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Confirmation / Vacation of Arbitration Awards

SECOND CIRCUIT AFFIRMS JUDGMENT CONFIRMING ARBITRATION AWARD AND DENYING MOTION TO VACATE

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In a summary order, the Second Circuit Court of Appeals affirmed the district court’s confirmation of an arbitration award issued in favor of NCG Network Asia and the denial of PAC Pacific Group International’s motion to vacate. The court found that the arbitrator had properly disclosed a prior business relationship that indirectly linked him with NCG Network Asia, nothing about the relationship would compel a reasonable person to believe that the arbitrator was partial, and that PAC Pacific Group had thus not made the requisite showing to entitle it to post-arbitration discovery on the arbitrator’s alleged bias. The court also held that there was nothing inappropriate in denying PAC Pacific Group’s challenges to the arbitrator based on alleged impartiality, which denials complied with governing AAA rules and, further, that the arbitrator’s conclusion that there was no breach of the implied covenant of good faith and fair dealing was in accord with applicable law. NGC Network Asia, LLC v. PAC Pacific Group International, Inc., No. 12-0967 (2d Cir. Feb. 11, 2013).

This post written by Ben Seessel.

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ARBITRATION AWARD ROUNDUP

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Following is a summary of selected court opinions addressing requests for confirmation and vacation of arbitration awards.

Manifest disregard

NYKCool A.B. v. Pacific Fruit, Inc., No. 11-4246 (2d Cir. Jan 16, 2013) (affirming judgment by S.D.N.Y. confirming an arbitration award based on finding that defendant did not establish a “manifest disregard of the law,” or that the panel exceeded its authority or that the panel denied defendant a fundamentally fair hearing)

Murray v. Citigroup Global Markets, Inc., No. 11-4355 (6th Cir. Jan. 10, 2013) (affirming district court’s denial of plaintiff’s motion to vacate or modify an arbitration award; court could not determine whether the panel acted in “manifest disregard of the law” because plaintiff did not request a reasoned award from the panel)

Swarm, LLC v. Cohen, Case No. 10-03188 (C.D. Cal. Dec. 7, 2012) (granting defendants’ motion to confirm final arbitration award based on finding that arbitrator’s application of the alter ego doctrine, finding of a written agreement, and reliance on the same evidence presented by plaintiff for two different claims is not a “manifest disregard of the law” under the FAA)

Ometto v. ASA Bioenergy Holding A.G., Case No. 12-1328 (S.D.N.Y. Jan. 9, 2013) (denying petitioners’ motion to vacate two arbitration awards and granting respondents’ motion to confirm the awards based on finding that petitioners’ grounds for vacatur were without merit, including allegations that the tribunal’s chairman was partial, the tribunal acted in manifest disregard of the law, and the awards were procured through fraud)

Budget Blinds Inc. v. LeClair, Case No. 12-1101 (C.D. Cal. Jan. 16, 2013) (denying petition to vacate arbitration award and granting cross-petition to confirm award, on grounds that petition to vacate did not establish “manifest disregard of the law” or that arbitrator exceeded her authority and was merely an attempt to re-litigate the arbitrator’s factual findings)

Fuchs & Associates, Inc. v. Lesso, No. B239246 (Cal. Ct. App. Jan. 8, 2013) (affirming trial court’s judgment confirming an arbitration award based on finding that the arbitrator did not exceed his authority and there was no “manifest disregard of the law”)

Exceeding authority

Brotherhood of Locomotive Engineers and Trainmen v. United Transportation Union, No. 11-4177 (6th Cir. Dec. 5, 2012) (affirming district court’s reinstatement of arbitration award following magistrate judge’s vacatur; arbitration board did not exceed its jurisdiction when it interpreted contractual provisions)

Zhao v. Ming Due International Trade, Inc., No. B236813 (Cal. Ct. App. Jan. 7, 2013) (affirming trial court’s judgment confirming an arbitration award based on finding that arbitrator did not exceed the scope of his power by denying plaintiff’s motion for an uncontested arbitration, especially since the parties stipulated to binding arbitration in which the arbitrator would control the proceedings in “his sole discretion”)

Disclosure inadequacy

Gray v. Chiu, No. B238304 (Cal. Ct. App. Jan. 22, 2013) (reversing trial court’s denial of appellant’s petition to vacate a medical malpractice arbitration award on grounds that the arbitrator violated the disclosure provisions of the California Arbitration Act and the California Ethics Standards for Neutral Arbitrators in Contractual Arbitrations by failing to disclose that counsel for the defendant was affiliated with the abritrator’s firm)

Re-litigating arbitrators’ decisions

Citigroup Global Markets, Inc. v. Bock, Case No. 10-24157 (S.D. Fla. Jan. 17, 2013) (confirming FINRA arbitration award and denying respondent’s motion to vacate the award as an attempt to “re-litigate discovery decisions that were properly before the arbitration panel”)

Untimely vacation request

Domnarski v. UBS Financial Services, Inc., Case No. 12-30139 (D. Mass. Jan. 23, 2013) (denying plaintiff’s motion to vacate a FINRA arbitration award and allowing defendant’s motion to confirm the award because plaintiff filed her motion outside the 3 month limitations period established by the FAA)

Foreign Arbitration Awards – jurisdiction

Covington Marine Corp. v. Xiamen Shipbuilding Industry Co., No. 12-30383 (5th Cir. Dec. 21, 2012) (affirming district court’s decision to deny confirmation of a foreign arbitral award under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards against a Chinese shipbuilding company and the People’s Republic of China due to lack of personal and subject matter jurisdiction)

This post written by Abigail Kortz.

