Originially from: World Arbitration and Mediation Review (WAMR)

Perspectives
WAMR is fortunate this month to have the commentary of two
distinguished scholars on significant developments in the decisional law
on arbitration and ADR. The cases that generated the commentary involve
questions that are vital to the legitimacy of the recourse to arbitration.
Badie raises the question of whether the unilateral decision to submit
disputes to arbitrate is binding upon both parties to the contract. As
Professor Dauer notes, a California state court has decided that it is not;
that determination defies the standard practice in the area. Wright involves
the arbitrability of federal statutory rights in union and employment
contract arbitration. As Professor Lynch observes, the U.S. Supreme Court
leaves unresolved the tension between Gardner-Denver and Gilmer in
Wright, but—perhaps unwittingly—changes the dynamic of the labormanagement
positions on this issue. Finally, the editor adds a brief
summary and commentary on Craft v. Campbell Soup Co. There, the
Ninth Circuit—again, in contradistinction to the accepted federal
decisional law—holds that the FAA does not apply to labor or
employment contracts.
I.
Summary of Badie v. Bank of America, 67 Cal. App. 4th 779 (Nov. 3,
1998)
Creditor-Debtor Arbitration: Customers did not Consent in Credit
Agreement to Alternative Dispute Resolution Clause Imposed by
Bank
A California Court of Appeals has held that customers who entered into
credit account agreements containing a provision that the bank could
change any "term, condition, service, or feature" of a customer's credit
account did not thereby consent to the bank's unilateral imposition of an
alternative dispute resolution clause. The court found that nothing in the
original agreement placed customers on notice that they might someday be
deemed to have agreed to surrender their right to a jury trial or to any
judicial forum whatsoever for settling disputes with the bank. Badie v.
Bank of America, 67 Cal. App. 4th 779 (Nov. 3, 1998).
Plaintiffs, four individuals and two consumer-oriented organizations,
Consumer Action and California Trial Lawyers Association, challenged
the validity of an alternative dispute resolution (ADR) clause which Bank
of America (the Bank) sought to add to existing account agreements by
sending customers an insert with their monthly account statements