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HARRISMARTIN REINSURANCE SUMMIT: FRESH PERSPECTIVES ON THE REINSURANCE FRONT

August 22nd, 2011 Arbitration Practice and Procedure, Events, Reinsurance Arbitration, Reinsurance Claims, Reinsurance Mediation No Comments »

The frequency of reinsurance disputes, like most things in the insurance industry, is cyclical in nature, and over the last three or four years or so, the number of new disputes each year has declined fairly significantly compared to 1990 through 2005 levels. I don’t have statistics to back that statement up, but it is informed by personal experience and numerous discussions with industry participants and their service providers.

Reduced dispute frequency is good news for the industry, but it doesn’t mean that industry executives should assume that reinsurance disputes are a thing of the past, ignore important developments that bear on their resolution, or become less proactive in their efforts to prevent them. Keeping apprised of recent, pertinent reinsurance- and dispute-resolution-related legal, regulatory and economic developments is particularly important today, because there have been – and will likely continue to be – many that may bear on the nature and frequency of future reinsurance disputes.

To that end, a number of experienced industry executives and in-house counsel, and a small group of outside counsel, have joined forces with HarrisMartin Publishing to put together a two-day conference designed to survey important, recent developments concerning reinsurance and reinsurance dispute resolution. The conference — entitled “Reinsurance Summit: Fresh Perspectives on the Reinsurance Front” — is scheduled to take place at the Lowes Philadelphia Hotel on September 22-23, 2011.

It promises to be an excellent opportunity to keep abreast of what’s happening in the world of reinsurance and reinsurance-dispute-resolution, network with friends and colleagues, and earn CLE credits if you need them. Admission is $895.00, but HarrisMartin is offering a $100.00 discount to those who register by September 2, 2011. Registration, CLE and hotel information is here (HarrisMartin has negotiated a reduced, $199.00 per night hotel rate for conference attendees).

Here’s the program as described by HarrisMartin:

Day 1, Thursday, September 22, 2011

8:15 a.m. – 8:30 a.m.

WELCOME BY CO-CHAIRS

Edward K. Lenci, Hinshaw & Culbertson LLP, NewYork

Leslie J. Davis, Vice President & Assistant General Counsel, General Re, and Senior Vice President & General Counsel, US Aviation Underwriters, Stamford, CT

Wendy R. Taylor, Vice President and Associate Counsel, Chubb & Son, a division of Federal Insurance Company, Warren, NJ

8:30 a.m. – 9:45 a.m.

STATUTORY AND REGULATORY UPDATE: DODD-FRANK, THE NON-ADMITTED AND REINSURANCE REFORM ACT, AND THE FEDERAL INSURANCE OFFICE

• Title V of the Dodd Frank Act: A discussion of the major interests lobbying for this legislation and against it, how and when the reinsurance provisions will be implemented and enforced, and the likely practical impact on reinsurance transactions.

• The Non-admitted and Reinsurance Reform Act: A discussion of issues relating to preemption, the future role of the NAIC, the changes to the significance of an insurer’s state of domicile, and how states and ceding companies may respond.

• The Federal Insurance Office: A discussion of this new office, “covered agreements,” the influence of Solvency II and international governing bodies, and the impact on state law, including a discussion of federalism and constitutionality.

Moderator:

A. Lindsay Doering, Law Office of A. Lindsay Doering, Philadelphia

Panel:

Patrick H. Cantilo, Cantilo & Bennett LLP, Austin, TX

Kimberly M. Welsh, Vice President and Assistant General Counsel, Reinsurance Association of America, Washington, D.C.

Daniel Schelp, Managing Attorney, National Association of Insurance Commissioners

9:45 a.m. – 10:45 a.m.

