Arbitration Process Issues

ARBITRATION ROUND-UP

November 23, 2012 by Carlton Fields

Employment Disputes

Mesa Airlines, Inc. v. Air Line Pilots Association International, Case No. 2:11-cv-02106 (USDC D. Ariz. Sept. 14, 2012) (granting summary judgment upholding labor arbitration award; arbitrator’s reinstatement of airline pilot did not exceed jurisdiction by ignoring language of collective bargaining agreement, did not violate public policy, and did not exhibit bias by ignoring evidence).

Hamerslough v. Hipple, Case No. 1:10-cv-03056 (USDC S.D.N.Y. Oct. 25, 2012) (denying petition to vacate award; granting cross-petition to confirm award; award providing additional commissions to former salesperson, but only based on revenue collected prior to termination, was not based on arbitrator “exceeding their powers,” was not a “manifest disregard,” and was not contrary to public policy, including determination that salesperson was not “prevailing party” for purposes of awarding attorney’s fees).

Class Waiver

Webster v. Freedom Debt Relief, LLC, Case No. 1:12-cv-01654 (USDC N.D. Ohio Sept. 25, 2012) (denying petition to vacate award finding that underlying agreement precluded class arbitration; arbitrator did not commit “manifest disregard”).

Exceeding Authority/Manifest Disregard

Estate of Wildhaber v. Life Care Centers of America, Case No. 2:10-cv-00015 (USDC D. Nev. Oct. 23, 2012) (granting application for confirmation of award; denying motion to vacate and modify award; award for $1.5 million for pain and suffering and statutory double damages was not excessive for wrongful death, elder abuse, and elder neglect; no “manifest disregard” for award of prejudgment interest on attorney’s fees, statutory double damages, and grief and sorrow).

Day & Zimmerman, Inc. v. SOC-SMG, Inc., Case No. 2:11-cv-06008 (USDC E.D. Pa. Oct. 22, 2012) (granting motion to confirm award; denying motion to vacate award; rejecting argument that filing of “complaint” to vacate award instead of “motion” under FAA was grounds for dismissal of action, but confirming award because arbitrators did not exceed authority and other vacatur arguments were not viable under FAA).

Oehme, Van Sweden & Associates, Inc. v. Maypaul Trading & Services Ltd., Case No. 1:12-cv-00005 (USDC D.D.C. Nov. 6, 2012) (granting motion to confirm award; denying motion to vacate award; non-signatory bound to arbitration agreement under “apparent agency”; arbitrator did not commit “manifest disregard”).

CD&L Realty LLC v. Owens-Illinois, Inc., Case No. 1:11-cv-07248 (USDC D.N.J. Sept. 25, 2012) (granting motion to confirm award after removal; denying vacatur; arbitrator did not exceed authority, or violate public policy; plaintiff could not challenge arbitrator’s rejection of fraud and breach of contract claims for legal or factual error).

Procedural Issues

Degrate v. Broadcast Music Inc., Case No. 1:12-cv-01700 (USDC S.D.N.Y. Oct. 25, 2012) (dismissing sua sponte pro se petition to vacate award as untimely; deadlines for petition under state law and FAA would not be extended due to “unique circumstances” or “equitable tolling”).

Nuzzi v. Coachmen Industries, Inc., Case No. 3:09-cv-00116 (USDC N.D. Ind. Oct. 26, 2012) (denying motion to vacate award; action stayed against entities that filed Chapter 7 bankruptcy, but would proceed against viable defendant parent company; perceived “unfairness” of summary arbitration procedures not viable grounds for vacatur under FAA; arbitrator did not commit “manifest disregard”).

This post written by Michael Wolgin.

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ARBITRATION AWARD PLACING A PARTY AT RISK OF VIOLATING FEDERAL REGULATIONS FOUND NOT TO BE A MANIFEST DISREGARD OF THE LAW

November 21, 2012 by Carlton Fields

The First Circuit affirmed a district court’s denial of a motion to vacate an arbitration award issued in a dispute between Bangor Gas, a pipeline owner, and H.Q. Energy, a natural gas supplier, concerning responsibility for certain costs regulated by the Federal Energy Regulatory Commission. The arbitration panel designed a remedy consistent with the FERC’s shipper-must-have-title rule, but that placed Bangor at risk for violating a different FERC regulation. Following the arbitration award’s issuance, Bangor received guidance from the FERC staff that the panel’s remedy “would violate the Commission’s posting and bidding regulations.” While the First Circuit does not recognize “manifest disregard of the law” as a valid ground for vacating an arbitral award, it analyzed the award as if the doctrine applied since there is a circuit split on the issue. The court determined that the arbitrators did not disregard the law because the FERC’s intentions were not clear cut. The staff’s guidance is not binding on FERC and the arbitrators provided for the contingency of a violation in the award. Bangor Gas Co. v. H.Q. Energy Servs. (U.S.) Inc., No. 12-1386 (1st Cir. Sept. 26, 2012).

