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Arbitration: Characteristics, Subtypes, and Legal Considerations, Exams of Physiology

National law University Physiology

The essential characteristics and common subtypes of arbitration, including labor arbitration, international commercial arbitration, maritime arbitration, and securities arbitration. It also discusses the legal considerations surrounding arbitration, such as vacating awards, arbitration and res judicata, and judicial review.

Typology: Exams

2020/2021

Uploaded on 02/21/2022

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I. Intro to ADR (Introduction)

A. Methods and Common Characteristics

1. Negotiations

a. Unassisted

b. Negotiation is part of all types of ADR.

c. Various methods/styles/personalities

d. Acts as contract; only as binding as the contract.

2. Mediation

a. Assisted - third party mediator

b. Different types: transformative, substance oriented, process

oriented

c. Acts as contract; only as binding as the contract

d. May be court annexed, but does not eliminate right to trial

3. Arbitration

a. Assisted - third party or parties of arbitrators.

b. Often include third party "experts"

c. BINDING - may eliminate right to jury trial

d. Usually agreed on by contract, prior to any dispute.

e. Arbitrator makes decision, not party.

4. Mini-trial

a. Non-binding

b. Gives parties idea of how judge might rule to encourage

settlement

5. Court Annexed ADR

a. ENE - encourages negotiation and settlement

b. Judicial mediation - mediation by a judge at court's insistence

c. Summary Jury Trial - mini-jury decides.

d. CAA - mandatory arbitration. Usually for low dollar value

(<$100,000) cases.

i. Unlike contracted Arbitration, parties can ask for a trial

de novo (essentially and appeal)

ii. If appeal is lost, appealing party has to pay attorney fees.

e. Private Judging - the more you have, the faster the system

works.

6. Administrative Agency Annexed Alternatives (like CAA, but before an

admin agency, not a court)

B. Ubiquitous Nature of Negotiations

1. Negotiations are everywhere. Duh.

C. Arguments for Private and Public ADR

1. Public: makes laws, sets precedent, outs those who continually break

the law and aren't held accountable.

2. Private: Privacy - no bad publicity for anyone involved.

D. ADR pluses and minuses

1. Pros:

a. Inexpensive

Partial preview of the text

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I. Intro to ADR (Introduction) A. Methods and Common Characteristics

Negotiations a. Unassisted b. Negotiation is part of all types of ADR. c. Various methods/styles/personalities d. Acts as contract; only as binding as the contract.
Mediation a. Assisted - third party mediator b. Different types: transformative, substance oriented, process oriented c. Acts as contract; only as binding as the contract d. May be court annexed, but does not eliminate right to trial
Arbitration a. Assisted - third party or parties of arbitrators. b. Often include third party "experts" c. BINDING - may eliminate right to jury trial d. Usually agreed on by contract, prior to any dispute. e. Arbitrator makes decision, not party.
Mini-trial a. Non-binding b. Gives parties idea of how judge might rule to encourage settlement
Court Annexed ADR a. ENE - encourages negotiation and settlement b. Judicial mediation - mediation by a judge at court's insistence c. Summary Jury Trial - mini-jury decides. d. CAA - mandatory arbitration. Usually for low dollar value (<$100,000) cases. i. Unlike contracted Arbitration, parties can ask for a trial de novo (essentially and appeal) ii. If appeal is lost, appealing party has to pay attorney fees. e. Private Judging - the more you have, the faster the system works.
Administrative Agency Annexed Alternatives (like CAA, but before an admin agency, not a court) B. Ubiquitous Nature of Negotiations
Negotiations are everywhere. Duh. C. Arguments for Private and Public ADR
Public: makes laws, sets precedent, outs those who continually break the law and aren't held accountable.
Private: Privacy - no bad publicity for anyone involved. D. ADR pluses and minuses
Pros: a. Inexpensive

b. Private c. Faster d. Win-win situation e. Possibility of expert arbitrators in complex suits. f. Can avoid complex international legal contradictions g. Good solution for courts which see themselves as problem solvers h. Good at divorce mediation, better application for protecting public policy of marriage.

