening the first. The Court of Appeals disagreed, holding that “it would be unreasonable and unjust to rigidly apply the doctrine of res judicata to prohibit the trial court from reconsidering its prior ruling in the first case.”

Similarly, as to the warrantor’s claim that it was denied a rightful hearing, the court “acknowledge[d] that [the applicable statute] requires a court to hold a hearing on a motion to compel arbitration when the arbitration agreement’s enforceability is raised.” Nevertheless, the court found no reversible error. According to the court, a notation of “Hearing Requested” was deemed insufficient since it “did not specifically request and evidentiary or oral hearing on its motions to stay and compel arbitration.” Second, the Court of Appeals determined that “the trial court did, in fact “hear” the parties,” because the parties submitted written briefs, which included evidentiary support.

While process purists can find much to challenge about the appellate decision, the justification for the Court of Appeals willingness to overlook procedural shortcuts lies in its conclusions about the warranty provision. According to the Court of Appeals, the warranty was delivered to the purchaser only four days after the purchase, and the purchaser neither had an opportunity or was briefed on its provisions at the time of purchase. As for the provision itself…. it required the purchaser, a family-owned Pennsylvania limited liability company, to arbitrate before a three person arbitration panel in North Carolina regarding a $25,000 claim.