Nifty Counsel, Dunce’s Caps in-house lawyer, came up with what he thought was a brilliant way to minimize the company’s liability to its customers.  Nifty added arbitration provisions to Dunce’s customer purchase order agreements, and included language that the customer agreed the arbitrator could not award the customer damages exceeding the price of the order.  Flat Backs, a major retail hat company, filed an arbitration action against Dunce’s after Dunce’s failed to deliver 100,000 Auburn Tigers 2019 NCAA Men’s Basketball Champions hats.[1]  The demand for arbitration alleged $4 million in damages, even though the purchase order price was only $500,000.  Terry B.L. Judge, the arbitrator, ignored Dunce’s arguments that the purchase order’s arbitration clause prohibited Judge from awarding Flat Backs more than $500,000, and awarded Flat Backs the requested $4 million.  Dunce’s then asked a court to overturn the arbitration award for the same reason – Judge exceeded his jurisdictional limits.    
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Before Duncey’s Caps, Inc. hired Bud Dunop as its new human resources manager in 2018, all of Duncey’s human resources issues were handled by Dot Uris. One of Dot’s responsibilities was to have all new employees complete their new hire paperwork, which included an agreement for the employee and Duncey’s to arbitrate any employment-related disputes.  The arbitration agreement included a signature block for Dot to sign on behalf of Duncey’s.  Instead of signing each employee’s agreement, Dot just placed it in the employee’s file.   

One day Don “Crash” Gordon broke his foot when he walked around the corner of the warehouse and stepped into a bucket that another Duncey’s employee placed on the floor.  Crash filed a lawsuit against Duncey’s when it failed to cover his medical bills.  Duncey’s attorney filed a motion to compel arbitration, attaching a copy of the arbitration agreement that Crash signed but Dot did not.  Will Duncey’s be able to get this lawsuit sent to arbitration?
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Duncey’s Caps, Inc. hired Bud Dunop as its new human resources manager for 2018.  Bud quickly determined that Duncey’s needed a formal employee policy handbook.  Included within the handbook was an arbitration agreement requiring employees to arbitrate all claims against Duncey’s relating to the employee’s employment.

Bud then held training and review sessions with all Duncey’s employees.  At the end of each session, each Duncey’s employee was required to log into a computer with their own self-created password.  Once logged in, the employee was given the opportunity to fully review the handbook and the arbitration agreement.  The employee was then required to click a box stating that he or she “acknowledges” receiving and reviewing the handbook, and that by clicking the box they “agreed” to abide by the handbook and the arbitration agreement. The employee was then required to enter their initials and click “submit.”

A few weeks later, one of Duncey’s employees who electronically acknowledged the handbook was injured on the job.  The employee filed a lawsuit.  Will Duncey’s be able to get this lawsuit sent to arbitration?
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judge hand with gavelFor nine years, Tilting the Scales has brought legal issues with a business slant –practical and conversation points. Many who we represent are entrepreneurs who prefer to avoid lawyers and, certainly, the courthouse. Few of our Tilting issues focus upon third party resolution of disputes.

This post discusses my arbitration that dodged the “Top 8 Pitfalls of Arbitration” discussed in Tilting’s January 2016 article and attorney insight on the steps of a trial. 
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arbitration-pitfallsAfter months of arguing over defective solar panels with his supplier, California X-Tra Green Solar, Ed Ezeeout finally calls his favorite attorney at Fixx, Itt & Quick. Dutifully gathering all emails, invoices and transport documents with X-Tra Green, Ezeeout comes across the parties’ master sales agreement. Giving it another look, he discovers a “boiler plate