Poorly drafted waivers include lawyerly language that may appear concrete on the surface but crumbles during a lawsuit, warns Hellmuth & Johnson in a blog post.

Authors Micheal D. Howard and Jason S. Raether describe a recent case involving a fitness studio  that demonstrates how a poorly drafted waiver can be as effective as having no waiver at all.

In the case, involving an injury to the customer of a fitness studio, a trial court found in favor of the studio, based on the language of an indemnity agreement. But the appellate court reversed, finding the language to be inadequate.

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A well-designed arbitration clause can give the parties substantial control over procedures and costs, as well as over who decides which issues and when, writes Daniel Pascucci in the blog ADR: Advice from the Trenches.

But, the Mintz, Levin, Cohn, Ferris, Glovsky and Popeo lawyer warns, all too often parties make agreements that leave the decisions on most of their options to others or to chance.

In his article, he dissects the generic arbitration clause, and describes what an arbitration clause should do and what it can do.

“Arbitration’s promise of being faster, more efficient, and more predictable than judicial litigation should be viewed as conditional – if the parties are willing to put in the effort to design a suitable process, arbitration can deliver on its promise,” Pascucci concludes.

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The U.S. Supreme Court has granted certiorari in New Prime Inc. v. Oliveira, which should provide guidance as to the circumstances in which the Federal Arbitration Act (FAA) applies to interstate transportation workers who are purported independent contractors, according to the Transportation Blog of Holland & Knight.

“The case will be important for in-house and private transactional attorneys who draft contracts with transportation sector independent contractors, as well as litigators handling employee misclassification cases,” the article’s authors write.

They explain: “Over the past several years, a spate of class action litigation has targeted the long-standing use of owner-operator truck drivers as independent contractors, with drivers claiming that they should be classified as employees. The contract between the motor carrier and the driver often contains an arbitration clause, but drivers typically file these cases in court, leading to a fight over the proper forum.”

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Pepper Hamilton LLP’s Constructlaw blog discusses an Ohio case in which a plaintiff sued a building company and attempted to have the arbitration clause in a construction contract declared unenforceable.

The contract identified the builder in the case by a name that was a fictitious name for a similarly named company and was not registered with the Ohio secretary of state, writes Emily D. Anderson. The trial court denied plaintiffs’ motion to invalidate the arbitration clause.

The appellate court agreed with the trial court, observing that the builder did not initiate the action but was merely defending it.

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An agreement between two parties involved in an international contract may involve a mechanism, known as the “home country” provision, that provides that the party initiating arbitration must sue the other party in its home country.

A post of the website of Skadden, Arps, Slate, Meagher & Flom explains that “proponents of such clauses say they provide a disincentive to elevate disputes because a party will be reluctant to go to the other side’s home country. Though they are not widely used in large transactions (and are not recommended in arbitral literature or by arbitral institutions), they are occasionally present.”

The authors discuss two cases that illustrate that “home country” arbitration clauses may prove cumbersome to administer in practice and may result in unintended consequences for the parties.

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In what appears to be a first-of-its-kind ruling, the District Court for the Southern District of New York recently concluded that a federal district court has the authority to vacate an arbitrator’s class certification award based on the due process rights of absent class members, according to a post on the website of K&L Gates.

The ruling involves the long-running Jock v. Sterling Jewelers, Inc., in which the district court and the Second Circuit Court of Appeals have rendered multiple decisions addressing the proper role of a court in reviewing an arbitrator’s authority to determine whether parties have agreed to class arbitration.

The K&L Gates authors explain that the Jock court determined that, absent an express class arbitration provision in each putative class member’s arbitration agreement, an arbitrator does not have the authority to bind absent class members to a class judgment—even if they signed the same form of arbitration agreement as the named plaintiffs.

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Liz Kramer, writing in Stinson Leonard Street’s Arbitration Nation blog, provides a rundown of the top 10 developments in arbitration law during the past year.

“2017 was a big year in arbitration law,” she writes. “We went from a country that seemed on the verge of banning arbitration in most consumer and employee contracts to a country whose federal policy embraces arbitration in nearly every context.”

Among the trends she discusses are cases on regulation reversal, preemption, the NLRB, small claims court confusion, statutory preclusion, non-signatories getting divergent results, and more.