THE JUDICIAL SCRUTINY OF ARBITRAL AWARDS

Over the last few years, courts, including the U.S. Supreme Court, have decided a number of controversial cases concerning the power of courts to vacate arbitral awards on the grounds of excess-of-powers, evident partiality and procedural misconduct. Several of those cases involved arbitrations concerning reinsurance disputes. This panel will discuss recent developments pertinent to judicial review of arbitral awards, including outcome-based review, arbitral authority to award attorney fees and costs, adequacy of arbitrator disclosures, arbitrator qualifications, and arbitral “due process.” Among the controversial cases the panel will discuss are:

• Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp. (U.S. Supreme Court)

• AT&T Mobility v. Concepcion (U.S. Supreme Court)

• Reliastar Life Ins. Co. v. EMC Nat’l Life Co. (2nd Circuit)

• PMA Capital Ins. Co. v. Platinum Underwriters Bermuda, Ltd. (3rd Circuit)

• Dealer Computer Services, Inc. v. Dub Herring Ford, et al. (6th Circuit)

• Trustmark Ins. Co. v. John Hancock Life Ins. Co. (7th Circuit)

• Scandinavian Re Co. Ltd. v. St. Paul Fire & Marine Ins. Co. (S.D.N.Y.) (appeal pending)

• Amerisure Mut. Ins. Co., et al. v. GLOBAL Reins. Corp. of Am. (Ill. App. 1st Dist.)

Panel:

Philip J. Loree Jr., Loree & Loree, Manhasset, NY

John M. Nonna, Dewey & LeBoeuf LLP, NewYork

Richard Faulkner, Blume, Faulkner, Skeen & Northam, PLLC, Richardson, TX

10:45 a.m. – 11:00 a.m.

REFRESHMENT BREAK

11:00 a.m. – 12:00 p.m.

REINSURANCE CONTRACT WORDING: BE CAREFUL WHAT YOU ASK FOR!

Reinsurance contract wording is changing, due in part to the increasingly global nature of reinsurance and the competing regulatory requirements of different jurisdictions around the world. As a result, seemingly straightforward requests may have unintended consequences. Some of the complex clauses and issues that this panel will discuss include:

• Governing Law, Jurisdiction and Venue: Enforceability of choice of law; the legacy of Wasa v. Lexington; the impact on arbitrators’ power; application of procedural law; and the possible collision of governing law with the negotiated and paid for coverage for punitive damages, ECO/XPL.

• Economic and Trade Sanctions: The recent rise in demand for sanction exclusionary language and the ramifications of wordings currently circulating, including a comparison of the traditional territorial exclusion, the US/OFAC exclusionary wording and the London Market exclusionary wording; the counter forces of anti-blocking legislation; and highlights of trade sanction programs, including discussion of particular countries and jurisdictions).

• Claims Cooperation: An examination of different clauses, why they are requested, how they help or hinder the parties, and the differences between the U.S. and U.K/Europe.

• Commutations and Sunset: Loss notice provisions; Mandatory or permissive commutations; formalized contractual commutation methodologies; appraisal provisions; actuarial arbitrations.

Panel:

Wendy R. Taylor, Vice President and Associate Counsel, Chubb & Son, a division of Federal Insurance Company, Warren, NJ

Myra E. Lobel, Managing Director, Guy Carpenter & Company LLC, NewYork

David A. Silva, Mound CottonWollan & Greengrass, New York

David N. Kragseth, Senior Contract Wording Specialist, Munich Reinsurance America, Inc., Princeton, NJ

12:00 p.m. – 1:30 p.m.

LUNCH

1:30 p.m. – 2:30 p.m.

WHAT, EXACTLY, IS BAD FAITH IN REINSURANCE?

The duty of utmost good faith is a two-way street. Two in-house attorneys will explore the duties and obligations of cedents and reinsurers with respect to underwriting, presentation and acceptance of the risk, renewals, claim handling, claim presentation, and arbitration or litigation.

Panel:

Leslie J. Davis, Vice President & Assistant General Counsel, General Re, and Senior Vice President & General Counsel, US Aviation Underwriters, Stamford, CT

Susan Grondine-Dauwer, General Counsel,R&Q USA, Boston

Jeanne M. Kohler, Edwards Angell Palmer & Dodge LLP, New York

2:30 p.m. – 2:45 p.m.

REFRESHMENT BREAK

2:45 p.m. – 3:45 p.m.

DISPUTE RESOLUTION ALTERNATIVES: LITIGATION, MEDIATION, ARBITRATION

In-house counsel will share insights and address the “pros and cons” of the litigation, arbitration and mediation of reinsurance disputes as well as alternative arbitral rules and fora, such as offered by AIRROC. Moderated by Bina T. Dagar, this panel will deliver a balanced view of cedent and assumed perspectives to ADR. The discussions will include:

• Options available to resolve reinsurance disputes

• Benfits and challenges posed by each alternative

• Ad Hoc vs. institutional arbitration/mediation

• Organizations as clearinghouses – ReMedi, AAA, AIRROC, ARIAS, CPR and JAMS

Attendees will be asked to complete a Zoomerang survey ahead of the Conference to be incorporated into the presentation.

