Confirmation / Vacation of Arbitration Awards

STAY OF PREMATURE ARBITRATION DID NOT RENDER SUBSEQUENT PROCEEDINGS OR AWARD VOID

February 24, 2011 by Carlton Fields

Where a court of appeals reversed a lower court’s order compelling arbitration, and mandated a stay of ongoing arbitration proceedings, the proceedings conducted in arbitration both before and after the institution of the stay were not void. The case surrounded a coverage dispute under an automobile insurance policy. The lower court had improperly compelled arbitration prior to determining whether coverage existed under the policy. After the court of appeals reversed, remanded, and stayed arbitration, the lower court found coverage existed and the arbitration resumed. The arbitrator then issued an award for the insureds, and the insurer appealed, contending the stay of the premature arbitration effectively voided all subsequent arbitral proceedings. Quoting a legal dictionary, the court held: “A stay does not vacate anything, but it is instead only the postponement or halting of a proceeding, judgment, or the like.” United Automobile Insurance Co. v. Wilson, Case No. 1-09-3061 (Ill. Ct. App. Jan. 18, 2011).

This post written by Michael Wolgin.

SECOND CIRCUIT AFFIRMS DISTRICT COURT’S DECISION IN CARDELL DISPUTE

February 23, 2011 by Carlton Fields

In the latest development in the dispute between Cardell Financial and Suchodolski Associates, the Second Circuit issued a summary order affirming the district court’s judgment confirming an arbitration award and injunctive relief in Cardell’s favor. (We earlier posted on this case at the district court-level on January 20, 2010.) The underlying dispute chiefly concerned two separate agreements: the first – a $12.8 million promissory note, the second – a nonrecourse stock pledge agreement. The district court determined that the arbitrator had not manifestly disregarded the law by, among other things, refusing to apply New York law. Suchodolski Associates appealed, asserting the same theory for overturning the award. The Second Circuit affirmed for substantially the same reasons stated by the district court. Cardell Fin. Corp. v. Suchodolski Associates, Inc., No. 10-226 (2d Cir. Feb. 9, 2011).

This post written by John Black.

MANIFEST DISREGARD OF THE LAW UNDER THE LABOR-MANAGEMENT RELATIONS ACT QUESTIONED IN THE EIGHTH CIRCUIT

February 22, 2011 by Carlton Fields

In a case involving an arbitration award in a labor dispute, a federal district court in the Eighth Circuit recently questioned whether the “manifest disregard of the law” ground for vacating an arbitration award continues to exist under the Labor-Management Relations Act. The case concerned an arbitration regarding the company’s procedures for evaluating whether an injured employee was physically able to return to work. The arbitrator found in favor of the employee, determining that the procedure employed by the company concerning this employee was inconsistent with its past practices with other employees. The company claimed that its actions were consistent with its collective bargaining agreement and with federal law, and moved to vacate the award as a “manifest disregard” under the LMRA and the Federal Arbitration Act. In upholding the arbitration award, the court recognized that in the Eighth Circuit, “manifest disregard” is no longer a valid basis for vacating an arbitration award under the FAA, and “even if this ground for vacatur survives in LMRA cases,” the arbitrator at worst incorrectly applied the applicable law, rather than refused to apply it. Breckenridge O’Fallon, Inc. v. Teamsters Union Local No. 682, Case No. 4:09CV2005 (USDC E.D. Mo. Jan. 24, 2011).

This post written by Michael Wolgin.

U.K. COURT CONFIRMS ARBITRATION AWARD AGAINST REINSURER AND IN FAVOR OF P&C INSURER THAT PAID SUMS UNDER SETTLEMENTS

February 16, 2011 by Carlton Fields

A reinsurer challenged an arbitration award finding coverage in favor of a P&C insurer in six cases where the insurer had paid sums under compromise agreements. A U.K. court confirmed the award in favor of the P&C insurer, finding that the arbitrators’ reasoning was clear, and that their judgment was unchallengeable in law. The underlying claims by insureds involved silicon breast implant manufacturers’ liability, liability of makers of products derived from blood contaminated with HIV or AIDS, asbestos, and environmental pollution. In re Arbitration Between IRB Brasil Resseguros SA & CX Reinsurance Co., [2010] EWHC 974 (Q.B. 2010).

This post written by Ben Seessel.

THIRD CIRCUIT ACCORDS “EXTREME DEFERENCE” TO ARBITRATOR’S AWARD

February 14, 2011 by Carlton Fields

The Third Circuit Court of Appeals affirmed a district court’s ruling confirming an arbitration award in a labor dispute under a collective bargaining agreement. The Court reiterated the principles of “extreme deference” accorded to arbitrator decisions under the Federal Arbitration Act, and cited the arbitrator’s review of testimony, exhibits, briefs, oral argument and thoughtful seven-page memorandum of decision. The Court concluded by citing the district court’s statement that the case “is really nothing more than Tube City’s quibbling over the arbitrator’s interpretation of the CBA [collective bargaining agreement].” Tube City IMS, LLC v. United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Industrial Service Workers Int’l Union, Local 5852-19, No. 10-1403 (3d Cir. Jan. 6, 2011).

This post written by John Pitblado.