United States Court Of Appeals For The Second Circuit | Loree Reinsurance and Arbitration Law Forum

Archive for the ‘United States Court of Appeals for the Second Circuit’ Category

Arthur Andersen LLP v. Carlisle: The United States Supreme Court Says that Non-Signatories Can Enforce Arbitration Agreements Whenever State Law Would Permit them to Enforce Contracts Generally

Introduction

The Second Circuit and other courts have recognized that signatories may enforce under Sections 3 and 4 of the Federal Arbitration Act arbitration agreements against non-signatories whenever common-law principles of contract and agency would permit such enforcement, and that non-signatories may enforce arbitration agreements against signatories at least under an estoppel theory, and possibly under other theories of contract and agency. See, e.g., Ross v. American Express Co., 547 F.3d 137, 143 & n.3 (2d Cir. 2008); Ross v. American Express Co., 478 F.3d 96, 99 (2d Cir. 2007); Astra Oil Co. v. Rover Navigation, Ltd., 344 F.3d 276, 279-80 & n.2 (2d Cir. 2003); Thomson-CSF, S.A. v. American Arbitration Assoc., 64 F.3d 773, 776-80 (2d Cir. 1995). The Second Circuit likewise allows interlocutory appeals from the denial of Section 4 motions to compel arbitration, or Section 3 motions to stay litigation in favor of arbitration, brought by or against non-signatories. See, generally, 478 F.3d at 99.

Certain other circuits have held that nonsigatories may not invoke Section 3 or 4 based on an estoppel theory, or at least cannot appeal on an interlocutory basis the denial of an estoppel-based Section 3 or 4 application. See, e.g., DSMC Inc. v. Convera Corp., 349 F.2d 679, 683-84 (D.C. Cir. 2003) (then Roberts, J.); Re Universal Service Fund Tel. Billing Practice Litigation v.Sprint Communications Co., 428 F.3d 940, 945 (10^th Cir. 2005) (limiting holding to whether Court of Appeals had appellate jurisdiction at interlocutory stage). These Courts have relied on Section 3′s and 4′s requirement that the relief sought must be “under” a written agreement to arbitrate, and their determination that an estoppel claim by a non-signatory is not one “under” a written agreement to arbitrate.

Arthur Andersen: Issues and Holding

On May 4, 2009, in Arthur Andersen LLP v. Carlisle, ___ U.S. ___ (2009) (Scalia, J.), the United States Supreme Court resolved the circuit split in favor of the courts permitting non-signatories to avail themselves of Federal Arbitration Act Sections 3 and 4. There were two issues before the Court:

Whether the federal appellate courts have jurisdiction under Federal Arbitration Act Section 16(a) to review denials of stays of litigation requested by litigants who were not parties to the arbitration agreement; and
Whether Federal Arbitration Act Section 3 can ever mandate a stay sought by a nonsignatory to an arbitration agreement.

The Court held that federal appellate courts have jurisdiction to review appeals from denials of stays sought by non-signatories and that Section 3 can mandate a stay where applicable state law allows the enforcement of an agreement by or against a non-signatory. Justice Souter dissented in an opinion joined by Chief Justice Roberts and Justice Stevens. Continue Reading »

Recent United States Supreme Court Decision May Further Undermine ReliaStar Life Ins. v. EMC National Life Co. Holding

May 8th, 2009 Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, New York Court of Appeals, United States Court of Appeals for the Second Circuit, United States Supreme Court 1 Comment »

We recently critiqued ReliaStar Life Ins. Co. v. EMC National Life Co., ___ F.3d ___ (2009) (Raggi, J.), in which the United States Court of Appeals for the Second Circuit held that an arbitration panel was authorized to award under the bad faith exception to the American Rule attorney and arbitrator fees to a ceding company in a case where the parties had agreed that each “shall bear the expense of its own arbitrator. . . and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.” We believe that the majority opinion did not faithfully apply New York’s strict rules of contract interpretation and construction, which the parties expressly agreed would apply. You can find our critique here, and a report on the case here. Continue Reading »

ReliaStar Life Insurance Co. v. EMC National Life Co.: Critical Analysis of an Important Reinsurance Arbitration Decision

April 28th, 2009 Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, New York Court of Appeals, United States Court of Appeals for the Second Circuit 3 Comments »

Introduction

We recently reported on ReliaStar Life Ins. Co. v. EMC National Life Co., ___ F.3d ___, ___ (2009) (Raggi, J.) (blogged here), in which the United States Court of Appeals for the Second Circuit held that an arbitration panel was authorized to award under the bad faith exception to the American Rule attorney and arbitrator fees to a ceding company in a case where the parties had agreed that “[e]ach party shall bear the expense of its own arbitrator. . . and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.” This post takes a critical look at ReliaStar.

