Things were pretty quiet on the ADR case front on Thursday and Friday. Some Cheeks analysis; a look at determining the amount in controversy for jurisdiction over an action to confirm or vacate under the FAA; a little bit of DocuSign caution; and, for once, some mediation law, discussing the effects of the failure of all parties to appear for mediation.
The Risks of DocuSign
DocuSign and other on-line signing apps are a great convenience in the overwhelming majority of cases in which no dispute arises. However, as discussed in earlier “Highlights,” the ease of executing an agreement by merely clicking a button raises problems when one party must prove that its alleged counterparty was the one who actually undertook that step. Reed v. Eastside Med. Ctr., Inc., 2020 U.S. Dist. LEXIS 174911 (N.D. Ga.) (Sept. 23, 2020) addresses the enforceability of an arbitration agreement contained within the documents executed upon Edd Lee Reed’s (“Decedent”) admission to a skilled nursing home.
The case arises from alleged medical negligence. Decedent was admitted to Signature Healthcare, a skilled nursing home, from another facility, where he had developed “skin breakdown.” While at Signature, he developed a fever and infection; he was transferred to Gwinnet Medical Center, where he died the next day, while in the intensive care unit. His widow, the plaintiff, brought this action against various parties arising from her husband’s death. This case addresses Signature’s motion to compel arbitration of the claim.
On Decedent’s admission to the nursing home, his widow, under a power of attorney, executed various documents on the patient’s behalf. She signed some documents – which are not described in the opinion, but are presumably the consents and health care notices typically signed upon admission to health care facility – by hand. However, a separate arbitration agreement, on which Signature relied in seeking to compel arbitration, was executed using DocuSign. Plaintiff claimed she never saw or executed that agreement, implying that someone else completed the necessary on-line steps to complete the form. The Court, Grimberg, J., determines that, under applicable state law, the nursing home, as the party asserting the existence of a contract, bears the burden of proving formation of the contract. He, then, summarizes the evidence in opposition to contract creation – other paperwork signed by the widow on the Decedent’s admission was hand-signed, while the agreement itself was esigned; some of the provisions of the arbitration agreement required a separate esignature and were never executed; there was no satisfactory proof of a business practice to support an inference that an esigning practice was followed here. However, because the Eleventh Circuit applies a summary judgment standard in resolving applications to compel arbitration, Judge Grimberg authorizes six weeks of limited discovery, “concerning whether Plaintiff assented to the Arbitration Agreement,” to “determine whether there exists a material fact on this question that renders a trial of the issue unnecessary.” The case, however, stands as a lesson in the evidence to consider in a DocuSign case and as a caution about the risks of the process.
Determining the amount in controversy for FAA review
A very short opinion, Carson v. Festiva Dev. Group, 2020 U.S. LEXIS 175676 ( D.S.C.) (Sept. 24, 2020), summarizes three approaches for determining the amount in controversy in an application to vacate or confirm an arbitration under the Federal Arbitration Act. The case serves as a reminder that the FAA does not create independent subject matter jurisdiction over an action to confirm or vacate an arbitration award; there must be an independent basis for federal jurisdiction, typically diversity jurisdiction under 28 U.S.C. 1332. Since Section 1332 requires that the amount in controversy exceed $75,000, the question can arise as to how to determine that figure. Magistrate Judge Gossett’s opinion summarizes those methods. Under the “award” approach, the court looks to amount of the award to determine whether the applicant has met the $75,000 threshold. Under the “demand” approach, the focus is on the amount of the original arbitration demand, regardless of the size of the award. Under the murky “remand” or “mixed” approach, which applies only to applications to vacate an award, “the amount in controversy in a suit challenging an arbitration award includes the matter at stake in the arbitration. . . .“ Finding that the plaintiff, in her pro se application to confirm a $1,525 arbitration award, failed to meet any of those standards, the Magistrate Judge recommends dismissal of the application for lack of subject matter jurisdiction.
Application of Cheeks review to arbitration settlements
In Prophet v. Jetro Cash & Carry Enters., 2020 U.S. Dist. LEXIS 176931 (E.D.N.Y.) (Sept. 25, 2020), Judge Chen, again, holds that Cheeks v. Freeport Pancake House, Inc., 769 F. 3d 199 (2nd Cir. 2015), requires court review and approval of the settlement, during arbitration, of a claim under Fair Labor Standards Act case. See September 18, 2020 “ADR Highlights” for another opinion by her on the issue. Recognizing that the Second Circuit has not ruled on the issue, Judge Chen gives a detailed analysis of the question. The case is important reading for anyone involved in the contested arbitration of an FLSA case, as it lays out the procedure for court supervision of various stages of those proceedings.
Failure to Appear at Mediation
Jones v. Campbell University, 2020 U.S. Dist. LEXIS 175520 (E.D.N.C.) (Sept. 24, 2020), reminds us that the challenges of mediation in the Covid-19 era do not automatically waive attendance requirements in court-mandated mediation. The District’s Local Rules require mediation attendance by all named parties, at least one attorney for each party, and a representative of any insurer, Local Alternative Dispute Resolution (ADR) Rule 101.1d. Here, General Counsel for the University, who was a named defendant, and defendants’ counsel appeared at arbitration; the President of Campbell, who was also a named defendant, and the insurer’s representative did not. Counsel for defendants advised the mediator that those present had full authority to settle and Plaintiff and his counsel, who had traveled to Raleigh from New York and D.C., agreed to go forward. After a full day of negotiations, the mediator declared an impasse. Plaintiff sought sanctions for the president’s and insurer’s failure to attend. The absent parties raised the challenges faced by University administration due to the pandemic and health-related travel restrictions imposed by the insurer on its staff as justifications for not attending. Although he recognized the challenges raised by the pandemic, Chief Judge Boyle imposed limited sanctions of $500 against the missing defendants, opining that, although they breached the Local Rule, the mediation proceeded, thus mitigating the impact of the violation. This case stands as a reminder of the benefits of on-line mediation, where all parties can attend regardless of their remoteness, without the risks of travel.
Not a lot of weight to today’s case load, but, hopefully, if you are facing one of these issues, these tidbits are useful. See you Wednesday – hopefully with a fuller plate.