Arbitration Clause Does Not Bar Wrongful Death Claim

Arbitration clause does not bar wrongful death claim; Chung et al. v. StudentCity.com, Inc., Lawyers Weekly No. 02-312-11.

Issue: Whether decedent’s consent to an arbitration clause forecloses the executor of that decedent’s estate from bringing a wrongful death action on behalf of statutorily designated beneficiaries.

Summary: Lisa Tam Chung and the plaintiff, Loren Daily went on a student tour of Mexico organized by defendant Studentcity.com, Inc.  A boating accident occurred during the trip, Loren almost drowned and Lisa was killed.  Lisa’s parents Oahn Nguyen Chung (as administratrix of Lisa’s estate) and Liem Chung, Loren Daily, and Loren Daily’s parents Ollie and Patricia Daily brought a suit against StudentCity.com for (1) negligence; (2) gross negligence; and (3) unfair and deceptive acts in violation of Mass. Gen. Laws ch. 93A.  Oahn Nguyen Chung as administratrix also sought damages for (4) conscious pain and suffering.  StudentCity moved to dismiss on the basis of a mandatory arbitration clause contained in the terms and conditions of the contract to undertake the trip, and in the alternative, to stay any claims that are not subject to arbitration pending the outcome of arbitration on those claims properly dismissed.

         Lisa Chung had signed a StudentCity registration form before embarking on the trip, which included an Agreement that when signing up for a trip, the payee had to check the box agreeing to.  The Agreement included an “Arbitration” clause stating that “any dispute concerning, relating or referring to this Agreement, the brochure/flier/website/invoice or any other literature concerning my Trip, the Trip itself or any claim for damages due to injury or death which occurs on the Trip shall be resolved exclusively by binding arbitration.”  When Lisa Chung paid for the program she consented to the terms of the Agreement, including the arbitration clause, which included any claim brought on her behalf by her estate as well.  Plaintiffs argue that the judicial review provision of the Agreement impermissibly expands the scope of review beyond that allowed by the Federal Arbitration Act, 9 U.S.C. section 1.  This invalid provision of the Agreement, they argue, is a “material term” whose absence makes at least the entire arbitration clause void under general principles of contract law.  Plaintiffs, however, cite no authority that supports this proposition.

         The parents of Lisa Chung are suing under the Commonwealth’s wrongful death statute Mass. Gen. Laws ch. 229.  The parties dispute whether Lisa Chung’s consent to the arbitration clause forecloses the executor of the estate from bringing a wrongful death action on behalf of the statutorily designated beneficiaries.  The parties rely on Lawrence v. Beverly Manor, holding that a wrongful death lawsuit was not barred by an agreement to arbitrate the decedent’s claims and claims derivative therefrom.  273 S.W.3d 525, 527-29 (Mo. 2009).  They argue that it would be inconsistent with fundamental tenets of contract law to hold that those beneficiaries, who did not sign an arbitration agreement, are bound by the decision of the decedent to sign.

The Massachusetts General Law for wrongful death can be found at: http://www.malegislature.gov/Laws/GeneralLaws/PartIII/TitleII/Chapter229.  As for Daily’s parents, Defendant argue that students paid for their trips using their parent’s credit cards and therefore, the parents were put on notice to inquire into the contract terms of what their daughter was paying for. 

Holding: The court held that the Defendant’s motion to dismiss is allowed as to the claims of Oahn Nguyen Chung as administratrix of Lisa Tam Chung’s estate brought on the estate’s behalf but are denied as to the wrongful death claims brought on behalf of Oahn and Liem Chung and denied without prejudice as to the claims of the Daily plaintiffs.

Implication: Arbitration clauses are not binding on the estate of the individual who signs in certain circumstances, for example, wrongful death.  Wrongful death is not derivative of the decedent’s claim and it would be inconsistent with contract law to hold non-signatory beneficiaries bound to the decision of the signatory decedent.  Thus, although the individual may agree to an arbitration clause, beneficiaries may not be bound to it.

