Arbitration / Court Decisions

In a putative class action, a court denied the defendant’s motion to compel individual arbitration, pending discovery as to the appropriate law governing the dispute and the scope of two potentially applicable agreements between the parties. The dispute surrounded the appropriate charges for propane delivery. Plaintiff, a propane customer, contended that an oral contract existed between him and the company which set the price at a “market rate” and did not include an agreement to arbitrate. The company, on the other hand, contended that the parties’ relationship was governed by a written agreement sent to the customer following the initial propane services, and that the agreement contained a class-waiver arbitration clause. The court found that it lacked sufficient facts to determine both which state laws and which of the two purported contracts applied. The court denied the motion to compel arbitration and ordered “limited discovery as to the appropriate choice-of-law as well as the scope of the oral and Master Agreements.” Howard v. Ferrellgas Partners, L.P., Case No. 10-02555 (USDC D. Kan. Aug. 27, 2012).

This post written by Michael Wolgin.

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In a class action suit against a company that sells online programs offering discounts on goods and services, the Second Circuit affirmed the district court’s denial of defendant’s motion to compel arbitration. Defendants argued that they provided plaintiffs with notice about the arbitration provision through a hyperlink on a webpage plaintiffs would have seen before enrolling in defendants’ service and in an email sent to plaintiffs after enrollment. The court held that an unsolicited email from an online consumer business sent after enrollment does not put recipients on inquiry notice of its terms and that failure to cancel the membership does not, by itself, constitute assent. The court declined to decide the issue of whether the hyperlink on the enrollment screen provided notice of the arbitration provision because defendants failed to raise the issue in the district court. However, the court hinted that the hyperlink “might have created a substantial question as to whether the [arbitration] provision was part of a contract between the parties.” Schnabel v. Trilegiant Corp., No. 11-1311 (2d Cir. Sept. 7, 2012).

This post written by Abigail Kortz.

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The defendant was the managing general agent for a book of reinsurance business for the plaintiff reinsurer. The parties disputed commission amounts owed by defendant to the plaintiff. Plaintiff initiated an arbitration seeking recoupment of approximately $2 million in commissions it claimed it was owed, as well as approximately $70,000 in other expenses arising from the dispute. An interim order in the arbitration established that plaintiff was owed the $70,000 portion of the claim, and the parties agreed to resolve the larger portion later, as they needed information to develop the claim. In the meantime, the plaintiff filed an application in district court seeking security from the defendant, pursuant to a Texas statute allowing for the posting of security in arbitrations. It sought security for the $70,000 already established by the interim award, as well as the $2 million it continued to seek in the arbitration. The Court denied both, arguing that plaintiff had not made out a case that is was likely to secure the $2 million award it sought, and that there was no basis to require security for the “de minimis” $70,000. General Fidelity Insurance Co. v. WFT Inc., 3-11-CV-0448 (USDC N.D. Tex. Oct. 15, 2012).

This post written by John Pitblado.

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