TBA Law Blog

Posted by: Christy Gibson on Aug 17, 2015

by Marnie Huff*

I.               Ethics and Professionalism

Rule 31 Amended. On February 12, 2015, the Tennessee Supreme Court amended Rule 31, governing the conduct of Tennessee mediators. The amended Rule 31, among other changes:

?      Adds new definitions of “Active Rule 31 Mediator” and “Inactive Rule 31 Mediator”.

?      Amends Section 3(a) to reflect that a Rule 31 ADR Proceeding may be initiated by the parties’ consent, not just by a court’s Order of Reference.

?      Deletes the former Section 5(b) provision that required filing status reports every 30 days.

?      Adds new Section 10 (e) and (f):

(e) The Neutral may assist the parties in memorializing the terms of the parties’ settlement at the end of the mediation.

(f) Rule 31 Neutrals shall not be called as a witness to enforce any terms of the resulting agreement.

?      Amends Section 17(a) and (b) regarding requirements for being listed by the ADRC.

?      Amends Section 17(d) regarding waiver of training requirements for certain Rule 31 mediators.

?      Amends Section 18(c)(3) by adding a provision that a Rule 31 Mediator on inactive status for at least 15 consecutive years will not be eligible to apply for reactivation. Instead, the Mediator’s listing will be terminated. If desiring a listing again, the mediator will have to fulfill Section 17’s listing requirements.

The amendments went into effect on July 1, 2015. Updated Rule 31, incorporating the changes, is at http://www.tncourts.gov/rules/supreme-court/31.

Thirty Day Solicitation Ban in Divorce/Legal Separation Matters.  On February 12, 2015, The Tennessee Supreme Court amended the Rules of Professional Conduct to ban written solicitation of potential divorce or legal separation clients within 30 days of the filing of a divorce. The Rule 8, RPC 7.3 amendment went into effect May 1, 2015. The TBA filed a comment voicing strong objections to the proposal. The comment also cited serious reservations about the constitutionality of the ban. A copy of Court’s order at: https://www.tba.org/sites/default/files/SCOrderR8_02122015.pdf.pdf.

Safety Planning. The Association for Conflict Resolution Taskforce on Safety in ADR has issued ADR Safety Planning: Recommended Guidance, available at file:///C:/Users/Marnie/Downloads/ACR%20Taskforce%20on%20Safety%20Recommended%20Guidance.pdf.

Three New Ethical Guidance Opinions From ABA Section of Dispute Resolution. The Section has issued three opinions in 2015 thus far.

SODR-2015-1 addresses whether a mediator may advertise that he mediated “the largest settlement in the history of [the] county.” The conclusion is that this ad is not proper under the ABA Model Standards of Conduct for Mediators. The ad gives the appearance that the mediator would favor plaintiffs in mediation. Also, absent party consent, the ad likely violates the mediator’s duty of confidentiality. The opinion cites ABA Model Standards of Conduct for Mediators, Standards II(B), V(A), and VII(B) (2005). Opinion at http://apps.americanbar.org/webupload/commupload/DR018600/relatedresources/SODR-2015-1.pdf.  

SODR-2015-2 addresses whether a mediator must disclose that she has conducted a number of previous mediations for one of the parties (or its attorney) and what needs to be disclosed. Generally, disclosure must be made since having conducted a prior mediation with a party could be a conflict of interest in a case, or give the appearance of a conflict. The mediator should, however, limit disclosure to the name of the person(s) the mediator worked with in the prior mediation. The mediator should not disclose how parties behaved in the prior mediation or whether the case settled. Disclosure would include an insurance carrier if the mediator knows, or after due inquiry learns, of insurance carriers in prior cases. If a relationship exists, after disclosure, the parties may – if they agree - consent to have the mediator serve in their case. Authority referenced is Model Standards of Conduct for Mediators, Standards III(A) and (C) and V(A)(1) (2005).  Opinion at http://apps.americanbar.org/webupload/commupload/DR018600/relatedresources/SODR-2015-2.pdf. 

SODR-2015-3discusses whether a mediator may accept a referral fee from an attorney where the  mediator referred a party to that attorney after the case involving that party was unsuccessfully mediated by the mediator. Unlike the 1994 Model Standards, the current Model Standards do not expressly prohibit such a fee. Nevertheless, a mediator should not accept the referral fee due to conflict of interest, mediator impartiality, and confidentiality problems. Authority referenced is Model Standards of Conduct for Mediators 2005, Standards II(B)(2), III(A), V(A)(2), VIII(B). Opinion at file:///C:/Users/Marnie/Downloads/-DR018600-relatedresources-SODR-2015-3%20(5).pdf.

How to Get an Advisory Opinion from the ABA (ABA membership not required). The ABA Section of Dispute Resolution's Committee on Mediator Ethical Guidance accepts inquiries and provides advisory responses. Of course, the opinions are offered as guidance and are not binding on a state ADR commission. The ABA Committee may accept an inquiry from an ABA member, an individual who is not an ABA member, or an organization; or it may consider an issue on its own initiative. While it may draw on other sources of authority, it focuses on interpreting the ABA Model Standards of Conduct for Mediators (2005) and applies them to the issue presented. The Committee includes ADR practitioners, academics, and leading ADR ethical experts from the public and private sectors. To submit an ethical guidance inquiry, go to http://apps.americanbar.org/dch/committee.cfm?com=DR018600&edit=1

How to Get Ethical Guidance from the Tennessee ADR Commission.  Tennessee Rule 31 Section 9(d) provides for an advisory opinion procedure:

(d) Ethics Advisory Opinion Committee.

(1) The Ethics Advisory Opinion Committee shall provide written advisory opinions to Rule 31 Neutrals and alternative dispute resolution organizations in response to ethical questions arising from Rule 31 and the Standards of Professional Conduct.

(2) The Ethics Advisory Opinion Committee shall be composed of three Commissioners, one from each Grand Division, appointed on a rotating basis by the Chair when a request for an opinion is received and reviewed by the Programs Manager. The Chair may also appoint a Committee, from time to time, to issue advisory opinions as to areas of concern to the Commission.

(3) All requests for advisory opinions shall be in writing and shall be submitted to the Programs Manager.

(4) The Committee shall meet in person or by telephone conference as necessary to consider the request for an advisory opinion. Upon due deliberation, and upon the concurrence of a majority of the Committee, the Committee shall issue an opinion. The opinion shall be signed by each member of the Committee, filed with the Programs Manager, published in the ADR News and on the AOC website, and be made available upon request.

(5) Prior to publication, all references to the requesting Neutral or any other real person, firm, organization, or corporation shall be deleted from any request for an opinion, any document associated with the preparation of an opinion and any opinion issued by the Committee.