Moderator:

Bina T. Dagar, Ameya Consulting, LLC, Livingston,NJ

Panel: Steven Agosta, General Counsel, XLRe America, Stamford, CT

Scott P. Birrell, Vice President and Associate General Counsel, Travelers Insurance Co., Hartford, CT

Anthony Vidovich, Vice President & Assistant General Counsel, Director of Reinsurance Law, The Hartford, Hartford, CT

Michael Zeller, Vice President, Reinsurance Services Division, AIG, Inc., New York

3:45 p.m. – 5:30 p.m.

THE VERY MODEL OF A REINSURANCE ARBITRATOR: INDUSTRY EXECUTIVES SPEAK OUT

The in-house counsel on our faculty will serve on this panel, to be moderated by Fritz K. Huszagh of Hinshaw & Culbertson in Chicago. Among the issues the panelists will address, from the insurers’ and reinsurers’ perspectives, in this potentially lively session are:

• What qualifications should an ideal arbitrator and umpire have?

• What disclosures should they make?

• Is there any value to “certification” of arbitrators and umpires?

• If so, what factors should be considered in the certification process?

• Should arbitrators accept conflicting assignments?

• What is a fair fee for arbitrators and umpires?

• Which expenses are proper and which are not?

• Should arbitrators and umpires be paid non-refundable retainers?

• Should they be paid hearing cancellation fees?

Moderator:

Fritz K. Huszagh, Hinshaw & Culbertson, Chicago

Panel:

Steven Agosta, General Counsel, XL Re America, Stamford, CT

Scott P. Birrell, Vice President and Associate General Counsel, Travelers Insurance Co., Hartford, CT

Ali E. Rifai, General Counsel, Zurich Insurance CMB Division, and former Interim General Counsel, Zurich Insurance Middle East Region

Susan Grondine-Dauwer, General Counsel, R&Q USA, Boston

Leslie J. Davis, Vice President & Assistant General Counsel, General Re, and Senior Vice President & General Counsel, US Aviation Underwriters, Stamford, CT

Thomas Freudenstein, COO, GLOBAL Reinsurance Corporation of America and Director and Attorney at GLOBALE Rückversicherungs-AG, New York and Cologne, Germany

Myra E. Lobel, Managing Director, Guy Carpenter & Company LLC, NewYork

Anthony Vidovich, Vice President & Assistant General Counsel, Director of Reinsurance Law, The Hartford, Hartford, CT

Michael Zeller, Vice President, Reinsurance Services Division, AIG, Inc., NewYork

5:30 p.m. – 7:00 p.m.

NETWORKING COCKTAIL RECEPTION

Day 2, Friday, September 23, 2011

7:30 a.m. – 8:30 a.m.

CONTINENTAL BREAKFAST

8:30 a.m. – 9:30 a.m.

ETHICAL CONSIDERATIONS FOR LAWYERS SERVING AS UMPIRES AND ARBITRATORS

An interactive talk on how state rules concerning the ethical obligations of lawyers impact lawyers who are serving as umpires and arbitrators.

Daniel E. Tranen, Hinshaw & Culbertson LLP,Boston

9:30 a.m. – 12:30 p.m.

DEVELOPMENTS IN REINSURANCE AROUND THE WORLD

In an ever-increasingly globalized economy, businesspersons and lawyers need to know what’s happening around the world. Each panelist will cover a different region of the world, providing crucial information about current market trends, governmental regulations, resolution of disputes and the like. (A Refreshment break will be held during this panel from 10:30 – 10:45 a.m.)

Panel:

UK: Peter W. Ambler, Managing Director, Towers Watson (Re)Insurance Brokers Ltd., London

Europe: Thomas Freudenstein, COO, GLOBAL Reinsurance Corp. of America and Director and Attorney at GLOBALE Rückversicherungs-AG, New York & Cologne, Germany

Latin America: M. Machua Millett, Senior Vice President, Senior Advisory Specialist and Global GPL Team Leader, Marsh USA Inc., Boston

Middle East: Ali E. Rifai, General Counsel, Zurich Insurance CMB Division, and former Interim General Counsel, Zurich Insurance Middle East Region

Canada: Stuart S. Carruthers, Stikeman Elliott, Toronto

I hope to see you there!