Cons a. Lack of legal principles / substantive law, potential loss of legal rights b. Win-win is not how the real [legal] world works c. In complex issues, cost and time may be more than trial. d. Lack of written opinion / precedent e. No discovery - may settle dispute without knowing all the facts f. Bad solution for courts which see themselves as making law/precedent g. No application of public values - forgets the public good of common law. h. Protection for the disadvantaged. II. Basic Factors Affecting Negotiations (Part One) A. Personality Styles
Game theorists - strategic bargaining and always holding for more than you actually should fairly get.
Win-loose negotiators - those who want to prove they're right more than reaching a solution.
Cooperative and Competitive a. Cooperative styles move towards their opponent and appear to be giving a lot to get a little. b. Competitive tend to move against their opponent and want to "win" c. Also called "Problem Solving" and "Adversarial" d. P.33 for more characteristics. B. Negotiating Styles
Getting to yes Style (goal reaching)
Bottom line and objectives - stick to the facts style C. Types of Negotiation D. Verbal communications E. Nonverbal Communications F. Nonverbal indications of deception G. Impact of Cultural Differences
Intercultural norms
Gender related stereotypes III. Negotiations Stages

c. Exploit it. d. Without getting to it, you will not be able to settle.

Value claiming - where attorneys diligently seek to advance the interest of their own client. a. Generally, the most firm negotiator will win, provide the zone is wide enough and the demands are not unreasonable. b. Negotiators need to recognize when their own assessments may have over or under-valued their own or their opponents position.
Power bargaining and concession strategy a. Essential needs b. Important Needs c. Desirable Needs d. Each of these needs is then: i. Shared ii. Independent (but mutually agreeable), and only valuable to one side. iii. Conflicting, and only valuable to one side. e. Negotiators looking to "expand the pie" will look at each of these needs and see how many can be met because they are not conflicting. i. Minimize the conflicting areas. ii. For conflicting needs, look at to whom they are "essential" and to whom they are "desirable" or "important". Where can compromise be made? Is there a tit-for-tat arrangement which can be made? f. Unstated alternatives - Is there something, unstated, which can resolve conflicting needs? i. Brainstorm negotiators. ii. Looking to satisfy needs more than reach goals. iii. "transformative" negotiations?
Power bargaining techniques a. The importance of self assurance b. No such thing as actual bargaining power, only the perception of it. c. Start with raised aspirations (but know what is reasonable to come down to) d. Concessions might come too quickly from those who are risk averse, and see prolonged negotiations as risky. e. Concessions should always principled. Avoid looking like there was no reason for your original number. f. Other power bargaining techniques i. Argument - argue the case, rather than the amount in question or principle behind it. ii. Get emotional in your argument iii. Threats, warnings, promises - threats of lawsuits, strikes, etc (not bodily harm or illegal stuff!) iv. Positive promises work better than negative promises (threats)

v. Threats have to be fully comprehended and appreciated by the opponent, and legal based to follow through on. vi. Rational and emotional appeals vii. Ridicule and Humor - use embarrassment to get opponents to see your side. · Makes the negotiator more likeable. viii. Control the agenda - influence the order in which issues are taken up. ix. Intransigence - only works for risk adverse - refuse to go any further until some concession is made. x. Straightforwardness - surprise them with complete candor. xi. Flattery xii. Manipulation of contextual factors - psychological advantage if you can get your opponent to believe your spin on things. xiii. Silence - just don't say anything. Only the amateur fears silence. xiv. Patience - let your opponent talk himself to death, wear him down. xv. Creation of guilt, embarrassment or indebtedness - make him "owe you one". · Downside: a simply apology may defuse this. xvi. Constructive Ambiguity - people can't agree on something? Draft something that appears to cover the matter, but does not actually resolve anything. Then, move on.

