Tuesday, April 25, 2006

Watch what you ask for

In Wachovia Bank v. Schmidt, the Fourth Circuit booted the case for lack of subject matter jurisdiction, got reversed by the Supreme Court on the jurisdictional issue, and then on remand ruled against the Bank on the merits, in an opinion by Judge King.

The issue was about the arbitrability of a dispute between some investors and the Bank over their losses as the result of an illegal tax shelter, on which the Bank supposedly gave some advice. The answer was - not arbitrable, where the alleged bad acts by and large preceded the writing with the arbitration clause, which seems like a pretty good reason to conclude the arbitration clause does not apply.

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