John Pitblado

FEDERAL CIRCUIT COURT UPHOLDS ENFORCEMENT OF FOREIGN ARBITRATION AWARD

October 22, 2015 by John Pitblado

The U.S. Court of Appeals for the Eighth Circuit upheld a federal district court’s enforcement of an arbitration award after finding that the Appellant’s claims were precluded by foreign proceedings. American Hearing Systems, doing business as Interton, appealed the enforcement of the foreign arbitration award, arguing that the district court did not have subject-matter jurisdiction under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“the Convention”). Additionally, Interton argued, even if the court had subject matter jurisdiction, the written arbitration agreement did not apply to the current dispute between the parties.

AVR Communication, Ltd., an Israeli company, sought arbitration in Israel asserting a number of claims governed by a previous arbitration agreement. Interton argued that the disputes giving rise to the claims were outside of the scope of the contract containing the arbitration provision. Interton failed to prevail on this argument in both the Israeli arbitration and later in the enforcement of the award by AVR in federal district court.

On appeal, Interton interpreted the language of the Convention to impose a subject matter jurisdiction requirement to include presentment of a written contract. The Eighth Circuit summarily dismissed this argument. The court found that the issue was not whether there was a written agreement, but whether the disputes in question were covered by the agreement to arbitrate. The court held that this question was precluded by the foreign arbitration proceeding and upheld the award. AVR Communications, Ltd. v. American Hearing Systems, Inc., Case No. 14-2313 (8th Cir. July 14, 2015)

This post written by Joshua S. Wirth, a law clerk at Carlton Fields in Washington, DC.

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CALIFORNIA APPELLATE COURT DENIES MANDAMUS PETITION: ARBITRATOR WILL DECIDE WHETHER ARBITRATION AGREEMENT PERMITS CLASS ACTION CLAIMS

October 21, 2015 by John Pitblado

An appellate court in California denied Universal Protection Service, LP (“Universal”) and their affiliate’s mandamus petition, seeking to overturn a lower court ruling compelling arbitration. The court found that whether an arbitration agreement permitted class-wide arbitration is a question for an arbitrator, and not the court.

Plaintiffs, a group of security officers formerly in the employ of Universal, sought arbitration following their employment termination—allegedly—after filing an administrative complaint. The issue before the court centered on whether an arbitration agreement within plaintiff’s employment contract gave an arbitrator the power to determine whether an arbitration agreement allowed for class action arbitration. The court looked to whether there was “clear and unmistakable evidence” that Universal and the plaintiffs planned for an arbitrator to handle such disputes.

Universal argued that because the arbitration agreement did not reference class actions specifically, this was concrete evidence that the parties did not intend the question of class action arbitration to be within the purview of an arbitrator. The court disagreed, finding that mere silence within an arbitration agreement is not sufficient. Instead, the court noted that the parties incorporated the American Arbitration Association’s (“AAA”) rules pertaining to employment disputes including the AAA’s Supplementary Rules for Class Arbitrations. Despite noting that some federal cases have rejected similar conclusions, the court held that because the parties intentionally made the AAA apart of their employment contract, this inclusion authorizes an arbitrator to decide whether the arbitration agreement permits class actions.

Universal Prot. Serv., LP v. Superior Ct. of Yolo Cnty., No. C078557 (Cal. Ct. App. Aug. 18, 2015)

This post written by Matthew Burrows, a law clerk at Carlton Fields in Washington, DC.

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REINSURANCE DISPUTE VOLUNTARILY DISMISSED AFTER CEDENT FAILED TO ESTABLISH GOOD CAUSE TO SEAL

October 20, 2015 by John Pitblado

A reinsurance dispute we have covered previously was voluntarily dismissed shortly after the Western District of Michigan ordered that cedent’s amended motion for partial stay and accompanying memorandum, affidavits, and exhibits be unsealed. Plaintiff/counter-defendant Michigan Millers Mutual Insurance Company (MMMIC), the cedent, had filed its amended motion for partial stay and accompanying documents under seal. When the district court discovered this fact, the court directed MMMIC to “either file with the Court a notice informing the Court of the order authorizing the sealing of it’s [sic] motion and accompanying materials, or file a motion consistent with the provisions of Rule 10.6(b) establishing ‘good cause’ for sealing them.”

In response, MMMIC filed a motion to maintain under seal certain redacted passages in its motion for partial stay and accompanying exhibits. The court denied that motion and ordered the motion for partial stay and accompanying documents to be unsealed because MMMIC failed to establish either a need or good cause to seal these documents. Soon thereafter, the parties voluntarily dismissed the suit.

Michigan Millers Mut’l Ins. Co. v. Westport Ins. Corp., No. 1:14-cv-00151-PLM (USDC W.D. Mich.) (Aug. 21, 2015, denying motion to seal); (Sept. 18, 2015, stipulation of dismissal).

This post written by Whitney Fore, a law clerk at Carlton Fields in Washington, DC.

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SIXTH CIRCUIT HOLDS PIZZA HUT FRANCHISEE WAIVED ARBITRATION RIGHT

October 19, 2015 by John Pitblado

The world’s largest Pizza Hut franchisee, NPC International, Inc. (“NPC”), which operates more than 1200 Pizza Hut restaurants in the United States, was sued in federal district court by employees in five separate collective action lawsuits for alleged unpaid “off the clock” work, meeting, and training time. The district court found that the defendant employer’s litigation actions waived its contractual right to insist on arbitration of employees’ claims for unpaid compensation by failing to assert timely the right. The district court accordingly denied NPC’s motion to compel arbitration in all five cases. NPC appealed.

The Sixth Circuit Court of Appeals affirmed, concluding that NPC had “slept on its rights” by waiting almost fifteen months before raising the arbitration issue in any of the five cases. Further, it was only after NPC obtained unfavorable rulings on its initial dispositive motions that it moved to dismiss or compel arbitration. Finally, NPC’s belated assertion of its right to arbitration caused plaintiffs actual prejudice in the form of unnecessary delay and expense.

Gunn v. NPC Int’l, Inc., Nos. 14-6036/6040/6041/6042/6044 (6th Cir. Aug. 28, 2015).

This post written by Whitney Fore, a law clerk at Carlton Fields in Washington, DC.

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LOUISIANA LEGISLATION REPEALS AUTHORITY TO ENTER NIMA

October 1, 2015 by John Pitblado

The Louisiana House of Representatives’ Bill 259, effective July 1, 2015 as Act 386, repeals the authority of the state’s insurance commissioner to enter the Non-Admitted Insurance Multi-State Agreement (“NIMA”) or other cooperative compacts or agreements with other states for the purpose of allocating surplus lines premium on multi-state policies and tax revenues. Act 386 provides that the entire surplus lines premium of a surplus lines policy of which Louisiana is the home state of the policyholder would be subject to the surplus lines tax, which the Act sets at 4.85%.

H.B. 259, 2015 Reg. Sess. (La. 2015).

This post written by Whitney Fore, a law clerk at Carlton Fields in Washington, DC.

See our disclaimer.