6th Circuit Contract Law News - U.S. Sixth Circuit
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The arbitration clause is "one-sided," "adhesive," "favors LexisNexis at every turn, and as a practical matter makes it practically unfeasible" to assert individual claims, as it requires arbitration to be brought in Dayton, Ohio, where LexisNexis is located. Oh, and it also requires the customer to split the tab and cover his own legal fees, regardless of the case outcome.

So why did the Sixth Circuit just enforce such an arguably (but not legally) unconscionable clause? Blame the Supreme Court.

There are good reasons not to call an opponent's argument "ridiculous," which is what State Farm calls Barbara Bennett's principal argument here. The reasons include civility; the near-certainty that overstatement will only push the reader away (especially when, as here, the hyperbole begins on page one of the brief); and that, even where the record supports an extreme modifier, "the better practice is usually to lay out the facts and let the court reach its own conclusions."

But here the biggest reason is more simple: the argument that State Farm derides as ridiculous is instead correct.

A woman walks down the street. She is hit by a car, and flung onto the car's hood, where she sustains additional injuries. The car was insured by State Farm.

CSI dropped the ball. The insurance brokerage company knows it made a mistake, it admits it, and in all likelihood, it'll be held accountable for it. But the question is: will that accountability come via the tort of negligence or for breach of contract?

When National Pastime, a company that runs promotions for Major League Baseball teams, contacted CSI about a series of Kids Nights at the Cleveland Indians baseball park, they explicitly stated that an inflatable slide would be used. CSI instead procured a policy that didn't cover inflatables, and when the slide collapsed onto two nearby people (killing one), the team was left without coverage.

Advance Sign had deals with foodservice customers. Optec had electronic signs. Advance agreed to sell Optec signs exclusively and Optec agreed not to sell directly to Advance’s foodservice customers.

Simple enough, right?

After a pilot program with Sonic Restaurants showed increased sales, Optec negotiated directly with Sonic to sell signs, cutting Advance out of the deal. After lengthy negotiations, the parties agreed to a 12 percent commission on all sales resulting from the Advance-Optec relationship, including Sonic. Advance memorialized the terms in a letter, sent it to Optec, and received only minor non-substantive edits in response, which it corrected and sent back.

Optec never signed the letter, nor did they later uphold their end of the bargain.

The Sixth Circuit confirmed on Tuesday that countries like the Congo are generally immune from suit unless their commercial activities occur in or directly affect the U.S.

Triple A International, Inc. (no not the auto club, we checked) sued the Congo (formerly Zaire) for payment on military equipment Triple A had sold them in 1993.

Zaire (and now Congo) has refused to pay, and although this behavior is certainly not good for business, the Sixth Circuit confirmed that the Congo is immune from suit.

Jeannette Martello, M.D., J.D. is a very intelligent woman. After all, she possessed both an M.D. and a J.D. (from Boalt Hall, no less). Nonetheless, she was unable to clear the hurdle that was the bar exam, despite four tries in Kentucky and New York. She did, however, pass the Multistate Professional Responsibility Exam before moving on to practice as a medical malpractice consultant.

As a consultant, she worked with Joshua Santana, Esq. on medical malpractice cases. After she referred a patient from her medical practice to Santana, the two came to an agreement, reduced to writing, that paid her a contingent percentage of the fee if the case was settled favorably.

You know you botched an arbitration when, after five years of proceedings, the Sixth Circuit refers to your work as “a model of how not to conduct one.” Or you could read the court’s opinion, which is a 10-page retelling of every imaginable way in which one could fail at presiding over a neutral, fair arbitration process.

The questionable conduct in Kinkade v. White began with the attorneys. The Whites’ first attorney was caught transmitting a live feed of the transcripts to a hotel room, where a disgruntled former Kinkade employee was responding with cross-examination questions. The replacement attorney was also replaced after he was convicted of federal tax fraud.

Encore Capital Group, a major debt-collection company, will head back to the settlement table after the Sixth Circuit scuttled the prior arrangement. Calling the relief given to the unnamed plaintiffs ($17.38 per claimant) and the one year injunction prohibiting illegal practices “perfunctory at best,” the Sixth Circuit found that the lower court abused its discretion in approving the $5.2 million settlement.

The case stemmed from Encore’s Midland Funding LLC subdivision’s shady debt-collection practices, which included using robo-signed affidavits to collect debt from more than a million individuals. According to the plaintiffs, the workers would process 300 to 400 affidavits per day, produced by the computer, all with no personal knowledge of the case.

Condition Precedent Still Matters in Excess Insurance Suit

Let's say you get a call from a client, a company that makes approximately a bazillion dollars annually. The company wants to sue its excess insurer for not ponying up the liability limits of an excess policy.

This is the time to remind your client of any relative condition precedent: "Your contract states that coverage won't kick in until X happens. X has not happened. They don't have to pay you a dime."

Your Bazillion Dollar Client may not want to hear it, but it's better that the bad news comes from you instead of the Sixth Circuit Court of Appeals.

Federal Preemption is a Sure Bet in Horse Racing Dispute

The Sixth Circuit Court of Appeals ruled this week that the Interstate Horseracing Act of 1978, which gives "horsemen's groups" veto power over horse-racing simulcasts, trumps an Ohio state law that vests final simulcast approval authority with a state racing commission.

Why does an Ohio horse racing case matter?

Aside from a feel-good, philosophical no-man-is-an-island perspective, this case matters because the Sixth Circuit also has authority over federal cases arising out of Kentucky, home of Churchill Downs and the Derby. That detail was not lost on the Sixth Circuit panel.