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ADR Lack of jury trial waiver won’t halt arbitration The lack of an express waiver of the right to jury trial did not invalidate an employment arbitration agreement, the 6 th U.S. Circuit Court of Appeals said on May 3. Cooper v. MRM Investment Co., No. 02-5702. As part of her employment contract, Tonya Cooper, an assistant manager at a Kentucky Fried Chicken franchise, was required to sign an arbitration provision covering all claims. Her employer did not separately advise her that she was giving up her right to a jury trial and did not provide her with a copy of the American Arbitration Association’s rules. Allegedly forced to quit because of sexual harassment, Cooper sued the franchise owner, MRM Investment Co. When MRM moved to compel arbitration, a Tennessee federal court denied the motion, holding that the arbitration pact was an unconscionable contract of adhesion. Citing the lack of a jury trial waiver, the court said that the agreement was invalid under federal law. It also held that the provision’s fee-splitting clause made the cost of arbitration so prohibitive for Cooper that it effectively denied her a forum. Reversing in part, the 6 th Circuit explained that the waiver of the right to a jury trial was “knowing and voluntary.” But the circuit court observed that at Cooper’s salary level, the cost of arbitration may be a deterrent. It remanded the case for a determination of what her costs would actually be under the applicable arbitration association rules.   Full text of the decision CONSUMER PROTECTION Despite preapproval, bank can still say ‘no’ Banks may prescreen consumers for firm offers of credit and may withdraw those offers without violating the Fair Credit Reporting Act if the customer fails to meet previously established criteria, the 5 th U.S. Circuit Court of Appeals ruled on May 6. Kennedy v. Chase Manhattan Bank USA N.A., No. 03-30811. Sally and Richard Kennedy returned an application for a preapproved credit card to Chase Manhattan Bank. Though the offer stated that it would not be extended if Chase determined they did not meet its criteria, the Kennedys expected to be granted credit. But after getting two credit agency reports, Chase rejected their application. The Kennedys sued Chase and the agencies, alleging violations of the act. They complained that the bank failed to honor firm credit offers and obtained credit information under false pretenses. They also alleged that the agencies failed to adopt reasonable procedures for complying with the act. A Louisiana federal court granted Chase’s motion to dismiss and entered judgment for all of the defendants. Affirming, the 5 th Circuit said that under the act, the reporting agencies were authorized to give out limited credit information on customers so that the bank could prescreen potential customers. The bank would not be able to get more information on the customer, to determine if that customer met another set of predetermined criteria, without the customer’s consent. If the preapproved offer explains this, the customer’s return of the offer is the authorization for further access to the customer’s credit report. The act also specifically allows banks to withdraw offers of credit.   Full text of the decision EVIDENCE Lay handwriting opinion needs solid foundation Describing for the first time the foundation necessary for lay opinion testimony under two federal rules of evidence, the 11 th U.S. Circuit Court of Appeals ruled on April 30 that an executor lacked sufficient familiarity with a decedent’s handwriting to offer credible testimony on it. Hall v. United Ins. Co. of America, No. 03-14527. Bobby Patterson, who was mentally impaired, had group life insurance with United Insurance through his former employer. United waived the premiums with certain conditions. But in a United questionnaire, Patterson wrote that he did not wish to continue the insurance. A subsequent document that he purportedly signed specifically requested immediate discontinuation. United confirmed the policy termination in a letter to Patterson. Almost four years later, he died. His mother, Agnes, who was his designated policy beneficiary, also died, without making a claim. Odessa Hall, the representative of her estate, made a claim. But an Alabama federal court struck Hall’s affidavit attesting that Patterson’s purported signature was not authentic, and struck another person’s affidavit attesting that Patterson was not competent to sign the termination statement. The trial court then granted United summary judgment. Affirming, the 11 th Circuit ruled that under Federal Rules of Evidence 901(b)(2), Hall’s affidavit did not contain sufficient particularity to establish her familiarity with Patterson’s handwriting and her relationship with him. This despite the fact that Hall claimed that she had seen Patterson write, received correspondence from him and helped him review documents that he signed in her presence. And because Hall had failed to demonstrate sufficient familiarity, the court ruled that her affidavit could not satisfy Rule 701(a) as her opinion testimony would not be rationally based on her own perceptions.   Full text of the decision INSURANCE LAW Carrier’s bad faith can lead to emotional harm An insured may recover emotional distress damages without proving economic damages in a bad-faith claim, the Colorado Supreme Court said on May 3 in a first impression case. Goodson v. American Standard Ins. Co. of Wisconsin, No. 02SC388. Dawn Goodson borrowed Chet Weber’s car, which was insured by American Standard. Goodson got into an accident and notified the insurer in a timely manner. More than a year later, Goodson and her children began receiving chiropractic treatment for problems that she claimed resulted from the crash. When she submitted her bills, American disputed the claim, contending that the chiropractor was not a preferred provider, that Weber had failed to pay the premiums and was thus not covered and that Goodman and her children must have an independent medical examination to determine the cause of the injuries and whether the treatment was reasonable and necessary. More than a year after she submitted the bills, now exceeding $8,000, American Standard paid them in full. Nevertheless, she sued, alleging bad-faith breach of insurance contract by way of delayed payment. The bad-faith claim was put to a jury, which returned a verdict awarding Goodman and her children $75,000 in actual damages for emotional distress, plus $75,000 in punitives. The trial court had refused the insurer’s request for a jury instruction requiring a finding of substantial property or economic loss as a prerequisite to an award of emotional distress damages. The state Court of Appeals reversed. Reversing again, the Colorado Supreme Court held that in a tort claim against an insurer for breach of the duty of good faith and fair dealing, the plaintiff may recover damages for emotional distress without proving substantial property or economic loss. Noting that an insured buys coverage so as not to suffer anxiety, fear, stress or uncertainty, the court said that the fact that the carrier paid in full does not erase the distress caused by the bad-faith conduct.   