Psychological entrapment a. The $1 auction and the desire to beat your opponent. b. Do not get so compelled to achieve a final settlement that you ignore the costs. c. Bargainers always have alternatives to non-settlement that they can fall back on. d. Determine if you can get a beneficial solution through negotiations. If not, do not get so psychologically caught up in creating a bargain that you make a bad one. E. Closing Stage
When closing is close or guaranteed, do not make unreciprocated concessions.
Patience and silence are most effective techniques during closing.
Take advantage of heightened excitement of opponents, however, to get additional concessions for your client.
Most competitive part of the bargaining process. F. Cooperative/Integrative Stage
Search for undiscovered alternatives a. Structured settlement payments for personal injury plaintiffs who may need continuing treatment.

c. May produce a settlement which is less than optimal for client (i.e. opposing party would have settled for less under traditional negotiations).

Settlement brochure - marketing spin in negotiations. Usually seen by personal injury attorneys.
Limited Client Authority
Lack of Client Authority
Nibble technique - used car salesman technique. Make an offer, go to "check" and find out that more is needed. Gets opponent to psychologically commit to offer.
Limited or Decreasing time offers
Real or feigned anger
Aggressive behavior - make opponent so uncomfortable as to concede anything so as not to have to deal with you.
Walking out / Hanging up - may seem bullying, but also good way to deal with a bully or aggressive negotiator.
Irrational behavior
False demands
If it weren't for you (or your client)
Alleged expertise / Snow job - overwhelm opponents with factual or legal analysis not really relevant to the basic interaction.
Use of disingenuous consecutive concessions
Uproar
B'rer Rabbit - reverse psychology. Do anything to me, just don't fling me into the brier patch!
So What? Downplay the concessions given.
Feigned boredom or disinterest
Mutt and Jeff (reasonable/unreasonable dichotomy) - praise your opponents, making it sound like your client has unreasonable ideas of grandeur in his head. Do this until they actually meet your unreasonable demand. a. Opponents of this strategy should be careful not to let Mutt and Jeff control the whole negotiation. b. Attempt to talk directly to the client.
Belly Up (yes…but) - wolves in sheep's clothing. Columbo analogy.
Passive-Aggressive - unreliable, show up with wrong documents, don't take strong positions, saying yes or no.
Weakening an Opponents Position of Strength
Enhancement of Weak Bargaining Position
Confronting Opponent Inflexibility - try to find common ground.
Splitting the difference
Telephone negotiations - harder to get a psychological commitment.
Negotiations by mail, email or through fax - written exchanges may be misinterpreted.
Negotiating with Government Agencies a. Government has a recognized advantage over other parties. b. Government representation is cost free (well, tax payers foot the bill, but the government doesn't care the way private sector does on what the cost is)

c. Government negotiators rarely possess the authority needed to bargain. d. Govt officials are also less likely to make decisions - they can't get in trouble for decisions they don't make. e. Opponents should give all information necessary to principle offer and make a case for settling. V. Negotiation Ethics A. Appropriate and Inappropriate misrepresentations

Misrepresentations about dollar amounts are fine.
Misrepresentations about material facts are not.
Puffery versus outright lie.
Look for minor inconsistencies in language - micro-inequities.
Non-disclosure and partial disclosure
DUTY TO CORRECT INACCURATE INFORMATION YOU PROVIDE. a. Unless you have not directly taken part in precipitating that belief.
May NOT misrepresent material facts. a. Lawyer opinion is not material fact. B. Unconscionable tactics and agreements.
Can not use tactics which have no substantial purpose other than to embarrass, delay or burden an person.
Can not threaten with criminal charges solely to benefit a civil matter (although you can mention them if they are applicable - just can't use as extortion) · Does not hold if the two suits come out of the same set of circumstances.
Strive for advancement of clients' interest while still being able to live with yourself. · Mark Twain: "Always do right. This will gratify some people, and astonish the rest" VI. Mediation (Part Two) A. Essential Characteristics
Facilitated/assisted negotiations
Party Control and Empowerment a. Parties are in control. b. Settlements should not be "crammed down their throats" c. Control empowers the parties - all the touchy feely stuff which makes people like mediation. d. Helps people who have a point, but are uncomfortable talking about money.
Privacy - no public airing of dirty laundry
Legal subservience - influenced by law, but not bound by it.
Consensual mediation as contract
Common Ground and Common Interest - don't have to enter into agreements against your interest.
Empowerment and Recognition - touchy-feely stuff.

