Confirmation / Vacation of Arbitration Awards

SECOND CIRCUIT REFUSES TO VACATE FINRA AWARD AS A MANIFEST DISREGARD OF THE LAW

January 21, 2016 by Carlton Fields

Raymond James had initiated a FINRA arbitration because Singh, a financial advisor who was a registered representative of Raymond James, had refused to indemnify Raymond James pursuant to the terms of their agreement. Following an arbitration award in favor Raymond James, Singh unsuccessfully attempted to vacate the arbitration award against him by arguing the award was a manifest disregard of the law. On appeal, the higher court also rejected Singh’s arguments, noting that unless it had “serious reservations about the soundness of the arbitrator’s reading of the contract” it could not vacate the award. The court further pointed out that it was prohibited from second guessing the arbitrators construing of the contract. Singh’s argument that the amount of the award was not justified by the evidence did not fare any better; arbitrators are not required to disclose their rationale for an award, the record showed that there was evidence presented to the panel, and the amount awarded was less than the amount sought by Raymond James. Singh v. Raymond James Financial Services, Inc., Case No. 14-3970 (2d Cir. Dec. 9, 2015).

This post written by Barry Weissman.

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FILING OF FOUR LAWSUITS OVER TEN YEARS DID NOT WAIVE RIGHT TO ARBITRATE WHERE “LITIGATION MACHINERY” HAD NOT BEEN INVOKED

January 19, 2016 by Carlton Fields

Grigsby & Associates appealed an order confirming an arbitration award of compensatory damages and attorney fees to M Securities, in a dispute relating to underwriting fees owed in a municipal bond transaction. Grigsby claimed that the award should be vacated because the defendants waived their right to arbitration after filing four lawsuits concerning the bond transaction over ten years. The Eleventh Circuit held, however, that despite the prior lawsuits, M Securities still had not “substantial[ly] invoke[d] the litigation machinery prior to demanding arbitration.” M Securities did not effectuate service against Grigsby in three of the lawsuits, and the fourth litigation did not progress beyond the filing stage. And while delay in seeking arbitration generally weighs in favor of finding waiver, it must be coupled with other substantial conduct “inconsistent with an intent to arbitrate,” which M Securities did not display here. Nor did Grigsby demonstrate prejudice given “the extremely limited nature” of the prior lawsuits. Grigsby & Associates, Inc. v. M Securities Investment, Case No. 13-15208 (11th Cir. Dec. 28, 2015).

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

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ARBITRATION AWARD OVERTURNED UNDER THE FAA BECAUSE THE PANEL WAS NOT IMPARTIAL

January 18, 2016 by Carlton Fields

The New York Supreme Court vacated the award entered in an arbitration of television rights between Mid-Atlantic Sports Network (“MASN”), the Baltimore Orioles, the Commissioner of Baseball (“MLB”) and the Washington Nationals. The arbitration was held by the Revenue Sharing Definitions Committee of Major League Baseball (“RSDC”). MASN and the Orioles filed a petition to vacate the award, and MLB and the Nationals moved to confirm it.

In vacating the award, the court discussed various grounds for vacatur under the FAA: corruption, fraud, misconduct of the arbitrator, use of undue means to procure the award, evident partiality, and corruption. The court found evident partiality existed here, because the law firm and lawyers opposing MASN and the Orioles served as counsel in other matters for every other entity in the arbitration, including the individual arbitrators. The court speculated that, to the extent that “there is no authority for a finding of ‘evident partiality’ in such a relationship,” it is because “arbitrators in similar situations have disqualified themselves rather than risk a charge of partiality.” While the “appearance of bias” is not a basis for vacatur under the FAA and therefore not applicable, the court noted that such an appearance existed here. The court further found that the panel completely ignored the prejudice established by MASN and the Orioles, which reflected “an utter lack of concern for fairness of the proceeding that is ‘so inconsistent with basic principles of justice’ that the award must be vacated.” TCR Broadcasting Holding, LLP v. WN Partner, LLC, Case No. 652044/2014 (N.Y. Sup. Ct. Nov. 4, 2015).

This post written by Barry Weissman.

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ELEVENTH CIRCUIT CONCLUDES IT LACKS JURISDICTION OVER APPEAL OF ORDER COMPELLING ARBITRATION BUT CONFIRMS ORDER CONFIRMING ARBITRATION AWARD

January 12, 2016 by Carlton Fields

This appeal is from two orders by a district court in Alabama. The first order in June 2012 compelled arbitration of a dispute between the parties, the Union and Wise Alloys. The second order in December 2014 enforced the resulting arbitration award in the Union’s favor, but denied the Union’s request for attorneys’ fees. Wise Alloys appealed both the June 2012 and December 2014 orders, and the Union appealed the aspect of the December 2014 which denied its motion for attorneys’ fees. The procedural history and issues involved in the underlying case can be found here.

The Eleventh Circuit held that it lacked jurisdiction over the appeal of the June 2012 order which compelled arbitration because no notice of appeal was filed within 30 days of that order. The Court noted that the June 2012 order was a final decision and was appealable, and the fact that the order stayed the litigation (and did not dismiss it) did not impact the finality of the order compelling arbitration. Thus, because Wise Alloys did not file its notice of appeal within 30 days of the order, the Court had no jurisdiction over that aspect of the appeal.

With respect to Wise Alloys’ appeal of the December 2014 order and its challenge to the arbitration award based on its view that the arbitrator exceeded his authority, the Eleventh Circuit noted that its judicial review of arbitration awards is limited and that it specifically reviews a labor arbitration award for “whether [it] is irrational, whether it fails to draw its essence from the collective bargaining agreement or whether it exceeds the scope of the arbitrator’s authority.” Thus, under this standard, the Eleventh Circuit agreed with the district court that the arbitrator’s interpretation of the agreement, even if incorrect, was not an impermissible amendment or change to the agreement. It also held that the arbitrator was permitted to resort to extrinsic evidence to interpret an ambiguity he concluded was in the agreement. Accordingly, the Court affirmed the district court’s December 2014 order, confirming the arbitration award. In addition, it also confirmed the portion of the order denying the Union’s request for attorneys’ fees. United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Int’l Union, et al. v. Wise Alloys, LLC, No. 14-15744 (11th Cir. Dec. 8, 2015).

This post written by Jeanne Kohler.
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COURT CONFIRMS FINAL ARBITRATION AWARD IN REINSURANCE DISPUTE

January 7, 2016 by Carlton Fields

Certain Underwriters at Lloyd’s of London petitioned the U.S. District Court for the District of Massachusetts to confirm an award issued by a three-member panel in an arbitration against Transport Insurance Company. The arbitration involved aggregation and allocation disputes related to certain billings submitted by Transport to Underwriters under various excess of loss reinsurance treaties. In 2014, the panel issued an interim award that imposed prospective obligations on the parties. Thereafter, a dispute arose between them regarding a revised billing submitted by Transport, resulting in the issuance of a final award that incorporated the panel’s interim ruling by reference. Underwriters moved to confirm under Section 9 of the Federal Arbitration Act, and, specifically, Chapter 2 of that Act, 9 U.S.C. §§ 201-208, which provides for enforcement of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (and applied, as the arbitration involved UK syndicates). The District Court granted Underwriter’s motion and entered judgment consistent with the final award. Certain Underwriters at Lloyd’s, London v. Transport Insurance Co., No. 1:15-cv-12313 (USDC D. Mass. Nov. 20, 2015).

This post written by Rob DiUbaldo.

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