The Arkansas appellate courts are starting a electronic filing pilot program. According to the standards document, briefs are to be submitted in searchable PDF formate (except for the addendum) and cannot have "live" links to other parts of the pdf or the Internet in them. More information is at the Arkansas Judiciary website.
The Arkansas Supreme Court affirmed Greene County Judge David Burnett's class certification decision in Firstplus Home Loan Owner 1997-1, et al. v. Bryant, No. 07-740. The plaintiffs are consumers who took out promissory notes secured second mortgages on their homes. They allege that they paid usurious interest rates on their notes and that the defendants fraudulently charge recording fees on the loans. Judge Burnett certified five subclasses against a panoply of thirteen trusts.
The defendants challenged every Rule 23 factor on appeal: commonality, typicality, adequacy (although not the adequacy of class counsel), numerosity, predominance, and superiority. Notable holdings include that a challenge to predominance due to defenses--the holder-in-due course doctrine, counterclaims, and bankruptcy--are merits determinations and thus off-limits in the class certification phase.
The case represents a re-affirmation of Arkansas's permissive class action procedure.
Thanks to Mac Golden for pointing us to Preston v. Ferrer, 552 U.S. __ (2008), which probably invalidates the Eighth Circuit's recent decision, Express Scripts v. Aegon Direct Marketing Services, Inc., (previously posted 2/20/08).
Ferrer is television's Judge Alex; Preston is an attorney who provided professional services to Ferrer. Their contract had an arbitration provision that incorporated the rules of the American Arbitration Association (AAA). California has a law called the California Talent Agencies Act (TAA) that gives the California Labor Commissioner jurisdiction over disputes against talent agents. When the parties had a dispute over fees, Preston initiated arbitration, while Ferrer petitioned the labor commissioner. The trial court and state appellate court both held the labor commissioner had exclusive jurisdiction.
The Supreme Court reversed, holding that when parties agree to arbitrate, the Federal Arbitration Act supersedes state laws granting primary jurisdiction to an administrative or judicial forum. Part of the Court's reasoning was the contract's incorporation of AAA rules, which let the arbitrator determine arbitrability. Note this argument was untimely brought up in Express Scripts, so the Eighth Circuit did not address it. When this issue comes before the Eighth Circuit again, it will likely find that the arbitrator determines arbitrability when the contract incorporates the AAA rules.
The Arkansas Court of Appeals affirmed summary judgment in Neal v. Farris, No. 07-839 (2/27/08). his case concerns a dispute about summary judgment procedure. As we all know, the nonmovant has 21 days to respond, and then the movant has 14 days to file a reply. See Ark. R. Civ. P. 56(c)(1). Later, the rule says, "No party shall submit supplemental supporting materials after the time for serving a reply." Id.
Farris moved for summary judgment. Neal received two extensions and then timely filed the response. Farris filed his reply 3 days later, and the trial court granted summary judgment 6 days later. Five days later (11 days since the response was filed), Neal tried to file a supplemental response with new evidence. Farris appealed, arguing the quoted language above means both parties have up to 14 days after the response is filed to submit supplemental materials, regardless of when the reply is actually filed.
The court of appeals skirted the issue. Following the supreme court's analysis in Southeastern Distributing Co. v. Miller Brewing Co., 366 Ark. 560 (2006), the court focused on Neal's extensions. The court felt that, with two extensions, Neal had plenty of time to supplement her response. These cases are unsatisfying; the courts need to declare whether or not filing the reply cuts off the time to submit supplemental materials or not.
A pro se plaintiff obtained judgment for copyright infringement and anticircumvention violations in Gregerson v. Vilana Financial, Inc., 2008 WL 451060 (D. Minn. 2/15/08) (previously posted here 9/12/07 and here 1/31/07).
Vilana copied two of Gregerson's photographs, and the court had previously granted him summary judgment as to copyright infringement liability. After a bench trial, the court awarded him damages of $9,462 on the copyright infringement claims. The more important issue was anticircumvention. Vilana removed a digital watermark from one of the photographs. The court held this was an anticircumvention violation, see 17 U.S.C. § 1202(b)(1), and awarded Gregerson statutory damages of $10,000. In reaching this conclusion, the court based its analysis on IG Group, Ltd. v. Wiesner Publishing, LLC, 409 F.Supp.2d 587 (D.N.J. 2006).
eBay filed a patent infringement lawsuit in the Western District of Arkansas. eBay, Inc. v. IDT Corp., No. 08-4015 (filed 2/20/08). According to the Complaint, eBay holds the patent for a long distance telephone communication system. The Complaint alleges IDT is infringing this patent, particularly through its PennyTalk calling cards.