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COURT REFUSES TO VACATE AWARD WHERE INSURER’S PRE-ARBITRATION APPEALS PROCESS NOT FOLLOWED

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Plaintiff USA Chiropractic commenced arbitration proceedings against PIP carrier NJ Re-Insurance Co., seeking coverage under an assignment of rights for medical treatment provided to NJ-Re’s insured. The arbitrator entered an award dismissing the claim, holding that USA Chiropractic lacked standing because it had not complied with the insurer’s appeals process before demanding arbitration. USA Chiropractic sought vacatur and also sued arbitration tribunal NAF in state court, arguing that the arbitrator had misapplied the law. The court denied plaintiff’s claims, holding that USA Chiropractic lacked standing for failure to follow NJ-Re’s pre-arbitration appeals process and, further, that NAF was immune from suit. The appellate court affirmed, finding that the trial court did not exceed its authority in denying USA Chiropractic’s request to set aside the award and that it was thus unnecessary to reach plaintiff’s appeal regarding whether NAF was an indispensable party to the litigation. USA Chiropractic v. NJ Re-Insurance Co., No. A-3108-11T1 (N.J. Ct. App. Dec. 14, 2012).

This post written by Ben Seessel.

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ARBITRATION ROUND-UP

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Evident Partiality, Fraud, Corruption, Undue Means

Dubois v. Macy’s Retail Holdings, Inc., Case No. 11-4904 (USDC E.D.N.Y. Sept. 13, 2012) (accepting magistrate’s report and recommendation denying motion to vacate, no corruption, fraud, undue means, or evident partiality; granting motion to confirm)

Burbach Aquatics, Inc. v. Huntley Illinois Park District, Case No. 12-6613 (USDC N.D. Ill Nov. 21, 2012) (denying motion to vacate, no evident partiality, no manifest disregard of the law)

Gambino v. Alfonso Electrical Services, Case No. 10-10860 (USDC D. Mass. Nov. 20, 2012) (granting motion to vacate, evident partiality where arbitrator owed fiduciary duty as trustee to prevailing party)

Failure or Refusal to Hear Material Evidence

Allstate Ins. Co. v. GEICO, No. D36443 (N.Y. App. Div. Oct. 9, 2012) (reversing trial court decision granting motion to vacate for failure or refusal to hear evidence, reinstating and confirming award)

Exeeding Scope of Submission

Integrated Construction Enterprises, Inc. v. Bradley Sciocchetti, Inc., No. A-2511-10T4 (N.J. App. Div. Nov. 20, 2012) (affirming denial of vacatur, arbitrator did not exceed powers by awarding prevailing party costs associated with arbitration, no evident mathematical error in damages award)

Arbitration Procedure

OneBeacon America Insurance Co. v. Swiss Reinsurance America Corp., Case No. 12-5043 (USDC S.D.N.Y. Oct. 19, 2012) (granting petition for appointment of neutral third arbitrator for tri-partite panel)

Hofer Builders, Inc. v. Captstone Building Corp., Case No. 12-1367 (USDC E.D. La. Nov. 20, 2012) (denying interlocutory motion to vacate arbitrator decision denying summary judgment, as decision did not constitute a “final award”)

Oakley Fertilizer, Inc. v. Hagrpota for Trading & Distribution, Ltd., Case No. 11-7799 (USDC S.D.N.Y. Nov. 16, 2012) (granting motion to confirm award under Convention on Recognition and Enforcement of Foreign Arbitral Awards and the FAA, where losing party in arbitration was refusing to pay award)

Choice Hotels International, Inc. v. Jai Shree Navdurga, LLC, Case No. 11-2893 (USDC D. Md. Nov. 29, 2012) (confirming award by default judgment, denying motion for costs not pled in initial complaint)

This post written by John Pitblado.

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AWARD CONFIRMED IN REINSURANCE DISPUTE INVOLVING 30-YEAR OLD ASBESTOS INJURIES

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In a perfunctory order, a court has confirmed an award related to amounts owed under facultative reinsurance certificates in connection with asbestos injuries and lawsuits dating back to 1980. In 2003, the reinsurer had agreed to pay a portion of the claims, subject to the terms of the underlying commercial liability insurance policy. When the reinsured submitted a claim after the reinsurance attachment point was reached in 2009, however, the reinsurer refused to pay. The parties arbitrated the dispute, and a final award in the reinsured’s favor was issued in June 2011. The reinsured then successfully petitioned the court to confirm the award, arguing that the reinsurer was estopped from contesting it, having failed to object to the award within three months of its entry. ACE Property & Casualty Insurance Co. v. Global Reinsurance Corp. of America, Case No. 1:11-cv-06945 (USDC S.D.N.Y. July 25, 2012).

This post written by Michael Wolgin.

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