Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

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

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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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COURT ENTERS FINAL ORDER APPROVING SETTLEMENT BETWEEN AIG AND MEMBERS OF NATIONAL WORKERS COMPENSATION REINSURANCE POOL

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A federal district court entered a final order and judgment approving a class action settlement in an action brought against AIG by certain members of the National Workers Compensation Reinsurance Pool (“NWCRP”). Class plaintiffs alleged that AIG had underreported workers compensation premium for the purpose of reducing its share of the workers compensation market and, consequently, increasing the residual market costs of other Pool members. The settlement provides for a $450 million payment to be allocated among class members according to market share. Liberty Mutual and two of its affiliates, Safeco and Ohio Casualty, objected to the settlement but their objections were overruled. American Int’l Group, Inc. v. ACE INA Holdings, Inc., Case No. 07-02898 (USDC N.D. Ill. Feb. 28, 2012).

This post written by Ben Seessel.

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ARBITRATION ROUND-UP

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Manifest Disregard

Biller v. Toyota Motor Corp., No. 11-55587 (9th Cir. Feb. 3, 2012) (affirming confirmation of award, no manifest disregard of the law)

Giller v. Oracle USA, Inc., Case No. 11-02456 (USDC S.D.N.Y. Feb. 14, 2012) (denying vacatur, no manifest disregard, no evident partiality)

Latour v. Citigroup Global Markets, Inc., Case No. 11-1167 (USDC S.D. Cal. March 16, 2012) (vacatur denied, no manifest disregard)

Collins v. Chicago Investment Group, LLC, Case No. 11-01105 (USDC D. Nev. March 20, 2012) (vacatur denied, arbitrator did not exceed scope by transferring matter from Nevada to Illinois, no manifest disregard)

Exceeded Scope

Muskegon Central Dispatch 911 v. Tiburon, Inc., No. 09-2214 (6th Cir. Feb. 2, 2012) (affirming vacatur where arbitrators exceeded scope of submission)

Tucker v. Sterling Jewelers, Inc., Case No. 09-14102 (USDC E.D. Mich. Feb. 10, 2012) (denying vacatur, arbitrator did not exceed scope of submission, no manifest disregard of the law)

Dubois Logistics, LLC v. United Food and Commercial Workers Union, Local 23, Case No. 11-34 (USDC W.D. Pa. March 5, 2012) (vacatur denied, arbitrator did not exceed scope, denying attorneys fees to prevailing party)

Garlyn, Inc. v. Auto-Owners Ins. Co., No. A11-1520 (Minn Ct. App. March 26, 2012) (affirming in part, reversing in part, affirming lower court’s vacatur where arbitrators did not exceed scope of submission in finding for petitioner on merits, but reversing lower court’s denial of vacatur of statutory pre-award interest, as that portion of award exceeded the scope of the submission)

Buy Rite Auto Glass, Inc. v. Progressive Casualty Ins. Co., No. A11-1492 (Minn. Ct. App. April 9, 2012) (affirming in part, reversing in part, affirming lower court’s denial of vacatur where arbitrators did not exceed scope of submission in finding for petitioner on merits, but reversing lower court’s denial of vacatur of statutory pre-award interest, as that portion of award exceeded the scope of the submission)

New York Convention on Enforcement of Foreign Arbitral Awards

SEI Societa Esplosivi Industriali SpA v. L-3 Fuzing and Ordnance Systems, Inc., Case No. 11-149 (USDC D. Del. Feb. 17, 2012) (confirming Swiss award under New York Convention on the Recognition and Enforcement of Foreign Arbitral awards, precluding review for manifest disregard, and finding award did not exceed scope and did not violate United States public policy)

Greatship (India) Limited v. Marine Logistics Solutions (Marsol) LLC, Case No. 11-420 (USDC S.D.N.Y. Jan. 24, 2012) (dismissing action to confirm foreign award for lack of personal jurisdiction over respondent)

Subway International, B.V. v. Bletas, Case No. 10-01715 (USDC D. Conn. April 3, 2012) (motion to confirm granted, personal jurisdiction satisfied under New York Convention, FAA applied where arbitration foreign parties took place in United States between)

Res Judicata

Druz v. Morgan Stanley, Inc., Case No. 10-6281 (USDC D.N.J. March 8, 2012) (denying vacatur of award previously confirmed by court, under principle of res judicata)

Evident Partiality

Urban Associates, Inc. v. Standex Electronics, Inc., Case No. 04-40059 (USDC E.D. Mich. Feb. 17, 2012) (denying vacatur, no evident partiality, no failure or refusal to hear material evidence, arbitrators did no exceed powers) (magistrate judge’s report and recommendation and district court’s order)

This post written by John Pitblado.

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

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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

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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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