Confirmation / Vacation of Arbitration Awards

COURTS CONFIRM ARBITRATION AWARDS WITH SOME DISCUSSION OF MANIFEST DISREGARD OF LAW DOCTRINE

March 5, 2009 by Carlton Fields

Courts have continued (with one exception) to confirm arbitration awards, with some discussion of the manifest disregard of law doctrine.

Manifest disregard of law: Seven Arts Pictures PLC v. Jonesfilm, No. 07-56045 (9th Cir. Feb. 12, 2009) (not discuss doctrine’s viability, but find no manifest disregard; dispute arbitrable); White Ford, Inc. v. Dealer Computer Services, Case No. 08-3755 (USDC S.D. Tex. Feb. 19, 2009) (doctrine questionable after Hall Street, but not proven anyway; dispute arbitrable); Paul Green School of Rock Music Franchising, LLC v. Smith, Case No. 08-5507 (USDC E.D. Pa. Feb. 17, 2009) (manifest disregard not proven, without discussion of Hall Street); Williams v. RI/WFI Acquisition Corp., Case No. 06-2103 (USDC N.D. Ill. Feb. 11, 2009) (manifest disregard is an analog to FAA vacation ground but not proven); Medicine Shoppe Int’l, Inc. v. Simmonds, Case No. 08-90 (USDC E.D. Mo. Feb. 11, 2009) (doctrine not viable after Hall Street; award drew essence from contract; not review sufficiency of facts);
Arbitrator’s resolution of disputed issues: Cacace Assoc., Inc. v. Southern N.J. Building Laborers Dist. Council, Case No. 07-5955 (USDC D.N.J. Feb. 19, 2009) (rejecting attack on arbitrator’s interpretation of contract and state law); Global Reinsurance Corp. v. Argunaut Ins. Co., Case No. 07-8196 (USDC S.D.N.Y. Jan. 12, 2009) (confirmation sought by both parties to award);
Validity of agreements: Doug Brady, Inc. v. N. J. Building Laborers Statewide Funds, Case No. 07-5122 (USDC D. N.J. Feb. 11, 2009) (whether contract void for arbitrator to decide; whether arbitration provision void for court to decide; failed to prove fraud in execution of contract);
Arbitrator’s authority: Local 283 v. Park-Rite Detroit, LLC, Case No. 08-10650 (USDC E.D. Mich. Feb. 17, 2009) (vacating an award which did not draw its essence from the contract; courts determine threshold question of arbitrability); Willbros Weat Africa, Inc. v. HFG Engineering US, Inc., Case No. 08-2646 (USDC S.D. Tex. Feb. 12, 2009) (arbitrator not exceed authority); Gentile v. Harrison Trading Group, LLC, Case No. 08-1704 (USDC E.D. Pa. Feb. 6, 2009) (waive arbitrability and jurisdiction issues by participating in hearing).

This post written by Rollie Goss.

ACTION TO CONFIRM ARBITRATION AWARD DISMISSED FOR LACK OF SUBJECT MATTER JURISDICTION

February 26, 2009 by Carlton Fields

On December 2, 2008, we reported on an order by the U.S. District Court for the Eastern District of Michigan granting the Respondent’s motion to seal in part, permitting the Respondent to “temporarily file” its motion to dismiss and the award under seal, pending a determination of the motion to dismiss for lack of subject matter jurisdiction in the Petitioners’ action to confirm the arbitration award. After the order, the Respondent filed its motion to dismiss and the Petitioners moved for sanctions. The district court noted that the arbitration award included declaratory provisions but no monetary award. Petitioners argued that the court retained jurisdiction from an earlier action to appoint an umpire and that the amount sought in the arbitration, rather than the award, provided diversity jurisdiction. In granting the motion to dismiss, the district court first stated that jurisdiction was not retained because the earlier action was dismissed without the court issuing an order to compel arbitration, which would have retained jurisdiction on a subsequent motion to confirm. The district court next stated that the amount in controversy is the amount of the arbitration award sought to be confirmed. Since no monetary damages were awarded and the Petitioners did not show that the declaratory provisions had any real value, the court concluded the amount in controversy did not meet the threshold required to exercise diversity jurisdiction, which will force the Petitioners to file a similar motion to confirm in state court. Petitioners sought sanctions against Respondent’s local counsel for costs incurred to defend against the motion to dismiss and to address the motion to seal and related motion papers. The court ultimately denied the motion for sanctions because the Respondent’s position in the motion to dismiss was correct and the arbitration premised on the parties’ own agreement necessitated the motion to seal. American Bankers Insurance Co. of Florida v. National Casualty Co., Case No. 08- 13522 (USDC E.D. Mich. Feb. 3, 2009).