Additional Resources:

– The entire decision is available at: http://pacer.mad.uscourts.gov/dc/cgi-bin/recentops.pl?filename=zobel/pdf/chung%20v%20studentcity%20sept%202011.pdf

Arbitration Clause Does Not Bar Wrongful Death Claim

Arbitration clause does not bar wrongful death claim; Chung et al. v. StudentCity.com, Inc., Lawyers Weekly No. 02-312-11.

Issue:Whether decedent’s consent to an arbitration clause forecloses the executor of that decedent’s estate from bringing a wrongful death action on behalf of statutorily designated beneficiaries.

Summary: Lisa Tam Chung and the plaintiff, Loren Daily went on a student tour of Mexico organized by defendant Studentcity.com, Inc.  A boating accident occurred during the trip, Loren almost drowned and Lisa was killed.  Lisa’s parents Oahn Nguyen Chung (as administratrix of Lisa’s estate) and Liem Chung, Loren Daily, and Loren Daily’s parents Ollie and Patricia Daily brought a suit against StudentCity.com for (1) negligence; (2) gross negligence; and (3) unfair and deceptive acts in violation of Mass. Gen. Laws ch. 93A.  Oahn Nguyen Chung as administratrix also sought damages for (4) conscious pain and suffering.  StudentCity moved to dismiss on the basis of a mandatory arbitration clause contained in the terms and conditions of the contract to undertake the trip, and in the alternative, to stay any claims that are not subject to arbitration pending the outcome of arbitration on those claims properly dismissed.

Lisa Chung had signed a StudentCity registration form before embarking on the trip, which included an Agreement that when signing up for a trip, the payee had to check the box agreeing to.  The Agreement included an “Arbitration” clause stating that “any dispute concerning, relating or referring to this Agreement, the brochure/flier/website/invoice or any other literature concerning my Trip, the Trip itself or any claim for damages due to injury or death which occurs on the Trip shall be resolved exclusively by binding arbitration.”  When Lisa Chung paid for the program she consented to the terms of the Agreement, including the arbitration clause, which included any claim brought on her behalf by her estate as well.  Plaintiffs argue that the judicial review provision of the Agreement impermissibly expands the scope of review beyond that allowed by the Federal Arbitration Act, 9 U.S.C. section 1.  This invalid provision of the Agreement, they argue, is a “material term” whose absence makes at least the entire arbitration clause void under general principles of contract law.  Plaintiffs, however, cite no authority that supports this proposition.

The parents of Lisa Chung are suing under the Commonwealth’s wrongful death statute Mass. Gen. Laws ch. 229.  The parties dispute whether Lisa Chung’s consent to the arbitration clause forecloses the executor of the estate from bringing a wrongful death action on behalf of the statutorily designated beneficiaries.  The parties rely on Lawrence v. Beverly Manor, holding that a wrongful death lawsuit was not barred by an agreement to arbitrate the decedent’s claims and claims derivative therefrom.  273 S.W.3d 525, 527-29 (Mo. 2009).  They argue that it would be inconsistent with fundamental tenets of contract law to hold that those beneficiaries, who did not sign an arbitration agreement, are bound by the decision of the decedent to sign.

The Massachusetts General Law for wrongful death can be found at: http://www.malegislature.gov/Laws/GeneralLaws/PartIII/TitleII/Chapter229.  As for Daily’s parents, Defendant argue that students paid for their trips using their parent’s credit cards and therefore, the parents were put on notice to inquire into the contract terms of what their daughter was paying for.

Holding: The court held that the Defendant’s motion to dismiss is allowed as to the claims of Oahn Nguyen Chung as administratrix of Lisa Tam Chung’s estate brought on the estate’s behalf but are denied as to the wrongful death claims brought on behalf of Oahn and Liem Chung and denied without prejudice as to the claims of the Daily plaintiffs.

Implication: Arbitration clauses are not binding on the estate of the individual who signs in certain circumstances, for example, wrongful death.  Wrongful death is not derivative of the decedent’s claim and it would be inconsistent with contract law to hold non-signatory beneficiaries bound to the decision of the signatory decedent.  Thus, although the individual may agree to an arbitration clause, beneficiaries may not be bound to it.

