Arbitration / Court Decisions

ELEVENTH CIRCUIT HOLDS THAT STATUTE TO AID DISCOVERY FOR FOREIGN LITIGATION DOES NOT BAR MATERIAL’S SUBSEQUENT USE IN DOMESTIC LITIGATION

November 3, 2015 by Carlton Fields

The Eleventh Circuit Court of Appeals has addressed what it deemed an issue of first impression for any circuit court: Whether documents obtained under 28 U.S.C. § 1782 can be used in a subsequent domestic litigation. The case pitted the former wife of Gaston Glock, founder of the Glock handgun company, against the Glock corporation. The former wife desired to use documents obtained through § 1782 for her Austrian divorce in a RICO action against Glock, Inc. Glock argued that § 1782 did not envision documents being used for such a purpose. The Eleventh Circuit agreed, but in so doing applied the rationale that allowing parties to use, “for purposes of litigation, documents they have lawfully obtained, regardless of whether they could have obtained them through discovery in the case in which they use them,” furthers the goals of the Federal Rules of Civil Procedure. Distinguishing between the former wife using the documents as part of the proceeding and whether the documents would be ultimately admissible, the court reasoned that a blanket rule precluding such use could create a procedural nightmare for lower courts. Such determinations should be committed to the discretion of the district courts to determine if the documents were solely obtained to abuse § 1782. Glock v. Glock, Inc., No. 14-15701 (11th Cir. Aug. 17, 2015).

This post written by Zach Ludens.
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FINRA PANEL DID NOT EXCEED AUTHORITY OR MANIFESTLY DISREGARD LAW BY FAILING TO AWARD “PREVAILING PARTY” ATTORNEY’S FEES

October 29, 2015 by Carlton Fields

A broker sought to vacate his FINRA compensatory damages award against a broker/dealer because the award did not include his attorney’s fees. The broker believed he was entitled to those fees as the “prevailing party” within the meaning of his contract with the broker/dealer. The broker argued that the panel exceeded its authority and manifestly disregarded the law by ignoring the contract and failing to award fees. The court, however, found that the panel did not exceed its authority because the panel’s authority was to award fees to the prevailing party, the panel had “interpreted that authority to include authority to award no fees,” and the panel was “arguably construing the contract before it and acting within its scope.” The court further found that the panel did not manifestly disregard the law because the panel never declared the broker to be the “prevailing party,” and the panel “was well within the limits of California law in deciding that despite recovering some damages, [the broker] was not a prevailing party, and was thus not entitled to attorney’s fees as a matter of right.” Lehner v. LPL Financial, LLC, Case No. 1:15-cv-01178 (USDC N.D. Ohio Aug. 7, 2015).

This post written by Michael Wolgin.

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OHIO JUDGE STAYS BAD FAITH ACTION PENDING ARBITRATION IN HEALTH CARE PAYMENT ROW

October 28, 2015 by Carlton Fields

A district court in Ohio granted defendant Pan-American Life Insurance Company’s (“Pan-American”) motion to stay pending arbitration finding a valid and enforceable arbitration provision within the pertinent group health policy. Plaintiffs Joan and Thomas Kirkland filed an action for breach of contract and bad faith arising from Pan-American’s denial of medical benefit payments. Plaintiffs alleged that defendant failed to uphold representations it made to pay for certain health procedures and office visits. Defendant sought arbitration of bad faith pursuant to the group health policy’s arbitration provision (the parties previously settled the breach of contract claim). The court found that the enforceable arbitration provision allowed for the arbitration of bad faith for a number of reasons. Plaintiffs had a duty to read the group health policy and further had an option to cancel within the prescribed time limit. The court also found that the policy did not lack mutuality. The court noted that the arbitration provision is applicable to both parties for “all claims or controversies” under the policy, including claims for bad faith. Kirkland v. Pan-Am. Life Ins. Co., No. 2:14-cv-2536 (S.D. Ohio Sep. 3, 2015)

This post written by Matthew Burrows, a law clerk at Carlton Fields in Washington, DC.

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COURT DENIES MOTION FOR INTERLOCUTORY APPEAL IN ALLEGED INSURANCE KICKBACK SCHEME

October 27, 2015 by Carlton Fields

We have previously reported on a case styled Munoz v. PHH Corp., one of similar suits alleging putative class actions under the Real Estate Settlement Procedures Act arising from purported “sham” reinsurance transfers covering private mortgage insurance. Here, the California district court had granted PHH’s partial motion to dismiss and certified the remainder of the class. Plaintiffs subsequently filed for interlocutory appeal concerning whether a prior decision in the Ninth Circuit concerning equitable tolling and equitable estoppel disturbed the holdings in other California district court opinions. The court found that plaintiffs failed to satisfy the second of three prongs for certification—that there is substantial ground for difference of opinion among the courts. A “party’s strong disagreement with the court’s ruling is not sufficient for there to be a substantial ground for difference.” The court found that the appellate and district court opinions were not inconsistent, instead, “all assume that there are situations in which equitable tolling or equitable estoppel can apply to RESPA violations.” Even divergent application of settled law is not sufficient to show substantial ground for difference. Munoz v. PHH Corp., No 1:08-cv-00759-AWI-BAM (E.D. Cal. Oct. 1, 2015)

This post written by Matthew Burrows, a law clerk at Carlton Fields in Washington, DC.

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FEDERAL CIRCUIT COURT UPHOLDS ENFORCEMENT OF FOREIGN ARBITRATION AWARD

October 22, 2015 by John Pitblado

The U.S. Court of Appeals for the Eighth Circuit upheld a federal district court’s enforcement of an arbitration award after finding that the Appellant’s claims were precluded by foreign proceedings. American Hearing Systems, doing business as Interton, appealed the enforcement of the foreign arbitration award, arguing that the district court did not have subject-matter jurisdiction under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“the Convention”). Additionally, Interton argued, even if the court had subject matter jurisdiction, the written arbitration agreement did not apply to the current dispute between the parties.

AVR Communication, Ltd., an Israeli company, sought arbitration in Israel asserting a number of claims governed by a previous arbitration agreement. Interton argued that the disputes giving rise to the claims were outside of the scope of the contract containing the arbitration provision. Interton failed to prevail on this argument in both the Israeli arbitration and later in the enforcement of the award by AVR in federal district court.

On appeal, Interton interpreted the language of the Convention to impose a subject matter jurisdiction requirement to include presentment of a written contract. The Eighth Circuit summarily dismissed this argument. The court found that the issue was not whether there was a written agreement, but whether the disputes in question were covered by the agreement to arbitrate. The court held that this question was precluded by the foreign arbitration proceeding and upheld the award. AVR Communications, Ltd. v. American Hearing Systems, Inc., Case No. 14-2313 (8th Cir. July 14, 2015)

This post written by Joshua S. Wirth, a law clerk at Carlton Fields in Washington, DC.

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