(6) Reliance by a Neutral on an opinion of the Committee shall not constitute a defense in any disciplinary proceeding; such reliance, however, shall be evidence of good faith and may be considered by the Commission in relation to any determination of guilt or in mitigation of punishment. If the requesting Neutral later is brought before the Grievance Committee on allegations of misconduct in the same mediation for which the mediator requested and received an opinion, the Commissioners who served on the Ethics Advisory Opinion Committee will be precluded from participating in the grievance procedure.

Links to advisory opinions from the Tennessee ADRC’s Ethics Advisory Opinion Committee are available at www.tsc.state.tn.us/programs/mediation/resources-mediators/opinions.

Pro Bono Reminder. Under the ADR Commission’s Policy 13:

Rule 31 mediators are encouraged to make themselves available for and participate in pro bono mediation. This may be accomplished in several ways, including but not limited to the following:

a.     Making oneself available for volunteer mediations at a community mediation center

b.     Getting on a legal services referral list for acceptance of pro bono mediations

c.     Advising clerks and judges that you are available for pro bono mediation

d.     To earn pro bono hours comparable to the 50 hours of pro bono hours attorneys should aspire to achieve (Rules of Professional Conduct, §6.1), Rule 31 mediators can do the following:

?      Mediating pro bono cases, regardless of the referral source

?      Serving on a mediation board and committees (See Comment 8 to RPC §6.1(b)(3) which permits lawyers to earn pro bono hours by serving on a bar association committee (any bar committee); serving on boards of pro bono or legal service programs.)

?      Teaching a mediation class to any community group, organization or group of individuals not for a fee and no expectation of fee. (but CMC or nonprofit can charge provided the money goes to the nonprofit for advancement of their mission)

(See Comment 8 to RPC §6.1(b)(3) which permits lawyers to earn pro bono hours by acting as a continuing legal education instructor.)

ADR Commission policies are at http://www.tncourts.gov/programs/mediation/resources-mediators/policies.

II.             ADR in the News: Articles and Resources

Is Rapid Arbitration too Rapid?  Under the new Delaware statute, unless agreed otherwise, the arbitrator in a business dispute must issue a final award within 120 days of the appointment. 10 Del. C. § 5808(b). The purpose of the Delaware Rapid Arbitration Act (DRAA), 10 Del. C. § 5801 et seq., is “to give Delaware business entities a method by which they may resolve business disputes in a prompt, cost-effective, and efficient manner, through voluntary arbitration conducted by expert arbitrators, and to ensure rapid resolution of those business disputes.” The statute is intended “to provide an additional option by which sophisticated entities may resolve their business disputes. Therefore, nothing in this chapter is intended to impair the ability of entities to use other arbitral procedures of their own choosing, including procedures that afford lengthier proceedings and allow for more extensive discovery.” 10 Del. C. § 5802. See a summary of the DRAA at http://apps.americanbar.org/litigation/committees/adr/news.html and the statute at http://delcode.delaware.gov/title10/c058/index.shtml.

When May a Court Correct an Arbitrator’s Award? In “California Supreme Court Clarifies When An Arbitration Award May Be Corrected” (February 5, 2015), Stephanie Lee and Richard Rahm discuss a court decision on when an arbitrator’s award may be corrected.  In Richey v. Autonation, Inc., a case involving statutory employment law claims, the court reviewed standards for review of arbitral awards involving unwaivable statutory rights. It concluded that, although the arbitrator may have committed error in applying the employers’ proffered “honest belief” equitable defense (a defense mostly available in the federal 7th Circuit, but not available under California law), the plaintiff was afforded his statutory rights.  The arbitrator had concluded that, on the basis of overwhelming evidence, the employer terminated the plaintiff’s employment for violating the employer’s policy prohibiting outside employment while on approved medical leave. Therefore, the plaintiff was not prejudiced by the arbitrator’s arguably misplaced application of the honest belief defense. Opinion in Richey v. Autonation, Inc., No. BC408319 (Calif. January 29, 2015) at http://www.courts.ca.gov/opinions/documents/S207536.PDF. Article at http://www.jdsupra.com/legalnews/california-supreme-court-clarifies-when-20892/.

Predator Settles through Mediation. Nashville Predators forward Mike Ribeiro and his wife have settled a Texas sexual assault case out-of-court with a former nanny per a mediator’s report filed with the court. See https://www.nashvillepost.com/news/2015/7/16/preds_forward_riberio_settles_sexual_assault_case.

New Advisory Commission for Business Court Pilot Project. The Tennessee Supreme Court recently launched a new advisory commission to provide input on procedures for its Business Court Pilot Project. Tennessee Court of Appeals Judge Neal McBrayer is chairing the commission. 

Research on Family Court Users. The Association of Family and Conciliation Courts has set up the AFCC Access to Family Court Services Task Force. The Task Force is working in collaboration with Professor Michael Saini of the University of Toronto to explore ways AFCC can facilitate better access for family court users. They are compiling views and recording the experiences of families who come into contact with court-based services after separation and divorce. If you have questions, contact Professor Michael Saini at michael.saini@utoronto.ca

Alimony Bench Book Available. The 13th Edition Alimony Bench Book is available from the TBA Family Law Section in loose-leaf format for $40 or a three-ring binder for $50. To order the book, visit the TBA’s online bookstore or contact TBA at (615) 383-7421. Members of the Family Law Section can download the new edition at no charge by logging in at TBA.org and going to the Resources link on the Family Law Section's webpage.  

Davidson County ODR Property Tax Appeal Process Featured by ABA. Robert Ambrogi reports in a March 1, 2015 post, “Tax boards use an online system to resolve disputes,” that Davidson County is using modular online dispute resolution implementation assistance (Modria) to resolve taxpayer challenges of property tax assessments. Article at: http://www.abajournal.com/magazine/article/tax_boards_use_an_online_system_to_resolve_disputes.

Leading Academic Considers Negotiation Theory. John Lande discussed problems with the traditional negotiation model of positional and interest-based negotiation and proposed a new model in “A Framework for Advancing Negotiation Theory: Implications from a Study of How Lawyers Reach Agreement in Pretrial Litigation,” 16 Cardozo Journal of Conflict Resolution 1 (2014); University of Missouri School of Law Legal Studies Research Paper No. 2014-05. Available at SSRN: http://ssrn.com/abstract=2405563. Short summaries of Lande’s ideas are available at http://www.indisputably.org/?p=6318 and http://www.indisputably.org/?p=6394.  suggests, “we should redefine the scope of negotiation to include the interactions leading up to the final negotiation. From this perspective, legal matters often involve a stream of negotiations, not merely a single event at the end of a process” and “we should focus on the process of reaching agreement, not only the process of resolving disputes.”  

