Confirmation / Vacation of Arbitration Awards

NINTH CIRCUIT FINDS THAT THE DISTRICT COURT LACKED JURISDICTION TO CONFIRM ARBITRATION AWARD AGAINST THE UNITED STATES

May 19, 2009 by Carlton Fields

In a proceeding in which the United States declined to participate, an arbitration panel awarded over $93 million to Park Place Associates, Ltd. (“Park Place”) on a breach of contract claim against the United States, which subsequently filed a motion to vacate in district court, which denied the motion to vacate and granted Park Place’s motion to confirm the award. On appeal, the Ninth Circuit first affirmed the denial of the motion to vacate, finding jurisdiction sufficient, since the United States had commenced civil proceedings in the district court by filing a complaint and a motion to vacate, and rejecting United States’ manifest disregard of the law arguments. Next, the court vacated the grant of the motion to confirm, concluding that, in this case where the action is to confirm a contract-based claim against the United States, the Tucker Act, which conditions its waiver on jurisdiction to the Court of Federal Claims, is the only means by which the United States can be said to have waived sovereign immunity, and, thus, the district court lacked jurisdiction to confirm the award. The court then remanded the case to the district court with instructions to dismiss the confirmation action as barred by sovereign immunity. United States v. Park Place Assocs., Ltd., No. 05-56235, No. 05-56312 (9th Cir. Apr. 22, 2009).

This post written by Dan Crisp.

RULE 60(B) MOTION NOT AVAILABLE TO CIRCUMVENT OR EXPAND THE FAA’S GROUNDS FOR VACATUR OF AN ARBITRATION AWARD

May 7, 2009 by Carlton Fields

On October 6, 2008, we reported on a Texas district court entering orders, over a period of several months, confirming two arbitration awards, granting partial final judgment under Rule 54(b), denying a stay without bond, and denying a Rule 59 motion to set aside the partial final judgment.

Halliburton Energy Services, Inc. (“Halliburton”) has since moved for relief under Rule 60(b), for discovery relating to its Rule 60(b) motion, and for a protective order on discovery into its assets. Halliburton claimed that documents recently discovered in its own files conclusively establish a key issue determined in the arbitration and sought discovery into the opposing party’s knowledge of these documents. The court, after declining to rule on the issue of the motion’s timeliness, denied the motion for relief under Rule 60(b), holding that Rule 60(b) was not available to vacate the award and, on the merits, finding that Halliburton presented no evidence of fraud or misconduct, could not show that these documents would have changed the proceedings, could not show that the judgment was inequitable, had the opportunity to fully and fairly present its case, and could not show due diligence in its search for documents. Finally, the court denied the motion for discovery related to the Rule 60(b) motion and granted the motion for a protective order, finding that discovery into Halliburton’s assets was not supported by the record. Halliburton Energy Servs., Inc. v. NL Indus., Case No. 05-4160 (USDC S.D. Tex. Mar. 31, 2009).

This post written by Dan Crisp.

RECENT RULINGS UPHOLD ARBITRATION AWARDS ON VARIOUS GROUNDS

May 6, 2009 by Carlton Fields

Manifest disregard of law: Dealer Computer Services, Inc. v. Dayton Ford, Inc., Case No. 08-3508 (USDC D.N.J. April 9, 2009) (granting motion to confirm, finding no manifest disregard of law).

Evident Partiality: Martik Brothers, Inc. v. Kiebler Slippery Rock, LLC, Case No. 08-1756 (USDC W.D. Pa. April 20, 2009) (granting petition to confirm, no evident partiality where arbitrator and plaintiff’s counsel engaged in casual conversation about golf and travel).

Sufficiency of evidence: Campbell v. American Family Life Assurance Co. of Columbus, Inc., Case No. 08-5806 (USDC D. Minn. April 14, 2009) (denying motion to vacate award, finding insufficient evidence submitted to overcome arbitrator’s grant of summary judgment award to defendant, based on unambiguous terms of parties’ insurance contract)

Exceeding authority: Reliastar Life Ins. Co. of New York v. EMC Nat’l Life Co., No. 07-0828 (2d Cir. April 9, 2009) (reversing trial court’s vacatur of portion of arbitrators’ award for attorneys fees against defendant for failing to arbitrate in good faith, finding such an award does not exceed submission, even though agreement required parties to pay own fees and costs); Dupont v. Tobin, Carberry, O’Malley, Riley & Selinger, PC, No. 08-1414 (2d. Cir. April 16, 2009) (affirming district court’s confirmation of award, arbitrators did not exceed authority in finding facts and interpreting agreement); Thule AB v. Advanced Accessory Holding Corp., Case No. 09-91 (USDC S.D.N.Y. April 2, 2009) (denying motion to vacate, reviewing accountant did not exceed authority by applying different methodology than requested by plaintiff).

