New reinsurance-related and arbitration developments from Carlton Fields
There has been a great deal of litigation over the past couple of years regarding the validity of class action arbitration waivers. In a Special Focus article, Re-Revisiting AT&T v. Concepcion: Yes, We Hear You Now (Mostly), John Pitblado provides an update on some of the most recent appellate cases in this area.
This post written by John Pitblado.
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In the ongoing dialectic between West Virginia’s high court and the U.S. Supreme Court (e.g., Marmet Health Care Center Inc. v. Brown, 132 S. Ct. 1201 (2012)) regarding enforcement of arbitration provisions, the state court has issued its latest contribution. In West Virginia v. Webster, the Court heard an appeal from an order denying a motion to compel individual arbitration in a case arising from a dispute between Ocwen Loan Servicing, LLC (“Ocwen”) and mortgage holders, respondents Robert and Tina Curry (the case is styled to reflect the procedural posture of a writ of prohibition, which the state brings on behalf of the petitioner, against the trial judge). Ocwen sought to compel arbitration of a dispute about certain fees Ocwen charged, pursuant to an arbitration provision contained in the parties’ relevant agreement. The trial court found the agreement unenforceable under the Dodd-Frank Act, and also unconscionable under West Virginia state law contract principles. The high court reversed, finding the Act was not applicable because the agreement was formed before it took effect. The West Virginia Supreme Court also disagreed with the trial court’s conclusion that the contract was unconscionable, and entered granted the request for a writ prohibiting the trial court from enforcing its order denying the motion to compel. West Virginia v. Webster, No. 13-0151 (W. Va. Nov. 13, 2013).
This post written by John Pitblado.
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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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In a reinsurance dispute, a court agreed to seal portions of two memoranda of law and exhibits containing excerpts of deposition testimony of the reinsurer’s vice president. The court had previously provisionally sealed the material pursuant to the parties’ stipulated protective order, subject to the reinsurer’s submission of the particular lines and/or passages of testimony to be sealed and the particular grounds for such sealing. After the reinsurer submitted this information, the court agreed to maintain the sealing. Regarding the relevant portions of the memoranda, the court found that they contain confidential business information, and that sealing was appropriate in light of the fact that the cedent had also filed redacted versions of both documents. The court also agreed to permanently seal the deposition excerpts because the court found that they “contain sensitive and confidential business information, disclosure of which could materially affect [the reinsurer’s] ability to compete effectively as a business,” and because the request was narrowly tailored. Travelers Indemnity Co. v. Excalibur Reinsurance Corp., Case No. 3:11-cv-1209 (USDC D. Conn. Nov. 26, 2013).
This post written by Michael Wolgin.
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The Fifth Circuit Court of Appeals reversed in part a decision by the National Labor Relations Board which held that D.R. Horton, a homebuilder with operations in over twenty states, had violated the National Labor Relations Act by requiring its employees to sign an arbitration agreement that prohibited them from pursuing collective or class claims addressing their wages, hours, or other working conditions against the employer in any forum, arbitral or judicial. Deferring to the NLRB’s interpretation of the National Labor Relations Act to the extent it could, the Fifth Circuit nonetheless found that the NLRB paid insufficient respect to other federal statutes and policies, namely the Federal Arbitration Act. The Court first emphasized that the FAA’s purpose is to ensure the enforcement of arbitration agreements according to their terms. However, requiring class arbitration interferes with fundamental attributes of arbitration, primarily its informality, and thus creates a scheme inconsistent with the FAA. Thus, consistent with the FAA, D.R. Horton’s prohibition should be upheld, absent an overriding contrary congressional command in the NLRA. Because (1) the NLRA contains no explicit language about, and does not even mention, collective action, much less the procedures such an action would employ, (2) the legislative history of the NLRA discusses no right to file class or consolidated claims against employers, and because (3) the NLRA was enacted prior to the advent of modern class action practice, the Court held that the class arbitration agreement must be enforced according to its terms. Additionally, the Court upheld the NLRB’s determination that D.R. Horton must clarify with its employees that the arbitration agreement language did not eliminate entirely their right to pursue claims of unfair labor practices with the NLRB. D.R. Horton, Inc. v. National Labor Relations Board, No. 12-60031 (5th Cir. Dec. 3, 2013).
This post written by Kyle Whitehead.
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