Dispute Resolution Section

This section provides members the opportunity to exchange information with other practitioners regarding alternate dispute resolution, including an annual CLE seminar and co-sponsored CLE programs with other sections that use mediation in their practice.

Chair
Memphis Area Legal Services, Inc.
116 Tuckahoe Rd
Jackson, TN 38305
(731)217-8013
Immediate Past Chair
Wilson Worley Moore Gamble &...
PO Box 88
Kingsport, TN 37662
(423)723-0402
Vice-Chair
Frantz McConnell & Seymour LLP
PO Box 39
Knoxville, TN 37901
(865)546-9321

TBA Mashup and Mini Legal Hackathon this Friday

In conjunction with the Law Tech UnConference CLE this Friday, the TBA is also offering a variety of free events and programs for lawyers we’re calling a Mashup. One program will teach you about Legal Hackathons and see one in action. A Legal Hackathon is a collaborative effort of experts in the legal profession collaborating with a computer programmer to find a technology assisted solution to a problem in the legal industry. Join the TBA Special Committee on the Evolving Legal Market for a mini legal hackathon that will demonstrate the power of collaborative minds at work. We will have tasty beverages and snacks to help you get your collaborative juices flowing.  
 
Other programs that will be a part of the Mashup include Pro Bono In Action which will show you various pro bono programs you can participate in to help your fellow Tennesseans and Member Benefit Programs that will provide you information on  Fastcase 7, health insurance options for small firms, ABA retirement funds and professional liability insurance.
 
Please sign up now to let us know you are coming.

read more »

Updates and Resources for ADR Practitioners

by Marnie Huff*

I. Resources

Here is a copy of Appendix N (Checklist for Preparing Clients for First Negotiation Session) from Lawyering with Planned Early Negotiation: How You Can Get Good Results for Clients and Make Money (2d Ed. 2015), reproduced with permission of the author John Lande. Information on Lande’s well-regarded book is available at the ABA Bookstore.

II. Caselaw Update

A. Certiorari Petitions Pending in U.S. Supreme Court

Cases on the SCOTUSblog watch list include the following cases with arbitration issues:

• Epic Systems Corporation v. Jacob Lewis, No. 16-285 (cert petition filed September 2, 2016: “Whether an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration, and waive class and collective proceedings, is enforceable under the Federal Arbitration Act, notwithstanding the provisions of the National Labor Relations Act.”).

• Ernst & Young, LLP, et al. v. Stephen Morris, et al., No. 16-300 (cert petition filed September 8, 2016: issue similar to Epic Systems case).

• Connie Patterson, Individually and on Behalf of All Others Similarly Situated, et al., v. Raymours Furniture Company, Inc., No. 16-388 (cert petition filed on September 22, 2016: “Whether a provision in an employment arbitration agreement that prohibits employees from seeking adjudication of any work-related claim on a class, collective, joint, or representative basis in any forum is invalid and unenforceable under Sections 2 and 3 of the Norris-LaGuardia Act, 29 U.S.C. §§ 102, 103, and Sections 7 and 8(a)(1) of the National Labor Relations Act, 29 U.S.C. §§ 157, 158(a)(1), because it ‘interfere[s]’ with the employees' statutory right ‘to engage in . . . concerted activities for the purpose of . . . mutual aid or protection.’”).

• National Labor Relations Board v. Murphy Oil USA, Inc., et al., No. 16-307 (cert petition filed September 9, 2016: issue similar to Patterson case)

• Government of Belize v. Newco Limited, No. 16-135 (cert petition filed on July 26, 2016: “(1) Whether, under the doctrine of forum non conveniens, as applied to a confirmation action to enforce a foreign arbitration award, a foreign forum is per se inadequate because assets in the United States cannot be attached by a foreign court, as the D.C. Circuit has held; or is adequate if it has jurisdiction and there are assets of the defendant in the alternative forum, as the Second Circuit held; and (2) whether, under Article V(2)(b) of the New York Convention, the public policy in favor of arbitration yields where confirmation of an arbitral award would be contrary to the countervailing public policies such as international comity and the policy against tax evasion.”).

• Government of Belize v. BCB Holdings Limited, et al., No. 16-136 (cert petition filed July 26, 2016: statement of issue similar to Newco case).

• Government of Belize v. Belize Social Development Limited, No. 15-830 (cert petition filed December 22, 2015: statement of issue similar to Newco case).