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Non-disclosure agreements are part of an arsenal of legal tools that employers have at their disposal to protect their reputation and their bottom line — but those tools often come at the expense of wronged employees, writes Michelle Chen in an article for The Nation.

She also discusses the use of forced arbitration that requires employees to channel their workplace disputes through an extralegal negotiation process, rather than through the courts.

She adds:

According to the National Women’s Law Center (NWLC), both forced arbitration and NDAs have in many workplaces become a standard tactic to preempt workers from taking legal action or disclosing sexual-harassment and -assault charges. These agreements force workers to sign away their rights in exchange for a job, by making them agree to settle future disputes outside the courts through an opaque negotiation process controlled by management and lawyers—effectively sentencing women to silence before they ever step into a courtroom.

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Jason M. Knott of  Zuckerman Spaeder LLP describes a recent case in which  T3 Motion, Inc. (a Segway competitor) used a lack of mutual assent to avoid arbitration of its claims against its former CEO, William Tsumpes.

Writing in the firm’s Suits By Suits blog, Knot explains that it’s unusual for an employee to seek arbitration in a contract dispute.

“T3 wanted to litigate in court, and its former CEO, William Tsumpes, wanted to force T3 into arbitration. T3 had brought suit against Tsumpes and various corporate entities that it alleged were his alter egos, alleging that Tsumpes improperly took money from the company for his own personal use,” Knott writes.

Tsumpes presented a signed employment agreement that required arbitration, but T3 contested whether it had agreed to the written contract.

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A recent federal court denied an employer’s motion to compel arbitration, finding that it waived its right to arbitration by engaging in litigation.

George L. Kanabe, a partner in the San Francisco office of Orrick, Herrington & Sutcliffe LLP, discusses three key lessons the ruling provides for plaintiff-employers.

Kanabe reports that the ruling noted, “[t]here is no other reasonable interpretation of plaintiff’s untimely demand for arbitration than as a deliberate tactic to test the judicial waters but then, when those waters did not flow the direction plaintiff intended, to change routes in hopes of finding a different current.”

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Liz Kramer, writing for Stinson Leonard Street’s Arbitration Nation, writes that a recent ruling for a state supreme court may be indicative of what litigation over nursing home arbitration agreements will look like after the U.S. Supreme Court’s ruling in Kindred Nursing Centers v. Clark.

Kramer, a partner in the firm, discusses the Wyoming Supreme Court’s reversal of a lower court’s ruling in an arbitration case. The lower court denied a nursing home’s motion to compel arbitration.

But the state’s high court reversed, following the U.S. Supreme Court’s Kindred ruling that another state’s rationale for not enforcing an arbitration agreement was preempted by the Federal Arbitration Act.

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A recent decision by the United States Court of Appeals for the Third Circuit is a reminder that — for an arbitration clause to apply in certain situations or to certain parties — that intention must be built into the plain terms of the contract.

In a post on the Blank Rome website, partners Stephen M. Orlofsky and Deborah Greenspan discuss White v. Sunoco, Inc. The case involved the “Sunoco Awards Program,” under which customers who used a Citibank-issued “Sunoco Rewards Card” credit card were supposed to receive a 5-cent per gallon discount on gasoline purchased at Sunoco gas stations.

A dispute over the discount led to arbitration.

In its ruling the appellate court found: “[n]owhere does the agreement provide for a third party, like Sunoco, the ability to elect arbitration or to move to compel arbitration.”

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The Senate has voted 51-50 to get rid of a banking rule that allows consumers to bring class-action lawsuits against banks and credit card companies to resolve financial disputes, NPR reports.

Vice President Pence cast the tie-breaking vote to rollback the Consumer Financial Protection Bureau rule banning restrictive mandatory arbitration clauses found in the fine print of credit card and checking account agreements, writes NPR reporter Scott Neuman.

President Trump is expected to sign the measure, which has already been approved by the U.S. house.

Neuman writes: “CFPB said it was redressing a situation in which consumers were forced ‘to give up or go it alone — usually over small amounts,’ while companies were able to ‘sidestep the court system, avoid big refunds, and continue harmful practices.'”

Read the NPR article.

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The validity of arbitration clauses in employment contracts is unclear and is now before the U.S Supreme Court, points out Mary An Couch in Bradley Arant Boult Cummings LLP’s Labor & Employment Insights blog.

