In a decision granting a workers’ compensation insurer’s petition to appoint an umpire and proceed with arbitration, a court recently analyzed and rejected a number of defenses to arbitration made by the two affiliated company respondents. The court considered whether one of the companies, a non-signatory to the underlying agreement, could be compelled to arbitrate. Applying principles of actual and apparent agency, the court found that the signatory had authority to obtain insurance for the non-signatory affiliate and was therefore subject to the agreement, based on the contract language, and other close connections between the affiliated companies. Next, the court rejected the respondents’ claim that the court lacked jurisdiction based on a forum selection clause in the agreement. The court also refused to stay the action pending a subsequently filed overlapping action in California and refused to find that the agreement was unenforceable because it had not first been submitted to the California Department of Insurance. The court found that the California DOI defense constituted a challenge to the entire insurance agreement, rather than specifically the arbitration provision, and thus the court could direct that arbitrability be resolved by the arbitration panel under the FAA. On this last point, the court found that the California requirements did not “reverse-preempt” FAA arbitration under the McCarran-Ferguson Act, because the court found no conflict between the California requirements and the agreement to arbitrate. National Union Fire Ins. Co. of Pittsburgh, PA v. Personnel Plus, Inc., Case No. 1:12-cv-04647 (USDC S.D.N.Y. July 23, 2013).
This post written by Michael Wolgin.
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