Additional Resources:

– The entire decision is available at: http://pacer.mad.uscourts.gov/dc/cgi-bin/recentops.pl?filename=zobel/pdf/chung%20v%20studentcity%20sept%202011.pdf

SJC Voids Life Sentence

SJC voids life sentence because of prosecutor’s use of probability analysis, Commonwealth v. Ferreira, SJC-10902

Issue: Whether the prosecutor’s mathematical analysis in his closing argument of the probability that the lone eyewitness’s identification of the defendant was accurate created a substantial risk of a miscarriage of justice, where the analysis was not supported by expert testimony, was fundamentally flawed, and equated proof beyond a reasonable doubt with a statistical probability.

Summary: The defendant was convicted by a jury of unarmed robbery of a person sixty years of age or older, in violation of M. G.L. c. 265 § 19, and was sentenced to life in prison.  The victim was a 60 year old pizza deliverer, who while delivering a pizza, was attacked by two men who demanded that the victim give them his money.  After reporting the crime, the victim was shown a photo line up resulting in him picking out the defendant and friend.  At trial, the victim said he was 80% sure of the identification.  When asked at trial to identify whether or not one of his attackers was there, the victim reported he was not sure.

            During closing arguments the prosecutor created a statistical probability regarding the victim’s ability to choose the defendant and his assailant out of a photo lineup.  The prosecutor argued that there was a one in forty-nine chance that the victim would have identified as his assailants two persons who knew each other well and therefore a ninety-eight percent probability that the victim had accurately identified the defendant as one of the assailants, which constituted proof beyond a reasonable doubt.  The court found this probability analysis to be flawed, unsupported by expert testimony (which is required when introducing mathematical probability that an eyewitness identification is accurate), and ruled that you cannot equate proof beyond a reasonable doubt with a numerical percentage.  Because the prosecution’s closing argument created a substantial risk of a miscarriage of justice, the judgment was reversed and the case is remanded to the Superior Court for a new trial.  Full information on the case, including oral arguments, is available at: http://www.suffolk.edu/sjc/archive/2011/SJC_10902.html.

The statute the defendant was charged under is available at: http://www.malegislature.gov/Laws/GeneralLaws/PartIV/TitleI/Chapter265/Section19.

Implications: Although the court in this case found that there was a substantial risk of a miscarriage of justice and the defendant received a new trial, the objection should have been made by defense counsel at trial.  The standard of proof beyond a reasonable doubt should not be minimized to being as simple as multiplying, as the prosecutor did here.  Such an analysis may come from expert testimony.

-Sapna Patel

Talking Points on the Federal Reserve Bank’s “Operation Twist”

Key points:


– New Fed Reserve Bank policy will push down long-term interest rates to encourage consumer and business borrowing and spending.

– Mortgage rates are expected to drop to lowest on record.

– Lower mortgage rates are conducive for refinancing: current mortgage holders can refinance to a lower rate and free up additional cash.

Yesterday, the Federal Reserve Bank announced a new plan aimed at supporting conditions in mortgage markets.  The Fed’s new stimulus plan focuses on current mortgage rates by shifting $400 billion from its short-term holdings into long-term government bonds. It plans to reinvest principal payments from its holdings of debt and mortgage-backed securities from government-sponsored enterprises Fannie Mae and Freddie Mac into agency mortgage-backed securities. The program, which begins October 3 and will run through June will finance the purchase of longer-term Treasury securities with remaining maturities of six years to 30 years through the sale of shorter-term Treasury securities with maturities of three years or less.  The Fed hopes that this program will put downward pressure on longer-term interest rates; rates are already at record lows but with slow growth in the economy, further rate reduction is the only tool available to the Fed.

General reaction to this program has been mixed: some economists believe this shift in the Fed’s portfolio could provide modest help by reducing borrowing costs and perhaps raising stock prices.  Others warn that refinancing may be difficult with stricter lending requirements making less consumer eligible and that there may be increases in inflation and short-term interest rates.

Sapna N. Patel