Week's Best Posts

APPELLATE COURT REMANDS TO COMPEL ARBITRATION UNDER “DELEGATION PROVISION”

May 14, 2012 by Carlton Fields

Plaintiff sued her bank in Florida federal court for the manner in which she was charged overdraft fees. The bank moved to compel arbitration, but the district court found the agreement to arbitrate unconscionable and unenforceable. The bank appealed. After the Supreme Court decided AT&T Mobility LLC v. Concepcion, __ U.S. __, 131 S.Ct. 1740 (2011), the Eleventh Circuit reversed and remanded for consideration in light thereof. The district court again refused to compel arbitration, avoiding an unconscionability finding, but nevertheless finding that the dispute did not come within the scope of the arbitration agreement. The bank again appealed and the Eleventh Circuit again reversed, finding the threshold issue of whether the dispute is arbitrable to be explicitly reserved for the arbitrator under the so-called “delegation provision” in the parties’ contract, which states that “[a]ny issue regarding whether a particular dispute or controversy is . . . subject to arbitration will be decided by the arbitrator.” In re Checking Account Overdraft Litigation, No. 11-14282 (11th Cir. March 21, 2012).

This post written by John Pitblado.

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COURT COMPELS PRODUCTION OF UNDERWRITING MANUALS; FINDS REINSURANCE DOCUMENTS GENERALLY IRRELEVANT

May 8, 2012 by Carlton Fields

A dispute arose between the city of Warren, Michigan and several insurance companies regarding their duties to defend and indemnify with respect to a state court class action suit against the city. The city sought to compel discovery of underwriting manuals, documents reflecting the company’s interpretation of key policy terms, and documents reflecting discussions with reinsurers and the setting of reserves from United States Fire Insurance Company as well as a series of other insurers who had provided coverage at various points between the 1960s and 2001. The district court granted the city’s motion to compel as to the claims manuals, underwriting manuals, and related documents, and denied all other requests. Specifically, the court found that (1) the other claims-related material was covered by attorney-client privilege or the work-product doctrine; (2) materials evidencing interpretation of policy terms were not relevant; and (3) while reinsurance policies themselves are discoverable, all other documents relating to reinsurance are irrelevant and not discoverable. United States Fire Insurance Co. v. The City of Warren, No. 10-13128 (E.D. Mich. Apr. 26, 2012).

This post written by John Black.

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COURT OVERTURNS DENIAL OF REQUEST FOR REINSURANCE-RELATED RECORDS FOR JURISDICTIONAL REASONS

May 7, 2012 by Carlton Fields

The Commonwealth Court of Pennsylvania issued an opinion vacating Pennsylvania’s Office of Open Records’ denial of a request for documents under the state’s Right-to-Know Law. Plaintiff sought records related to Reinsurance Offset Guidelines from the Pennsylvania Department of Insurance and Reliance Insurance Company, which has been in liquidation since 2001. The OOR denied the request on the basis that the documents were “internal, pre-decisional deliberations.” The court vacated the denial because the OOR did not have jurisdiction to hear this matter as Reliance’s Statutory Liquidator. The court further explained that the Pennsylvania Insurance Department, when aiding the Statutory Liquidator, and Reliance are acting pursuant to a judicial order and under the supervision of the Commonwealth Court. Because the court had appointed the state Insurance Commissioner as Statutory Liquidator, it retained general supervision over the Statutory Liquidator and the insolvent estate. Thus, all complaints regarding how the insolvency is being administered must be directed to the court, and any records can only be obtained through court order. Greenberger v. Pennsylvania Ins. Dept., No. 931 C.D. 2011 (Pa. Commw. Ct. Mar. 7, 2012).

This post written by John Black.

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SECOND CIRCUIT AFFIRMS ORDER DENYING MOTION TO DISQUALIFY REINSURER’S ATTORNEYS

May 1, 2012 by Carlton Fields

In a matter involving an arbitration with a reinsurance company, the Second Circuit Court of Appeals affirmed a district court’s order denying Utica Mutual Insurance Company’s motion to disqualify R & Q Reinsurance Company’s attorneys, the law firm of Chadbourne & Park, LLP. Utica had unsuccessfully argued to the district court that Chadbourne should be disqualified because a part-time associate had been exposed to Utica’s confidential information. The Second Circuit further affirmed the district court’s order unsealing certain confidential non-privileged information underlying Utica’s motion to disqualify, and the district court’s decision requiring R & Q to withdraw certain discovery requests that Utica had identified as suggesting an inference of Chadbourne’s improper knowledge of Utica’s confidential information. Utica Mut. Ins. Co. v. INA Reinsurance Co., No. 10-4164 (2d. Cir. Mar. 15, 2012) (See the district court disqualification and discovery orders).

This post written by Ben Seessel.

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COURT OF APPEALS RE-AFFIRMS ORDER DENYING MOTION TO VACATE ARBITRATION AWARD, DISTINGUISHES STOLT-NIELSEN

April 30, 2012 by Carlton Fields

Dr. Ivan Sutter filed a putative class action complaint against Oxford Health Plans in state court, alleging that Oxford had improperly denied, underpaid, and delayed reimbursement of claims. The court granted Oxford’s motion to compel arbitration and ordered all procedural issues to be resolved by the arbitrator, including those pertaining to class certification. Prior to the Supreme Court’s decision in Stolt-Nielsen, the arbitrator ruled that the arbitration clause in Oxford’s primary care physician agreement authorized class arbitrations. The clause at issue provided that: “No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration.” The district court denied Oxford’s motion to vacate and the Third Circuit affirmed.

Oxford sought reconsideration from the arbitrator after the Supreme Court held in Stolt-Nielsen that “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” The arbitrator reaffirmed his decision, holding that the arbitration provision indicated that the parties had agreed to resolve disputes through class arbitrations because the clause’s first phrase was broad enough to encompass class actions, and the second phrase made clear that all disputes, including class actions, were to be arbitrated. The Third Circuit held that the arbitrator’s interpretation of the arbitration provision was not totally irrational, even after Stolt-Nielsen, and thus affirmed the district court’s denial of Oxford’s second motion to vacate. The Third Circuit held that Stolt-Nielsen was distinguishable because the parties in that case had stipulated that the arbitration provision was “silent” as to class arbitrations, i.e., that there was no agreement on whether disputes could be resolved by class arbitration. The court further stated that Stolt-Nielsen “did not establish a bright line rule that class arbitration is allowed only under an arbitration agreement that incants ‘class arbitration.’” Sutter v. Oxford Health Plans, LLC, No. 11-1773 (3d. Cir. Apr. 3, 2012).

This post written by Ben Seessel.

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