The Supreme Court heard oral argument in National Labor Relations Board v. Murphy Oil, USA, Inc. and two other consolidated cases about whether such clauses violate the National Labor Relations Act (which governs employer-employee relations) or whether the Federal Arbitration Act (which governs arbitration agreements) trumps the NLRA, she writes.

The relevant cases being considered are from the 5th Circuit, which found the arbitration clause did not violate the NLRA, and the 7th and 9th circuits, which found similar clauses unenforceable.

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In a case of first impression, the First U.S. Circuit Court of Appeals addressed issues that have broad implications and present a reminder to companies to review their arbitration clauses and confirm if they are drafted properly as to the issue of who decides arbitrability issues; a court or arbitrator?

Christopher R. Nolan and Clayton J. Vignocchi discuss Oliveira v. New Prime, Inc. in Holland & Knight’s Transportation Blog.

“The dispute concerned a Fair Labor Standards Act class action between an independent contractor truck driver and an interstate trucking company. The plaintiff executed an ‘Independent Contractor Operating Agreement,’ which included an arbitration clause,” the authors explain.

They discuss the court’s rejection of the trucking company’s argument, warning that in-house counsel who draft a broad arbitration clause similar the the trucking company’s will result in litigation concerning arbitrability.

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The U.S. Second Circuit Court of Appeals has issued a landmark ruling in Meyer v. Kalanick that clarifies the standards for contract formation in the age of smartphones and mobile contracting, providing important guidance to companies about how to design enforceable mobile contracts, reports Coblentz Patch Duffy & Bass.

The court applied California law to determine the enforceability of the arbitration clause in Uber’s Terms of Service, holding that a “reasonably prudent smartphone user” unambiguously assents to a conspicuously hyperlinked contract when he downloads a smartphone application to his mobile phone and signs up for an account.

“Now is a good time for businesses to review their online and mobile contracting practices,” according to the article by Timothy Crudo, Rees Morgan, Skye Langs, and Mark Hejinian. Make sure that your terms and conditions are highly visible on an uncluttered page or screen.”

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California courts are often hostile toward defendants that seek to require litigious employees to honor their arbitration agreements, warns Michael Wahlander in the Seyfarth Shaw California Peculiarities Employment Law Blog.

“The defendant’s plight might seem more stark still if the defendant has not itself signed the agreement. But defendant employers still have means of enforcing such agreements, which can be especially significant in class actions claiming joint employment,” he writes.

He covers the subjects of the agency theory, equitable estoppel, and third-party beneficiary.

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Most arbitrations, and all commercial arbitrations, are creations of contract, and courts are generally required to enforce an arbitration agreement as they would any other contract, points out Samuel M. Tony Starr on Mintz Levin’s ADR: Advice From the Trenches blog.

Because the arbitration clause in a commercial contract is so critical, careful review of that clause surely must be a component of an enterprise’s risk analysis.

He offers 10 basic considerations that will help to guide that review.

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As a result of a rule imposed by the Consumer Financial Protection Bureau, consumer contracts entered into after March 19, 2018, with a wide range of consumer financial services companies will need to be revised in regard to their agreements’ arbitration clauses.

Pillsbury Global Sourcing explains on its website that those companies “will need to: (a) remove language in pre-dispute arbitration provisions that bars consumers from participating in class actions; and (b) add language informing consumers of their rights to participate in class actions. The Rule will also require such companies to provide information on individual arbitration awards to the CFPB for publication in a public database (redacting consumers’ private financial information).”

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Alston & Bird asks and answers the question: In an international arbitration, when an arbitration provision is ambiguous about the seat of the arbitration, who resolves the question?

Authors Andy Tuck and Lee Deneen discuss Bamberger Rosenheim Ltd. v. OA Development Inc., in which the Eleventh Circuit held that interpretation of a venue provision is the arbitrator’s prerogative.

They write:

The federal circuits are split on whether the FAA serves as a proper basis for vacatur of an international arbitration award. In this case, the panel saw “no reason to analyze [Bamberger’s] arguments under the New York Convention or [the FAA] separately,” since Bamberger’s argument was the same for both bases for vacatur. The court stated in a footnote that it “assume[d], without deciding, that [the FAA] applies to the award in the present case.”

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