B. Selected Cases from U.S. Court of Appeals for the Sixth Circuit

1. Arbitration

Continuing to work constitutes assent to employee handbook’s arbitration agreement. Marlena Aldrich; Kristin Nolan v. University of Phoenix, Inc., Case No. 16-5276 (6th Cir. October 24, 2016) (not recommended for publication) involved a suit against the University of Phoenix for wrongful termination and for uncompensated overtime hours. For the latter claim, the plaintiffs sought to represent a class of similarly uncompensated employees. After removal to federal court, the district court dismissed the case without prejudice on the ground that the plaintiffs were required to arbitrate their claims, notwithstanding the plaintiffs’ affidavits asserting they never received or signed the university’s online form acknowledging an agreement to arbitrate in the employee handbook. One of the issues on appeal was whether the district court erred in ordering arbitration because there was a genuine dispute of material fact as to whether the plaintiffs signed the acknowledgement form. Under the FAA, if an arbitration agreement’s existence is “in issue,” a court cannot grant a motion to compel arbitration. 9 U.S.C. § 4. Under applicable Kentucky law in this case, an employee who does not sign an arbitration agreement can still demonstrate acceptance of the agreement by continuing to work for an employer. Here, the university’s employee handbook stated that acceptance of the arbitration agreement was a condition of employment. The plaintiffs demonstrated assent to the arbitration agreement by continuing to work at the university, whether or not they signed the acknowledgment form. Access the opinion

Arbitration clause doesn’t survive expiration of contract. In Linglong Americas, Inc., et al. v. Horizon Tire, Case No. 16-3520 (6th Cir. December 1, 2016) (not recommended for full-text publication), the District Court denied Linglong’s motion to compel arbitration of Horizon's claims. Linglong argued that an agreement between the parties mandated arbitration even though the agreement had expired by its terms four years earlier. In 2006, the companies entered into a "Collaboration Agreement," under which Linglong China would produce a line of light-truck tires, for which Horizon would be the sole distributor. The Agreement would "remain valid for five years" if not renewed. It had an arbitration clause providing that, "if no settlement can be reached through negotiations," the parties would arbitrate in China any "disputes or claims arising out of this agreement." The agreement was not renewed, but the companies continued to do business with each other. The Court of Appeals held that the arbitration clause did not survive expiration of the Collaboration Agreement because: 1) the majority of the material facts and occurrences giving rise to the dispute did not occur before the contract expired; 2) the contractual right at issue did not survive the Agreement’s expiration, given that Horizon expressly waived any claim that it had a permanent right of exclusive distributorship under the Agreement. Access the opinion

Milan Express Co., Inc. v. Applied Underwriters Captive Risk Assurance Co., Inc., Case No. 16-5270 (6th Cir. December 2, 2016) (not recommended for full-text publication) involved a contract and tort federal court action in Tennessee based on the parties' diversity of citizenship. In a prior appeal, the Court of Appeals vacated the district court’s order stopping arbitration because, under the parties’ contract, arbitrability was for the arbitrator to decide, not the court. After remand from that earlier appeal, the parties agreed to arbitrate in Tennessee. The arbitration panel decided that the parties’ arbitration clause was not enforceable under governing Nebraska law. Applied Undertwriters then moved the district court to vacate the arbitration award, asserting the arbitrators acted with manifest disregard for the law. It also moved to dismiss the action in federal court. Per the parties' contractual forum-selection clause, the parties had agreed that Nebraska courts had exclusive jurisdiction to enforce any arbitration award and resolve other disputes related to their contract. Enforcing that clause, the district court granted Applied Underwriters’ motion to dismiss for forum non conveniens. Neither party challenged that dismissal order. Rather, Applied Underwriters challenged the district court’s failure to decide the motion to vacate the arbitration award. Applied Underwriters argued the district court's non-ruling on the motion to vacate the award, pending when the case was dismissed was an implied denial of the motion, making it ripe for appeal. The Court of Appeals declined to exercise appellate jurisdiction. The district court properly honored the parties’ agreement to litigate the arbitration award in Nebraska courts. Access the opinion

2. Settlements

Bad faith claim rejected. In Great American Insurance Company v. E.L. Bailey & Company, Inc.; Edward L. Bailey, ___ F.3d ___, No. 15-2149 (6th Cir. November 7, 2016), the State of Michigan contracted with E.L. Bailey & Company, Inc. to construct a prison kitchen. After delays, Bailey and the State sued each other for breach of contract in the Michigan Court of Claims. Bailey had obtained surety bonds from Great American Insurance Company guaranteeing its performance. In exchange, Bailey agreed to assign Great American the right to settle claims related to the construction project if Bailey allegedly breached the construction contract. Exercising this right, Great American negotiated with the State to settle Bailey's claims without Bailey's knowledge. It then sought a declaratory judgment from the district court recognizing its right to settle. The district court granted summary judgment to Great American. On appeal, Bailey argued that Great American settled Bailey's claims against the State in bad faith. Affirming the court below, the Court of Appeals held that Bailey presented insufficient evidence of bad faith. Great American’s failure to inform Bailey until the day before a scheduled ADR proceeding was concerning, but alone did not defeat summary judgment. Bailey also did not establish that Great American failed to adequately investigate Michigan law. Access the opinion.