Miscellaneous confirmations: Schmidt v. Citibank (South Dakota), N.A., Case No. 08-165 (USDC E.D. Va. April 10, 2009) (granting defendant’s motion to confirm, denying several motions by pro se plaintiff on numerous grounds); Mutual Marine Office, Inc. v. Transfercom Ltd., Case No. 08-10367 (USDC S.D.N.Y. April 15, 2009) (granting petition to confirm as defendant failed to raise arguments in arbitration and thus waived them); Jones v. PPG Industries, Inc., Case No. 07-1537 (USDC W.D. Pa. April 27, 2009) (granting motion to confirm arbitrator’s award in favor of employer on discrimination claims on various grounds).

This post written by John Pitblado.

VARYING RULINGS WITH RESPECT TO ARBITRATION AWARDS

April 15, 2009 by Carlton Fields

Courts Confirm Awards Finding Sufficient Support In Record: New Jersey Reg'l Council of Carpenters v. Patock Constr. Co., Case No. 08-4952 (USDC D.N.J. Mar. 11, 2009) (sufficient basis to find that respondent improperly subcontracted with a non-signatory subcontractor and lost work opportunity damages were proper); Tlumacki v. CAN Ins. Cos., No. A-4024-05T5 (N.J. Super. Ct. App. Div. Mar. 31, 2009) (sufficient evidentiary basis for the award existed and no showing of impartiality).

Confirming Awards Based On Arbitrator’s Interpretation Of Agreement: Blair Commc'ns, Inc. v. Int'l Bhd. of Elec. Workers, Local Union No. 5, Case No. 07-162 (W.D. Pa. Mar. 26, 2009) (“work preservation” agreement in collective bargaining agreement did not violate public policy); Global Reinsurance Corp. of Am. v. Argonaut Ins. Co., Case No. 07-7514 (USDC S.D.N.Y. Mar. 23, 2009) (arbitrator employed a plausible construction of reinsurance treaties’ definition of “loss occurrence,” and properly applied “follow the fortunes” doctrine).

Requests To Vacate: McQueen-Starling v. UnitedHealth Group, Inc., Case No. 08-4885 (USDC S.D.N.Y. Mar. 20, 2009) (remanding to arbitrator for clarification of unaddressed “retaliation claim” in discrimination case); Int'l Longshoremen’s Ass'n (Local 1575) v. Horizon Lines, Inc., Case. No. 08-1530 (USDC D.P.R. Mar. 16, 2008) (award “does not suffer from inanition or manifest errors of law”); Jones v. PPG Indus. Inc., Case No. 07-1537 (USDC W.D. Pa. Mar. 13, 2009) (no manifest disregard of law); Williams v. Mexican Rest. Inc., Case No. 05-841 (USDC E.D.Tex. Mar. 18, 2009) (confirming award since errors of fact did not justify vacating awards; see March 25, 2009 post); Kesterson v. NCO Portfolio Mgmt. Inc., Case No. 08-182 (USDC N.D. Ind. Mar. 27, 2009) (adopting Report and Recommendation that petition to vacate award be granted following entry of default judgment for defendant’s failure to appear).

Miscellaneous: A. Bauer Mech. Inc. v. Joint Arbitration Bd. of the Plumbing Contractors’ Ass'n, No. 06-3936 (7th Cir. Mar. 25, 2009) (affirming default judgment for failure to respond to counterclaim to enforce arbitration board’s ruling; Caraballo v. City of Chicago, Case No. 07-2807 (USDC N.D. Ill. Mar. 18, 2009) (requiring plaintiffs to arbitrate consolidated FLSA claims); Laundry, Dry Cleaning Workers & Allied Indus. Health Fund v. Jung Sun Laundry Group Corp Case, No. 08-2771 (USDC E.D.N.Y. Mar. 16, 2007) (adopting Report and Recommendation that award be confirmed; respondent failed to appear at arbitration and confirmation proceedings and no manifest disregard of law).

This post written by Brian Perryman.

SECOND CIRCUIT AFFIRMS ORDER COMPELLING ARBITRATION OF CLASS CLAIM

March 30, 2009 by Carlton Fields

The Second Circuit has affirmed an order compelling arbitration and a judgment confirming a final arbitration award. Plaintiff-appellant appealed the order on the basis that the arbitration agreement required arbitration only of his individual claim, but permitted his class claim to be heard in court. The appellant contended that because claims may not be arbitrated as class actions under the rules of the NYSE and the NASD (incorporated by reference in the Settlement Agreement), the parties must have intended any class claims to be litigated in the courts.

Relying on the Supreme Court’s decision in Green Tree Financial v. Bazzle, the Second Circuit found that whether an arbitration contract forbids class arbitration falls under the domain of arbitrators, and therefore the district court properly compelled arbitration on the question of the arbitrability of class claims under the Settlement Agreement. The Court also rejected appellant’s claim that the arbitration decision should not have been confirmed because the arbitrators: (1) acted with a lack of fundamental rationality; (2) exceeded the scope of their authority; and (3) acted with manifest disregarded of the law. Vaughn v. Leeds, Morelli & Brown, No. 07-5637 (2d Cir. Mar. 16, 2009).

This post written by Lynn Hawkins.