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Arbitration / Court Decisions

COURT COMPELS PRODUCTION OF UNDERWRITING MANUALS; FINDS REINSURANCE DOCUMENTS GENERALLY IRRELEVANT

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A dispute arose between the city of Warren, Michigan and several insurance companies regarding their duties to defend and indemnify with respect to a state court class action suit against the city. The city sought to compel discovery of underwriting manuals, documents reflecting the company’s interpretation of key policy terms, and documents reflecting discussions with reinsurers and the setting of reserves from United States Fire Insurance Company as well as a series of other insurers who had provided coverage at various points between the 1960s and 2001. The district court granted the city’s motion to compel as to the claims manuals, underwriting manuals, and related documents, and denied all other requests. Specifically, the court found that (1) the other claims-related material was covered by attorney-client privilege or the work-product doctrine; (2) materials evidencing interpretation of policy terms were not relevant; and (3) while reinsurance policies themselves are discoverable, all other documents relating to reinsurance are irrelevant and not discoverable. United States Fire Insurance Co. v. The City of Warren, No. 10-13128 (E.D. Mich. Apr. 26, 2012).

This post written by John Black.

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COURT OVERTURNS DENIAL OF REQUEST FOR REINSURANCE-RELATED RECORDS FOR JURISDICTIONAL REASONS

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The Commonwealth Court of Pennsylvania issued an opinion vacating Pennsylvania’s Office of Open Records’ denial of a request for documents under the state’s Right-to-Know Law. Plaintiff sought records related to Reinsurance Offset Guidelines from the Pennsylvania Department of Insurance and Reliance Insurance Company, which has been in liquidation since 2001. The OOR denied the request on the basis that the documents were “internal, pre-decisional deliberations.” The court vacated the denial because the OOR did not have jurisdiction to hear this matter as Reliance’s Statutory Liquidator. The court further explained that the Pennsylvania Insurance Department, when aiding the Statutory Liquidator, and Reliance are acting pursuant to a judicial order and under the supervision of the Commonwealth Court. Because the court had appointed the state Insurance Commissioner as Statutory Liquidator, it retained general supervision over the Statutory Liquidator and the insolvent estate. Thus, all complaints regarding how the insolvency is being administered must be directed to the court, and any records can only be obtained through court order. Greenberger v. Pennsylvania Ins. Dept., No. 931 C.D. 2011 (Pa. Commw. Ct. Mar. 7, 2012).

This post written by John Black.

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COURT ENTERS FINAL ORDER APPROVING SETTLEMENT BETWEEN AIG AND MEMBERS OF NATIONAL WORKERS COMPENSATION REINSURANCE POOL

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A federal district court entered a final order and judgment approving a class action settlement in an action brought against AIG by certain members of the National Workers Compensation Reinsurance Pool (“NWCRP”). Class plaintiffs alleged that AIG had underreported workers compensation premium for the purpose of reducing its share of the workers compensation market and, consequently, increasing the residual market costs of other Pool members. The settlement provides for a $450 million payment to be allocated among class members according to market share. Liberty Mutual and two of its affiliates, Safeco and Ohio Casualty, objected to the settlement but their objections were overruled. American Int’l Group, Inc. v. ACE INA Holdings, Inc., Case No. 07-02898 (USDC N.D. Ill. Feb. 28, 2012).

This post written by Ben Seessel.

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ARBITRATION ROUND-UP

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Manifest Disregard

Biller v. Toyota Motor Corp., No. 11-55587 (9th Cir. Feb. 3, 2012) (affirming confirmation of award, no manifest disregard of the law)

Giller v. Oracle USA, Inc., Case No. 11-02456 (USDC S.D.N.Y. Feb. 14, 2012) (denying vacatur, no manifest disregard, no evident partiality)

Latour v. Citigroup Global Markets, Inc., Case No. 11-1167 (USDC S.D. Cal. March 16, 2012) (vacatur denied, no manifest disregard)

Collins v. Chicago Investment Group, LLC, Case No. 11-01105 (USDC D. Nev. March 20, 2012) (vacatur denied, arbitrator did not exceed scope by transferring matter from Nevada to Illinois, no manifest disregard)

