Arbitration / Court Decisions

REVERSING TRIAL COURT, TENTH CIRCUIT FINDS NO WAIVER OF RIGHT TO ARBITRATE

May 26, 2010 by Carlton Fields

Phillip Hill sued his former employer in federal court, alleging retaliatory discharge. His former employer, Ricoh Americas Corp., answered the complaint, and the parties engaged in a Rule 26 pre-trial conference to set discovery and trial deadlines. Shortly thereafter, and approximately four months after suit had been filed, Ricoh moved to compel arbitration based on a provision in Hill’s original employment contract with Ricoh’s predecessor-in-interest. The district court denied the motion to compel on waiver grounds and Ricoh appealed. The Tenth Circuit found no waiver, quickly disposing of Hill’s argument that Ricoh failed to raise “arbitration and award” as an affirmative defense with its answer, as Hill asserted was required under Rule 8, noting that the provision only applies to completed arbitrations. The Tenth Circuit then analyzed several factors to determine whether Ricoh had waived its right to arbitrate, and found that on balance of the factors, it had not. Key to this analysis was that Ricoh had engaged in “minimal litigation activity,” and that there was “no evidence in the record that Ricoh intentionally and knowingly relinquished its right to demand arbitration.” It remanded with instructions to compel arbitration. Hill v. Ricoh Americas Corp., No. 09-3182 (10th Cir. April 19, 2010).

This post written by John Pitblado.

UNAUTHORIZED INSURER’S OBJECTION TO RULING ON PRE-PLEADING SECURITY OVERRULED

May 25, 2010 by Carlton Fields

On April 19, 2010, we reported on a magistrate judge ordering that the defendant, an unauthorized insurer, post pre-pleading security in the amount of $660,389. The defendant subsequently filed an objection to this ruling, arguing that the plaintiff could not recover more than the current amount contained in the segregated accounts at issue. Affirming the ruling of the magistrate judge, the district court observed that the pre-pleading security statute contemplated the posting of an amount sufficient to secure the judgment sought by the plaintiff and concluded that the ruling was not erroneous or contrary to law. Arrowood Surplus Lines Ins. Co. v. Gettysburg Nat’l Indem. Co., Case No. 09-972 (USDC D. Conn. May 7, 2010).

This post written by Dan Crisp.

ON REMAND FROM SECOND CIRCUIT, FEDERAL COURT DECLINES TO COMPEL ARBITRATION

May 24, 2010 by Carlton Fields

As reported in our December 3, 2009 post, the Second Circuit recently reversed and remanded a $40 million jury verdict against New Hampshire Insurance Company on claims made by AXA Versicherung AG. The remand instructed the trial court to determine whether the claims should have been arbitrated. In a thorough opinion, the lower court ruled on remand that (1) the claims were not arbitrable; and (2) even if the claims were arbitrable, New Hampshire waived its right to arbitrate them. The basis for the court’s first conclusion was that each of AXA’s claims generally sounded in fraud, rather than a dispute over interpretation of the parties’ reinsurance agreement. Because the agreement only required arbitration over disputes pertaining to the interpretation of the agreement, the fraud claims were non-arbitrable. The court also held that, even assuming any of the claims were arbitrable, New Hampshire waived its right to arbitration by (1) failing to seek arbitration of similar claims in separate litigation involving a different plaintiff; and (2) delaying any attempt to compel arbitration in the AXA litigation of non-fraud claims until after discovery and summary judgment briefing. AXA Versicherung AG v. New Hampshire Ins. Co., 05-10180 (USDC S.D.N.Y. April 29, 2010).

This post written by John Pitblado.

HALL STREET ASSOCIATES DOES NOT BAR A REMAND TO AN ARBITRATION PANEL FOR CLARIFICATION OF THE AWARD

May 20, 2010 by Carlton Fields

A trial court’s judgment confirming an arbitration award and awarding certain pre- and post-judgment interest to the defendant insurance companies was unsuccessfully appealed, the appellate court determining that an earlier remand to the arbitration panel was proper because, among other things, nothing in the United States Supreme Court’s ruling in Hall Street Associates, L.L.C. v. Mattel, Inc. precluded that procedure. On appeal, the plaintiff contended that the trial court: (1) improperly remanded the matter to the arbitration panel for clarification of its award; (2) improperly confirmed the arbitration award as clarified; and (3) abused its discretion in awarding pre- and post-judgment interest.

On the first point, the plaintiff contended that Hall Street Associates overruled the body of precedent permitting a remand to an arbitration panel for clarification of an award. This contention was rejected, as the issue in Hall Street Associates was whether parties to an arbitration proceeding could, by contractual agreement, supplement the statutory grounds for vacating an arbitration award. Hall Street Associates did not concern the procedure at issue, a remand for clarification of an arbitration award. On the second point, plaintiff argued that the arbitration panel imperfectly executed its powers, so that the clarified arbitration award did not conform to the submission. The appellate court noted, however, that courts will not review the evidence nor, where the submission is unrestricted, will they review the arbitrators’ decision of the legal questions. The submission at issue was unrestricted. On the third point, the plaintiff claimed the trial court abused its discretion in awarding pre- and post-judgment interest. The decision, however, of whether to grant interest is an equitable determination within the trial court’s discretion. The trial court’s reasoning was sound: “Although it does not appear that the plaintiff made its motions and appeals in bad faith, the plaintiff would receive an unfair advantage if it were allowed to retain this money while the defendants were deprived of its use and the opportunity to earn interest upon it for the past six years.” The judgment was confirmed in full. Hartford Steam Boiler Inspection & Insurance Co. v. Underwriters at Lloyd’s, Case No. AC 30162 (Conn. App. Ct. May 11, 2010).

This post written by Brian Perryman.

Court Orders Stay in B.D. Cooke v. Lloyds

May 19, 2010 by Carlton Fields

In the latest development in the dispute between B.D. Cooke & Partners and Lloyd’s of London, the Southern District of New York stayed litigation pending arbitration of the dispute. B.D. Cooke was directed to inform the Court within 30 days and every three months thereafter as to the status of the arbitration proceedings. If no timely response is received, the Court may dismiss the action pursuant to Fed. R. Civ. P. 41(b). B.D. Cooke & Partners Ltd. v. Certain Underwriters at Lloyd’s London, Case No. 08-3435 (S.D.N.Y. Apr. 13, 2010).

This post written by John Black.