New York Law Journal Article: “Arbitrator Evident Partiality Standard Under Scrutiny in ‘Scandinavian Re’”

May 20th, 2011 Appellate Practice, Arbitration Practice and Procedure, Ethics, Evident Partiality, Grounds for Vacatur, Practice and Procedure, Reinsurance Arbitration, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Seventh Circuit, United States District Court for the Southern District of New York, United States Supreme Court No Comments »

On May 18, 2011 the New York Law Journal published in its Outside Counsel section an article I wrote, which argues that the United States Court of Appeals for the Second Circuit should reverse the district court’s judgment in Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co., No. 09 Civ. 9531(SAS), 2010 WL 653481, at *8 (S.D.N.Y. Feb. 23, 2010), appeal pending No. 10-910-cv (2d Cir.).

The article is reprinted below with permission, and I would like to thank Elaine Song, a member of the New York Law Journal’s editorial staff, for her assistance and work in getting this published in New York’s leading legal trade publication. Continue Reading »

SCOTUS Decides AT&T Mobility LLC v. Concepcion!

April 27th, 2011 Arbitrability, Arbitration Agreements, Arbitration Practice and Procedure, Class Action Arbitration, Class Action Waivers, Practice and Procedure, Unconscionability, United States Court of Appeals for the Ninth Circuit, United States Supreme Court No Comments »

This morning the United States Supreme Court handed down its long-awaited decision in AT&T Mobility LLC v. Concepcion, No. 09-893, slip op. (April 27, 2011). The Court held that the Federal Arbitration Act preempts California’s Discover Bank rule, which deems unconscionable class waivers in adhesive contracts under certain circumstances, because it “‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. . . .’” Slip op. at 18 (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). (The majority, concurring and dissenting opinions are here.)

Associate Justice Antonin Scalia wrote the majority opinion, joined by Chief Justice John G. Roberts and Associate Justices Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito, Jr. Justice Thomas wrote a concurring opinion and Associate Justice Stephen G. Breyer dissented, joined by Associate Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.

Stay tuned for more….

The Seventh Circuit Issues a Landmark Reinsurance Arbitration Opinion in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.): Part III.A

March 9th, 2011 Arbitration Practice and Procedure, Awards, Ethics, Evident Partiality, Practice and Procedure, Reinsurance Arbitration, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Seventh Circuit, United States District Court for the Southern District of New York No Comments »

Should the Second Circuit Reverse the District Court’s Judgment in Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co.?

I. Introduction

Parts I and II of this three-part post discussed Chief Judge Frank H. Easterbrook’s decision in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.), No. 09-3682, 2011 WL 285156 (7^th Cir. Jan. 31, 2011), and said that Trustmark, in conjunction with Sphere Drake Ins. Co. v. All American Life Ins. Co., 307 F.3d 617, 622 (7th Cir. 2002) (Easterbrook, J.), demonstrates that the district court should not have vacated on evident partiality grounds the arbitration award in Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co, No. 09 Civ. 9531(SAS), 2010 WL 653481 (S.D.N.Y. Feb. 23, 2010). This Part III.A explains some of the reasons why that is so. Continue Reading »

The Seventh Circuit Issues a Landmark Reinsurance Arbitration Opinion in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.): Part II

February 24th, 2011 Arbitrability, Arbitration Agreements, Arbitration Practice and Procedure, Authority of Arbitrators, Evident Partiality, Practice and Procedure, United States Court of Appeals for the Fifth Circuit, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Seventh Circuit 1 Comment »

I. Introduction

Part I (here) briefly discussed Chief Judge Frank H. Easterbrook’s decision in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.), No. 09-3682, slip op. (7^th Cir. Jan. 31, 2011), and its implications on the pending Second and Fifth Circuit appeals in Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co, No. 09 Civ. 9531(SAS), 2010 WL 653481 (S.D.N.Y. Feb. 23, 2010), and Dealer Computer Svcs., Inc. v. Michael Motor Co., No. H-10-2132, slip op. (S.D. Tex. December 29, 2010). This Part II examines in some detail Trustmark’s background and rationale, and Part III will focus on Trustmark’s implications on the Scandinavian Re and Dealer Computer appeals.