C. Tennessee Cases

1. Arbitration

Failure to provide services, in context of third party beneficiary claim, means arbitration not a consumer case. Billy Coffey, et al. v. Hamblen County, et al., No. E2016-01116-COA-R3-CV (Tenn. Ct. App. December 28, 2016) was a breach of contract action. On behalf of the decedent, who died as a result of suicide in the county jail, the plaintiffs sought damages from a designated emergency medical services provider, pursuant to a contract between the provider and the county. The EMS provider moved to compel arbitration per the contract’s arbitration clause. The arbitration clause provided for arbitration in accordance with the American Health Lawyers Association ADR Services Rules of Procedure. In consumer cases, the AHLA requires a separate notice about waiver of the right to a jury trial and appeal. The plaintiffs argued that the contract’s arbitration provision was invalid because it did not contain this required notice. Reversing the trial court’s decision denying arbitration, the Court of Appeals remanded for arbitration. After examining the AHLA’s definitions of “Health Care Entity,” “Consumer,” and “Consumer Case,” the Court of Appeals rejected the trial court’s classification of the case as a consumer case because the plaintiffs’ action involved the failure to provide services promised in the service agreement between the EMS provider and the county. The plaintiffs’ claim was dependent on the decedent’s status as a third-party beneficiary to the service agreement. Enforcement of the arbitration clause will result in bifurcated proceedings and possibly inconsistent results, but that possibility does not change the result. The Court of Appeals also rejected the EMS provider’s argument that the arbitrator, not the trial court, had authority to decide whether the arbitration agreement was valid. Access the opinion. Access the concurring and dissenting opinion (disagreeing with majority’s view that case is not a consumer case).

Agreed order setting aside arbitration and setting trial results in waiving prejudice from delay claim. Demquarter Healthcare Investors, L.P. v. OP Chattanooga, LLC, et al., No. E2016-00031-COA-R3-CV (Tenn. Ct. App. December 29, 2016) involved a skilled nursing facility lease. After trial began, the trial court, sua sponte, inquired about a lease provision stating that disputes not resolved within thirty days of notice of the dispute "shall be submitted to arbitration . . . ." The defendants asserted that they had not waived arbitration and orally moved for arbitration, which the trial court granted over the plaintiff’s objections. Two weeks after the trial court ordered arbitration, and before any arbitration took place, the trial court entered an agreed order setting aside its arbitration order and resetting the case for trial. One of the issues on appeal was whether the plaintiff was prejudiced by delay caused by the arbitration order. The Court of Appeals held that the plaintiff had agreed to proceed with the trial per the agreed order setting aside the arbitration order and therefore waived the prejudice issue. Access the opinion.

2. Settlements

Response to settlement offer was an acceptance, not a counteroffer. In Tim Grace v. Jeanna Grace d/b/a Grace Trucking, No. W2016-00650-COA-R3-CV (Tenn. Ct. App. November 29, 2016), Tim Grace filed a breach of contract action against Jeanna Grace. Tim later filed a motion to enforce a settlement agreement. Jeanna conceded that Tim had made an offer, but claimed there was no agreement because her response to the offer was a counteroffer, not an acceptance, and she had then revoked the counteroffer. Affirming the trial court’s decision, the Court of Appeals held that the parties had an enforceable settlement agreement. Jeanna’s response involved accepting the terms of Tim’s offer with an added requirement that the agreed order include language that the case was dismissed with prejudice. This added requirement did not materially alter the terms of Tim’s offer and therefore did not constitute a counteroffer. See Disney v. Henry, 656 S.W. 2d 859 (Tenn. Ct. App. 1983). Access the opinion.

John Christopher Gibbs v. Lisa Stacy Gibbs, No. E2015-01362-COA-R3-CV (Tenn. Ct. App. September 7, 2016) involved a post-divorce civil contempt petition filed by the former wife, asserting that the former husband willfully breached their property settlement agreement that was incorporated into the divorce decree. The husband did not attend the contempt hearing. The trial court found that the husband willfully violated the divorce decree based on the wife’s testimony. The trial court ordered incarceration and $50 per day fine until the husband complied with the divorce decree. The Court of Appeals affirmed, holding that contempt is a proper remedy for breach of a property settlement agreement that was incorporated into the divorce decree. It also held that the evidence did not preponderate against the trial court’s finding that the husband’s failure to comply with the divorce decree was willful. Access the opinion.


* Marnie Huff is a member and past Chair of the TBA Dispute Resolution Section. As a member of the Nashville Bar Association’s Board, she is liaison to the NBA ADR Committee and Fee Disputes Committee. She chairs the membership subcommittee of the ABA Section of Litigation’s ADR Committee. She is a past member of the ABA Section of Dispute Resolution’s Council and past co-chair of the ABA Advanced Mediation and Advocacy Skills Institute. Marnie is an independent mediator, arbitrator, and workplace conflict management consultant in Nashville.

read more »