Arbitration / Court Decisions

NLRB FINDS THAT PROHIBITING CLASS ACTIONS IN EMPLOYMENT CONTRACTS VIOLATES FEDERAL LABOR LAW

February 16, 2012 by Carlton Fields

The National Labor Relations Board (“NLRB”) affirmed an administrative law judge’s decision that an employer violated the National Labor Relations Act (“NLRA”) by requiring covered employees, as a condition of employment, to sign an agreement precluding them from filing class actions addressing their wages, hours or other working conditions in any forum, arbitral and judicial. The NLRB found that such a prohibition unlawfully restricts employees’ NLRA Section 7 rights to engage in concerted action for mutual aid or protection. The NLRB stated that its holding does not conflict with the FAA or undermine the policy underlying the FAA and distinguished the Supreme Court’s recent Stolt-Nielson and Concepcion decisions. D.R. Horton, Inc., Case No.12-CA-25764 (N.L.R.B. Jan. 2, 2012).

This post written by Ben Seessel.

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COURT DECLINES TO COMPEL ARBITRATION UNDER “NARROW” ARBITRATION PROVISION

February 15, 2012 by Carlton Fields

Union Insurance Company and other insurers entered into an “Agency-Company Agreement,” with broker Hull & Company, providing Hull with binding authority. Hull bound risk from the Thirsty Parrot Bar and Grill, including umbrella coverage from Union. The Thirsty Parrot ultimately settled a covered assault claim against one its former employees, to which Union contributed $800,000. Union sought recompense from Hull, alleging that Hull breached underwriting guidelines which were incorporated by reference into the Agency-Company Agreement. Union sought to compel arbitration of its claim, but Hull resisted. The Court refused to compel arbitration under a provision allowing arbitration of disputes pertaining to “misunderstanding as to the interpretation or application of any provision of this Agreement.” The Court found that the dispute over underwriting guidelines was not related or collateral to interpretation of the Agency-Company Agreement, because it found that Union failed to establish that the underwriting guidelines were incorporated by reference into the Agreement, and thus the dispute did not come within the Agreement’s arbitration provision. Union Ins. Co. v. Hull &Company, Inc., Case No. 4-00337 (USDC S.D. Iowa Dec. 19, 2011).

This post written by John Pitblado.

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SUPREME COURT ENFORCES ARBITRATION OF CREDIT REPAIR ORGANIZATIONS ACT CLAIMS

February 13, 2012 by Carlton Fields

The United States Supreme Court reversed a Ninth Circuit Court of Appeals decision that affirmed a “right to sue” under the Credit Repair Organizations Act (CROA). A putative class of cardholders brought CROA violation claims against CompuCredit, which issues Visa cards to individuals with poor credit scores seeking to repair their credit. The cardholder agreement contained an arbitration provision. When the cardholders brought suit in California federal court, CompuCredit moved to compel arbitration. The trial court denied the motion to compel, citing language in CROA requiring companies to provide a disclosure to consumers that includes the sentence, “You have a right to sue a credit repair organization that violates the [Act].” The Ninth Circuit affirmed. In an 8-1 decision authored by Justice Scalia (Justices Sotomayor and Kagan in a separate concurrence, Justice Ginsburg dissenting), the Supreme Court reversed, holding that the cited language did not unambiguously provide a right that supersedes the strong public policy embodied in the FAA of enforcing arbitration agreements. CompuCredit Corp. v. Greenwood, No. 10-948, 565 U.S. —-, 132 S.Ct. 665 (Jan. 10, 2012).

This post written by John Pitblado.

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CONFIDENTIAL ARBITRATION AWARD AGAINST AXA RE CONFIRMED WITHOUT OPPOSITION

February 9, 2012 by Carlton Fields

A court recently confirmed an arbitration award against AXA Re in a reinsurance dispute involving reinsurance contracts entered into by predecessor companies in the 1970s. Details on the underlying arbitration are not available, as the petitioners’ filing was sealed by court order in accordance with a confidentiality agreement entered into by the parties in the arbitration. AXA Re did not oppose the petition nor appear in the court action, which was filed pursuant to the New York Convention. ACE Property & Casualty Insurance Co. v. AXA Re, Case No. 1:11-cv-07050 (USDC S.D.N.Y. Jan. 9, 2012).

This post written by Michael Wolgin.

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COURT CONSOLIDATES REINSURANCE CASES BEFORE EXISTING ARBITRATION PANEL

February 8, 2012 by Carlton Fields

A federal district court consolidated several reinsurance cases to be heard before an arbitration panel already formed to hear a dispute between the parties, as well as a corporation which the parties agreed to keep confidential. The court determined that, to avoid duplicative litigation and conserve litigation, all three actions could be consolidated and resolved through arbitration. Further, because all three actions arose from the same set of operative facts the arbitration panel already in existence could determine the correct reading of the arbitration agreements contained in each reinsurance agreement. The panel would first determine if each dispute should be heard by an independent panel. The court stayed the actions pending resolution by the existing arbitration panel. Arrowood Indemnity Co. v. Harper Insurance Co., No. 12-2 (USDC W.D.N.C. Jan. 19, 2012).

This post written by John Black.

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