This post written by Abigail Kortz.

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VERMONT SUPREME COURT SENDS BANK BACK INTO CLASS ARBITRATION

November 13, 2012 by Carlton Fields

The Vermont Supreme Court reversed a trial court order that had the effect of precluding class arbitration where the parties’ agreement was silent on the issue. The trial court based its ruling on the then-recent U.S. Supreme Court decision in Stolt-Nielsen SA v. AnimalFeeds Int’l Corp. However, on appeal, the Vermont Supreme Court reversed, holding that the trial court’s involvement was premature, as it was not based on a timely vacatur or confirmation action, as required to invoke a court’s jurisdiction under the Vermont Arbitration Act. The defendant bank failed to timely challenge the arbitrator’s pre-Stolt-Nielsen decision allowing class arbitration, and failed to re-raise the issue of arbitrability with the arbitrator in light of Stolt-Nielsen. Bandler and Bandler & Co. v. Charter One Bank, No. 2011-249 (VT Oct. 5, 2012).

This post written by John Pitblado.

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COURT ENFORCES FORUM SELECTION CLAUSE IN REINSURANCE AGREEMENTS AND TRANSFERS ARBITRATION DISPUTE UNDER 28 U.S.C. § 1404

November 12, 2012 by Carlton Fields

In an arbitration dispute brought in the Western District of Wisconsin over the inability of the parties to choose an arbitrator for reinsurance disputes, the court found that venue was improper and transferred the case to the Southern District of New York under 28 U.S.C. § 1404. Petitioners sought an order compelling the respondent to comply with the method for choosing arbitrators provided for in the arbitration agreement and respondent counterclaimed asking the court to choose an arbitrator since the parties could not agree on one. Respondent also argued that venue was not proper as to petitioners claims because the arbitration agreements included an agreement to hold arbitrations in New York, but argued at the same time that it should be allowed to assert its counterclaim in Wisconsin because it related to appointing an umpire under 9 U.S.C. § 5, which does not include a venue limitation, rather than enforcing an arbitration agreement under 9 U.S.C. §4, which includes a venue limitation. The court determined that the transfer of all claims was appropriate because the Seventh Circuit held in Haber v. Biomet that § 4 requires district courts to enforce forum selection clauses in arbitration agreements and that the counterclaim could not be tried separately from petitioners’ claims because the claims were too intertwined. Employers Ins. Co. of Wausau v. Arrowood Indemnity Co., Case No. 12-283 (USDC W.D. Wis. Oct. 26, 2012).

This post written by Abigail Kortz.

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COURT REFUSES TO COMPEL ARBITRATION PENDING DISCOVERY AS TO SCOPE OF TWO POTENTIALLY APPLICABLE CONTRACTS

November 8, 2012 by Carlton Fields

In a putative class action, a court denied the defendant’s motion to compel individual arbitration, pending discovery as to the appropriate law governing the dispute and the scope of two potentially applicable agreements between the parties. The dispute surrounded the appropriate charges for propane delivery. Plaintiff, a propane customer, contended that an oral contract existed between him and the company which set the price at a “market rate” and did not include an agreement to arbitrate. The company, on the other hand, contended that the parties’ relationship was governed by a written agreement sent to the customer following the initial propane services, and that the agreement contained a class-waiver arbitration clause. The court found that it lacked sufficient facts to determine both which state laws and which of the two purported contracts applied. The court denied the motion to compel arbitration and ordered “limited discovery as to the appropriate choice-of-law as well as the scope of the oral and Master Agreements.” Howard v. Ferrellgas Partners, L.P., Case No. 10-02555 (USDC D. Kan. Aug. 27, 2012).

This post written by Michael Wolgin.

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