Montana High Court Creates "Buckeye" Exception

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Plus Decisions by Other State Courts

In Thompson v. Lithia Chrysler Jeep Dodge (185 P.3d 332, May 20, 2008) the Montana Supreme Court held that a court should decide contract formation issues, including whether a party failed to satisfy a condition precedent. The court reasoned, "If formation of a contract never occurred, then the parties never agreed to arbitrate and it would be inappropriate to submit the matter to arbitration."

Buckeye Check Cashing v. Cardegna (546 U.S. 440, 2006) held that claims alleging a contract is void from the outset for illegality or other reasons are for the arbitrator to decide. The Montana Supreme Court acknowledged that its ruling established a narrow exception to Buckeye. It explained that it would not make sense to have an arbitrator decide if a contract was formed because if the decision is "no," the arbitrator never had the authority to decide the issue in the first place.

Ala. Rules on Class Arb. and Time to Appeal

In the May-July 2008 issue, the Dispute Resolution Journal reported on the Sept. 25, 2007, decision by the Alabama Supreme Court in Ex parte Johnson. This decision has been withdrawn and replaced with a decision dated May 16, 2008 (Nos. 1061760 & 1061762, 2008 WL 2068077). The new decision holds that whether mobile home purchasers could arbitrate as a class depended on whether their agreement specifically granted the arbitrator authority to hear class disputes. The court also held that by agreeing to arbitrate under the American Arbitration Association's Commercial Arbitration Rules, the parties gave the arbitrator authority to determine if their arbitration agreement permits classwide arbitration.

In Horton Homes v. William Shaner (No. 1061659, 2008 WL 2469364, June 20, 2008) the Alabama Supreme Court ruled that a party has 30 days from the filing of a notice of appeal to request that a circuit court amend or vacate an arbitration award. In addition, it held that circuit courts have 90 days to decide the motion to vacate, and a party desiring to appeal the award to a higher court has 42 days from the receipt of the award to file a notice of appeal.

Cal.: Rulings on Disclosure, Judicial Review

On July 10, 2008, in Haworth v. the Superior Court (79 Cal. Rptr. 3d 800) the 2nd Appellate District vacated an award in a medical malpractice case arising out of a woman's plastic surgery because the third arbitrator, a former judge, failed to disclose that he had been censured by the California Supreme Court for disparaging women based on their appearance.

In Luce, Forward, Hamilton & Scripps, LLP v. Koch (75 Cal. Rptr. 3d 869, April 30, 2008), a case of first impression, the 4th Appellate District held that an arbitrator did not have to recuse himself at a party's request after disclosing his prior service on the board of a professional legal organization on which the adversary's counsel and expert witness also served, since the disclosure was not required by law. In addition, the court held that there was no basis to vacate the arbitrator's award.

In Casden Park La Brea Retail LLC v. Ross Dress for Less (75 Cal. Rptr. 3d 763, April 25, 2008) the 2nd Appellate District ruled: (1) nondisclosure of a minor political contribution to a party-appointed arbitrator who previously ran for office was insubstantial and not a ground to vacate an award; (2) a neutral arbitrator had no duty to disclose transactions by his employer in which he had no financial interest, and no duty to investigate the employer's transactions or political contributions of other employees of which he had no knowledge at the time of his appointment.

The California Supreme Court ruled in Berglund v. Arthroscopic & Laser Surgery Center (187 P.3d 86, July 27, 2008) that under Section 1283.05(c) of the Code of Civil Procedure, a nonparty to an arbitration is entitled to full judicial review of an order compelling document production. …