II. Trustmark Background

The following facts were gleaned from both the district court and Seventh Circuit opinions (the district court opinion is reported at 680 F. Supp. 2d 944 and can be found here): Continue Reading »

The Seventh Circuit Issues a Landmark Reinsurance Arbitration Opinion in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.)

February 23rd, 2011 Arbitration Practice and Procedure, Authority of Arbitrators, Evident Partiality, Grounds for Vacatur, Practice and Procedure, United States Court of Appeals for the Fifth Circuit, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Seventh Circuit 3 Comments »

Chief Judge Frank H. Easterbrook of the United States Court of Appeals for the Seventh Circuit is not only a brilliant judge, writer and law professor, but a master of (among many other things) arbitration law. He understands better than most judges how commercial arbitration is supposed to work, what the Federal Arbitration Act is supposed to achieve, and how to implement the Act to ensure the parties get not only what they bargained for, but also the potential to realize the benefits that private, voluntary dispute resolution can offer. His arbitration-law opinions are clearly written, imbued with common and commercial sense, and seem purposely designed to make sometimes elusive concepts readily understandable to courts, arbitrators, parties and counsel. They tend to ensure that the objective, reasonable expectations of the parties are enforced, not frustrated. Continue Reading »

Second Circuit Arbitration Roundup 2011: January 1, 2011 – January 14, 2011

January 15th, 2011 Arbitrability, Arbitration Agreements, Arbitration Practice and Procedure, Existence of Arbitration Agreement, United States Court of Appeals for the Second Circuit, United States District Court for the Southern District of New York No Comments »

In the first two weeks of the New Year the United States Court of Appeals for the Second Circuit decided two Federal Arbitration Act cases: UBS Securities, LLC v. Voegeli, No. 10-0690-cv, slip op. (2d Cir. Jan. 4, 2011) (summary order), and Dedon GmbH v. Janus et Cie, No. 10-4331-cv, slip op. (2d Cir. Jan. 6, 2011) (summary order). Both cases are summary orders, which under Second Circuit Local Rule 32.1.1, ”do not have precedential effect.” Second Circuit Local Rule 32.1.1(a).

Each involved a dispute about the existence of an arbitration agreement. In UBS Securities United States District Judge Denise L. Cote of the United States District Court for the Southern District of New York entered a declaratory judgment that certain Swiss investors could not compel UBS to arbitrate their securities fraud claims, and permanently enjoined the Swiss investors from pursuing their claims in arbitration. Affirming the district court, the Second Circuit held that UBS satisfied the three requisites of permanent injunctive relief: 1) success on the merits; 2) lack of an adequate remedy at law; and 3) irreparable harm.

As respects success on the merits, the Court held that UBS was not obligated to arbitrate with the Swiss investors, and therefore had succeeded on the merits. Financial Industry Regulatory Authority (“FINRA”) Code Rule 12200 provides that members can be compelled to arbitrate only 1) pursuant to a written agreement; or 2) where a customer requests arbitration. FINRA R. 12200. There was no written agreement to arbitrate between UBS and any of the Swiss investors and the Swiss investors were not customers of UBS. See UBS Securities, slip op. at 3.

As respects the lack of an adequate remedy at law and irreparable harm, the Court explained that under Merrill Lynch Inv. v. Optibase, Ltd., 337 F.3d 125, 129 (2d Cir. 2003), “[b]eing forced to arbitrate a claim one did not agree to arbitrate constitutes an irreparable harm for which there is no remedy at law.” Slip op. at 3. Because UBS was not legally obligated to arbitrate, and because “the lack of an injunction would result in UBS effectively being required to do so, UBS satisfie[d] the ‘irreparable harm’ and ‘lack of an adequate remedy at law’ requirements for an injunction.” Slip op. at 3.

Dedon concerned the familiar rule that disputes about the existence of a contract containing an arbitration agreement must be decided by the court (absent a clear and unmistakable post-dispute submission of that issue to arbitration). Janus sought to compel arbitration before the International Chamber of Commerce (“ICC”) of an exclusive-distribution-agreement dispute, contending 1) the parties had agreed to arbitrate “as evidenced by a draft exclusive distribution agreement or the standard terms and conditions that accompanied each purchase;” and 2) Dedon had “waived its right to arbitrate through its conduct before the ICC” in London. Slip op. at 2. United States District Judge Colleen McMahon of the United States District Court for the Southern District of New York denied the motion to compel and declined to stay the proceedings pending an ICC determination of the contract formation issue, holding that the dispute concerned the existence of an arbitration agreement and that Dedon had not unreservedly submitted the contract formation issue to ICC arbitration.

