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Arbitration / Court Decisions

EIGHTH CIRCUIT APPLIES BROAD INTERPRETATION OF CONCEPCION TO UPHOLD CLASS-WAIVER ARBITRATION CLAUSE IN EMPLOYMENT DISPUTE

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The Eighth Circuit recently reversed a district court’s refusal to compel arbitration in an employment dispute under the Fair Labor Standards Act, enforcing a class-waiver arbitration clause. The district court interpreted the FLSA as providing a right to a class action, and had found that the class waiver in this case was therefore invalid. The district court had also held that Concepcion was not controlling in the employment context, relying on a recent National Labor Relations Board decision. The Eighth Circuit reversed, holding that nothing in the text or legislative history of the FLSA indicates a congressional intent to bar employees from agreeing to arbitrate FLSA claims individually, and that there is no conflict between the FLSA and the FAA. The Eighth Circuit further held that the NLRB decision relied on by the district court was not entitled to deference. In any event, the court explained, the NLRB decision limited its holding to arbitration agreements barring all concerted actions, unlike the agreement in this case, which did not preclude reporting to administrative agencies, which themselves could file representative class suits. The court also rejected the notion that Concepcion and other U.S. Supreme Court precedent upholding the enforceability of class waivers is limited to the consumer context. Owen v. Bristol Care, Inc., No. 12-1719 (8th Cir. Jan. 7, 2013).

This post written by Michael Wolgin.

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ARBITRATION PROCEDURE ROUNDUP

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Confirming/Vacating Arbitral Award

Fisher v. Wells Fargo Advisors, LLC, Case No. 12-1413-CM (USDC D. Kan. Dec. 18, 2012) (granting motion to confirm arbitration award; holding that allegedly erroneous discovery rulings did not deprive plaintiff of a fundamentally fair hearing nor constitute arbitrator misconduct)

Laughlin v. VMWare, Inc., Case No. 11-cv-00530-EJD (USDC N.D. Cal. Dec. 20, 2012) (denying motion to vacate arbitration award; holding that the arbitrator did not manifestly disregard the law by denying respondent’s motion to strike class allegations)

State Farm Insurance Cos. v. Padilla, No. 27-CV-11-23900 (Minn. Ct. App. Dec. 24 2012) (reversing order vacating no fault arbitration award; holding that the arbitrator did not exceed his powers by finding that insurer’s request for an examination under oath was unreasonable)

Stone & Youngberg, LLC v. Kay Family Revocable Trust, No. 11-16684 (9th Cir. Dec. 12, 2012) (holding that the arbitrator did not manifestly disregard negligence law and, further, that a court has no authority under the FAA to modify an arbitration award to prevent double recovery)

Compelling Arbitration

Baltazar v. Forever 21, Inc., No. B237173 (Cal. Ct. App. Dec. 20, 2012) (reversing order denying motion to compel arbitration; holding, among other things, that a provision in an arbitration agreement allowing either party to seek provisional remedies in court, such as injunctive relief, did not render the arbitration agreement unconscionable)

Taylor v. Community Bankers Securities, LLC, Case No. H-12-2088 (USDC S.D. Tex. Dec. 19, 2012) (denying motion to compel arbitration of action brought by receiver appointed to represent investors in Ponzi scheme due to absence of evidence that investors entered into arbitration agreements)

Botorff v. Amerco, Case No. 2:12-cv-01286-MCE-EFB (USDC E.D. Cal. Dec. 19, 2012) (dismissing UCL claim against truck rental company; holding that arbitration agreement referred to but not included in rental agreement was enforceable and, further, that small claims court exception to compulsory arbitration did not apply because plaintiff’s lawsuit was brought as a class action that could not be adjudicated in small claims court)

Stone v. Vail Resorts Development Co., Case No. 1:09-cv-02081 (USDC D. Colo. Dec. 20, 2012) (denying plaintiff’s motion to reopen case and reconsider order compelling arbitration)

Interim Arbitral Relief

United States f/b/o Clifford & Galvin Contracting, LLC v. Endicott Constructors Corp., Case No. 12-10152-MLW (USDC D. Mass. Dec. 13, 2012) (denying motion to dismiss Miller Act claims against surety and staying case pending arbitration between contractor and assured party)

