Carlton Fields

ROUNDUP OF FEDERAL DECISIONS ON MOTIONS TO COMPEL ARBITRATION

September 7, 2012 by Carlton Fields

Following is a summary of court decisions, some compelled, others denying, arbitration:

Authenment, III v. Ingram Barge Co., Case No. 10-2107 (USDC E.D. La. July 13, 2012) (granting West of England Shipowner’s Mutual’s motion to stay pending arbitration in a case initially brought against West of England’s insured, notwithstanding that plaintiff was non-signatory to arbitration agreement; holding that Convention on the Recognition and Enforcement of Foreign Arbitral Awards supersedes Louisiana’s statute prohibiting arbitration agreements in insurance contracts).

ISC Holding AG v. Nobel Biocare Finance AG, No. 11-239 (2d Cir. July 25, 2012) (affirming order dismissing with prejudice petition to compel arbitration and vacating petitioner’s notice of voluntary dismissal; holding that Rule Federal Rule 41(a)(1)(A)(i) does not apply in the context of petitions to compel arbitration).

Wooten v. Fisher Invest., Inc., No. 11-2476 (8th Cir. July 26, 2012) (affirming that district court properly dismissed without prejudice plaintiff’s state and federal statutory claims because they were subject to an ongoing arbitration that was required to be completed before remedies could be pursued in federal court).

Gove v. Career Sys. Dev’l Corp., No. 11-2468 (1st Cir. July 17, 2012) (affirming that employment discrimination claims brought by applicant against potential employer were not subject to compulsory arbitration because arbitration agreement was ambiguous as to whether claims brought by applicants that were not hired were subject to arbitration provision).

Union Elec. Co. v. Aegis Energy Syndicate 1225, Case No. 4:12CV87 (USDC E.D. Mo. Aug. 23, 2012) (denying insurer’s motion to compel arbitration; holding that Missouri choice of law and forum selection clause in policy endorsement prevails over alternative resolution provision in policy).

This post written by Ben Seessel.

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COMMUTATION AGREEMENTS BETWEEN RELIANCE INSURANCE COMPANY (IN LIQUIDATION) AND THREE REINSURERS APPROVED

September 6, 2012 by Carlton Fields

A Pennsylvania court has approved commutation agreements between Reliance Insurance Company (in Liquidation) and reinsurers Connecticut General Life Insurance Company (“Connecticut General”), Phoenix Life Insurance Company (“Phoenix”), and Hannover Rueckversicherung AG and E + S Rueckversicherung AG (“Hanover”), respectively. The Reliance Estate will receive $7,044,565 from Connecticut General and $5,017,408 from Phoenix for commuting obligations on reinsurance policies written through Unicover Managers covering workers’ compensation losses. Hanover will pay $4,790,789 to the Reliance Estate in exchange for commuting liabilities on reinsurance contracts covering various lines of business including accident and health, aviation liability, and D&O liability.

This post written by Ben Seessel.

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CALIFORNIA COURTS CONTINUE TO CONTEND WITH CONCEPCION

September 5, 2012 by Carlton Fields

Two recent California Appellate Court decisions address class arbitration waivers post-AT&T Mobility v. Concepcion, the 2011 U.S. Supreme Court case that dramatically curtailed parties’ ability to challenge class action waivers in arbitration agreements. In Caron v. Mercedes-Benz Financial Services USA, LLC, No. G044550 (June 29, 2012), the Court reviewed a trial court decision denying a motion to compel, based on the anti-class-action-waiver provision of California’s Consumer Legal Remedies Act. The Appellate Court reversed, citing Concepcion, and holding that the CLRA is pre-empted by the FAA, because it acts as an obstacle to the FAA’s intention of enforcing arbitration agreements.

Likewise, in Truly Nolen of America v. Superior Court, No. D060519 (Aug. 9, 2012), the Appellate Court reversed an order allowing class-wide arbitration. The trial court had granted a motion to compel arbitration of a putative class action labor dispute, but denied the employer’s motion to direct individual arbitration, instead allowing class-wide arbitration of the claims. The employer appealed and the Appellate Court reversed, citing Concepcion. However, it remanded with instructions that the trial court hear arguments and evidence on whether the arbitration agreement in fact contained an implied right to class-wide arbitration, as argued by the plaintiff class, including extrinsic evidence of intent, if necessary, and to then rule anew on the issue of whether class-wide arbitration should be allowed.

This post written by John Pitblado.

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NAIC REINSURANCE AND SURPLUS LINES TASK FORCE MEETINGS

September 4, 2012 by Carlton Fields

The NAIC has released summaries of the minutes of the meetings of its Reinsurance Task Force and Surplus Lines Task Force, both of which took place on August 13, 2012, during the Summer National Meeting in Atlanta.

The Reinsurance Task Force adopted recommendations regarding accreditation standards, heard status updates on implementation of the revised credit for reinsurance models, approved establishing a subgroup regarding quota share reinsurance contracts, addressed ongoing international reinsurance issues, including US/EU dialogue and activities of the International Association of Insurance Supervisors, heard updates from the Captive and Special Purpose Vehicle Use Subgroup on alternative risk transfer in relation to existing state law, and heard a status update from The Financial Condition Committee regarding ceding reinsurers in receivership.

The Surplus Lines Task Force created a Surplus Lines Requirements Subgroup, to research issues related to eligibility requirements, which were addressed at the meeting.

This post written by John Pitblado.

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COURT COMPELS ARBITRATION, CALLING UNCONSCIONABILITY AN ISSUE FOR THE ARBITRATOR

August 30, 2012 by Carlton Fields

Applying California law and the Federal Arbitration Act, a federal district court ruled that Senior Services of Palm Beach must arbitrate its claims against ABCSP, Inc., a franchising company, pursuant to the arbitration clause of the parties’ franchise agreement. Although Senior Services claimed the arbitration clause was unconscionable, the court held that, by incorporating the rules of the American Arbitration Association into their arbitration provision, the parties had agreed to allow the arbitrator to determine gateway issues such as arbitrability, which included unconscionability. The court went on to say that, however, that if the matter were properly before it, it would hold that the arbitration clause was not unconscionable. The provision did not meet the test for either procedural or substantive unconscionability, as there was no inequality in bargaining power or evidence of surprise, nor was the provision, including its requirement to arbitrate in California, harsh or one-sided. Thus, the court granted the prevailing party’s motion to dismiss the case and compel arbitration. Senior Services of Palm Beach LLC v. ABCSP Inc., Case No. 9:12-cv-80226-JIC (USDC S.D. Fla. June 7, 2012).

This post written by Brian Perryman.

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