This case discusses the power of an industry-wide arbitrator to change the terms of the agreement by which its members handle claims.

In this consolidated appeal two insurance companies had paid claims under homeowners’ policies for damage caused to their insureds’ homes by Defendant’s plumbing products. They filed subrogation cases against it. The parties were all signatories to the property subrogation agreement of Arbitration Forums, an outfit that arbitrates property claims. But after they signed it AF changed the agreement to exclude products-liability claims. Defendant moved to compel arbitration in both cases, lost both motions, and appeals.

The Court of Appeals reverses. The insurers relied on language in the agreement allowing AF to make rules and regulations covering arbitrations. But the court inteprets that, based on its reading of the structure of the agreement, as procedural. Exclusions of products actions was “a significant, substantive change,” not a mere procedural change. AF didn’t have the power to make a substantive change. The court rejects an Indiana case (also involving this defendant, which has been fighting this battle around the country for a few years now) that read the agreement differently.

The court also relies on 12-3006, making agreements to arbitrate future claims “enforceable and irrevocable,” which it says happens “upon the arising of the controversy, unless the parties agree otherwise.”

AF is an insurance-industry entity with insurance-industry attitudes, which explains why it figured to change a contract unilaterally by sending out a notice.  But these plaintiffs have that same attitude and as far as we know never objected to the change; they continue to be among the most frequent users of the agreement’s arbitration procedures. It would be interesting to know what discussions, if any, they had with AF about the change at the time.

(Opinion: Allstate v. Watts)

This was an attempt to use equity to enforce an unwritten agreement to split a contingent fee.

Plaintiff, a lawyer, was asked by another lawyer to work on a personal-injury case. They agreed to split the fee but put nothing in writing. Eventually the clients fired Plaintiff. They later fired the other attorney and hired Defendant, who settled their claim. Plaintiff demanded part of the fee; Defendant refused. Plaintiff sued in quantum meruit. (The opinion includes a footnote defining quantum meruit. We wonder what other obscure legal terms the court will from now on think it necessary to define — “statute” perhaps.) The trial court dismissed the Complaint.

The Court of Appeals affirms. The ERs require both contingent fees and fee splits to be in writing. The court explains why this is a good thing. Equity won’t enforce a contract that is against public policy. Plaintiff had a California case but “[n]either the interpretation and application of the Arizona Rules of Professional Conduct, nor this state’s public policy is subject to meaningful analysis by applying the law of other jurisdictions.” (This is of course throw-away rhetoric that our courts will ignore when foreign precedent supports their policy views.) Plaintiff also argued that prior Arizona cases had involved violation of statutes, not just ethical rules. But public policy has “the same force and effect” as a statute.

Plaintiff and the lawyer who brought him into the case were buddies who would have split the fee without a writing. Instead of being embarrassed by that Plaintiff insists on it. The moral is that friends don’t let friends act unethically.

(Opinion: Levine v. Haralson, Miller, Pitt et al.)

Defendants tried to use a foreign worker’s compensation claim to block an Arizona personal-injury case. The opinion is interesting mostly because the analysis stops just about the time it should start.

Plaintiff’s employer, a Nebraska company, sent him to truck-driving school in Arizona. He was injured in an accident caused by an instructor. He obtained worker’s compensation in Nebraska and then sued the school and instructor here. Defendants argued that because he was entitled to Arizona worker’s comp benefits our statute (23-1023.B) applies: over one year had passed and Plaintiff had no re-assignment so Defendants sought summary judgment. The trial court granted it.

The Court of Appeals reverses.  Plaintiff cited cases to the effect that the statute doesn’t apply when workers comp benefits aren’t involved, even if the plaintiff could have sought them. The court agrees with Defendant that these don’t apply since Plaintiff did obtain comp benefits and his employer, under Nebraska law, has a subrogation interest in his lawsuit (and he included it as a party in his lawsuit, as required by Nebraska law to get it reimbursed). But the court decides that the statute doesn’t apply anyway, because it has not been “interpreted . . . as a statute of limitations” and is “not designed” to trap plaintiffs or shield tortfeasors.

That is the limit of the court’s statutory interpretation. It does at least quote the statute, though it never really explains why the language of that statute, or any other, means that it doesn’t apply. Maybe its conclusion is correct. But its analysis consists of a wave of the hand and a nod to good intentions.

And what of the employer’s subrogation interest? That is saved, too, since the law of the state where compensation is paid governs subrogation rights.

(Opinion: Jackson v. Eagle FMC LLC)