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Arbitration / Court Decisions

ARBITRATION ROUNDUP

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Class Arbitration

Sutter v. Oxford Health Plans, LLC, Case No. 10-04903 (USDC D.N.J. Feb. 25, 2011) (class arbitration was still required following the Supreme Court’s Stolt-Nielson decision, notwithstanding the omission of the words “class action” in the parties’ arbitration agreement because the arbitrator had determined that the agreement unambiguously expressed the parties’ intent to authorize class arbitration).

Interim Awards

Draeger Safety Diagnostics, Inc. v. New Horizon Interlock, Inc., Case No. 11-mc-50160 (USDC E.D. Mich. Feb. 14, 2011) (confirming interim award for emergency relief ordering defendant to return records, data, and reports; claim was ripe because the plaintiff was likely to be harmed absent confirmation; court lacked subject matter jurisdiction to confirm non-final award of fees because the claim was not ripe).

Arbitrator Disqualification

O’Dowd v. Hardy, No. G04308 (Cal. Ct. App. Feb. 24, 2011) (defendant’s counsel’s letter to arbitrator, copied to plaintiff’s counsel, containing negative statements about plaintiff did not warrant arbitrator disqualification).

Notice Issues

Selective Ins. Co. v. Coach Leasing, Inc., No. A-4007-06T2 (N.J. Super. Ct. App. Div. June 16, 2008) (reversing orders vacating arbitration awards and remanding for entry of judgment enforcing awards; notifying defendant’s third-party administrator of the arbitration was sufficient notice under the parties’ agreement and New Jersey statute).

Exceeding Authority; Manifest Disregard for the Law

CCent. Mont. Rail v. BNSF Ry. Co., No. 05-00116 (9th Cir. Mar. 18, 2011) (affirming the district court’s confirmation of an arbitration award because the conditions for vacatur were not met; the arbitrators had not exceeded their authority nor manifestly disregarded the law).

Ameser v. Nordstrom, Inc., Case No. 09-0395 (USDC N.D. Tex. Mar. 14, 2011) (denying motion to vacate award; movant failed to demonstrate that the arbitrator was partial, exceeded her powers, demonstrated manifest disregarded for the law, or that the award was obtained by undue means).

Harrell & Owens Farm v. Fed. Crop Ins. Corp., Case No. 09-217 (USDC E.D.N.C. Mar. 23, 2011) (denying motion to vacate award and confirming award; arbitrator did not exceed the scope of his authority by purportedly failing to follow a government agency’s binding interpretation of an insurance policy; award did not fail to draw its essence from the arbitration agreement).

IFA Ins. Co. v. Am. Trucking & Transp. Ins. Co., No. A-1845-09T2 (N.J. Super. Ct. App. Div. Mar. 22, 2011) (affirming confirmation of arbitration award; failure of the arbitrator to apply comparative negligence principles did not warrant vacatur; the fact that the arbitration was court ordered and not by agreement of the parties did not alter the narrow scope of judicial review).

Timeliness Issues

Century Indem. Co. v. Clearwater Ins. Co., Case No. 11-1038 (USDC S.D.N.Y. Mar. 30, 2011) (confirming arbitration award because respondent failed to timely move to vacate, modify, or correct the award and finding no other basis for vacating the award).

Am. Ins. Managers, Inc. v. Guar. Ins. Co., Case No. 07-01615 (USDC D.S.C. Mar. 29, 2011) (motion to vacate or modify filed exactly three-months after delivery of the award was timely because the FAA and not state law governed the applicable statute of limitations; denying motion to vacate or modify; award was not “fundamentally unfair” or “irrational” and there was no “evident partiality” by the arbitrator).

This post written by Ben Seessel.

