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Nora Valenza-Frost

Nevada Supreme Court Reverses Ordered Arbitration as the FAA Preempts NRS 597.995

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Nevada Revised Statutes section 597.995 requires agreements that include an arbitration provision to also include a specific authorization for the arbitration provision showing that the parties affirmatively agreed to that provision. When a settlement agreement referenced a licensing agreement that included an arbitration provision, the trial court denied the motion to compel arbitration, “concluding the arbitration provision was unenforceable because it did not include the specific authorization required by NRS 597.995.”

In reversing the decision, the Nevada Supreme Court held that the Federal Arbitration Act, 9 U.S.C. § 2, which provides that written provisions for arbitration are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract,” preempts section 597.995 and that the statute did not void the arbitration clause. The court cited Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (1996), wherein the “Supreme Court explained that under the FFA, courts may not ‘invalidate arbitration agreements under state laws applicable only to arbitration provisions,’ as Congress has ‘precluded states from singling out arbitration provisions for suspect status’ and requires arbitration provisions to be placed on ‘the same footing as other contracts.'” The parties were thus compelled to arbitrate.

MMAWC, LLC v. Zion Wood Obi Wan Tr., No. 75596 (Nev. Sept. 5, 2019).

Intervenor-Defendant Obtains Stay of SDNY Action in Favor of Arbitration 14 Months After Complaint Filed

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The plaintiff and intervenor-defendant entered into a contract wherein they agreed to arbitrate claims arising out of the contract. Following a dispute, the plaintiff asserted that the intervenor-defendant had waived its right to arbitration. To determine whether arbitration was waived, the district court considered: “(1) the time elapsed from when litigation was commenced until the request for arbitration; (2) the amount of limitation to date, including motion practice and discovery; and (3) proof of prejudice.” The court concluded that, in light of the strong presumption in favor of arbitration, and despite the 14-month delay in applying for a stay, the plaintiff “failed to show that it has suffered prejudice as a result of the delay, or will suffer prejudice by proceeding to arbitration.” The case was stayed pending the conclusion of arbitration pursuant to the terms of the parties’ contract.

United States ex rel. Preferred Masonry Restoration, Inc. v. Int’l Fidelity Ins. Co., No. 7:17-cv-01358 (S.D.N.Y. Aug. 30, 2019).

District of Connecticut Enforces Amex Arbitration Clause Where Cardmember Did Not “Opt Out”

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In a dispute involving fraudulent charges, the District of Connecticut required American Express and the cardmember to resolve their issue in arbitration, pursuant to the cardmember agreement, as amended. AmEx provided notice of the arbitration provision in a document titled “Important Changes to Your Account Terms,” which explained the changes to the arbitration provision and stated that cardmembers have the opportunity to reject the provision, which the cardmember here did not. The cardmember “claimed to have no recollection of any Arbitration Provision contained in his Cardmember Agreement nor any recollection of receiving any particular amendment to his Cardmember Agreement which imposed an Arbitration provision, or which required him to opt out of an Arbitration participation.” Nonetheless, the cardmember admitted that, at all times relevant, “he and his accounts were subject to the terms of a Cardmember Agreement.”

The cardmember did not deny receipt of the amendment or refute any evidence provided by AmEx “that he was, in fact, mailed the various amendments to his Cardmember Agreements.” Accordingly, the court determined that the cardmember’s use of his credit card after receiving the various amendments to his cardholder agreement constituted acceptance of their terms, including the arbitration provisions contained therein.

Errato v. Am. Express Co., No. 3:18-cv-01634 (D. Conn. Aug. 23, 2019).

NDNY Finds Party Waived Right to Pursue Employment-Related Claims and Confirms Arbitration Award

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The plaintiff voluntarily signed an employment agreement that provided that any and all employment-related disputes arising out of the plaintiff’s employment would be subject to confidential arbitration. Following his termination, the plaintiff filed suit, asserting claims of retaliation and discrimination, which action was stayed pending arbitration. The employment agreement “clearly and expressly states that, by signing the agreement, Plaintiff agrees to arbitrate all claims regarding his employment against Defendant under the terms of the” agreement. “Plaintiff has not provided any reason as to why this agreement is somehow unenforceable. As a result, the Court finds that the Arbitrator had jurisdiction to preside over the parties’ dispute.” The court affirmed the arbitration award, as the plaintiff failed to show the existence of grounds to vacate the award.

McNeill v. Ramours Furniture Co., No. 6:15-cv-01473 (N.D.N.Y. Aug. 1, 2019).

NDNY Unable to Resolve Ambiguity in Umbrella Policies and Sets Trial

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On remand from the Second Circuit, the Northern District of New York was asked to determine whether Utica Mutual Insurance Co. (the cedent) had a defense obligation under its umbrella policies. If it did, then Utica would be entitled to recover defense costs from Clearwater Insurance Co. (the reinsurer).

The umbrella policies required Utica to defend any occurrence “not covered by the policies listed in the schedule of underlying insurance … but covered by the terms and conditions of this policy.” Both parties argued different interpretations of the meaning of “not covered by.” Finding the language ambiguous, and having not been provided extrinsic evidence allowing the court to resolve the ambiguity as a matter of law, summary judgment was denied and the case set for trial.

Utica Mut. Ins. Co. v. Clearwater Ins. Co., No. 6:13-cv-01178 (N.D.N.Y. July 25, 2019).