Mediation’s Future. Mediate.com has been featuring articles on mediation’s future. Two examples are:

?      “Reclaiming Mediation’s Future: Getting over the Intoxication of Expertise, Re-Focusing on Party Self-Determination,” by Robert A. Baruch Bush and Joseph P. Folger, advocates for self-determination (party empowerment) as mediation’s central value, not substantive expertise and not a “wise-problem-solver” role. The authors believe mediator training should be revamped, reducing attention given to reframing, shaping agendas, probing for underlying needs, and reaching agreement as the only valuable outcome. Rather, mediators should be trained to support (not supplant) party deliberation and decision-making. Article available at http://www.mediate.com/articles/BushFolgerFuture.cfm.

?      “Looking to the Future: Is There Still A Place For Proactive, Early Intervention Mediation in Our Changing Field?” by Nina Meierding, finds that clients want more opportunities for early, direct communication. Meierding supports the return to self-determination as the ultimate goal of any form of mediation. Article available at http://www.mediate.com/articles/MeierdingFuture.cfm.

Game Theory in Negotiations. Mediate.com is publishing a series of lengthy articles on game playing in negotiation authored by Robert Benjamin. Thus far, the articles are:

“Part 1, Evolutionary Purpose and Necessity—Machiavelli’s Place at the Table” at http://www.mediate.com//articles/BenjaminMachiavelli.cfm (September 2014) and

“Part 2, An Inventory of Strategies and Devices: 2.1 Overview and Organizational Approach” at http://www.mediate.com/articles/BenjaminMachiavelli2.cfm.

Upcoming articles in the series will be:

2.2 Reasoned Persuasion and Games of Reason

2.3 Positional Bargaining and the High-Low Game

2.4 Caucus Style Negotiation and “Divide and Conquer” Game

2.5 Competitive Negotiations and the Intimidation Game

2.6 Relational Negotiation and the “I Feel Your Pain” Game

Part 3, A Framework for the Assessment of Constructive Uses, Risks and Ethical Limits

Book review. “Getting to Yes with Yourself: Book Review” by Jeff Thompson reviews William Ury’s new book, Getting to Yes with Yourself and Other Worthy Opponents. The book provides seven steps to help reach agreement with yourself to improve your ability to negotiate with others. Short review at http://www.mediate.com/articles/ThompsonJbl20150213.cfm.

Relational Mediation. Tom Stipanowich discusses relational mediation, including its application in construction disputes, in his article "Beyond ‘Getting to Yes’: Building Mediation Skills and Insights into Relationships” (December 2014). He summarizes Dwight Golann’s research more than a decade ago that found that key factors for restoring relationships in mediations were: 1) the stage of the dispute (earlier mediation improves chances of restoring relationships; 2) relative value of the relationship to the parties; 3) attitudes of the parties and their attorneys; and 4) whether the mediator met with the participants before starting the formal mediation process. Focusing on the construction field, Stipanowich regrets the growing emphasis of lawyered adversarial processes, which are counter to the value he sees in “facilitated partnering workshops,” the appointment of “standing” dispute resolution professionals, and the use of “Dispute Resolution Advisors.” He concludes that ADR professionals need to make the business value of relational mediation more apparent to potential clients. Article at http://www.mediate.com/articles/StipanowichFuture.cfm#.

Mediation in Church Bankruptcy Case. “Judge orders Twin Cities archdiocese bankruptcy into mediation” (February 2, 2015) discusses the bankruptcy of the St. Paul/Minneapolis Archdiocese where the judge ordered mediation at the beginning of the case. Article available at http://www.startribune.com/judge-orders-archdiocese-bankruptcy-into-mediation/289218921/.

Access to Justice - Mediation’s Critical Role in Bridging the Access to Justice Gap. “For more than a decade, Colorado has worked to provide access to justice for indigent and modest means citizens. Despite efforts by the bar and the courts, the state continues to struggle. Often overlooked, however, is how mediation provides courts and litigants an affordable, efficient option to resolving many disputes.”  Article at http://www.mediate.com/articles/McDonaldR3.cfm

Confidentiality Risks. In "Shhhh! The Big Risk Associated with Mediation Confidentiality Nobody Talks About" (September 2014), Rachel Ehrlich notes that information provided through mediation in complex civil disputes is often subject to mediation confidentiality. When related disputes (contractual indemnity, insurance carrier contribution, insurance coverage and bad faith, and reinsurance) arise, mediation confidentiality prohibits using the information relied upon as evidence in the related matter. Article at http://www.mediate.com/articles/EhrlichR1.cfm.

ABA Online ADR News. The ABA Section of Litigation ADR Committee reports ADR news and developments at http://apps.americanbar.org/litigation/committees/adr/news.html.

III.           Caselaw Update

A.    U.S. Supreme Court

Supreme Court Grants Cert in DirecTV. On March 23, 2015, the U.S. Supreme granted certiorari in DirecTV Inc. v. Imburgia, U.S. Supreme Court, No. 14-462. The Question Presented, available at http://www.supremecourt.gov/qp/14-00462qp.pdf, is "Whether the California Court of Appeal erred by holding, in direct conflict with the Ninth Circuit, that a reference to state law in an arbitration agreement governed by the Federal Arbitration Act requires the application of state law preempted by the Federal Arbitration Act." As described in the lower court decision, Amy Imburgia filed a class action complaint against DIRECTV, alleging various state law claims based on allegations that DIRECTV improperly charged early termination fees to customers. The trial court granted class certification as to one of the plaintiffs' theories. On April 27, 2011, the U.S. Supreme Court decided Concepcion, holding that the Federal Arbitration Act preempts California’s “Discover Bank” rule. The Court in Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005) had held that, under certain circumstances, class action waivers in consumer contracts were unconscionable and unenforceable. On May 17, 2011, DIRECTV moved to stay or dismiss plaintiffs' action, decertify the class, and compel arbitration of plaintiffs' claims. DIRECTV explained that until Concepcion held that the FAA preempts the Discover Bank rule, DIRECTV believed a motion to compel arbitration would have been futile.

The DIRECTV customer contract includes an arbitration provision in section 9: if "any legal or equitable claim relating to this Agreement, any addendum, or your Service" is not resolved informally, "any Claim either of us asserts will be resolved only by binding arbitration" under JAMS rules. Under the heading "Special Rules," section 9 provides: "Neither you nor we shall be entitled to join or consolidate claims in arbitration by or against other individuals or entities, or arbitrate any claim as a representative member of a class or in a private attorney general capacity. Accordingly, you and we agree that the JAMS Class Action Procedures do not apply to our arbitration. If, however, the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable." Section 10 of the customer agreement includes a choice of law provision: "The interpretation and enforcement of this Agreement shall be governed by the rules and regulations of the Federal Communications Commission, other applicable federal laws, and the laws of the state and local area where Service is provided to you. This Agreement is subject to modification if required by such laws. Notwithstanding the foregoing, Section 9 shall be governed by the Federal Arbitration Act."

