In this Special Focus article, John Pitblado provides an in-depth analysis of Century Indemnity Co. v. Certain Underwriters at Lloyd’s, London. In this decision, the Third Circuit addresses whether an agreement to arbitrate existed, and explores the tension between the presumption favoring arbitration and a party’s right to his/her day in court.
SHORT TERM ASSISTANCE FOR HAITI
Haiti is one of sixteen members of the Carribean Catastrophe Risk Insurance Facility (CCRIC), which is a regional parametric trigger cat risk insurance pool that is intended to provide member governments with short term cash payments to bridge the gap between hurricanes or earthquakes and the receipt of contributions from other governments, organizations and individuals. The facility makes payments to member governments after a 14 day waiting period after a qualifying event. The CCRIF is scheduled to make a payment to the Government of Haiti of $8 million on January 26, which is more than 20 times the premium of $385,000 paid by Haiti for this coverage. The World Bank sponsored a donor conference when the CCRIF was founded in 2007, seeking international support for this facility, but pledges of support at that time from countries around the world, the World Bank and other organizations totaled only $47 million. This level of support may have been due in part to the fact that this was the first regional cat risk insurance pool of its kind, and there was uncertainty as to how effective it would be in accomplishing its goal. The CCRIF claims that it provides coverage to its members at approximately 40% less than commercially available coverage, when such coverage is available. While the amount of the CCRIF’s payment to Haiti is not impressive in light of the magnitude of this disaster, perhaps this event will prompt a re-evaluation of the level of international support for the CCRIF as a means of providing short term liquidity for immediate relief efforts for such disasters.
News reports have indicated that a large portion of the losses in Haiti are not insured, making the impact of this disaster for one of the historically poorest nations in the Western Hemisphere even more catastrophic. For sobering details about the impact of this disaster, including post-earthquake population movements in Haiti, details on the humanitarian response, and details about relief contributions from many sources around the world, go to the Relief Web, which is administered by the United Nations’ Office for the Coordination of Humanitarian Affairs.
This post written by Rollie Goss.
NEW YORK INSURANCE DEPARTMENT SEEKS COMMENTS ON FIRST SUPPLEMENT TO CIRCULAR LETTER NO. 20
In October 2008, the New York Insurance Department issued Circular Letter No. 20 to address the topic of contract certainty in reinsurance contracts (as noted in our November 11, 2008 post). In its first draft supplement to the circular letter, the Department proposes further guidance on the subject in response to inquiries by interested persons. Initially, the definition of “promptly” in the context of delivering policy documentation would be construed to mean “within 30 business days.” Next, the draft supplement suggests the Department will ensure compliance with the Circular Letter on a case-by-case basis, depending on the “unique nature or size of the risk.” It also clarifies that the Department will employ principles of contract certainty in effect in the United Kingdom and Bermuda as standards for what constitutes adequate “policy documentation.” Finally, the 30-day period for achieving contract certainty would be allocated as follows: where a producer intermediates a transaction, the insurer should deliver policy terms and conditions within 18 business days post-inception. The broker then would have 12 business days to deliver the contract to the policyholder. The deadline for submitting public comments on this draft supplement is January 22, 2010.
This post written by Brian Perryman.
DISTRICT COURT SEES BLEMISHES IN BEAUTY PRODUCTS DISTRIBUTORS’ CLAIMS
In one outgrowth of a thicket of litigation between Amway Global and a number of its former beauty product “independent business owners” (“IBOs”), a Michigan federal court confirmed an arbitration award in favor of Amway. Dispute arose when the IBOs allegedly breached agreements with Amway when they went to work for a competitor. The IBOs alleged that the contracts were unenforceable, as were the arbitration provisions. In Michigan litigation, the court compelled the parties to arbitrate, which they did over 16 days in Detroit in 2009. The arbitrator ruled in favor of Amway. Meanwhile, the IBOs had brought putative class action claims in Utah federal court, which claims were consolidated with two similar cases brought by Amway and its competitor, MonaVie products, and were pending (and remain pending) when the arbitration took place. When Amway filed an action in Michigan to confirm the arbitration award, the IBOs filed an identical action in Utah, seeking to vacate the award, and seeking to consolidate that action with the other consolidated Utah cases. The Michigan court refused the IBOs’ motion to stay or transfer to Utah, citing the “first to file” rule, as Amway had filed its action to confirm the award three days earlier than the IBOs filed their similar Utah action, and the IBOs failed to demonstrate a reason to depart from the rule. Amway Global v. Woodward, No. 09-12946 (E.D. Mich., Nov. 20, 2009).