The Second Circuit affirmed. It said the United States Supreme Court in Granite Rock Co. v. Int’l Bhd. of Teamsters, ___ U.S. ___, 130 S. Ct. 2847, 2857-58 (2010), had “reconfirm[ed]” the Second Circuit’s “well-established precedent that where a party challenges the very existence of a contract containing an arbitration clause, a court cannot compel arbitration without first resolving the issue of the contract’s existence.” Slip op. at 3 (citing Interocean Shipping Co. v. National Shipping & Trading Corp., 462 F.2d 673, 676 (2d Cir. 1972); Sphere Drake Ins. Ltd v. Clarendon Nat’l Ins. Co., 263 F.3d 26, 30 (2d Cir. 2001); Denny v. BDO Seidman LLP, 412 F.3d 58, 68 (2d Cir. 2005); Opals on Ice Lingerie v. Body Lines Inc., 320 F.3d 362, 369 (2d Cir. 2003); Sprecht v. Netscape Commc’ns Corp., 306 F.3d 17, 26 (2d Cir. 2002)). Because Janus sought to compel arbitration based on a draft agreement containing an arbitration clause, the district court had to decide whether the parties had agreed to arbitrate.

The Court held that Dedon had not waived its right to court determination of the contract formation issue. The Court said that “Dedon’s submissions to the ICC were replete with statements that Dedon disputed the ICC’s jurisdiction; such repeated objections to ICC jurisdiction prevent a finding of waiver. . . .” Slip op. at 5 (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 946 (1995); Opals on Ice, 320 F.3d at 368).

The Court also rejected Janus’ argument that an agreement to arbitrate “may be found in the terms and conditions that accompanied each purchase order between Dedon and Janus.” Slip op. at 5:

On their face, the terms and conditions in those purchase orders govern the particular exchange of goods occurring with that purchase order — “[a]ll contractual and extra-contractual disputes arising out of or in connection with contracts to which these International Terms and Conditions apply, shall be finally resolved by arbitration” (emphasis added) — and do not purport to create or refer to any exclusive distribution relationship between the parties, which is the sole focus of the present suit.

Janus also argues that the exclusive distribution agreement should be encompassed within the meaning of ‘pre-contractual and collateral obligations’ to the purchase orders. Janus would thus have this court find that “any dispute related to any obligation arising prior to or outside of the contract formed by each shipment of goods” is governed by the purchase orders’ terms and conditions. (emphasis in original) We decline to adopt Janus’s broad reading of that contractual language, as it ignores the plain language of the purchase order, and we agree with the district court that the terms and conditions do not provide an alternative basis for compelling arbitration.

Slip op. at 5-6 (emphasis in original).

Dedon — the party who prevailed in the district court — argued that the district court should have denied the motion to compel with prejudice. Dedon relied on Kahn Lucas Lancaster, Inc. v. Lark Int’l Ltd., 186 F.3d 210, 218 (2d Cir. 1999), partially abrogated on other grounds by Sarhank Group v. Oracle Corp., 404 F.3d 657, 660 n.2 (2d Cir. 2005), which held that under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, arbitration agreements, to be enforceable, “must be signed by the parties or contained within an exchange of letters or telegrams.” 186 F.3d at 218) (quoting Article II of the Convention). But Dedon did not raise that argument before the district court, and so the Court said “the parties will have the opportunity to argue this issue at the trial on the existence of a contact.” Slip op. at 6-7. The Court also noted that the district court may “consider what effect, if any, [the Court's] holding in Kahn Lucas has on any renewed motion to compel.” Slip op. at 7.

[EDITOR'S NOTE: (Summary orders "filed on or after January 1, 2007 may be cited in a document filed" with the Second Circuit, subject to Rule 32.1 of the Federal Rules of Appellate Procedure and Local Rule 32.1.1. See Second Circuit Local Rule 32.1.1(b)(1) ; Fed. R. App. P. 32.1. "[A] party must cite either the Federal Appendix or an electronic database (with the notation ‘summary order)[,]” and “must serve a copy of it on every party not represented by counsel.” Second Circuit Local Rule 32.1.1(c) & (d).]

