Week's Best Posts

Last week we reported on a decision by one California appellate court holding that U.S. Supreme Court precedent did not overrule the California Supreme Court’s Gentry decision to the extent the latter voids class arbitration waivers that are determined by the court to prevent an employee from vindicating certain statutory rights. Another decision of a different panel of the same California appellate district highlights the broader approach currently taken by California courts on this issue. In an appeal of an order refusing to enforce a class arbitration waiver based on California statutory law, the appellate court reversed, finding that Concepcion made clear that the FAA preempts state law prohibiting a consumer from waiving class action rights. The court noted the current divide with California courts regarding the viability of Gentry, but concluded that it “need not comment on the continuing viability of Gentry because the instant case does not deal with employment issues.” The court did conclude, however, that Concepcion rejects the argument that class action waivers in consumer contracts can be invalidated in order to vindicate statutory rights even if the statutory right is desirable for other reasons” — a position that is apparently not unanimously held in California. Sherf v. Rusnak/Westlake, Case No. B237275 (Cal. Ct. App. October 16, 2012).

This post written by Michael Wolgin.

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The Second Circuit has dismissed an appeal arising from a reinsurance dispute between Northwestern National Insurance Company and Insco, Ltd. As we last reported in a December 29, 2011 post, those entities were parties to a reinsurance agreement and submitted a dispute to arbitration, with each party appointing its own arbitrator, and those two in turn selecting a neutral third to act as umpire. Insco’s appointed arbitrator shared private email communications between panel members with Insco’s counsel, believing that they showed that Northwestern’s selected arbitrator could not serve as an impartial arbitrator. Insco reviewed the emails and thereafter demanded that all the arbitrators resign immediately. Northwestern’s arbitrator resigned, but Insco’s and the neutral umpire did not. Northwestern then became suspicious that Insco had received the private panel member emails and demanded copies, but Insco refused. Northwestern named a new arbitrator, and the panel took up the issue, compelling production, determining that Insco’s counsel had acted inappropriately, and allowing the parties time to take the matter up in court.

Northwestern brought an action in federal court to disqualify Insco’s counsel. The trial court granted the motion to disqualify. Insco appealed, challenging the trial court’s jurisdiction and statutory authority to do so. On November 6, 2012, however, Insco moved to dismiss the appeal because the parties had settled the underlying arbitration. That motion was granted on November 21, 2012. Northwestern National Insurance Co. v. Insco, Ltd., No. 11-4626 (2d Cir. Nov. 21, 2012).

This post written by Brian Perryman.

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Amerisure successfully arbitrated a dispute with Global Re. Under the parties’ reinsurance agreement, arbitration was to be governed by Illinois law, though Amerisure is a Michigan-based company and Global Re is based in New York. Amerisure’s award was confirmed by an Illinois circuit court but the portion of it awarding attorney’s fees was vacated. Subsequently, Amerisure filed a one-count complaint in the circuit court seeking attorney’s fees pursuant to Illinois statute. The court dismissed Amerisure’s complaint, determining that New York law applied to the lawsuit and that New York law did not permit an award of attorney’s fees in this instance. While the parties agreed that Illinois law should apply to arbitration matters, there was no such provision governing litigation. Absent a governing choice of law provision, New York law applied because New York had the most significant contacts with the parties’ dispute. Amerisure Mutual Insurance Co. v. Global Reinsurance Corp. of America, Case No. 10 L 012665 (Ill. Cir. Ct. Nov. 7, 2012).

This post written by Ben Seessel.

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