a. Mediator selection - not as difficult as arbitrator selection, but not easy, either. i. Generally, done by exchanging independent lists of mediators and seeing where there might be a match. Repeat until match is found. ii. Helps to be on good terms with opposing counsel. iii. Usually want someone with some experience in the field being mediated. b. Timing of initial mediation intervention c. Party and mediator preparation d. Preliminary mediator-party contact

Initial Session a. May include the clients. b. Client overview can be very beneficial, as long as client doesn't flip out. c. Usually short d. No witnesses, no testifying, usually just attorney summations. e. Be careful - if there is bad blood between clients, skip the initial session with everyone; go right to caucus.
The Caucus: Conducting separate mediation sessions a. Private meetings between mediator and parties. b. Allows confidential disclosure of your side's facts. c. Can use to calm the fears of clients, and let them know when fears are unfounded and why. d. Less threatening than group sessions. e. Can show favoritism based on who you caucus with first. f. Allows mediator to show how both sides can gain, rather than look at what is lost.
Closing a. Always nice to point out what a good job the attorneys did in furthering their clients' interests. D. Creativity of Mediation E. Mediation and Confidentiality
Do you always want confidentiality? Example of battered wife arguing for child custody against batterer/husband.
Some states have codes which require collection of statistical data for monitoring of mediation results.
California code says evidence collected in mediation is not admissible. F. Agreements to Mediate and the role of Lawyers
Kaiser Foundation Health Plan v. Doe (1995) a. Oral agreements to sign the contract created out of mediation is binding (if you say you are going to sign it, and parties stop negotiating because everyone agreed to it verbally), then you are bound to that. G. Ethical and Professional issues
Professionalism general considerations · Are you "practicing law" as a mediator? You are not representing either client.

· Parties consider the mediator a lawyer. · How to avoid creating an attorney-client relationship.

Lawyers obligation to counsel client about mediation · Ethical requirement to bring up mediation possibilities? · A few states require ADR before litigation
Ethics in divorce mediation a. Potential for non-lawyer mediators and unauthorized practice of law. b. Parties in mediation often look to mediator for legal advice or analysis. c. Need to advise parties of their right to an attorney. · What about party control? · Some argue attorneys should only be involved after a settlement is reached. · How to parties know if they are being taken advantage of? d. Lawyer/Mediators should not represent either party if the case later goes to court (Barbour v. Barbour) H. Mediator immunity and qualifications
Immunity - mediators are not liable for the decisions reached in mediation.
Qualifications - no vigorously supported qualifications for mediators. a. Model Standards of Conduct for Mediators VII. Common Uses of Mediation A. Divorce Mediation B. Commercial Mediation C. Environmental Mediation D. Mediation and Employment Disputes E. Victim-Offender Mediation VIII. Arbitration (Part Three) A. Essential characteristics of arbitration
Adjudication - a trial-like device
Privacy a. Usually single most important feature. b. Prevents precedent from being set. c. Labor arbitration, international commercial arbitration and maritime arbitration are the only types which commonly issue written opinions.
Informal Procedural Rules a. Rules of evidence do not apply b. Arbitrators have control over timing and nature of discovery. c. Discovery and evidence is where cost and time savings are.
Subordination of Substantive Law a. Arbitrators are not bound by precedent (McMahon) b. Arbitration by contract means the parties desire to "disregard strict rules of law or evidence and decide according to their sense of equity" (Fudickar v. Guardian Mut. Life Ins. Co.)

e. How is Labor Arbitration and "industrial due process" different from Constitutional "Due Process" - do arbitration parties override the Constitution? f. Non-union arbitration i. Is participation really voluntary? Is consent valid? ii. AAA refuses to hear non-union arbitration cases where employee rights are restricted (i.e. right to an attorney, right to bring claims for damages, etc.) g. Interest arbitration i. Decides a feature of the relationship between the two parties, not their "rights". ii. Example: wages, hours of employment, but not right to sue, right to attorney, civil rights, etc.