This post written by Dan Crisp.

COURTS CONTINUE TO REJECT FAIRLY ROUTINE OBJECTIONS TO ARBITRATION AWARDS

February 20, 2009 by Carlton Fields

Courts have continued to confirm arbitration awards. Recent decisions include one that characterizes the manifest disregard of law doctrine in the Seventh Circuit as being part of the statutory ground relating to the scope of the arbitrators’ authority.

Exceeding authority: U.S. Postal Service v. Amer. Postal Workers Union, No. 08-5056 (D.C. Cir. Jan 23, 2009) (reversing vacation of arbitration award because it drew its essence from the parties’ contract); 2M Group, Inc. v. Solstice Mgmt., LLC, Case No. 07-136 (USDC N.D.Cal. Jan. 22, 2009) (award confirmed – arbitrator did not exceed authority); Amer. Employers Ins. Co. v. Robinson Outdoors, Inc., A08-510 (Mn. Ct. App. Feb. 10, 2009) (affirming confirmation of award under Minnesota law – award was within the authority granted to the arbitrators by the contract).

Manifest disregard of law: Doerflein v. Pruco Securities, LLC, Case No. 07-738 (USDC S.D.In. Jan 30, 2009) (confirming award, rejecting challenges to how arbitration was conducted and manifest disregard of law; states that manifest disregard of law is an example of an arbitrator exceeding his/her authority under the FAA).

Sufficiency of evidence: New York City Dist. Council of Carpenters Pension Fund v. B & A Interiors, Ltd., Case No. 07-5620 (USDC S.D.N.Y. Jan. 22, 2009) (award confirmed, rejecting argument that it was not supported by the evidence).

Binding arbitration agreement: Cline v. Chase Manhattan Bank USA, N.A., Case No. 07-728 (USDC D.Ut. Jan. 29, 2009) (confirmed over objection that there was no binding arbitration agreement).

Default: New York City Dist. Council of Carpenters Pension Fund v. Angel Constr. Group, LLC, Case No. 08-9061 (USDC S.D.N.Y. Feb. 2, 2009) (award confirmed – losing party did not appear to contest confirmation).

This post written by Rollie Goss.

NINTH CIRCUIT AFFIRMS SUMMARY JUDGMENT IN CHALLENGE OF ARBITRATION AWARD

February 13, 2009 by Carlton Fields

Collier appealed from the district court’s sua sponte grant of summary judgment, confirming an arbitration award. Finding the case suitable for decision without oral argument, the Ninth Circuit concluded that summary judgment was properly granted because Collier initiated and fully participated in arbitration proceedings and, as a consequence, waived any argument that the dispute was not arbitrable. Additionally, the Ninth Circuit affirmed the district court’s conclusion that Collier failed to satisfy the statutory requirements to vacate or modify the arbitrator’s award. This opinion demonstrates the importance of preserving objections to the arbitration process. Collier v. State of New York, No. 07-55474 (9th Cir. Jan. 15, 2009).

This post written by Dan Crisp.

COURT GRANTS MOTION TO SEAL ARBITRATION AWARD

February 10, 2009 by Carlton Fields

Parties to a reinsurance agreement arbitrated a claims dispute, agreeing that the final award and all “arbitration information” be kept confidential. The prevailing party moved to confirm the award and to seal the award. The court found that there was a strong presumption of access to court records, and that the award should be sealed only if there was a showing that the material was of the kind of information that courts will protect, and that disclosure would work a clearly defined and serious injury to the party seeking closure. Evaluating the factors to be considered in evaluating a request to seal a portion of a court record set forth by the Third Circuit, the court found that the award should be sealed. Century Indem. Co. v. Certain Underwriters at Lloyd's, London, Case No. 08-219 (USDC E.D. Pa. Jan. 12, 2009).

This post written by Rollie Goss.