US Supreme Court I: Employer May Compel Contract Arbitration; Federal
Arbitration Act Preempts State Discrimination Laws.
The Federal Arbitration Act (FAA) declares agreements to arbitrate
made in a contract involving commerce to be "valid, irrevocable
and enforceable." Section 1 of the Act exempts from its
coverage "contracts of employment of seaman, railroad employees
or any other class of workers engaged in foreign or interstate
commerce." When Respondent employee completed his application
for employment with Petitioner employer, it contained an arbitration
provision. When employee later filed a state law discrimination
action, his employer invoked the arbitration provisions of that
contract. Held: the exemption for "workers engaged
in foreign or interstate commerce" applies only to transportation
workers. In addition, the FAA was intended to pre-empt state
employment anti-arbitration laws. Circuit
City vs. Adams, No. 99-1379, U.S.S.C., March 21, 2001.
US Supreme Court II: State Statutes Providing for Nullification of Spouse
as Beneficiary in Event of Divorce Pre-Empted by ERISA.
During their marriage, husband named his new spouse (now Petitioner)
as beneficiary under his employer's life insurance policy and
pension plan. Following his divorce from Petitioner, husband
failed to change his beneficiary designation before he died intestate.
Relying on state law which automatically revoked a former spouse
as beneficiary in the event of divorce, his children from a previous
marriage filed suit, claiming the proceeds of the policy and
pension plan. ERISA pre-empts all state laws which may relate
to any employee benefit plan covered by ERISA. Finding that under
the state statute, Administrators were required to pay benefits
to the beneficiaries chosen by state law, rather than to those
identified in the plan documents, in violation of ERISA, the
U.S. Supreme Court held that the state statute was pre-empted,
and the plan was required to be administered in accordance with
the plan documents. Egelhoff
vs. Egelhoff, No. 99-1529, March 21, 2001.
Business Method Patents Rejected by UK,
Fewer Issued by U.S. Patent & Trademark Office.
After seeking public comment, the Patent
Office of the United Kingdom has released its report
and conclusions on the issuance of patents for computer software
and business patents. The report concludes that software should
be patentable only when there is technological innovation, and
reveals that opposition to that the issuance of business method
patents was virtually unanimous where no computer was involved,
and strongly opposed for computer-implemented business method
patents where no innovation was involved. Meanwhile, The Wall
Street Journal reports that according to Esther Kepplinger,
deputy commissioner for patent operations for the US Patent &
Trademark Office, the number of business method patents issued
by the U.S.P.T.O. is down
56% in 1st Quarter 2001, after new policies were issued requiring
a second review for such patent applications.
More on Arbitration: Arbitrator's Decision, Although "Unsound"
Was within Arbitrator's Authority.
Noting that its ability to review arbitrator's awards concerning
collective bargaining agreements (CBAs) was strictly limited
to determining whether or not the arbitrator had exceeded his
or her authority, the 7th Circuit let stand the arbitrator's
decision in favor of defendant-union in its interpretation of
the CBA, even though the decision may have been "unsound."
The Court was not empowered to set aside the award since the
arbitrator was only interpreting the CBA, which was within his
authority. Northern
Indiana Public Service Company vs.United Steelworkers
of America, No. 00-3208, CA 7th Cir., March 12,
2001. Go to http://www.ca7.uscourts.gov/,
click on "Judicial Opinions," and input case number
00-3208.
Insurance Broker Not Agent of Insurer,
Although Named Agent.
Broker chosen by Plaintiff to acquire business-interruption insurance
was a named agent of insurer, pursuant to a signed agreement,
but covering other types of insurance. Although Broker assured
Plaintff that he had acquired the correct insurance, it failed
to cover Plaintiff's losses. Even though Broker signed documents
and collected premiums on behalf of insurer, Plaintiff did not
show that Broker was agent of insurer for underwriting purposes
for purposes of this type of policy. Archer
Daniels Midland Company vs. Hartford Fire Insurance Co.,
No. 98-1608, CA 7th Cir., March 14, 2001. Go to http://www.ca7.uscourts.gov/,
click on "Judicial Opinions," and input case number
98-1608.
Temporary Staffing Agency Had No Mechanic's
Lien Rights. Adopting the reasoning of a Colorado Court of Appeals,
the Illinois Appellate Court has ruled that a temporary agency
providing contract workers for a construction project has no
mechanic's lien rights for work done on the project. Even though
the temporary staffing agency provided workers for the construction
site, they did not assume any responsibility for performing work
on the site, and so are not entitlted to Mechanic's Lien rights.
Onsite
Engineering & Management, Inc. vs. Illinois Tool Works, Inc.,
No. 1-00-0786, Ill. App., 1st Dist., February 8, 2001.
Bankrupty Bill Aims at Florida's Unlimited
Homestead Exemption, Corporations' Right to Form Reorganization
Plan, Retailers' Sale of Leases. House Resolution 333, and Senate Bill 420 both seek
to reform the Bankruptcy Code in dramatic ways. Supporters of
the proposed new federal bankruptcy law say that it is necessary
to prevent the kind of abuse caused by Florida's unlimited homestead
exemption, which permits a potential bankrupt to buy a luxury
home and keep it even after filing for bankruptcy protection.
The House
Bill would set an 18 month time limit on the right of a corporation
in Chapter 11 reorganization to come up with its own reorganization
plan, after which creditors could propose their own plans. It
also sets a 120 day limit on the right of a retailer to decide
whether to sell its leases or turn them over to the landlord.
Both the House and the Senate have passed their separate versions
of the bill, and President Bush has said he will sign it, but
the bill
is now stalled by the 50-50 split in the Senate. See the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2001
(HR 333), and the Bankruptcy Abuse Prevention and Reform Act
of 2001, (SB 420). Go to http://thomas.loc.gov
and search for the bill number.
UCITA in Illinois Dies Quick Death, While
New York Attorney General Declares it Void and Unenforceable.
UCITA in Illinois, HB
3058 , has been re-referred to the Rules committee, which
means it is dead, at least for this year. Meanwhile, in New York
the Attorney General has declared the law detrimental to New
York consumers, and void and unenforceable if one of the parties
to a contract under UCITA is a New York resident. As reported
in BNA's Electronic Law and Commerce Report.
Descriptive Mark Which Has Acquired Secondary
Meaning Not Sufficiently Distinctive to Acquire Protection Under
Federal Trademark Anti-Dilution Act. Plaintiff sought to bar Defendant from using 81 internet
domain names similar to Plaintiff's mark, "The Children's
Place," for a store selling children's clothes. Plaintiff's
mark, although descriptive, had acquired secondary meaning. However,
the Second Circuit ruled, Plaintiff had failed to show that the
mark was either inherently distinctive or famous, as required
by the Federal
Trademark Anti-Dilution Act, 15 U.S.C. § 1125(c), and
so does not qualify for the protection of the Act. TCPIP
Holding Company vs. Haar Communications, Inc., No. 99-7744,
2d Cir. Ct.App., February 28, 2001.
Food for Thought. Is it time for "all-state"
attorneys?" Given the increasingly global nature of
business, and the growing jurisdictional problems of doing business
over the internet, why not? The American Bar Association and
the Florida Bar Association are both reviewing the matter, in
view of the recent California decision, reported here previously,
that New York lawyers handling an arbitration in California for
their clients were practicing law without a license.