Bergman v. Spruce Peak Realty, LLC, Case Nos. 2:11-cv-127, 2:11-cv-128 (USDC D. Vt. Dec. 13, 2012) (granting motion to consolidate two related class action cases and granting motion to stay consolidated action pending arbitrator’s decision on scope of arbitrable claims in one case)

Jurisdictional Issues

First Investment Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding, Ltd., No. 12-30377 (5th Cir. Dec. 21, 2012) (affirming that district court properly dismissed for lack of personal jurisdiction a petition to confirm a foreign arbitration award under the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards; affirming that defendant People’s Republic of China was properly dismissed for lack of subject matter jurisdiction)

This post written by Ben Seessel.

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COURT CERTIFIES APPEAL IN COMMUTATION/COMMISSION DISPUTE

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In our September 17, 2012 post, we reported on Acumen Re Management Corporation’s reinsurance-related suit against General Security National Insurance Company, in which it claimed that General improperly entered into commutation agreements with insurers with respect to accounts for which Acumen was receiving, and expected to continue receiving, premium commissions, based on the parties’ agency contracts. General denied any breach. The parties cross-moved for summary judgment. Acumen’s motion was denied outright. General’s motion was granted in part and denied in part. Acumen moved to reconsider, or, in the alternative, for certification for immediate appeal. The court declined reconsideration, but granted certification to appeal, finding the appeal could efficiently dispose of a number of issues before trial. Acumen Re Management Corp. v. General Security National Insurance Co., No. 09-Civ-1796 (USDC S.D.N.Y. Dec. 4, 2012)

This post written by John Pitblado.

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FEDERAL COURT DISMISSES ACTION TO DISQUALIFY COUNSEL IN REINSURANCE ARBITRATION FOR FAILURE TO SATISFY AMOUNT IN CONTROVERSY REQUIREMENT

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Plaintiff and defendant were parties to a contract under which dispute arose and arbitration was demanded. Plaintiff filed an action in state court seeking to disqualify defendant’s counsel due to an alleged conflict of interest. Defendant removed to federal court. The federal court sua sponte raised the issue of whether the amount in controversy requirement for a diversity action was satisfied. After briefing on the issue, the court held that the requirement was not met, and that the exposure in the underlying arbitration was not the appropriate measure for amount in controversy, but rather only the financial impact of having counsel disqualified and retaining new counsel was implicated. The removing defendant failed to establish the requirement and remanded the case to state court. National Casualty Co. v. Utica Mutual Insurance Co., No. 12-cv-657-bbc (USDC W.D. Wis. Dec. 12, 2012).

This post written by John Pitblado.

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REINSURERS’ ACTION SEEKING TO VOID REINSURANCE AGREEMENT TRANSFERRED TO PLACE OF RELATED ARBITRATION

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Plaintiffs, five Lloyd’s of London underwriters, filed suit in Ohio federal court seeking a declaration that an alleged reinsurance agreement between them and defendant Stonebridge Casualty Insurance Company’s predecessor in interest was invalid because plaintiffs had no knowledge of it. Plaintiffs’ Ohio action was filed after Stonebridge had successfully moved in Florida federal court to compel arbitration of disputes arising under the agreement. Stonebridge moved to have the Ohio action transferred to Florida or dismissed. In response, plaintiffs argued that the Florida court lacked jurisdiction due to the presence of an Ohio forum selection clause in the reinsurance agreement. The court found that this clause did not strip the Florida court of its diversity jurisdiction. The court chastised plaintiffs for attempting to rely on a forum selection clause in a contract that they had not even acknowledge existed. The Ohio court similarly rejected plaintiffs’ argument that venue was improper in Florida, given that many of the relevant negotiations occurred in Florida, and key witnesses and documents were located in Florida. Certain Underwriters at Lloyd’s, London v. Stonebridge Casualty Insurance Co., Case No. 2:12-cv-160 (USDC S.D. Ohio Dec. 12, 2012).

This post written by Ben Seessel.

See our disclaimer.