Commercial Arbitration a. Perceived as one of the most successful forms of arbitration. b. Original intent of the FAA was to cover commercial arbitration. c. Usually intra-industry disputes, where relationships are ongoing. d. Considered "relational contracts" rather than "transactional contacts" i. Folklore that arbitration avoids the hassles and animosities which arise in trials. e. Parties are usually of equal bargaining power, and know what they are getting into when agreeing to arbitrate. i. Also, they will generally have attorneys who have reviewed the contracts, and are not going into this blindly. ii. Key to successful arbitration is BALANCE - parties of equal power, with equal resources and equal understanding of the process. f. Not all commercial transactions are really appropriate for commercial arbitration i. Contract between bank and customer to arbitrate disputes. ii. Contract between patient and hospital to arbitrate any medical malpractice claims.
International Commercial Arbitration a. Good for business relationships, especially in cultures where "saving face" is valued. b. Can make international business partners more likely to do business if they don't have to worry about foreign laws and trial proceedings. c. Choice of law clauses are common in international arbitration. i. Business people still want to minimize uncertainty. ii. Keeps arbitrators from getting completely away from substantive law. · Others prefer "amiable compositeur" - the general "justice" which is given by arbitration but not following substantive law. · May be chosen when substantive law is vastly different between the two countries involved. iii. May also choose procedural rules, such as AAA, ICC, or SIAC.

d. More closely resembles litigation i. Panel of three arbitrators - one chosen be each the defendant and plaintiff, the third chosen by the two arbitrators. ii. Not necessarily more speedy than conventional trials. iii. Usually get a written opinion. e. International arbitration is allowable for U.S. companies doing business abroad even when the same case (i.e. antitrust) is NOT arbitrable between two U.S. companies (Mitsubishi Motor Corp. v. Soler Chrysler-Plymouth) i. SCOTUS is very amenable to international arbitration.

Maritime Arbitration a. Maritime arbitration tends to be more judicial-like b. Arbitral awards are frequently published. i. Arbitrations are not required to follow previously decided awards. ii. However, the previous awards are inevitably taken into consideration, and are sometimes even cited. c. Nature of maritime arbitration helps set a "lex maritima" or general maritime law. d. Law gets set and decided by experts, which is preferred here.
Securities Arbitration a. Tricky issue of arbitration of bank account disputes. i. Banks putting arbitration clauses in account contracts with individual clients. ii. Issues of consent and unequal bargaining powers. b. Securities arbitration is overseen by the SEC. c. NASD is largest provider of arbitrators i. Three person panels, two of which must be "public arbitrators" - no ties to the industry. Third is usually a non-lawyer former broker. ii. Recently, there have been complaints about industry bias of NASD. iii. AAA does not require arbitrator-broker, and more folks are opting for AAA to hear claims rather than NASD d. Most statistics show that there is no statistical difference between claims settled in litigation and those settled through arbitration. i. However, results show that when an investor "wins" in arbitration, the damages amounts are higher. ii. Reform suggestions are being made to deal with the appearance of impropriety.
Arbitration Outside the Relational Contract a. Usually in tort claims, where no prior contractual relationship exists. b. Arbitration in a box i. Bank and credit card companies. ii. Lemon law arbitrations, as approved by the Magnusom- Moss Warranty Act

ii. Allowed state courts to hear claims to compel arbitration even in interstate commerce activities where a separate, federal, subject matter jurisdiction or diversity did not exist. IX. Arbitration Preemption and the Relevance of State Arbitration Law A. Southland Corp. v. Keating (1984)- federal preemption of state law

Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration laws, namely the FAA.
Federal law can be used in state court, and it trumps state law when concerning arbitration. a. California courts refused to allow arbitration of claims brought under the state statute. i. This conflicts with the FAA ii. FAA dominates due to the Supremacy Clause - congress declared a "national policy" in favor of arbitration. iii. Supremacy clause wins because this touches "interstate commerce" and is, therefore, within Congress's authority.
FAA preempts inconsistent state law.
Federal law in the terms of the Arbitration Act governs that issue in either state or federal court. - Federal substantive law. a. O'Connor's dissent is that the FAA is federal procedural law (i.e. under the Erie Doctrine, there is no federal substantive civil law).
California law would encourage and reward forum shopping, because CA courts would not necessarily enforce arbitration, as would the federal courts.
Stevens' dissent: issues with the FAA not defining on what grounds revocation of the arbitration clause or revocation of the entire contract is possible. a. Causes judiciary to need to create limitations as a matter of federal common law. b. But I thought there was no federal common law?? c. Wants to see arbitration clauses and contracts with them "as enforceable as other contracts, but not more so".
O'Connor's dissent: congress intended a procedural law, not a substantive one. Furthermore, they intended for the FAA to apply only to issues before the federal court on separate, federal matters. B. Volt Information Science, Inc. v. Board of Trustees of Leland Stanford Junior University (1989)
Multiple party suit, not all of whom are bound to contracts requiring arbitration.
No federal policy favoring arbitration under a certain set of rules, the policy is simply to ensure enforceability, according to their terms of private agreements to arbitrate. a. Volt test: "does the statute undermine the goals and policies of the FAA?"
State law is only preempted when if conflicts with federal law - if both can exists harmoniously, then no preemption is necessary.
The FAA does not require parties to arbitrate when they have not agreed to do so.

a. Per Keating, the FAA preempts state law only when the state law requires a judicial proceeding even though the parties agreed to arbitrate. C. Allied-Bruce Terminix v. Dobson (1995)

The FAA should be applied broadly, to all contracts "evidencing a transaction involving commerce"
Even if parties never intended to involve interstate commerce, and the contract was solely acted upon intrastate. a. Requires a "transaction in fact" of interstate commerce - i.e. Terminix was a multi-state entity - even if all the transactions, as known to one party are intrastate.
Facts of case show that the transactions involving the contract were all within the state of Alabama. a. Alabama has statutes stating pre-dispute arbitration clauses for intrastate commerce are de facto invalid and unenforceable. b. AL court says the parties never contemplated interstate commerce when signing the contract, therefore, it fell solely under state law. c. SCOTUS says any transaction in fact which is interstate will make FAA preempt state law - the FAA is that broad. Intentions of the parties does not matter. i. Isn't this inconsistent with contract law, where the intent of the parties is considered in interpreting the contract?
Court concludes that the FAA does not limit itself to only interstate commerce - it is as broad as the Commerce Clause will allow it to be. a. In the time where almost all business is not within a single state, this allows the FAA to be applicable nearly everywhere. b. To read it any more narrow would cause too much pre- arbitration litigation to determine if the level of interstate commerce reached some threshold (O'connor concurrence). This would be against the purpose of the FAA in reducing litigation.
Terminix Test: Does the state law determine that a contract is fair enough to enforce all of its basic terms, but not fair enough to enforce the arbitration clause?
If Congress wants to narrow the powers of the FAA, they have to rewrite the law (O'Connor concurrence - she's resigned herself to the court's interpretation).
Dissent says FAA is still procedural, and the procedures only apply in federal court. Congress does not have the constitutional power to set procedural rules for state courts. a. Likens arbitration clause to a forum selection - therefore, procedural. D. Doctor's Associates, Inc. v. Casarotto (1996)
Another case of whether FAA preempts state law. In this case, Montana law declaring arbitration clauses invalid unless they are on the first page of the contract, in underlined capital letters.
Court found the MT statute to be preempted by the FAA because it did not apply to all contracts, but only contracts with arbitration clauses.

c. Dissent: Arbitration is supposed to be about deciding factual controversies arising out of a valid contract, NOT whether or not the entire contract (including the arbitration clause) is valid. i. Also is inconsistent with future holdings which says laws regarding arbitration clauses can not apply to only the arbitration clause, but must apply to the contract as a whole (Casarotto)