The Arkansas Court of Appeals reversed judgment in Farm Bureau Mut. Ins. Co. of Am. v. Nowlin, No. 06-1053 (2/20/08).
Nowlin took ownership of his deceased mother's home and had it insured by Farm Bureau. The home was destroyed by fire in May 2003. At trial, he and his uncle both confirmed that no one had lived in the house from September 2002 until May 2003. The insurance policy had an exception if the house was not occupied for more than 60 consecutive days. Despite Nowlin's testimony, the jury found the exception did not apply.
The court of appeals held there was no evidence to support the jury's finding. Even considering his testimony in a light most favorable to Nowlin, the house had been unoccupied for more than 60 consecutive days.
The Arkansas Court of Appeals reversed a grant of default judgment in Brooks v. Farmers Bank and Trust Co., No. 07-694 (2/20/08).
Farmers Bank properly served Brooks with the complaint, but he failed to answer. The bank did not move for default judgment, but there was a "hearing on the Bank's complaint" (we're not sure what that is). Brooks appeared at this hearing. The bank orally moved for default judgment, and the trial court granted it.
The court of appeals reversed on procedural grounds. When a motion for default judgment is filed, the defendant must have at least 3 days' notice before the hearing. See Ark. R. Civ. P. 55(b). This point is probably academic; it seems Brooks has no defense to his failure to answer, and the default judgment will probably be reinstated.
The Southern District of Iowa entered judgment after jury trial in a trade secret misappropriation case. C Plus Northwest, Inc. v. DeGroot, 2008 WL 391271 (S.D. Iowa 2/14/08).
The facts of the case are not particularly exceptional. Mr. Sjogren owned C Plus; defendants were key employees. Defendants than formed a new company, diverted C Plus customers to their new company, and left C Plus with substantial liabilities. The jury awarded Sjogren and C Plus total damages of $1.295 million to C Plus and Sjogren. The court remitted the award to $752,000 to C Plus and denied individual damages to Sjogren.
The exceptional aspect of this case was the court's praise of the attorneys' professionalism: "The parties were represented well at trial, and the hard work and professionalism exhibited by counsel for both sides was apparent to the Court, as well as to the jurors." Id. at * 1.
The Eastern District of Arkansas denied cross motions for summary judgment in Otto Dental Supply, Inc. v. Kerr Corp., 2008 WL 410630 (E.D. Ark. 2/13/08).
For 25 years, Otto Dental was an authorized dealer of Kerr, using Kerr's trademarks to market and sell its goods. In 2004, Kerr imposed a purchasing requirement on its dealers. When Otto could not meet the requirement, Kerr terminated the relationship. Otto argues the parties formed a franchise under the Arkansas Franchise Practices Act, and Kerr violated the act. See A.C.A. § 4-72-201, et seq. Kerr argues the parties did not create a franchise.
Both parties moved for summary judgment, but the court determined that the jury must decide whether the parties created a franchise.
The Eighth Circuit affirmed a denial of a motion to dismiss pending arbitration in Express Scripts, Inc. v. Aegon Direct Marketing Services, Inc., No. 07-1971 (2/13/08). This is a long post, but this case has two important points for the validity of arbitration clauses in the Eighth Circuit.
Aegon and Express Scripts (ESI) entered into a contract in 1995 that contained a broad arbitration provision. The provision adopted the rules of the American Arbitration Association (AAA). The parties proposed an amended contract in 2000 that eliminated the provision, but they never signed the contract. After a billing dispute, Aegon demanded repayment of $5 million from ESI. Aegon felt the 1995 agreement was in effect and filed an arbitration proceeding. ESI claimed the parties adopted the 2000 agreement through performance and filed a declaratory action in the Eastern District of Missouri.
The main issue was whether the claim was arbitrable and who should make this determination. Aegon claimed the arbitrator should make this determination; ESI argued the court should. One of the AAA rules in force, which the parties adopted, was that the arbitrator has the power to determine his/her jurisdiction, i.e. the issue of arbitrability. Aegon never raised this argument to the district court. The district court determined: (1) the 1995 arbitration provision did not govern a later dispute of whether a subsequent contract amended the 1995 contract; and (2) it was for the court to determine arbitrability. The court then denied the motion to dismiss pending arbitration.