The trial court denied the motion to compel arbitration. On appeal to the California Court of Appeals, the Court stated the question before it was how to interpret section 9's choice of law provision concerning enforceability of the class action waiver. Section 9 requires a court to consider whether "the law of your state would find this agreement to dispense with class arbitration procedures unenforceable . . ." Does that mean "the law of your state to the extent it is not preempted by the FAA," or "the law of your state without considering the preemptive effect, if any, of the FAA"? The Court of Appeals agreed with the Plaintiffs’ argument that it means the latter. Court of Appeals opinion Imburgia v. DIRECTV, Inc., 225 Cal.App.4th 338 (2014)  available at http://leagle.com/decision/In%20CACO%2020140407012.xml/IMBURGIA%20v.%20DIRECTV,%20INC.

B.    Selected Sixth Circuit Cases

Defendant Did Not Waive Right to Arbitrate. In Shy v. Navistar International Corp, 781 F.3d 820 (6th Cir. 2015), the Court addressed two issues: 1) whether a dispute was subject to an arbitration clause, and 2) whether the defendant waived its right to arbitrate. Under a settlement and consent decree, the defendant was pay into a Supplemental Benefit Trust for the defendant’s retired employees, based on certain calculations. The Trust was managed by a Supplemental Benefit Committee (SBC). The settlement agreement included a narrow arbitration clause that required arbitration of unresolved disputes over the “information or calculation[s]” provided by the defendant to the SBC with regard to the payments. Although the disputes at issue included the SBC’s complaints about the defendant’s operational conduct, the Sixth Circuit found that conduct was sufficiently related to “information” to fall under the arbitration clause. Distinguishing Johnson Associates Corp. v. HL Operating Corp., 680 F.3d 713 (6th. Cir. 2012), the Court further held that the defendant had not waived its right to arbitrate, notwithstanding certain pre-litigation conduct and delays in the litigation. The dissenting judge vigorously disagreed on both points. Majority opinion and dissent at: http://www.ca6.uscourts.gov/opinions.pdf/15a0056p-06.pdf.

Seven Year Old Dispute Regarding USDA Refusal to Consider Farmer’s Expert Report During Mediation Still Unresolved. Maple Drive Farms Limited Partnership and Nicholas H. Smith v. Tom Vilsack, Secretary, United States Department of Agriculture, No. 13-1091 (6th Cir. April 1, 2015) involved the "Swampbuster" provisions of the Food Security Act of 1985 that deny certain farm-program benefits to persons who convert a wetland on their property for agricultural purposes. In 2008, the U.S. Department of Agriculture determined that the plaintiff had converted wetland on his property and that he was therefore totally ineligible for program benefits. A time-consuming process, including unsuccessful mediation, ensued. This was followed by a decision adverse to the plaintiff which was upheld by the federal district court. In April 2015, the Court of Appeals reversed the district court and remanded the case for further administrative proceedings. The Court held that the USDA failed to abide by the applicable regulations. In the course of its discussion of the procedural history of the case, the Court noted that that the parties had agreed to mediate their dispute with the Michigan Agricultural Mediation Program. The parties agreed to keep mediation open pending completion of a wetland delineation by a USDA agency. The plaintiff was permitted to farm the parcel at issue and cut down trees as long as he did not remove stumps. The plaintiff farmed the parcel at issue per the mediation agreement. Although the plaintiff did not violate the terms of the mediation agreement, the USDA later notified the plaintiff that wetland delineation was not possible due to alterations to the land. At a subsequent mediation session, the plaintiff presented a report by his independently retained expert to show his activity on the land had minimal effect on wetlands in the area. The USDA agency refused to consider the expert’s report and the parties were unable to settle the dispute. Opinion at http://www.gpo.gov/fdsys/pkg/USCOURTS-ca6-13-01091/pdf/USCOURTS-ca6-13-01091-0.pdf.

Federal Railroad Safety Act’s “Election of Remedies Provision” Not Applicable When Employee First Filed Grievance under CBA and Submitted Dispute to Mandatory Arbitration; Employee Can File A Separate Retaliation Claim with Department of Labor Under FSRA.Norfolk Southern Railway Company v. Thomas E. Perez, Secretary of Labor, No. 14-3274 (6th Cir. February 18, 2015) involved an employee’s claim under the Federal Railroad Safety Act, which prohibits a railroad carrier from retaliating against employees who report work-related injuries and potential safety violations. The FRSA provides that "[a]n employee may not seek protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier." 49 U.S.C. § 20109(f). Affirming the decision of the U.S. Department of Labor’s Administrative Review Board, the Court held that § 20109(f) did not preclude filing an FRSA retaliation claim, even though the railroad employee had already claimed the employment decision violated a collective bargaining agreement and had a pending arbitration of that dispute under Railway Labor Act. Opinion at http://www.ca6.uscourts.gov/opinions.pdf/15a0026p-06.pdf.

Major vs. Minor Disputes under Railway Labor Act. In Wheeling & Lake Erie Railway Company v. Brotherhood of Locomotive Engineers and Trainmen; Robert H. Linsey, No. 13-4356 (6th Cir. June 26, 2015), the Court addressed whether a railroad and a labor union were engaged in a major or a minor dispute under the Railway Labor Act (RLA). The district court’s preliminary injunction barred the union from taking any economic action against the railroad because the court found that the parties were in a minor dispute. The Court of Appeals reversed, vacated a portion of the injunction and remanded the case. The court found that the parties' dispute over the railroad's use of supervisors as conductors was major rather than minor because the collective bargaining agreement (CBA) expressly required the railroad to assign a union conductor on every train and the railroad was attempting to renegotiate the CBA. The Court’s opinion includes a summary of the procedures used in railroad/labor disputes that fall into two categories: 1) disputes over the making of collective agreements (major disputes), and disputes over grievances (minor disputes). The RLA establishes separate mechanisms to resolve both types of disputes. It encourages carriers and their employees to resolve disputes "in conference between representatives designated and authorized so to confer." 45 U.S.C. § 152. In both cases, the process begins with negotiation, but the procedure then diverges into two separate systems depending upon whether the dispute is major or minor. In a major dispute, if the parties attempt to settle the dispute in negotiation fails, they must then mediate under the National Mediation Board’s auspices. If mediation fails, the parties must voluntarily accept or reject arbitration. If the dispute continues, it may reach the President for possible intervention before a strike impacts the nation’s transportation system. A federal district court has jurisdiction to enjoin a violation of the status quo only after the parties complete all statutory dispute resolution steps. Minor disputes, on the other hand, begin the resolution process with the same private negotiation step, but then proceed to compulsory and binding arbitration before the National Railroad Adjustment Board, or an adjustment board set up by the railroad and its employees. Judicial review of any arbitration decision on a minor dispute is limited. Opinion at http://clelaw.lib.oh.us/public/decision/CTA6/062615.html.