First Options of Chicago, Inc. v. Kaplan (1995) a. Required consent to arbitrate, as shown in the contract between the parties. Here, there are two contracts, one with an arbitration clause, one without. b. RULE: when deciding whether the parties agreed to arbitrate, regular state law principles governing the formation of contracts should apply. i. Qualification: Courts should not assume that the parties agreed to arbitrate arbitrability unless there is "clear and unmistakable" evidence that they did. ii. Question here is who determines if the people agreed to arbitrate - an arbitrator of the courts? SCOTUS says courts decide unless there is "clear" evidence that the parties said an arbitrator should. c. Analysis of arbitration agreement: i. First, determine if parties agreed to arbitrate (court issue, per Kaplan) ii. Second, determine the scope of the agreement (court can assign to arbitrator, if it is determined the parties agreed to arbitrate) iii. Third, if federal statutory claims are involved, decide if Congress intended these issues to be arbitrable. (courts) iv. Fourth, if some claims are arbitrable and others are not, court must determine whether to stay the action of the non-arbitrable claims while the others are being arbitrated.
Time barring of arbitration - who decides if an issue is time barred from arbitration? a. Courts have to abide by statute of limitation affirmative defenses. b. Arbitrators are not bound by the law. c. Districts are split over this - some say arbitrators decide (5th and 8th Circuit), others say courts decide (10th and 11th Circuit)
Arbitration and Res Judicata: who decides if a prior arbitration has closed the issue? a. 9th Circuit says the arbitrator determines if the issue was decided, and can not be litigated or arbitrated further (Chiron Corp. v. Ortho Diagnostic Systems, Inc.) B. Judging Consent to Arbitrate
American Italian Pasta Co. v. Austin Co. (1990) a. General question of whether the parties agreed to arbitrate, when contract says "may" arbitrate, not "must" or "shall" arbitrate. b. RULE: FAA does not require parties to arbitrate when they have not agreed to do so.

c. Arbitration is compelled if either party options for the "may" arbitrate - they both must agree not to arbitrate in order to get out of it. d. Dissent argues that the contract must be construed against the drafter, who is the one requesting compelling arbitration. Compelling arbitration goes against general state laws in contract interpretation.

CHI inc. v. Marcus Brother Textile, Inc. (1991) a. Arbitration clauses in adhesion contracts b. CHI says it should not be held to the arbitration clause, but did not offer any evidence showing the contract was an adhesion contract or that he entered it under fraud or economic duress. c. Court did not rule on whether arbitration clauses in adhesion contracts were valid, only said the plaintiff had no proof of it to decide that issue. d. Issue is more of a company signing a contract without reading or understanding it. Law has no sympathy for these people. i. Duty to read a contract. e. Other "adhesion" contract defenses have generally found no adhesion contract, rather than rule on whether or not an adhesion contract with an arbitration clause in an adhesion contract are valid. f. Exception: Title VII of the Civil Rights Act - one cannot waive the right to judicial review of civil rights violation (Prudential
Ramirez v. Superior Court (1980) a. California law require(d) arbitration if it determines that the right to compel arbitration has not been waived or grounds exists for the revocation of the contract. b. California law also required the arbitration clause to be "at least 10 point bold red type". The contract in question also allowed rescission of the arbitration clause within 30 days of signing it. c. A jury is needed to determine if the contract was fairly entered into (remand) i. Contracts signed at emergency room admissions have different standards for looking at fraud, inducement and unconscionability. ii. Procedures allowing for rescission help eradicate issues of unconscionability and fraud - party is allowed a limited time to get out of the contract. d. Duty to read is lessened in an emergency room admissions, with showing less than fraud required to explain the lack or reading or understanding.
Definition of adhesion contracts: a. Standard form contracts with general terms b. Terms are designed to aid the drafting party c. The terms are not likely to be analyzed or grasped at the time of signing d. The drafting party has the economic power to not bargain over the "take it or leave it" clause.
But, if it meets all the elements of an adhesion contract, but says its not an adhesion contract, is it? a. Is there a right to rescind or other means to get out of the contract?

Arbitration: Characteristics, Subtypes, and Legal Considerations, Exams of Physiology

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