This post written by John Pitblado.
A SHORT SUMMARY OF RECENT ARBITRATION DECISIONS
This post briefly summarizes circuit and district courts’ recent decisions concerning arbitration awards, none of which vacate an award.
Awards Upheld:
National Postal Mail Handlers Union v. American Postal Workers Union, No. 08-5487 (D.C. Cir. Dec. 18, 2009) (agreeing with the district court that the arbitrator probably erred, but noting the deferential standard of review given to labor arbitration decisions, affirmed the decision of the district court, which upheld the award).
Mishra v. Doctors Hosp. of Augusta, LLC, No. 09-12548 (11th Cir. Dec. 3, 2009) (concluding that the district court did not err in compelling arbitration or in affirming the arbitration award).
Peng v. Gabay, Case No. 05-3939 (USDC D. N.J. Dec. 29, 2009) (denying plaintiffs’ motion for reconsideration as the plaintiffs’ arguments did not address any new evidence or controlling decisions and confirming the FINRA panel’s award, which, among other things, dismissed the plaintiffs’ claims for failure to comply with the panel’s discovery orders).
Cardell Fin. Corp. v. Suchodolski Assocs., Inc., Case No. 09-6148 (USDC S.D.N.Y. Dec. 16, 2009) (granting petition to confirm the award and denying cross-petition to vacate the award, finding that the panel neither exceeded authority nor exhibited a manifest disregard of the law and that the respondents were not denied a meaningful opportunity to present their case).
Matthew v. Papua New Guinea, Case No. 09-3851 (USDC S.D.N.Y. Dec. 9, 2009) (denying the petition to vacate the award; the petitioner failed to show the award was made in manifest disregard of the law or the arbitrator exceeded his authority, committed misconduct, or rendered an ambiguous or indefinite award).
Dailey v. Legg Mason Wood Walker, Inc., Case No. 08-1577 (USDC W.D. Pa. Dec. 8, 2009) (granting a motion for summary judgment to confirm a FINRA panel’s award; the plaintiff failed to establish that the award was completely irrational or that the arbitrator demonstrated evident partiality or acted in manifest disregard of the law).
MPJ, My Pers. Jet, A.V.V. v. Aero Sky, L.L.C., Case No. 09-693 (USDC W.D. Tex. Nov. 30, 2009) (accepting the conclusion from the Magistrate Judge’s Report and Recommendation that the plaintiffs’ motion to confirm the award should be granted; no procurement of award by evident partiality, arbitrator exceeding authority or misconduct, or corruption, fraud or undue means).
Francis v. Landstar Sys. Holdings, Inc., Case No. 09-238 (USDC M.D. Fla. Nov. 25, 2009) (denying the motion to vacate award in employment dispute; the arbitrator did not exceed her powers, and no basis existed to conclude that the award was made in manifest disregard for the law).
Damages:
Mason Tenders Dist. Council v. Circle Interior Demolition, Inc., Case No. 07-11227 (USDC S.D.N.Y. Dec. 22, 2009) (adopting the Magistrate Judge’s Report and Recommendation in its entirety, finding that the amount of damages is clear from the face of the award and that the plaintiff is entitled to interest).
Motion to Alter or Amend Judgment:
Waddell v. Holiday Isle, LLC, Case No. 09-0040 (USDC S.D. Ala. Dec. 10, 2009) (denying motion to alter or amend judgment that challenged, among other things, the court’s denials of the motion to vacate and supplemental motion to vacate).
Finality of Award:
Mitsubishi Heavy Indus., Ltd., v. Stone & Webster, Inc., Case No. 08-00509 (USDC S.D.N.Y. Sept. 29, 2009) (dismissing both the petition to vacate and the cross-petition to confirm, ruling that the award is not final and ready for review and refusing to address the parties’ arguments concerning whether part of the award should be vacated or confirmed).
This post written by Dan Crisp.