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New reinsurance-related and arbitration developments from Carlton Fields

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APPEALS COURT BALANCES DEFERENCE TO ARBITRATOR WITH LESS STRINGENT STANDARDS FOR PRO SE PARTIES

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The plaintiff, Sandra Parker, brought an employment discrimination suit against her employer, J.C. Penney, which moved to arbitrate the case. Plaintiff proceeded pro se in the arbitration, after her counsel filed a motion to withdraw. The arbitrator found in favor of J.C. Penney. The plaintiff moved to vacate the award in federal district court. The court denied vacatur and confirmed the arbitrator’s award. The plaintiff appealed to the Court of Appeals for the Fifth Circuit. Citing competing constraints of “exceedingly deferential” review of an arbitrator’s award, while nonetheless “liberally” construing a pro se litigant’s brief and generally applying a less stringent standard to parties proceeding pro se than to parties represented by counsel, the Fifth Circuit affirmed, holding that plaintiff failed to demonstrate any of the bases for vacatur provided for in the FAA. Parker v. J.C. Penney Corporation, Inc., No. 10-40280 (5th Cir. May 20, 2011).

This post written by John Pitblado. [Read more…] about APPEALS COURT BALANCES DEFERENCE TO ARBITRATOR WITH LESS STRINGENT STANDARDS FOR PRO SE PARTIES

COURT CHARACTERIZES CROSS-PETITION TO CONFIRM AWARD AS SUPERFLUOUS AND IMPROPER, BUT DECLINES TO STRIKE IT

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Century Insurance arbitrated a dispute with London Market Reinsurers under the parties’ treaty reinsuring Century’s exposure to asbestos claims. Century petitioned the federal district court to have the arbitration award confirmed. The reinsurers cross-petitioned, citing the same basis for confirmation as did Century, but using its filing to tell its side of the story. Century moved to strike the cross-petition, charging that it was redundant, misleading, violative of the parties’ confidentiality agreement, and an improper attempt to advance the reinsurers’ “public relations agenda.” The court agreed that the filing was improper, and that the parties should “conduct their own public relations campaign outside the Court,” but refused to strike the cross-petition, reasoning that orders striking papers should be sparingly granted because the public should have access to court filings. Century Insurance Co. v. Certain Underwriters at Lloyd’s London, Case No. 11 Civ. 1503 (USDC S.D.N.Y. May 23, 2011).

This post written by Ben Seessel.

SUPREME COURT DENIES REVIEW OF CASE CHALLENGING PARTY-SELECTED ARBITRATOR

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The Supreme Court denied certiorari in Trustmark Insurance Co. v. John Hancock Life Insurance Co., a case involving a challenge to a party-selected arbitrator in a tripartite arbitration (where each party selects an arbitrator, and the two arbitrators select an umpire). We reported earlier on both the federal district court’s decision enjoining the arbitration on the basis that John Hancock’s selected arbitrator was not “disinterested” because of his participation in a prior arbitration proceeding between the same parties (Feb. 8, 2011), and the court of appeals’ reversal of the district court’s decision (May 10, 2010). The court of appeals held the district court erred in holding that John Hancock’s arbitrator was not “disinterested” because he had knowledge of the parties’ prior arbitration, and further erred in determining that the arbitration panel lacked the power to construe a confidentiality agreement that the parties had reached during the first arbitration proceeding. Trustmark Insurance Co. v. John Hancock Life Insurance Co., No. 09-3682 (7th Cir. Jan. 6, 2011), cert. denied 79 U.S.L.W. 3594 (U.S. May 16, 2011) (No. 10-1213).

This post written by Ben Seessel.

PREJUDGMENT INTEREST AVAILABLE ONLY FOR COMPENSATORY DAMAGES, BUT NOT FOR PUNITIVE OR TREBLED DAMAGES

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On March 7, 2011, we posted on an extensive decision of a District Court in a dispute over a reinsurance relationship which had not been documented in a written agreement. The court has now assessed prejudgment interest, attorneys’ fees and costs. The court held that prejudgment interest must be computed on actual damages, and may not be based upon doubled or trebled amounts, and that prejudgment interest may not be awarded for punitive damages. Trenwick America Reinsurance Corp. v. IRC, Inc., Case No. 07-12160 (USDC D. Mass. May 23, 2011).

This post written by Rollie Goss.

ARBITRATION COMPELLED DESPITE CLAIM OF INVALIDITY

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In response to Plaintiff Gordon Hook’s action to enjoin UBS from enforcing a promissory note it required Hook to execute after he commenced his employment at UBS, the company moved to compel arbitration and for dismissal or stay pending completion of arbitration. Hook, for his part, moved for a preliminary injunction to enjoin UBS from enforcing the arbitration provisions of the promissory note and from proceeding with the pending arbitration before FINRA. The US District Court for the District of Connecticut granted UBS’s motion to compel arbitration and further dismissed the action pending arbitration. The Court found specifically that the arbitration provision was valid and that it required that all challenges to the validity of the promissory note (and the arbitration provision itself) must be determined by arbitrators. This included all of Hook’s claims of fraudulent inducement, conversion, and statutory theft. Hook’s motion for an injunction was denied, as he failed to demonstrate the likelihood of irreparable harm. Accordingly, the Court closed the case. Hook v. UBS Fin. Servs., Case No. 10-950 (USDC D. Conn. May 4, 2011).

This post written by John Black.