C.   Tennessee ADR Cases

1.     Arbitration

Conception Does Not Require the OverrulingTaylor v. Butler, but Arbitration Clause with a Judicial Foreclosure Provision Upheld . In Richard A. Berent v. CMH Homes, Inc. et al, No. E2013-01214-SC-R11-CV (Tenn. June 5, 2015), the trial court had ruled that a consumer contract’s arbitration agreement between a buyer and a manufactured homebuilder was unfair and unenforceable. The Court of Appeals affirmed that decision, but the Tennessee Supreme Court reversed. It held that the arbitration provision, in which the homebuilder retained a judicial forum for limited purposes, did not make the arbitration agreement unconscionable. The Court also ruled that a prior decision, Taylor v. Butler, 142 S.W.3d 277 (Tenn. 2004), did not need to be overruled or modified under the reasoning of AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011). Taylor did not adopt a per se rule that any degree of non-mutuality of remedies in an adhesion contract's arbitration clause would render the clause unconscionable and unenforceable. Therefore, the Taylor ruling was not preempted by the Federal Arbitration Act. Taylor was still good law, and completely one-sided arbitration agreements are unenforceable. But here, the agreement was not completely one-sided. The agreement applied equally to both parties, and the exception for foreclosures was narrow and with reasonable business justification. The Court noted that other courts have upheld arbitration agreements with a similar exception. Courts are better suited to handle foreclosures, and the rules governing state foreclosure proceedings protect both the buyer and the seller. Opinion at berentr_CORR_070815.pdf.

Fraudulent Inducement in Contract Formation not Arbitrable if Contract States It Is Governed by Tennessee Law. In Mark A. White, et al. v. Turnberry Homes, LLC, et al., No. M2014-01858-COA-R3-CV (Tenn. Ct. App. May 28, 2015), homeowners sued a builder and others due to defects in their home. The trial court granted the builder’s motion to compel arbitration per an arbitration clause in the purchase agreement, except for the fraudulent inducement claim. The purchase agreement provided that it was governed by Tennessee law. On appeal, the Court rejected the builder’s claim that the fraudulent inducement claim was subject to arbitration, citing Frizzell Construction Company, Inc. v. Gatlinburg, L.L.C., 9 S.W.3d 79 (Tenn. 1999) (Tennessee law requires judicial determination of contract formation issues) and Hubert v. Turnberry Homes, LLC, No. M2005-00955-COA-R3-CV, 2006 WL 2843449 (Tenn. Ct. App. Oct. 4, 2006). A federal court has held to the contrary in Tennessee, LLC v. Ochiai Georgia, LLC, No. 3:11-CV-340, 2012 WL 381338 at *4, 8 (E.D. Tenn. Feb. 6, 2012) (fraudulent inducement must be arbitrated under FAA, despite Frizzell and a Tennessee choice-of-law provision). The Court of Appeals is obligated to follow Frizzell, not Ochiai. Opinion at http://www.tncourts.gov/sites/default/files/whitem.opn_.pdf.

Trial Court Must Decide Contract Formation Issue; If Parties Did Agree to Arbitrate, then under Arbitration Agreement Arbitrator Must Decide Issue of Whether One of the Parties Waived Arbitration. In Ames G. Clayton, et al. v. Davidson Contractors, LLC, et al. (Tenn. Ct. App. April 24, 2015), home buyers signed an application for a home warranty that included an arbitration clause. They sued the builders on the warranty, among other things. In their answer, the builders mentioned that the court could not hear the case due to an arbitration clause in the warranty. Over five years after answering the complaint, the builders moved to stay litigation and compel arbitration based on the arbitration provision in the home warranty. The trial court denied the motion on two grounds: 1) the arbitration provision did not comply with the Tennessee Uniform Arbitration Act, and 2) the builders’ delay in moving to compel arbitration resulted in waiver of their right to arbitrate. On appeal, the Court vacated and remanded. The Federal Arbitration Act, not the Tennessee Uniform Arbitration Act, governed the arbitration provision  because the contract was a transaction involving commerce. Unlike at Tenn. Code Ann. § 29-5-302(a), the FAA does not require that parties separately sign or initial arbitration agreements regarding residential structures. The arbitration agreement included a provision that any defense based on waiver was to be decided by the arbitrator. The trial court did not consider the home buyers’ claim that they never entered into an arbitration agreement, which is a contract formation issue. Therefore, the trial court’s consideration of the waiver defense was premature. On remand, the trial court must decide whether a contract was formed. If a contract was formed, then the arbitrator must decide the parties’ dispute, including the issue of waiver. Opinion at claytonj_042415.pdf.

Arbitration Clause Not Enforced Where Notices on Product Referred to Manufacturer’s Warranty on Website but Failed to Refer to any Arbitration Clause Included in Warranty. Robert Randall Capps, et. al. v. Adams Wholesale Co., Inc., et. al. No. E2014-01882-COA-R3-CV (Tenn. Ct. App. May 21, 2015) involved enforceability of an arbitration agreement included in a warranty on a manufacturer’s website. The plaintiffs, who were unsophisticated consumers, purchased the defendant’s decking product. The product was covered by a limited warranty that included an arbitration agreement. The defendant never provided a copy the warranty to the plaintiffs. Instead, a notice attached to the delivered product advised the plaintiffs to retrieve a copy of the warranty through the defendant’s website. Following installation of the product, the plaintiffs experienced problems and filed a breach of warranty action. The defendant moved to dismiss or stay the proceedings and compel arbitration. The Court of Appeals affirmed the trial court’s decision that the parties had not entered into an agreement to arbitrate. Absence of a signature was not fatal, and failure to read the arbitration agreement did not absolve the plaintiffs from the agreement’s terms. But notices on the product did not refer to an arbitration agreement or indicate that accepting the product constituted acceptance of an arbitration agreement. The Court relied on the principle that “’contemplated mutual assent and meeting of the minds cannot be accomplished by the unilateral action of one party,’” citing Jamestowne on Signal, Inc. v. First Fed. Sav. & Loan Ass’n, 807 S.W.2d 559, 564 (Tenn. Ct. App. 1990). Opinion at cappsr_052115.pdf.