Exceeded Scope

Muskegon Central Dispatch 911 v. Tiburon, Inc., No. 09-2214 (6th Cir. Feb. 2, 2012) (affirming vacatur where arbitrators exceeded scope of submission)

Tucker v. Sterling Jewelers, Inc., Case No. 09-14102 (USDC E.D. Mich. Feb. 10, 2012) (denying vacatur, arbitrator did not exceed scope of submission, no manifest disregard of the law)

Dubois Logistics, LLC v. United Food and Commercial Workers Union, Local 23, Case No. 11-34 (USDC W.D. Pa. March 5, 2012) (vacatur denied, arbitrator did not exceed scope, denying attorneys fees to prevailing party)

Garlyn, Inc. v. Auto-Owners Ins. Co., No. A11-1520 (Minn Ct. App. March 26, 2012) (affirming in part, reversing in part, affirming lower court’s vacatur where arbitrators did not exceed scope of submission in finding for petitioner on merits, but reversing lower court’s denial of vacatur of statutory pre-award interest, as that portion of award exceeded the scope of the submission)

Buy Rite Auto Glass, Inc. v. Progressive Casualty Ins. Co., No. A11-1492 (Minn. Ct. App. April 9, 2012) (affirming in part, reversing in part, affirming lower court’s denial of vacatur where arbitrators did not exceed scope of submission in finding for petitioner on merits, but reversing lower court’s denial of vacatur of statutory pre-award interest, as that portion of award exceeded the scope of the submission)

New York Convention on Enforcement of Foreign Arbitral Awards

SEI Societa Esplosivi Industriali SpA v. L-3 Fuzing and Ordnance Systems, Inc., Case No. 11-149 (USDC D. Del. Feb. 17, 2012) (confirming Swiss award under New York Convention on the Recognition and Enforcement of Foreign Arbitral awards, precluding review for manifest disregard, and finding award did not exceed scope and did not violate United States public policy)

Greatship (India) Limited v. Marine Logistics Solutions (Marsol) LLC, Case No. 11-420 (USDC S.D.N.Y. Jan. 24, 2012) (dismissing action to confirm foreign award for lack of personal jurisdiction over respondent)

Subway International, B.V. v. Bletas, Case No. 10-01715 (USDC D. Conn. April 3, 2012) (motion to confirm granted, personal jurisdiction satisfied under New York Convention, FAA applied where arbitration foreign parties took place in United States between)

Res Judicata

Druz v. Morgan Stanley, Inc., Case No. 10-6281 (USDC D.N.J. March 8, 2012) (denying vacatur of award previously confirmed by court, under principle of res judicata)

Evident Partiality

Urban Associates, Inc. v. Standex Electronics, Inc., Case No. 04-40059 (USDC E.D. Mich. Feb. 17, 2012) (denying vacatur, no evident partiality, no failure or refusal to hear material evidence, arbitrators did no exceed powers) (magistrate judge’s report and recommendation and district court’s order)

This post written by John Pitblado.

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SECOND CIRCUIT AFFIRMS ORDER DENYING MOTION TO DISQUALIFY REINSURER’S ATTORNEYS

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In a matter involving an arbitration with a reinsurance company, the Second Circuit Court of Appeals affirmed a district court’s order denying Utica Mutual Insurance Company’s motion to disqualify R & Q Reinsurance Company’s attorneys, the law firm of Chadbourne & Park, LLP. Utica had unsuccessfully argued to the district court that Chadbourne should be disqualified because a part-time associate had been exposed to Utica’s confidential information. The Second Circuit further affirmed the district court’s order unsealing certain confidential non-privileged information underlying Utica’s motion to disqualify, and the district court’s decision requiring R & Q to withdraw certain discovery requests that Utica had identified as suggesting an inference of Chadbourne’s improper knowledge of Utica’s confidential information. Utica Mut. Ins. Co. v. INA Reinsurance Co., No. 10-4164 (2d. Cir. Mar. 15, 2012) (See the district court disqualification and discovery orders).

This post written by Ben Seessel.

See our disclaimer.