AT&T Mobility, LLC v. Concepcion: What Would Cousin Vinny Have to Say About The Ninth Circuit’s Interpretation of the Equal Footing Principle?

December 10th, 2010 Arbitration Agreements, Arbitration Practice and Procedure, California State Courts, Class Action Arbitration, Class Action Waivers, Practice and Procedure, United States Court of Appeals for the Ninth Circuit, United States Supreme Court 1 Comment »

One of my favorite scenes from the movie My Cousin Vinny (1992) is Vincent Laguardia Gambini’s (a/k/a “Vinny’s”) opening statement in the criminal trial of his cousin and cousin’s friend, both of whom were arrested and mistakenly charged for murder and robbery while driving through Alabama. Vinny (played by Joe Pesci) — a native New Yorker who is as out of place in a rural Alabama courtroom as I suppose anyone could be — dozes off during the prosecution’s opening statement only to be jarred awake by his cousin — who is facing the death penalty — so that he can deliver an opening statement. He saunters over to the jury, and says, gesturing at the prosecutor, “Everything that guy just said is bull$#!+. Thank you.” Then he returns to the defense table. (Watch the scene here, which begins approximately three minutes and 33 seconds into the clip.) Continue Reading »

Some Initial Thoughts on the SCOTUS AT&T Mobility, LLC v. Concepcion Oral Argument

November 16th, 2010 Arbitration Agreements, Arbitration Practice and Procedure, California State Courts, Class Action Arbitration, Class Action Waivers, Practice and Procedure, United States Court of Appeals for the Ninth Circuit, United States Supreme Court No Comments »

As many readers know, on Tuesday, November 9, 2010 the United States Supreme Court heard oral argument in AT&T Mobility, LLC v. Concepcion, No. 09-893 (blogged here, here, here and here). You can find the transcript of the argument, here, and the audio, here.

After reviewing the oral argument transcript a number of times, and listening to the audio, we still believe it more likely than not that AT&T Mobility will prevail. We’ll develop that thought further in upcoming installments of our Disputing guest post, ”AT&T Mobility LLC v. Concepcion: Can Discover Bank Withstand Stolt-Nielsen Scrutiny?” (Part I, here).

There have been a number of differing opinions post argument on how the Court will likely rule. Some believe the argument foreshadows victory for the Concepcions. Others are not so certain, and still others believe that AT&T Mobility may emerge the victor. Like all such opinions, they are are really nothing more than educated guesswork, and should be taken with a grain of salt.

We don’t suggest our take on things is anything more, but we share it for what it is worth. We think the oral argument was basically a toss-up, and that it mainly confirmed what we already knew or surmised: That this is a very difficult case, and that the eight Justices who asked questions appear to be split along ideological lines. We expected no less in light of the 5-3 and 5-4 split decisions in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 559 U.S. ___, 130 S. Ct. 1758 (2010); and Rent-A-Center West v. Jackson, 561 U.S. ___, 130 S. Ct. 2772 (2010).

The key point on which the argument shed no meaningful light is what Associate Justice Clarence Thomas makes of this case. Justice Thomas joined the Stolt-Nielsen and Rent-A-Center majority opinions, but those cases, unlike this one, did not concern the preemptive scope of the Federal Arbitration Act.

Preemption is controversial, and its importance extends far beyond the AT&T Mobility case. Particularly controversial — and very supportive of AT&T Mobility’s position — is the doctrine of “implied preemption,” also known as “conflict” or “obstacle” preemption. In Federal Arbitration Act cases this doctrine tells us that state laws or policies that undermine “the goals and policies of the FAA” are preempted by the Act. Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Univ., 489 U.S. 468, 477-78 (1990).

But Justice Thomas believes that the implied preemption doctrine is unconstitutional. See Wyeth v. Levine, 555 U.S. ___, 129 S. Ct. 1187, 1205 (2009) (Thomas, J. concurring) (“implied pre-emption doctrines that wander far from the statutory text are inconsistent with the Constitution. . . .”). He also believes that Congress intended the Federal Arbitration Act to be a procedural statute that applies only in federal court. See, e.g., Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995) (Thomas, J., dissenting); Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440 (2006) (Thomas, J., dissenting) (“[I]n state-court proceedings, the FAA cannot be the basis for displacing a state law that prohibits enforcement of an arbitration clause contained in a contract that is unenforceable under state law.”).

