ARBITRATION VENUE PROVISION NOT UNCONSCIONABLE
Plaintiff Ellison Framing Inc. recently filed a complaint with the California Department of Insurance against Zurich American Insurance claiming that Zurich had overcharged Ellison by almost $200,000 in improper fees pursuant to a workers compensation insurance plan. Zurich subsequently made a demand for arbitration, alleging nearly $570,000 in unpaid deductibles. Ellison responded by filing a suit in California Superior Court seeking declaratory and injunctive relief, contending that the venue provision, which provides that arbitration should occur in Schaumburg, Illinois, Zurich’s principal place of business, was unconscionable. Zurich removed the action to Federal Court and submitted a motion to stay the action and compel arbitration. The US District Court for the Eastern District of California granted Zurich’s motion finding that the American Arbitration Association’s decision as to venue may not be reversed because the AAA met the minimum standards for fair dealing. Further, plaintiff had not met its burden in claiming that the arbitration venue provision was unconscionable. Accordingly, the Court stayed the action, and found that plaintiff’s claim for fraud fell with the scope of arbitration. Zurich was additionally found not to have waived its right to seek relief. Ellison Framing, Inc. v. Zurich Am. Ins. Co., Case No. 11-0122 (USDC E.D. Cal. Apr. 4, 2011).
This post written by John Black.
