FINRA Arbitration Panel’s Decision Is Supreme
The 5th Circuit Court of Appeals affirmed a lower court ruling holding that the petitioner did not provide adequate evidence to show that an arbitration award was procured by fraud in Wanken v. Wanken, 2011 U.S. App. LEXIS 20014 (5th Cir. 2011). Beacon Financial Advisors terminated Wanken, a sales associate, and Wanken filed for arbitration via the Financial Industry Regulatory Authority (FINRA). The FINRA arbitrator upheld the firm's decision to terminate the employee, but granted him arbitration costs and changed his termination status to “no-fault.” Wanken argued that the Court should review the arbitration award on its merits, and the Court disagreed. To read more, go to: http://www.ca5.uscourts.gov/opinions/unpub/11/11-10219.0.wpd.pdf
The Illusion of Illusory Arbitration Clauses: Protecting the Little Guy
Earlier this year, the 5th Circuit Court of Appeals held that an arbitration clause in the defendant's employee handbook was illusory. In Carey v. 24 Hour Fitness USA, Inc., 2012 U.S. App. LEXIS 1339 (5th Cir. 2012), Carey was a sales representative at 24 Hour Fitness and signed the Employee Handbook Receipt Acknowledgement, binding him to the arbitration clause therein. He filed a class action against 24 Hour Fitness alleging a Fair Labor Standards Act violation for not compensating him and other similarly situated employees for overtime work. 24 Hour Fitness submitted a petition to compel arbitration. Carey argued that the agreement was illusory because 24 Hour Fitness “retain[ed] the unilateral right to modify or terminate the arbitration provision” at any time. The Court agreed that one party, 24 Hour Fitness, could unilaterally avoid its promise to arbitrate by modifying the Handbook to eliminate the arbitration provision if it determined that arbitration was no longer in its interest. To read more, go to: http://www.lexisnexis.com/community/labor-employment-law/blogs/le-martindale/archive/2012/03/05/u-s-fifth-circuit-of-appeals-invalidates-arbitration-clause-in-at-will-handbook-applying-texas-law.aspx
The Supreme Court Goes in a Decision after AT&T Mobility V. Concepcion
In Marmet Health Care Ctr. v. Brown, 2012 U.S. LEXIS 1076 (2012), the U.S. Supreme Court vacated the Supreme Court of Appeals of West Virginia’s judgment and granted certiorari in two consolidated negligence cases involving patients, nursing homes, and the Federal Arbitration Act (FAA). The parties entered into contracts with arbitration agreements that compelled all disputes, aside late payment disputes, to arbitration pursuant to the FAA. In each case, a family member sued a nursing home for negligence because of the death of a patient. The Supreme Court remanded the cases back to , finding that the high court incorrectly interpreted the FAA without giving deference to precedent from the Supreme Court. The Court found that ’s rule prohibiting pre-dispute arbitration agreements in personal injury and wrongful-death claims is contrary to the terms and coverage of the FAA in light of AT&T Mobility. To read more, go to: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cts=1331742631542&ved=0CDIQFjAA&url=http%3A%2F%2Fwww.supremecourt.gov%2Fopinions%2F11pdf%2F11-391.pdf&ei=ocdgT_SyNqba0QGMx9m8Bw&usg=AFQjCNHCRpdgk2Sm7pTiDjCSz24yZLB9pw&sig2=aeoZHQuTaarrB5zKoDeQPg
Duane Rohrbacher is a law student and Ph.D. candidate at Pennsylvania State University.