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Arbitration / Court Decisions

THOU SHALT ARBITRATE: FEDERAL COURT ENFORCES A BIBLICALLY-BASED ARBITRATION AGREEMENT

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In this case, the plaintiff brought suit against her former employer, Heritage Christian Schools, Inc. (“Heritage”), after being constructively discharged from her teaching position. Heritage then filed a motion to stay proceedings and compel arbitration, and the plaintiff filed a motion to strike the arbitration agreement, which commanded that the parties resolve their differences in accordance with Matthew 18:15-17 and that the arbitration process be conducted in accordance with the Rules of Procedure for Christian Conciliation (“RPCC”), which proclaimed that the Bible shall be the supreme authority governing the arbitration process, though local, state, and federal laws must be taken into consideration. In denying the motion to strike and granting the motion to stay proceedings and compel arbitration, the court found that: (1) no evidence supported the argument that the arbitration provision is vague and ambiguous; (2) the plaintiff had not shown that submission to arbitration under the RPCC will deprive her of the ability to vindicate her statutory rights; (3) the plaintiff failed to articulate how the processes under the arbitration agreement are structurally biased and procedurally inadequate; and (4) despite the RPCC requiring that the plaintiff pay half of the fees and costs of arbitration, the arbitrator still has the power to award fees and costs to a participant and, thus, the plaintiff was not precluded from effectively enforcing her rights. Easterly v. Heritage Christian Schools, Case No. 08-1714 (USDC S.D. Ind. Aug. 26, 2009).

This post written by Dan Crisp.

ARBITRATION AWARD IN FAVOR OF UNION UNDER CBA UPHELD

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The plaintiff moved to vacate an arbitration award in favor of the defendant in disputes about grievance procedures arising from the parties’ Collective Bargaining Agreement (“CBA”). The disputes arose from the plaintiff’s disciplinary actions of certain members of the defendant unions. The court declined to vacate the award, relying on principles of deference to arbitral panels generally, and in particular under a CBA, deference to the arbitrators’ interpretation of the CBA and its procedural requirements. Continental Carbon Corp. v. United Steel, Paper and Forestry, Rubber Manufacturing, Energy, and Allied Industrial Service Workers Int’l Union, 08-cv-543-JHP-TLW (N. D. Okla. July 23, 2009).

This post written by John Pitblado.

COURT DISMISSES EQUITABLE CONTRIBUTION CLAIM IN MULTI-PARTY COVERAGE DISPUTE

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The parties to this insurance dispute sought to determine which insurance company, if any, must provide coverage to Charleston Area Medical Center, Inc. (“CAMC”) in regards to a verdict and resulting settlement. In the Second Amended Complaint, the plaintiff, Executive Risk Indemnity, Inc. (“ERI”), asserted two claims, which were a declaratory judgment action and a claim for equitable contribution against a captive insurance company, Vandalia Insurance Company (“Vandalia”), and an assumption reinsurer, Employers Reinsurance Corporation (“ERC”). CAMC and Vandalia brought cross claims against ERC, and ERC moved to dismiss all claims.

On ERI’s equitable contribution claim, the court found that one part of the policy assumed by ERC was in excess to the policy issued by ERI and that two other parts of the policy assumed by ERC did not insure the same risk as the policy issued by ERI. Thus, the court dismissed ERI’s equitable contribution claim. The court then denied the dismissal of ERI’s, CAMC’s, and Vandalia’s declaratory judgment cause of actions against ERC because a substantial live controversy existed between the parties and the issuance of a declaration of rights or other legal relations was warranted. Executive Risk Indem., Inc. v. Charleston Area Med. Ctr., Inc., Case No. 08-00810 (USDC S.D. W. Va. July 30, 2009).

This post written by Dan Crisp.

THIRD CIRCUIT AFFIRMS APPROVAL OF SETTLEMENTS IN CONSOLIDATED INSURANCE BROKERAGE ANTITRUST LITIGATION

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In a 94 page opinion, the Third Circuit Court of Appeals has affirmed the approval of the class settlement of certain consolidated cases of alleged insurance brokerage antitrust litigation arising from the New York Attorney General “bid-rigging” investigation in 2004. The district court approved proposed settlements involving the Zurich-affiliate defendants (see prior post dated March 5, 2007) and the Arthur J. Gallagher & Co.-affiliate defendants (see prior posts dated September 25, 2007 and October 15, 2007), and denied the objections to the proposed settlements. The objectors to the Zurich settlement challenged the attorneys fee award to class counsel as based on improper inclusion of work done on other non-settled aspects of related litigation, failure to properly account for work done on behalf of the public by attorneys general involved in the litigation, class counsel’s performance of its gatekeeper function, and the overall amount of the fees, which totaled approximately $29,000,000. The objectors to the Gallagher settlement challenged the amount of the settlement, the requirements of the proposed claim form, the allocation of settlement funds, and whether the requirements of class certification were met. The Third Circuit Court affirmed the district court’s approval of both settlements and the attorneys fee award in the Zurich settlement, and affirmed the denial of each of the objections. In re Insurance Brokerage Antitrust Litigation, Nos. 07-1759 et al (3d Cir. Sept. 8, 2009).

This post written by John Pitblado.

EQUITAS BUSINESS TRANSFER SCHEME SANCTIONED

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A UK court has entered judgment in an application brought by Equitas Ltd. and Equitas Insurance Ltd. for an order under section 111 of the Financial Services and Markets Act 2000 sanctioning a scheme for the transfer to Equitas Insurance Ltd. of the 1992 and Prior Business carried on at Lloyd’s. Section 111 is concerned with business transfer schemes. Per the court, the scheme is intended to bring finality to a process which began with a reconstruction and renewal plan promoted and implemented by Lloyd’s in the second half of 1996. In the Matter of the Names at Lloyd’s for the 1992 and Prior Years of Account, Represented by Equitas Ltd., [2009] EWHC 1595 (Ch. Ct. July 7, 2009).

This post written by John Black.