Appeals Court Rejects a Claim that Arbitrator Exceeded Authority in Awarding Attorney’s Fees. In Lasco Inc. v. Inman Construction Corp., et al., N. W2014-00802-COA-R3-CV (Tenn. Ct. App. January 9, 2015), the trial court vacated an arbitrator’s award of attorney’s fees in favor of the defendant general contractor and its surety because the award exceeded the arbitrator’s power. On appeal the appellant’s argued: 1) the trial court broadened the applicable standard of review in vacating the award, and 2) attorney’s fees were not contemplated by the parties’ agreement to arbitrate. Applying the reasoning in D & E Construction Co., Inc. v. Robert J. Denley Co., Inc., 38 S.W. 3d 513, 518 (Tenn. 2001), the Court of Appeals noted that the scope of an arbitrator’s authority “is determined by the terms of the agreement between the parties.”  The Court examined the entire written agreement to determine the parties’ intent, construed contractual terms in their ordinary meaning and construed the contract harmoniously to avoid creating internal conflicts. It found that the parties clearly contemplated using the Construction Industry Arbitration Rules. These rules included attorney’s fees if all of the parties have requested such an award, if authorized by law or if it is pursuant to their arbitration agreement. Here, both parties asked for attorney’s fees in the initial arbitration.  The Court reversed and remanded the case to the trial court for the entry of an order confirming the arbitration award and a determination of the reasonable attorney’s fees, including attorney’s fees for the appeal. Copy of opinion at lasco_010915.pdf.

Arbitration Clause Non-Binding on Third Parties; All Claims Must Be Resolved in Court. In George Ernest Diggs v. David Lingo, et al., No. W2014-00525-COA-R3-CV (Tenn. Ct. App. December 30, 2014), beneficiaries of a trust sued the trustee for self-dealing in a transaction where the trustee and his wife purchased real property from the trust as tenants by the entirety. The beneficiaries sought to set aside a portion of the sale. The trustee moved to compel arbitration per the trust agreement’s arbitration clause. The trial court denied the motion because the trustee’s wife was a necessary party to the dispute’s resolution and she was not a party to the trust agreement. Therefore, there was no enforceable arbitration agreement between her and the beneficiaries. The Court of Appeals affirmed that the wife was a necessary party to any suit seeking to encumber her property interest because the wife purchased the real estate with the trustee as tenants by the entirety. The Court also noted that the wife consenting to arbitration was meaningless since the beneficiaries did not consent. Also, under the circumstances of this case, the trial correctly decided that all claims should be resolved in court, rather than piecemeal with part in an arbitration as to the trustee. Opinion at diggsg_12302014.pdf.

Arbitration in Nursing Home Case Denied. In Elizabeth Sanders, by and through her next of kin, Tonita Minter v. Harbor View Nursing And Rehabilitation Center, Inc., et al., No. W2014-01407-COA-R3-CV (Tenn. Ct. App. May 29, 2015), the decedent granted her daughter power of attorney while living in Minnesota. Broad powers were given to the daughter, including decisions regarding claims, litigation, and “all other matters.” However, under the applicable Minnesota statute, this POA did not include healthcare decisions notwithstanding the broad language used. A separate healthcare power of attorney, signed by the decedent, was not in effect because no physician had determined the decedent incompetent. Upon the decedent’s admission to the nursing facility, the daughter signed the admission contract and a separate, voluntary arbitration agreement. The arbitration agreement stated that the decision to agree to arbitration was within the scope of a “health care decision” under Tennessee law. The trial court properly denied motions to compel arbitration. Opinion at sanderse_052915.pdf.

Parties to Arbitration Personally Liable for Arbitration Awards; Arbitration Award Could Not Be Vacated Since 90-Days to File a Motion Had Expired.  In Richard Malone, et al. v. Mathew Lasater, et al., No. M2014-00777-COA-R3-CV (Tenn. Ct. App. March 12, 2015), the parties signed, in their corporate capacities, a franchise agreement with an arbitration clause. They also executed a subsequent agreement to submit disputes arising from their franchise agreement to binding arbitration. The trial court held that the new arbitration agreement modified the franchise agreement with respect to the arbitration provision. The individual defendants were subject to arbitration in both their personal and corporate capacities because the CEO signed the new arbitration agreement in his personal rather than corporate capacity, and an additional individual signed the new arbitration agreement. As a result, they were liable for the amount the arbitrators awarded to plaintiffs, even though they were not personally bound by the franchise agreement. The trial court also denied defendants’ motion to dismiss based on the arbitrators’ failure to conduct a hearing required by Tenn. Code Ann. § 29-5-306. This issue, raised for the first time on appeal by the corporate defendant, was waived. Also, appeal was waived in the arbitration agreement. In any event, the lack of an arbitration hearing was not a valid basis to vacate because the defendants did not file a motion to vacate the arbitration award within 90 days, as required by Tenn. Code Ann. § 29-5-313(b). Opinion at maloner_031815.pdf.

Trial Court Did Not Clearly Rule on Motion to Compel Arbitration and Failed to Rule on Motion Challenging Amount and Reasonableness of Attorney’s Fees. In Faye Bowling Devore, et al. No. W2013-02827-COA-R3-CV (Tenn. Ct. App. July 17, 2015), the appellant’s law firm filed an attorney’s lien against real property awarded to her in the underlying case. The trial court set the lien amount. The appellant then disputed the amount of attorney’s fees by filing a motion to compel arbitration. She argued that, under their contract, the parties were required to arbitrate any dispute over the amount of attorney’s fees. The trial court did not specifically rule on the motion to compel arbitration, but inferentially denied it when granting Appellee’s motion to sell the property to satisfy the lien. The trial court then denied the appellant’s Rule 60.02 motion for relief from the order enforcing the attorney’s lien. The Court of Appeals found that the attorney’s lien was valid, but concluded the trial court erred in enforcing the lien as a judgment when there was a dispute over enforceability of the parties’ contract, the amount of attorney’s fees, and the proper means of calculating those fees. The Court vacated the order enforcing the attorney’s lien and remanded for an evidentiary hearing to resolve those questions. The Court of Appeals did not discuss the propriety of an “inferential” denial of the motion to arbitrate was proper. Opinion at chambersi_071715.pdf

2.     Mediation

In Retroactive Child Support Case, Amount of Child Support Based on Actual Parenting Time Rather Than Time Allowed in Mediated Agreement. In Richard Lee Hibbens v. Ashley Elizabeth Rue, No. E2014-00829-COA-R3-CV (Tenn. Ct. App. June 12, 2015), a mother and father reached a mediated agreement regarding the father’s parenting time and other issues. The agreement provided that child support would be modified by the attorneys according to state guidelines, but the child support amount was not modified at that time. Subsequently, the mother sought an award of retroactive child support. The father argued that his child support obligation should be based on the number of days he would have had with the child, regardless of the fact that he did not exercise all of that time due to his military deployment overseas. The Court of Appeals affirmed the calculation of child support and other issues. Child support must be calculated per actual days of parenting time, not the number of days the father was allowed under the mediated agreement. Opinion at hibbonsr_061215.pdf.

