Jurisdiction Issues

REINSURANCE DISCOVERY DISPUTE TRANSFERRED

February 25, 2014 by Carlton Fields

The FDIC receiver of a bank served subpoenas on reinsurers, seeking information as to how the cedent insurer interpreted certain ambiguous terms in the underlying liability insurance policy. The insurer and reinsurer objected to the subpoenas, and the receiver filed an action in the reinsurer’s district to compel responses. Rather than ruling on the objections, the court elected to transfer the matter to the court in which the underlying litigation was pending. The transferor court relied on considerations of judicial efficiency and comity, explaining that it was not in a position to resolve arguments over the transferee court’s intentions with respect to the scope of permitted discovery, and that differences in the districts’ respective case law on the relevance of reinsurance information presented a risk of conflicting discovery rulings. The court also noted that recent revisions to the Federal Rule of Civil Procedure governing subpoenas further supported transfer of the action. FDIC v. Everest Reinsurance Holdings, Inc., Case No. 1:13-mc-00381 (USDC S.D.N.Y. January 23, 2014).

This post written by Michael Wolgin.

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NONAPPEALABILIY CLAUSES IN ARBITRATION AGREEMENT HELD NOT ENFORCEABLE IN THE NINTH CIRCUIT

December 25, 2013 by Carlton Fields

Faced with a question of first impression, the Ninth Circuit recently held that a clause in an arbitration agreement that eliminates any and all federal court review of arbitration awards, including review under § 10 of the Federal Arbitration Act, is unenforeceable. The Court reasoned that allowing parties to “contractually eliminate all judicial review of arbitration awards . . . run[s] counter to the text of the FAA,” and “would also frustrate Congress’s attempt to ensure a minimum level of due process for parties to an arbitration.” In re Wal-Mart Wage and Hour Employment Practices Litigation, No. 11-17718 (9th Cir. Dec. 17, 2013).

This post written by Abigail Kortz.

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BRITISH COURT REFUSES TO ENJOIN U.S. REINSURANCE LAWSUIT, OR STAY BRITISH SUIT, BETWEEN SAME PARTIES REGARDING SAME ISSUES.

December 16, 2013 by Carlton Fields

The claimant, the Insurance Company of the State of Pennsylvania, sued Equitas under certain reinsurance contracts that provided cover of $15 million, excess of $5 million in underlying insurance for ICP-issued policies covering the Dole Food Co. Dole faced more than $30 million in liabilities arising from alleged personal injuries caused by its use of certain pesticides in its fruit farming operations. Equitas claimed that ICP failed to timely notify Equitas of the claims, barring coverage under the reinsurance contracts. ICP brought suit first in New York, and Equitas filed its own later action in London, arguing that venue in the U.S. was improper, and seeking to enjoin the U.S. action. The English court declined to enjoin the U.S. action. However, it also denied ICP’s motion to stay the English proceeding, leaving the litigation proceeding on parallel tracks in New York and London. Insurance Co. of Pa. v. Equitas, [2013] EWHC 3713 (U.K. High Court of Justice, Comm. Div. Nov. 29, 2013)

This post written by John Pitblado.

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COURT REFUSES TO COMPEL ARBITRATION AGAINST NONSIGNATORY ASSOCIATION CAPTIVE INSURER

November 7, 2013 by Carlton Fields

The case involved motions to compel arbitration by multiple defendants, all of which were parties to contracts with the plaintiff, an association captive insurer, but only some of which had signed contracts containing arbitration provisions. The court compelled the plaintiff to arbitrate breach of contract and related claims with the arbitration-signatories, finding that the claims fell under the arbitration provisions’ scope, which covered all disputes “arising out of” the underlying contracts. The court rejected, however, a non-arbitration-signatory’s attempt to compel the plaintiff to arbitrate under an estoppel theory, finding that the nonsignatory was “really arguing” that the court should read the arbitration clause into its non-arbitration agreements. Notwithstanding the court’s decision to only partly compel arbitration, it did stay the entire litigation, finding that some of the issues or claims might eliminate certain issues against the non-arbitration-signatory, and that the arbitration would likely proceed expeditiously. J.M. Woodworth Risk Retention Group, Inc. v. Uni-Ter Underwriting Management Corp., Case No. 2:13-cv-00911 (USDC D. Nev. Sept. 11, 2013).

This post written by Michael Wolgin.

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COURT ORDERS UNSEALING OF CONFIDENTIAL REINSURANCE ARBITRATION INFORMATION

October 8, 2013 by Carlton Fields

A court recently unsealed certain record documents related to a reinsurance arbitration, at the request of interested nonparties. The documents were originally filed with the court in connection with a petition to confirm the arbitration award and a responsive motion to dismiss. The parties were permitted to file the documents under seal pursuant to an approved confidentiality agreement. In deciding to unseal, the court found that the documents were “judicial documents” relevant to the performance of the judicial function, and thus subject to a “presumption of access.” The weight of the presumption was “high,” in that the documents constituted the heart of the what the court was asked to act upon (notwithstanding that the case settled prior to the court’s consideration of the materials). Neither the existence of a confidentiality agreement, nor the fact that the movant nonparties were engaged in related reinsurance arbitration with one of the parties, could keep the documents protected from public access. Eagle Star Insurance Co. v. Arrowood Indemnity Co., Case No. 1:13-cv-03410 (USDC S.D.N.Y. Sept. 23, 2013).

This post written by Michael Wolgin.

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