Full text of the decision LEGAL PROFESSION No mandamus unless other remedies used up The failure to first seek district court reconsideration of a magistrate’s order stripping an attorney of his pro hac vice privileges was fatal to a petition for a writ of mandamus, despite a finding that the magistrate’s order was “clear error,” the 9 th U.S. Circuit Court of Appeals said on May 4. Cole v. U.S. District Court for District of Idaho, No. 03-73027. For more than six years, Kenneth Simoncini represented three plaintiffs pro hac vice in a case that was set for trial in an Idaho federal court. The defendants moved to disqualify Simoncini based on an alleged conflict of interest. When the magistrate judge ordered him to submit an affidavit regarding the disqualification motion, Simoncini wrote that he “respectfully declined to submit” one. Rejecting the conflict-of-interest ground for disqualification, the magistrate revoked Simoncini’s pro hac vice admission for refusing to submit the affidavit. His clients petitioned the 9 th Circuit for a writ of mandamus. Stating that one of the criteria for mandamus relief is exhaustion of all other means, the 9 th Circuit denied the writ. It noted that the petitioners failed first to move the magistrate to reconsider or ask the district court to reconsider-a statutorily available remedy under 28 U.S.C. 636(b)(1)(A). Ironically, the court also found that the revocation of Simoncini’s privileges was a denial of due process because the magistrate failed to give him notice of the contemplated sanction and failed to let him present argument.   Full text of the decision SCHOOLS AND EDUCATION Title IX no bar to suit by student against teacher Though a college professor, sued for sexual harassment by a student he employed as an assistant, may evade liability under Title IX, that federal act does not preclude suit under 42 U.S.C. 1983, the 7 th U.S. Circuit Court of Appeals ruled on May 4. Delgado v. Stegall, No. 03-2700. Sophomore Nicole Delgado sued music professor James Stegall, for whom she worked. Delgado also sued the school, Western Illinois University. She alleged claims under Title IX of the Educational Amendments of 1972 and under � 1983. Title IX prohibits sex discrimination in educational programs or activities supported by federal grants. An Illinois federal court ruled that the defendants were entitled to immunity under Title IX because the school’s officials were unaware of any risk that Stegall would behave that way and had no actual knowledge that he did. It also ruled that Title IX provided Delgado’s exclusive remedy and dismissed the � 1983 claim against Stegall. The 7 th Circuit affirmed the Title IX ruling, but reversed on the � 1983 ruling. The court said that though Stegall was known to have had a questionable relationship with a student 10 years earlier, Delgado did not rely on the case and did not allege that the university knew of that case. The court then ruled that though Title IX does preclude � 1983 suits when the defendant is an official of some sort, it does not operate to extinguish a student’s claim against a teacher. To hold otherwise would be to immunize Stegall from liability for his federal constitutional tort, which would not have been Congress’ intent in passing Title IX.   Full text of the decision TORTS Teacher immune from wood shop suit liability Common law and official immunity shield a high school wood shop from a lawsuit brought by a student hurt by a circular table saw during class, the Minnesota Supreme Court ruled on May 6. Anderson v. Anoka Hennepin Indep. School Dist. 11, No. CO-02-1125. Shop teacher Paul Peterson instructed student Trevor Anderson on how to perform a certain type of work on a circular table saw. Peterson told Anderson to disengage the blade guard and use a stick to push the wood through the saw. After watching Anderson, who was in the intermediate woodworking class, make a few cuts, Peterson left him alone. Anderson later severed his left index finger at the knuckle when he reached across a table saw blade to remove a piece of waste wood. Trevor’s father sued Peterson and the school for negligence. The trial court denied the defendants’ summary judgment motion. The intermediate appellate court affirmed, ruling that because Peterson’s decision not to use blade guards on the saws was not a policy decision, neither he nor the school was entitled to any kind of immunity. A divided Minnesota Supreme Court reversed. Instead of focusing on the policy-making nature of Peterson’s decision, the appellate court should have looked at whether Peterson’s decisions in the woodworking class required the exercise of discretion at the operational level, it said. There was evidence that school district protocol required the method used by Peterson for the type of work Anderson was performing. As a result, his action in following the protocol was ministerial. But the court concluded that a teacher like Peterson does not forfeit official immunity because his conduct was ministerial if that conduct was required by a protocol established through the exercise of discretionary judgment that would itself be protected by official immunity.   Full text of the decision Independent physician owes duty to examinee An independent medical examiner (IME) physician owes the examinee a limited duty to exercise professional care and not to harm him or her, the Michigan Supreme Court ruled on May 5. Dyer v. Trachtman, No. 123590. During personal injury litigation over shoulder injuries he suffered in an altercation, Marquis Dyer was examined by an IME physician, Edward Trachtman, as part of the civil discovery procedure. During the examination, Trachtman allegedly further exacerbated the underlying injury, forcing Dyer to get additional surgery. Dyer filed a malpractice action against Trachtman. The trial court ruled that Dyer’s claim could not be one for medical malpractice because there was no physician-patient relationship, and that Dyer did not meet his burden to defeat summary judgment in a negligence action. The state appeals court affirmed. The Michigan Supreme Court reversed, characterizing the claim as one of medical malpractice. It concluded, as have other states, that an IME physician has a limited physician-patient relationship with the examinee that gives rise to limited duties to exercise professional care. The limited duty requires an IME physician to perform the examination so as not to cause the examinee physical harm.   Full text of the decision

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