3.     Settlements; Releases

Assistant City Attorney Lacked Authority to Settle With a Former City Employee. In Michael Savage v. City of Memphis, No. W2014-01067-COA-R3-CV, (Tenn. Ct. App. February 9, 2015), an action to enforce a mediated settlement, the Court addressed whether an Assistant City Attorney had authority to settle a dispute with a former Memphis City employee. The former employee and the Assistant City Attorney participated in a mediation where the mediator instructed the parties to have someone with authority to settle. In addition to the Assistant City Attorney, two City administrators attended the mediation, one in person and the other by phone. The parties agreed to a settlement in the amount of $72,000.00. The Assistant City Attorney sent a written settlement agreement to the employee’s attorney. The employee signed the settlement agreement. The agreement had no language that the settlement was subject to the Mayor’s approval and had no signature line for the Mayor. The employee was never informed that the agreement was contingent on the Mayor's approval. The Mayor knew nothing about the case until he received the proposed settlement. He then rejected the settlement after reviewing it. The Memphis City Charter provides that, regarding settlements exceeding $500.00, the City Attorney may settle claims against the City "by and with the approval of the Mayor." The trial court agreed with the former employee's claim that the Assistant City Attorney acted with apparent authority to settle. The Court of Appeals reversed and granted summary judgment in favor of the City. The record did not contain sufficient evidence to establish that the Assistant City Attorney acted with either actual or implied authority to bind the City. One of the elements of apparent authority is that the principal knew or negligently acquiesced in the agent’s exercise of authority, an element that requires proof of the principal’s conduct. This was not established, given that the Mayor knew nothing about the case. Although, in the past, the Mayor approved settlements in excess of $500.00 in most instances, that course of conduct did not establish that the Mayor impliedly waived all objections in future matters. The Assistant City Attorney may have subjectively believed that she had authority to settle, but that does not establish implied authority. Opinion at http://www.tncourts.gov/sites/default/files/savagemichaelopn.pdf

Court Rejects a Husband’s Arguments Regarding Withdrawal of Consent to Marriage Dissolution Agreement and Condition Precedent. In Michael David Olson v. Jennifer Carlin Beck, No. M2013-02560-COA-R3-CV (Tenn. Ct. App. February 27, 2015), the husband argued that the trial court erred in: 1) not allowing him to repudiate the parties’ marital dissolution agreement, 2) its parenting plan determinations, and 3) its attorney fees award. The Court of Appeals affirmed. On the first issue, the Court applied the Supreme Court’s reasoning in Barnes v. Barnes, 193 S.W.3d at 495 (Tenn. 2006). The husband in Barnes, like the husband here, repudiated the terms of an MDA before court approval. But a marital dissolution agreement “may be enforceable as a contract even if one of the parties withdraws consent prior to the entry of judgment by the trial court, so long as the agreement is otherwise a validly enforceable contract.” Id. at 499. The agreement was reduced to writing, signed by both parties and notarized. As a result, the MDA was a contract. Id. The Court of Appeals also rejected the husband’s argument that the marital home’s good repair was a condition precedent to his agreement to the MDA. He had waived an argument that the trial court granting of a divorce on the basis of irreconcilable differences was a condition precedent to the MDA.  Opinion at olsonm_030215.pdf.

Failed Attempt to Undo Settlement. In Judy Woodard v. Farmers Family Restaurant, et al., No. M2014-00132-COA-R3-CV (Tenn. Ct. App. February 9, 2015), the plaintiff sued her former employer for sexual discrimination, retaliation, intentional infliction of emotional distress, negligent hiring, retention and supervision practices, and workers’ comp retaliation. The parties settled and the court entered an agreed order dismissing the case. The Plaintiff then filed a pro se motion to vacate the order of dismissal, claiming fraud. Her former employer moved to enforce the settlement. The trial court dismissed the complaint and then denied the Plaintiff’s Rule 60.02 motion for relief. On appeal, the Court affirmed the dismissal. The settlement included an enforcement mechanism where the Plaintiff retained the ability to seek specific performance or sue for breach of contract. Opinion at woodardj_021015.pdf

Abuse of Judicial Process Claim Did Not Require that Settlement Be a Presently Valid and Enforceable Contract and Only Required that Settlement Created Legal Relationship Between Parties. Susan Isbell v. William G. Hatchett, et al., No. W2014-00633-COA-R3-CV (Tenn. Ct. App. February 23, 2015) involved an alleged litigation settlement reduced to writing but not signed. One defendant did not make a required settlement payment because he was in divorce proceedings where he was enjoined from dissipating marital assets, an injunction that existed at the time of the settlement. After the divorce between the defendant and his wife was dismissed, Isbell alleged four causes of action in this case: 1) tortious interference with a contractual obligation; 2) abuse of judicial process; 3) breach of implied covenant of good faith and fair dealing; and 4) conspiracy to deny her rights under the settlement. The trial court dismissed the causes of action for tortious interference, breach of good faith, and conspiracy because each required existence of a contract. The settlement was unenforceable because it would violate the injunction against dissipation of marital assets. The trial court also dismissed the abuse of judicial process claim. On appeal, the Court reversed dismissal of Isbell’s claims. It held that the settlement agreement did not have to be presently valid and enforceable. Rather, the settlement agreement had to effectuate a legal relationship between the parties during the period when Isbell’s claims arose. The settlement was not wholly void from the outset. The divorce court’s §36-4-106 injunction was not a final judgment and not entitled to res judicata effect, and it was not absolute. Thus, the parties created a voidable contract, creating a legal relationship. The defendant’s own filing, which asked the court to lift the injunction, is further evidence of that legal relationship. The Court found that the complaint sufficiently alleged abuse of judicial process, and reversed the trial court‘s dismissal of that claim. Opinion at isbells_COR_022415.pdf.


Settlement Announced in Open Court Enforced. Nancy Hart Diehl Harvey, Executrix of the Estate of W. Joseph Diehl, Jr., et al. v. Phillips Turner, Jr., No. M2014-00368-COA-R3-CV (Tenn. Ct. App. March 26, 2015) involved enforcing a settlement announced in open court. After a bench trial in a property damage suit, but before the court ruled, the parties negotiated a settlement “agreement in principle.” The attorneys announced the settlement’s essential terms in detail to the court. By agreement, the parties were not present. Their attorneys announced that the parties agreed to the settlement. The parties then failed to agree to a written settlement document, and the plaintiffs asked the trial court to enforce the settlement. The Court of Appeals affirmed the trial court’s decision to enforce the settlement. First, although Tennessee Courts have not defined “agreement in principle” and other courts have conflicting views on the term’s meaning, the settlement was not a mere agreement to agree; its terms were not indefinite. Second, although the parties contemplated a formal written settlement, the agreement announced in court was detailed, with the attorneys announcing that they were reciting the “essential terms of the settlement” from which they would work to prepare a comprehensive release. The trial court found that the announced settlement resolved all the issues the court was going to try. Third, although the party challenging the settlement wanted a sewer line that was not addressed in the settlement announcement, the sewer line was not among his claims in the lawsuit and therefore not material as to whether a settlement contract was created. Fourth, although the parties continued to negotiate after the court announcement, there was no claim that those negotiations involved any essential term presented to the court. Fifth, the presence of the parties in open court was not required where the parties agreed not to be present and the attorneys advised the court of that agreement. Sixth, no condition precedent prevented enforcement. Seventh, the settlement involved a property line dispute so the Statute of Frauds did not apply. Opinion at harveyn_033115.pdf.

