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Arbitration / Court Decisions

FIFTH CIRCUIT HOLDS DEFENDANT WAIVED RIGHT TO ARBITRATE BY FILING MOTIONS TO DISMISS

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In In re Mirant Corporation, the Fifth Circuit affirmed the lower court’s finding that the defendant waived its right to arbitrate. The defendant had filed multiple motions to dismiss based, in part, on waiver and estoppel, over a span of eighteen months. The court held that whether a motion to dismiss constitutes a waiver of arbitration as an invocation of the judicial process is a case-by-case determination. Here, the court explained, the defendant’s multiple motions invoked the judicial process by seeking a decision on the merits and a dismissal with prejudice for failure to state a claim. The court was also persuaded by the fact that the defendant did not file its motions to dismiss as an alternative to arbitration, but instead filed them prior to seeking arbitration as a “backup plan.” Lastly, the court held that the plaintiff was prejudiced both legally and financially by the defendant’s tactics. In re Mirant Corp., No. 09-10451 (5th Cir. August 2, 2010).

This post written by Michael Wolgin.

ARBITRATION ROUND UP

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Manifest Disregard:

ABS Brokerage Services, LLC v. Penson Financial Services, Inc., Case No. 09-4590 (USDC D.N.J. July 8, 2010) (denying motion to vacate, granting motion to confirm, no manifest disregard)

Arora v. TD Ameritrade, Inc., Case No. CV-10-01216 (USDC N.D. Cal. July 26, 2010) (denying motion to vacate FINRA award, no manifest disregard).

Dealer Computer Services, Inc. v. Johnson Ford Lincoln Mercury Nissan, Inc., Case No H-10-719 (USDC S.D. Tex. July 26, 2010) (granting motion to confirm, denying motion to vacate, no manifest disregard, and awarding attorneys fees and court costs to plaintiff as defendant had “no legally non-frivolous” basis for its challenge to the award and refusal to pay award was in bad faith)

Alpaca Shop Franchise Co. v. Roxburgh, Case No. 3:05-cv-1203 (USDC D. Conn. July 22, 2010) (granting petition to confirm, no manifest disregard, no ambiguity in award)

The First Baptist Church of Glenarden v. New Market Metalcraft, Inc., Case No. 8:10-cv-00543 (USDC S.D. Md. July 30, 2010) (granting motion to confirm, no manifest disregard).

Evident Partiality:

Hernandez v. Smart & Final, Inc., Case No. 3:09-CV-02266 (USDC S.D. Cal. June 17, 2010) (granting petition to confirm, denying petition to vacate award, no manifest disregard, no evident partiality)

Haddad v. Jackson, Case No. 1:07-cv-01676 (USDC E.D. Cal. July 16, 2010) (granting motion to confirm, denying motion to vacate, no evident partiality)

Procedure / Jurisdiction:

Technologists, Inc. v. Mir’s Ltd., Case No. 09-1339 (USDC D.D.C. July 27, 2010) (granting Rule 60(b) motion to vacate default judgment on petition to vacate, re-opening post-arbitration proceeding to further briefing on confirmation/vacatur)

Cargill Inc. v. Morgan, Case No. 1:10-cv-00088 (USDC E.D. Mo. July 28, 2010) (denying motion to vacate award, no arbitrator misconduct, and failure to exhaust arbitration appeal process under National Grain and Feed Association rules)

Exceed Powers:

Valve Corp. v. Activision Blizzard, Inc., Case No. 09-35800 (9th Cir. July 30, 2010) (affirming order requiring further arbitration proceedings on an offset issue the arbitrator initially refused to decide, finding arbitrator’s refusal to decide properly presented issue exceeded powers)

Samaritan Medical Center v. Local 1199, Service Employees Int’l Union, Case No. 7:09-cv-01072 (USDC N.D.N.Y. July 19, 2010) (denying motion to vacate, granting motion to confirm, arbitrator did not exceed powers by crafting remedy not provided for in collective bargaining agreement)

This post written by John Pitblado.

TENTH CIRCUIT HOLDS POST-JUDGMENT INTEREST RATE IN “BROAD” ARBITRATION PROVISION TRUMPS STATUTORY RATE

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On November 17, 2008, we reported on a Colorado district court’s decision in a reinsurance dispute to alter the post-judgment interest rate provided in the arbitration panel’s final award and replace it with a statutory rate.

Earlier this month, however, the Tenth Circuit reversed the district court, holding that the post-judgment interest entitlement and rate decided by the arbitration panel should govern. The court reasoned that parties are permitted to set their own rate of post-judgment interest through contract, and the arbitration provision at issue in this case was a “broad” provision. The court further held that “the parties’ intent is a quintessential fact question, and we see no reason why an arbitration panel with authority to decide a contractual dispute cannot also determine whether the contract in question includes language clearly, unambiguously, and unequivocally stating the parties’ intent to bypass § 1961[, the post-judgment interest statute].” Newmont USA LTD v. Ins. Co. of N. Am., Nos. 08-1347 & 08-1370 (10th Cir. Aug. 11, 2010).

This post written by Michael Wolgin.

LLOYD’S UNDERWRITERS MUST REVEAL “NAMES” TO ESTABLISH JURISDICTION

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Certain Underwriters at Lloyd’s, London brought suit in Florida federal court to seek adjudication of the binding effect of a purported settlement agreement it had entered with insureds pertaining to coverage for an underlying all terrain vehicle accident. Lloyd’s and the insureds had been approaching a tentative agreement on a settlement, but the parties’ stories diverged from there, with Lloyd’s asserting settlement had been in fact been reached in principle, and the insureds asserting that no final agreement had been reached. Lloyd’s brought suit in federal court to resolve the dispute, and the trial court rejected the insureds’ challenge to jurisdiction, by way of motion to dismiss, asserting that Lloyd’s had to specifically allege the residence of each of the “names” actually sponsoring the insurance, and for whom liability attaches severally under pertinent British statutory laws governing Lloyd’s. The Eleventh Circuit Court reversed that decision, detailing the history of Lloyd’s, its nature as an unincorporated association of “names” who sign on to particular risks, which are administered by “syndicates,” and the manner in which liability attaches to the “names,” akin to the members of a partnership. The Court held that Lloyd’s must allege each of the actual “names” bringing suit for purposes of establishing diversity jurisdiction. Underwriters at Lloyd’s, London v. Osting-Schwinn, No. 08-15809 (11th Cir. August 5, 2010).

This post written by John Pitblado.

11TH CIRCUIT UPHOLDS CONFIRMATION OF ARBITRATION AWARD PURSUANT TO LIQUIDATED DAMAGES CLAUSE

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Following the district court’s confirmation of an arbitration award of damages to Seaborne Virgin Islands, National Aerotech Aviation appealed to the 11th Circuit Court of Appeals arguing that the district court “improperly and erroneously weighed the material facts” in determining whether the arbitrator acted in manifest disregard of the law. The 11th Circuit affirmed the district court’s decision, concluding that Aerotech had offered no evidence to suggest that the arbitrator deliberately ignored the law, and further holding that Georgia law explicitly allows parties to a contract to agree to liquidated damages. Thus, the district court did not err in granting summary judgment in favor of Seaborne. Aviation’s final argument – that the district court should have allowed discovery to proceed – was quickly dismissed by the Court, noting that district courts are granted wide discretion in ruling on discovery motions. National Aerotech Aviation, Inc. v. Seaborne Virgin Islands, Inc., Case No. 09-3252 (11th Cir. July 19, 2010).

This post written by John Black.