In its appellate brief, Aegon failed to raise its argument that AAA rules grant the arbitrator the right to determine arbitrability. It raised this argument for the first time at oral argument. The Eighth Circuit declined to address this issue. The Eighth Circuit affirmed the district court's decision, stating that courts determine arbitrability unless the contract specifically states otherwise.
To sum up, if you want the arbitrator to determine arbitrability, and if you want the arbitration clause to apply to any future argument about whether a superseding contract exists, the clause needs to specifically state that it governs these issues.
The Arkansas Supreme Court granted a writ of mandamus and writ of prohibition in CenterPoint Energy, Inc. v. Miller County Circuit Court, No. 07-924 (2/14/08).
In a class action against CenterPoint, the named plaintiffs were an Arkansas plaintiff (Johnson) and a Texas plaintiff (Engledowl). Last summer, the Arkansas supreme court dismissed Johnson because the Arkansas Public Service Commission had exclusive jurisdiction (previously posted 6/11/07). CenterPoint then moved the trial to dismiss Johnson for lack of jurisdiction.
CenterPoint also moved to dismiss Engledowl for lack of venue because now there was no Arkansas plaintiff in the case. Engledowl argued CenterPoint waived venue because it did not raise it in the first motion to dismiss. CenterPoint claimed its venue challenge did not arise until Johnson was dismissed. The trial court denied the motions and stayed the proceedings pending a decision by the APSC.
The supreme court reversed, stating that the trial court never had jurisdiction over Johnson's claims, so it cannot maintain jurisdiction while awaiting a ruling by the APSC. Citing federal cases, the court agreed with CenterPoint that its venue challenge did not arise until Johnson was dismissed. CenterPoint did not waive its venue challenge by not raising it in the original motion to dismiss.
The Arkansas Court of Appeals affirmed judgment in Bilo v. El Dorado Broadcasting Co., No. 07-507 (2/13/08).
Bilo owns land east of EDB; rainfall typically passed over Bilo's land and traveled south. He built a landfill, which caused rainfall to be diverted to EDB's land. There was no dispute the rainfall at issue was heavy and fast flowing. The issue turned on whether such rainfall is considered a watercourse or surface water. If the rainfall is surface water, then the common enemy doctrine applies, and Bilo's actions were probably legal.
The trial court found that the rainfall is a watercourse and enjoined his landfill. The court of appeals affirmed but did not provide a discussion on the watercourse/surface water issue. They just held the trial court did not err in its determination. Judge Gladwin, joined by Judge Griffen, dissented. He argued the rainfall should be considered surface water and that Bilo's actions were legal.
The Arkansas Supreme Court clarified its stance on appealable orders when multiple claims against multiple parties are involved in Advanced Environmental Recycling Technologies v. Advanced Control Solutions, Inc., No. 06-1145 (2/7/08).
ACS filed suit against AERT and one of its former employees for trade secret misappropriation, breach of a noncompete agreement, and tortious interference with business. ACS nonsuited its claim against the former employee and then obtained a final judgment against AERT.
In a thorough opinion, the supreme court held the order was a final appealable order. The court explained that, when a plaintiff files a nonsuit against one defendant, one appeal will still decide all issues between the plaintiff and the remaining defendants. A nonsuit of certain claims against one defendant is not an appealable order because one appeal cannot dispose of the claims between the two parties.
The Arkansas Court of Appeals affirmed dismissal without prejudice in Clouse v. Tu, No. 07-586 (2/6/08). The opening line of the opinion states: "This case arises at the three-way intersection of a service problem, the statute of limitations, and the terms of the dismissal."
One week before the limitations period expired, Tu filed suit against Dr. Clouse. The service was defective because the complaint was served on Dr. Clouse's wife at his office. Tu did not cure the defect within 120 days. The trial court dismissed the case without prejudice, which triggered the one-year saving statute. See A.C.A. § 16-56-126(a)(1).
The court of appeals affirmed and clarified the saving statute. If the plaintiff fails to accomplish any service, the statute is not triggered. If the plaintiff makes timely but defective service, the statute is triggered.
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