The Second Circuit is one of the most influential and respected Circuit Courts of Appeal in the United States, yet on occasion even this prestigious court renders a decision that is open to question. ReliaStar is one of those decisions. The majority opinion lost sight of what the parties agreed about the arbitrators’ power to award attorney fees. Rather than adhere to the plain meaning of the parties’ agreement as required by New York law, the Court construed an unambiguous limitation on arbitral authority to mean something other than what it said.

No doubt that the Court believed that its decision would encourage resort to arbitration by construing arbitral authority broadly. But the Court would have done a far better job encouraging resort to arbitration had it simply enforced the parties’ agreement as written. One of the most attractive features of arbitration is that parties get to dictate how they want their dispute decided, including, among other things, how best to allocate the costs, fees and expenses of deciding it. But that feature falls by the wayside if courts cannot be relied upon to enforce arbitration agreements as written. Continue Reading »

Coming Soon: Guest Blogging, Some Interesting Posts, and Arbitration Fairness Day

April 26th, 2009 General, Legislative Developments, Life Reinsurance, United States Court of Appeals for the Second Circuit No Comments »

From time-to-time the Loree Reinsurance and Arbitration Law Forum will be featuring guest bloggers. We are honored that Victoria Van Buren of Disputing has accepted our invitation to guest blog, and expect within the next week or so to feature her post concerning Fifth Circuit standards of review under Section 10(a)(4) of the Federal Arbitration Act in the wake of Citigroup Global Markets, Inc. v. Bacon, ___ F.3d ___ (5^th Cir. 2009), in which the Court held that manifest disregard of the law is no longer an independent ground for vacatur under the Federal Arbitration Act. We expect that Victoria will be submitting other guest blog posts in the future, and look forward to featuring them. We shall also be inviting others to guest blog here at the Forum. Continue Reading »

ReliaStar Life Insurance Co. v. EMC National Life Co.: Second Circuit Holds That Life Reinsurer Must Pay Ceding Company Attorney and Arbitrator Fees Notwithstanding Contract Language to the Contrary

April 21st, 2009 Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, Reinsurance Arbitration, United States Court of Appeals for the Second Circuit 3 Comments »

Introduction

On April 9, 2009 the United States Court of Appeals for the Second Circuit decided a case that may significantly expand the power of arbitrators to award attorney and arbitrator fees in cases involving reinsurance and other contracts. The Court held that an arbitration panel was authorized to award under the bad faith exception to the American Rule attorney and arbitrator fees to a ceding company in a case where the parties had agreed that “[e]ach party shall bear the expense of its own arbitrator. . . and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.” ReliaStar Life Ins. Co. v. EMC National Life Co., ___ F.3d ___, ___ (2009) (Raggi, J.). This post briefly discusses the majority and dissenting opinions. Our critical analysis will be provided in a subsequent post. Continue Reading »

Archive for the ‘United States Court of Appeals for the Second Circuit’ Category

Arthur Andersen LLP v. Carlisle: The United States Supreme Court Says that Non-Signatories Can Enforce Arbitration Agreements Whenever State Law Would Permit them to Enforce Contracts Generally

Recent United States Supreme Court Decision May Further Undermine ReliaStar Life Ins. v. EMC National Life Co. Holding

ReliaStar Life Insurance Co. v. EMC National Life Co.: Critical Analysis of an Important Reinsurance Arbitration Decision

Coming Soon: Guest Blogging, Some Interesting Posts, and Arbitration Fairness Day

ReliaStar Life Insurance Co. v. EMC National Life Co.: Second Circuit Holds That Life Reinsurer Must Pay Ceding Company Attorney and Arbitrator Fees Notwithstanding Contract Language to the Contrary

Recent Posts

Archives

Categories

Blogroll