He thus believes that state courts can apply state arbitration law as they see fit, irrespective of whether the result would be different had the case been brought in federal court. While AT&T Mobility – like Stolt-Nielsen and Rent-A-Center – was brought in federal court, and everybody concedes that the Federal Arbitration Act applies, Justice Thomas remains a strong proponent of federalism.

Justice Thomas’ deference to state law is problematic for AT&T Mobility. Perhaps AT&T Mobility’s best argument is that the Federal Arbitration Act impliedly preempts the Discover Bank rule for the reasons set forth in Stolt-Nielsen. Apparently concluding that the Justices in the Stolt-Nielsen majority – including Justice Thomas — are the ones most likely to support AT&T Mobility’s position, AT&T Mobility deliberately downplayed the implied preemption issue, although it made clear that it believes the Federal Arbitration Act both expressly and impliedly preempts the Discover Bank rule.

That was a wise strategy given Justice Thomas’ rejection of implied preemption. Its wisdom was borne out by what transpired at the argument: of the eight Justices that asked questions, the four more liberal ones (Associate Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia M. Sotomayor and Elena Kagan) appear to be leaning in favor of finding that the Federal Arbitration Act does not preempt the Discover Bank rule, while the four more conservative ones (Chief Justice John G. Roberts, and Associate Justices Antonin G. Scalia, Anthony M. Kennedy, and Samuel J. Alito, Jr.) appear to be leaning in favor of finding that the Federal Arbitration Act preempts Discover Bank.

That means Justice Thomas is likely to hold the deciding vote, but where he’ll ultimately cast it, nobody knows (at least outside the Supreme Court). We believe there are equally plausible reasons why he might vote for or against preemption.

We’ll explore all of this and more in our Disputing guest post. In the meantime, keep an eye out for our next Forum article on AT&T Mobility, which will focus on the highlights of the oral argument and tie them into the express and implied preemption issues that this critically important case presents.

Oral Argument to be Held Tomorrow in SCOTUS AT&T Mobility Class Waiver Case

November 8th, 2010 ADR Social Media, Arbitration Agreements, Arbitration Practice and Procedure, Class Action Arbitration, Class Action Waivers, Guest Posts, Practice and Procedure, United States Supreme Court No Comments »

The United States Supreme Court will hear oral argument in AT&T Mobility LLC v. Concepcion, No. 09-893, tomorrow, November 9, 2010. (Read about the case here, here, here and here.) If you are interested in reading the transcript, you should be able to access it here by approximately 4:00 p.m. tomorrow.

Earlier this morning the Disputing blog published the first installment of a multi-part guest post we are writing, entitled “AT&T Mobility v. Concepcion: Can Discover Bank Withstand Stolt-Nielsen Scrutiny?” (Read it here.) Our focus in that post will be how Stolt-Nielsen bears on the Federal Arbitration Act preemption questions before the Court, and in particular, what (if anything) we can glean from the upcoming oral argument about those questions.

The first installment briefly describes the preemption issues and comments on the uncertainty surrounding implied preemption because of Associate Justice Clarence Thomas’ rejection of that doctrine in his Wyeth v. Levine, 555 U.S. ___, 129 S. Ct. 1187 (2009), concurring opinion, see 129 S. Ct. at 1205 (Thomas, J., concurring), and the deference he accords state law in Federal Arbitration Act cases which (unlike AT&T Mobility) are brought in state court. See, e.g., Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440 (2006) (Thomas, J., dissenting) (“[I]n state-court proceedings, the FAA cannot be the basis for displacing a state law that prohibits enforcement of an arbitration clause contained in a contract that is unenforceable under state law.”).

The first installment also poses some examples of the types of Stolt-Nielsen-related questions Justices might ask the Concepcions’ counsel at the argument. It will be interesting to see whether the Court asks questions of this type, and, if so, what the Concepcions have to say in response.

The number of future installments will depend on what transpires at the argument. We suspect that there will be at least two.

We would like to thank Karl Bayer and Beth Graham of the Disputing blog for featuring us as an AT&T Mobility guest blogger.

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