Court Requires Attorneys to Honor Agreed Fee Reduction in Mediated Settlement despite Client’s Refusal to Sign Releases. In Janice Bunch v. Tiffany Jones, No. W2014-01161-COA-R3-CV (Tenn. Ct. App. March 30, 2015), the Court addressed the amount of attorney's fees after the underlying lawsuit was settled. The plaintiff’s lawyers represented her in an auto accident action. The attorney engagement letter provided for a contingency fee of 1/3 of gross proceeds which were defined to include a recovery by settlement. During mediation, the attorneys agreed to lower the fee from 1/3 to 10%, in consideration of the client's agreement to settle her case against the tort defendants for $52,000. This reduction was confirmed in a letter from the attorneys. The client then signed an Agreement of Essential Terms of Settlement at the mediation. But later, she allegedly refused to sign the releases drafted by the tort defendants. The trial court granted the lawyers’ motion to withdraw. The attorneys then filed a notice of attorney’s lien for a 1/3 contingency fee, not 10%, asserting that their client had breached her agreement with them. On the tort defendants' motion, the trial court enforced the settlement agreement reached by the parties at mediation. The trial court also agreed with the attorneys’ claim that the client’s refusal to sign the releases drafted by the tort defendants was a breach of the modified fee agreement. The trial court granted the motion to enforce the attorney’s lien for the full amount. The Court of Appeals reversed. The terms of the modified fee agreement between the client and her attorneys, a contract that was separate from the Agreement of Essential Terms of Settlement, only required the client to settle her case with the tort defendants for $52,000, which she did. The obligation to release the tort defendants was a duty the client owed to the tort defendants, not to her attorneys. Regardless, any breach of the settlement by the client’s refusal to sign releases was cured by the trial court’s dismissal of the tort claims with prejudice. Opinion at bunchj_033115.pdf.

Post-Settlement Attorney Fees Unreasonable in Memphis Divorce Case. In Jennifer Furnas Coleman v. Marty Alan Coleman, No. W2011-00585-COA-R3-CV (Tenn. Ct. App. February 4, 2015), the mother petitioned to modify the permanent parenting plan and suspend the father’s parenting time with the parties’ two minor children due to his admitted drug and alcohol abuse. The mother incurred around $16,000.00 in legal expenses and then changed attorneys. The parties eventually settled the petition as to visitation, but reserved the issue of attorney’s fees which by then totaled $49,594.74. Despite the settlement, the mother incurred additional attorney and investigator fees, to the point her legal expenses totaled over $350,000.00. The trial court awarded the mother approximately $42,000.00, which was affirmed on appeal. Opinion at colemanj_COR_020615.pdf.

Unsuccessful Duress Claim Regarding Mediated MDA. Lori Kay Jones Trigg v.  Richard Darrell Trigg, No. E2014-00860-COA-R3-CV (Tenn. Ct. App. January 5, 2015), involved a husband’s motion to set aside or amend a final divorce judgment that incorporated the parties' mediated marital dissolution agreement. Both parties were represented by counsel. He claimed, among other things, that he was under duress when he entered into the marital dissolution agreement in that pending orders of protection were “leveraged” against him. The husband did not appeal the trial court’s decision to strike the husband’s affidavit. The husband was a sophisticated party with bargaining power, unlike the inexperienced “country girl” threatened with bodily harm in Pride v. Baker, 64 S.W. 329 (Tenn. Ct. Ch. App. 1901). Also, unlike the situation in Pride, the external pressure on the husband was not “improper” or “wrongful.” Here, the wife did not seek an order of protection for any wrongful purpose. The Court of Appeals also distinguished Simpson v. Harper, 111 S.W.2d 882 (Tenn. Ct. App. 1937) on the duress issue. Opinion at http://www.tncourts.gov/courts/court-appeals/opinions/2015/01/05/lori-kay-jones-trigg-v-richard-darrell-trigg.

4.     Workers Comp; Employment Grievance Procedures

Reconsideration of Workers Compensation Settlement Granted when Employee, according to Board Minutes, Was Terminated without Cause. Jimmy Hensley v. Cocke Farmers CooperativeTNo. E2014-00264-SC-R3-WC (Tenn. Workers Comp App. April 27, 2015) is a workers’ compensation settlement reconsideration case. The employee was injured in 2005. He returned to his job and settled his claim for permanent disability benefits in 2007. In 2010, he was terminated by his employer, a nonprofit. The employer’s Board minutes state the employee was terminated without cause. When the employee sought reconsideration of the workers’ compensation settlement, the employer argued that the employee was actually terminated for misconduct and, per Tenn.  Code Ann. § 50-6-241(d)(1)(B)(iii)(b), not entitled to reconsideration. The trial court granted the employee’s motion for partial summary judgment and awarded additional permanent disability benefits. Tenn.  Code Ann. § 48-58-101(b) provides that “all corporate powers shall be exercised by or under the authority of, and the affairs of the corporation managed under the direction of, its board.” In Tennessee, a corporation speaks through the minutes of its board, and the “unofficial declarations” of members of the board cannot disprove the contents of the minutes. Therefore, the trial court properly declined to consider affidavits stating the employee was actually terminated for cause, and the Board gave him a break by not reflecting that in the minutes. Opinion at hensleyj_042915.pdf,


* Marnie Huff’s law clerk, Mallory Maier, prepared part of the caselaw update section of the e-news. Marnie is an independent mediator, arbitrator, and workplace conflict management consultant in Nashville. Her website is at www.MargaretHuffMediation.com. She is a member and past Chair of the TBA Dispute Resolution Section. She recently completed a 5 year term on the ABA Section of Dispute Resolution Council. She served the Section in additional leadership positions, including Strategic Outreach Officer, Chair of the Section’s Ethics and Membership Committees, and Co-chair of the ABA Advanced Mediation and Advocacy Skills Institute. She is currently a member of the Nashville Bar Association’s Board of Directors and Board liaison to the NBA ADR and Fee Disputes Committees.