SECOND CIRCUIT REMANDS FOR CONSIDERATION OF PERSONAL JURISDICTION ISSUES WITH RESPECT TO ORDER CONFIRMING CHINESE ARBITRATION AWARD

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Last year, we reported that the Southern District of New York had confirmed an arbitration award made by the China Maritime Arbitration Commission against Pactrans Air & Sea, Inc. (“Pactrans”), notwithstanding Pactrans’ argument that the award was being challenged before the proper authorities in China. The judgment recognizing the award was subsequently appealed by Pactrans on jurisdictional grounds. The Second Circuit Court of Appeals remanded the case, instructing the district court to determine whether it decided the issue of its personal jurisdiction over Pactrans, and, if not, to enter an order to show cause why it should not dismiss the case for lack of personal jurisdiction. China Nat’l Chartering Corp. v. Pactrans Air & Sea, Inc., No. 09-4956 (2d. Cir. Jan. 19, 2011).

This post written by Ben Seessel.

COURT COMPELS FINRA ARBITRATION OF EMPLOYMENT DISPUTE

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Kevin Imhoff left his job as a broker for Primerica, for whom he sold various securities and insurance products, to go work for a competitor. He sued Primerica in state court, alleging that they harmed his relationship with his clients and with AIG (one of the insurance companies whose products he sold), as a result of various communications Primerica sent announcing his departure. Primerica filed a petition in federal court seeking to compel arbitration under FINRA. Imhoff conceded he agreed to arbitrate certain disputes, as set forth in his FINRA registration, but that the dispute pertaining to his sale of insurance products was exempt from arbitration by FINRA Rule 13200. The Court rejected this claim, narrowly construing Rule 13200’s exception for “insurance related claims,” which states that “disputes arising out of insurance business activities of a member that is also an insurance company are not required to be arbitrated under FINRA,” and finding that it does not encompass employment disputes, but rather only “intrinsically insurance” claims. The Court compelled arbitration of all claims. PFS Investments, Inc. v. Imhoff, No. 11-10142 (USDC E.D. Mich. March 25, 2011).

This post written by John Pitblado.

COURT STANDS BY “NERVE CENTER” DETERMINATION IN REINSURANCE DISPUTE

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On January 27, 2011, we reported on a court’s application of the “nerve center” test to dismiss for lack of diversity of citizenship a case seeking the return of excess reinsurance deposit. The insurer alleged its domicile in the complaint, but failed to allege the location of its principal place of business. The nerve center was the “single place” where direction, control and coordination originated. The court earlier found that to be the state where the insurer’s president, secretary, and director were located, and not the state where most of the insurer’s board of directors and board meetings were located. The court has now denied the plaintiff’s motion to reconsider that finding, holding that plaintiff’s motion was “nothing more than a request for a second bite at the apple.” Health Facilities of California Mutual Insurance Co., Inc. v. British American Insurance Group, Ltd., Case No. CV 10-3736 (USDC C.D. Cal. April 5, 2011).

This post written by Michael Wolgin.

CLAIMANT IN UK COURT ENTITLED TO ENGINEERING REPORTS OF DAMAGED HIGHWAY COVERED UNDER REINSURANCE AGREEMENT

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The UK Commercial Court, Queens Bench Division, recently decided a discovery matter in a reinsurance dispute. The litigation arose out of a dispute under a facultative reinsurance contract, which reinsured claimant Axa Seguros’ participation in an insurance policy covering risks of physical damage to a “Toll Road Network concession” in Mexico. After a hurricane caused damage to a highway, Axa Seguros initiated arbitration and subsequently filed suit against Allianz, seeking indemnity for sums said to be due under the reinsurance contract. Axa sought all reports and associated documents produced by Halcrow, an engineering company hired to inspect the damaged highway. Allianz, for its part, claimed a litigation privilege on the basis that it was obtained and prepared for the purpose of obtaining legal advice in connection with expected litigation. The presiding justice concluded that, although litigation was reasonably expected at the time the reports were made, the reports were not generated for the predominant purpose of anticipated litigation. Rather, they were generated to assess whether the highway had been constructed up to international standards, and to determine what damage had been caused by the hurricane. Accordingly, Axa was entitled to the materials sought. Axa Seguros, S.A. DE C.V. v. Allianz Ins. PLC, 2011 EWHC 268, Case No. 2007 Folio 1396 (Comm. Ct. Q.B. Feb. 3, 2011).

This post written by John Black.