Arbitration Process Issues

PETITION TO VACATE ARBITRATION AWARD FILED IN WRONG COURT

July 7, 2009 by Carlton Fields

Following an unfavorable decision by an arbitrator, the Pacific Northwest Regional Council of Carpenters (“PNRCC”) filed suit in the Western District of Washington to vacate the arbitrator’s award to the Laborers’ International Union of North America (“LIUNA”). LIUNA filed a motion to transfer PNRCC’s action to D.C. federal court, arguing that PNRCC was bound to consent to D.C. jurisdiction by the collective bargaining agreement. Finding that the action could clearly have been brought in D.C., the district court focused on the “convenience of the parties” and “interests of justice” requirements for a §1404(a) transfer. The court noted that both LIUNA and PRNCC’s parent union were headquartered in Washington, D.C. and that all relevant records were in D.C. where all of the operative facts of the case occurred. For these reasons, the court held that D.C. was the more convenient forum.

The court also held that the interests of justice supported the transfer. LIUNA had filed a suit seeking enforcement of the arbitration award in D.C. and the court noted that it would be inefficient and duplicative to examine the same issues in separate cases. Ultimately, the court granted the motion to transfer, explaining that whether the agreement properly bound PNRCC was irrelevant in the §1404(a) analysis. LIUNA had met their burden by showing that D.C. was the most appropriate forum to decide all issues based on the traditional §1404(a) considerations. Pacific Northwest Reg'l Council of Carpenters v. Laborers Int'l Union of N. Am., Case No. C09-420 (W.D. Wash. June 5, 2009).

This post written by John Black.

ORDER ALLOWING DISCOVERY OF ARBITRATION AWARD’S VALIDITY LACKED FINALITY TO CONFER APPELLATE JURISDICTION

July 6, 2009 by Carlton Fields

In an unpublished opinion, the Third Circuit Court of Appeals declined to exercise jurisdiction over an appeal of an order allowing discovery in connection with a motion to vacate an arbitration award. The Federal Arbitration Act provides for appeals from orders “modifying, correcting, or vacating an [arbitration] award.” The trial court’s decision to permit discovery into whether the award should be vacated might be a prelude to a final order vacating or modifying the award, but it is not a final order for purposes of the Act. Guyden v. Prudential Life Ins. Co. of Am., No. 08-3108 (3d Cir. June 5, 2009).

This post written by Brian Perryman.

ADR UMPIRE HAS AUTHORITY TO DETERMINE ENFORCEABILITY OF SETTLEMENT AGREEMENT

July 2, 2009 by Carlton Fields

Constructamax, Inc. (“CMAX”), joined by Arch Insurance Company and Arch Reinsurance Company, filed a motion in federal district court to enforce a purported settlement agreement reached with Whitlock Mills LP (“Whitlock”) prior to the commencement of an Alternative Dispute Resolution (“ADR”) proceeding . Whitlock acknowledged the settlement discussion, but denied the existence of an enforceable settlement agreement. The district court ultimately denied CMAX’s motion, ruling that pursuant to the plain language of The New Jersey Alternative Procedure for Dispute Resolution Act, the ADR umpire had full jurisdiction to decide the enforceability of the purported settlement agreement. Deluxe Building Sys., Inc. v. Constructamax, Inc., Case No. 06-2996 (USDC D.N.J. June 2, 2009).

This post written by Dan Crisp.

JUDICIAL REVIEW OF ARBITRATION ISSUE DENIED AGAIN ON RIPENESS GROUNDS

June 30, 2009 by Carlton Fields

On December 1, 2008, we reported on a Sixth Circuit remand with instructions to dismiss for lack of jurisdiction on ripeness grounds, which the district court subsequently dismissed the action. Though in the underlying arbitration, the arbitration panel issued a “Partial Final Class Determination Award” denying the defendants’ motion for class certification. Then, after granting plaintiff’s motion to reopen the case, the plaintiff filed a motion to confirm the award, and defendants filed a motion to dismiss for lack of subject matter jurisdiction. Applying the Sixth Circuit’s analysis from the earlier action, the district court granted the motion to dismiss as the matter was not ripe for judicial review, determining that the plaintiff could not establish a suffering of harm or hardship and quoting the circuit court stating that courts “should remain reluctant to invite a judicial proceeding every time the arbitrator sneezes.” Dealer Computer Servs., Inc. v. Dub Herring Ford Lincoln Mercury, Inc., Case No. 017-10263 (USDC D.N.J. May 29, 2009).

This post written by Dan Crisp.

FIFTH CIRCUIT CONFIRMS INTERNATIONAL ARBITRATION AWARD FROM NETHERLANDS

June 24, 2009 by Carlton Fields

On June 9, 2009, the U.S. Court of Appeals for the Fifth Circuit affirmed an arbitration award against Saipem America, which arose out of an international commercial insurance dispute. The Fifth Circuit reviewed the arbitration award handed down by a tribunal in The Hague, Netherlands for $1 million in damages and $400,000 in attorneys' fees. In addressing the parties' dispute over whether the U.S. Supreme Court's decision in Hall Street Associates prevented review of the award on nonstatutory grounds, the Fifth Circuit concluded that it may vacate the award only if a statutory ground supported the vacatur. With respect to the negligence claim, the Court ruled that the tribunal was within its authority to rule on the issue of negligence because the parties had submitted the issue in the “Terms of Reference” to the arbitration tribunal. Further, the Court ruled that the award of attorneys' fees was statutorily proper under Texas Code Section 172.145. Finally, the Court found no basis to overturn the tribunal's ruling as to indemnity. Saipem Am. v. Wellington Underwriters Agencies Ltd., No. 08-20247 (5th Cir. Jun. 9, 2009).

This post written by John Black.