A Special Focus article by Rollie Goss discusses a Court of Appeals opinion which gives practical effect to the honorable engagement provision of a reinsurance agreement.
This post written by Rollie Goss.
See our disclaimer.
New reinsurance-related and arbitration developments from Carlton Fields
A Special Focus article by Rollie Goss discusses a Court of Appeals opinion which gives practical effect to the honorable engagement provision of a reinsurance agreement.
This post written by Rollie Goss.
See our disclaimer.
A New York district court denied defendant Gogo LLC and Gogo Inc. (collectively “Gogo”) motions to transfer venue, compel arbitration, and dismiss for lack of standing in a lawsuit relating to internet services.
Plaintiffs filed a putative class action against Gogo alleging common law breach of the implied covenant of good faith and fair dealing, unjust enrichment, and violation of various consumer protection statutes. The lawsuit stems from the purchase of wireless internet connectivity services, available in airports and aboard air flights. Plaintiffs’ allege that Gogo mislead customers into purchasing a single one-month wireless internet service subscription, but then automatically renewed those services without obtaining their signatures or authorization.
The court looked into whether plaintiffs were given effective notice of the terms and conditions for their online purchases. As such, the offeror, in this case Gogo, “must show that a reasonable person in the position of the consumer would have known about what he was assenting to.” The court found that Gogo did not effectively draw plaintiffs’ attention to their terms and conditions nor did they provide their terms and conditions to purchasers via email or other methods of delivery. The court finally addressed Gogo’s jurisdictional argument. Gogo alleged that because plaintiffs were eventually fully reimbursed for subsequent internet charges, they lacked standing to sue. The court, citing Second Circuit precedent, found that since plaintiffs have “a practical stake in the dispute,” they continue to have standing to sue. Berkson v. Gogo, Case No. 14-CV-1199 (USDC E.D.N.Y. April 9, 2015).
This post written by Matthew Burrows, a law clerk at Carlton Fields in Washington, DC.
See our disclaimer.
This case involved a FINRA arbitration held to resolve a dispute over money allegedly owed to Ameriprise Financial Services by a former financial adviser. The financial adviser appealed the district court’s confirmation of the award favoring Ameriprise, contending that the award was procured by fraud and that the arbitrator committed a manifest disregard of the law. On appeal, the financial adviser first contended that the award should be reviewed under the Wisconsin Arbitration Act instead of the FAA. The Seventh Circuit, however, disagreed, holding that the parties’ arbitration agreement expressly selected the FAA, and that the FAA was applicable notwithstanding potential application of other Wisconsin law on the merits of the dispute. Regarding “manifest disregard,” the Seventh Circuit rejected the financial adviser’s contention that the panel inappropriately applied federal securities laws instead of certain states’ laws. The court explained that it “is not manifest disregard of a law to consider [the state law] and its relation to [federal law] and then conclude that the law does not apply in the specific factual situation at issue.” The court also noted that the panel had not issued a written opinion, and that the court would not “second-guess the arbitrators’ decision based on speculation when it is possible for the panel to have reached the decision it did based on the evidence presented to it.” As to fraud, the Seventh Circuit held that Ameriprise’s counsel’s closing argument, in which counsel asserted that the financial adviser “violated” certain laws and characterized certain cases as “on point,” did not misrepresent the record or the law. Renard v. Ameriprise Financial Services, Inc., No. 14-1730 (7th Cir. Jan. 30, 2015).
This post written by Michael Wolgin.
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A state appellate court in California reversed a trial court’s decision to deny defendant Santa Lucia Preserve Company’s (“Santa Lucia”) motion to compel arbitration, holding that plaintiffs failed to prove that the underlying arbitration agreement was substantively unconscionable in order for that agreement to be invalidated.
Plaintiffs filed a putative class action complaint against Santa Lucia alleging the company failed to pay requisite overtime compensation in addition to other violations of California’s Business and Professions Code. Santa Lucia moved to compel arbitration under previously signed employment agreements with plaintiffs. Plaintiffs alleged that the arbitration agreements were substantively unconscionable as they lacked mutuality and that they did not provide for judicial review. The trial court denied Santa Lucia’s motion to compel arbitration finding the agreements unconscionable both procedurally and substantively.
The appellate court reversed, finding that the arbitration agreements were not substantively unconscionable for a number of reasons. First, the agreements bound both employee and employer to arbitration for “any dispute or claim.” Second, the agreements waived court and jury trials for both parties. The court noted that judicial review is allowed when “arbitrators exceed[] their power and the award cannot be corrected without affecting the merits of the decisions…” The court determined that plaintiffs’ claims for overtime pay are subject only to the review requirements in Armendariz, namely that an arbitration decision be written and be reviewed under limited circumstances. Valdez v. Santa Lucia Preserve Co., No. H040685 (Cal. App. 6th Dist., Mar. 23, 2015).
This post written by Matthew Burrows, a law clerk at Carlton Fields in Washington, DC.
See our disclaimer.
The dispute at issue in this case involved claims of fraud in the sale of condominium units asserted by unit purchasers against the condominium developer. Arbitration under the AAA was underway between the parties, when it was discovered that the arbitrator had failed to disclose that he had become involved in business ventures to finance litigation for investment purposes. The developer requested that the AAA disqualify the arbitrator and stay the arbitration, but the AAA denied the request. The developer then convinced the district court to intervene in the pending arbitration and disqualify the arbitrator.
On appeal, the Ninth Circuit determined that the court committed “clear error,” holding that: (1) “the financial relationship in this case is contingent, attenuated, and merely potential” and did not satisfy “evident partiality”; and (2) “the district court’s equitable concern that delays and expenses would result if an arbitration award were vacated is manifestly inadequate to justify a mid-arbitration intervention, regardless of the size and early stage of the arbitration.” The Ninth Circuit entered a writ of mandamus, and directed the district court to vacate its ruling, finding that the lower court’s “interference in ongoing arbitration proceedings raises the specter” of confusion in the court system, and creates “new and important problems” and an issue of law of first impression. In re Sussex, No. 14-70158 (9th Cir. Jan. 27, 2015).
This post written by Michael Wolgin.
See our disclaimer.