Archive for 2009

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Introducing Loree Reinsurance and Arbitration Law Forum Guest Blogger Peter A. Scarpato, Esq.

May 14th, 2009 General, Guest Posts, Mediation, Reinsurance Mediation 2 Comments »

This week we are delighted and honored to feature Peter A. Scarpato, Esq. as a guest blogger on the Forum.  I have known Peter since 1990, when he was the General Counsel of American Centennial Insurance Company in run-off, and I was an associate at Miller, Singer, Raives & Brandes, P.C.   We have stayed in touch over the years and have worked together on matters where Peter was the key client contact, both at American Centennial, and later, at the American International Group. 

Currently the President of Conflict Resolved, LLC, Peter is a full-time ADR professional who has extensive experience as an arbitrator, umpire, counsel, mediator and negotiator in hundreds of reinsurance and other commercial disputes, settlements and commutations.  He is a run-off specialist for all forms of property and casualty insurance and reinsurance; warranty; surety; and various types of program business.  He is an ARIAS-U.S. certified arbitrator and mediator who also holds ADR certifications or positions for FINRA Dispute Resolution (formerly the National Association of Securities Dealers (NASD));  Executive Mediator Services; Reinsurance Association of America (RAA); Construction Dispute Resolution Services LLC; the United States District Court for the Eastern District of New York; New York State Supreme Court – Commercial Division; and Case Closure, LLC.  Continue Reading »

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

May 12th, 2009 Appellate Practice, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Sixth Circuit, United States Supreme Court 1 Comment »

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 (10th 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:

  1. 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
  2. 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 »

The Senate Weighs in With Its Own Arbitration Fairness Act

May 7th, 2009 Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court 1 Comment »

On April 29 — a/k/a “Arbitration Fairness Day” – – Senator Russ Feingold (D-WI) introduced the Senate’s version of the Arbitration Fairness Act of 2009 (S. 931).  The Senate’s version  tracks the House version in many respects, but there are some important differences between the two. 

The Senate Arbitration Fairness Act adds a Chapter 4 to the Federal Arbitration Act, rather than amending Section 2 of Chapter 1.  This Proposed Chapter 4 consists of two sections:  Section 401, entitled “Definitions”; and Section 402, entitled “Validity and Enforceability.”  Proposed Section 402(a) states:  “In General – Notwithstanding any other provision of this title, no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment, consumer, franchise, or civil rights dispute.”  Proposed Section 402(b) provides: 

(1)  IN GENERAL – An issue as to whether this chapter applies to an arbitration agreement shall be determined under Federal law.  The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to arbitrate to which this chapter applies shall be determined by the court, rather than the arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement. 

(2)  COLLECTIVE BARGAINING AGREEMENTS – Nothing in this chapter shall apply to any arbitration provision in a contract between an employer and a labor organization or between labor organizations, except that no such arbitration provision shall have the effect of waiving the right of an employee to seek judicial enforcement of a right arising under a provision of the Constitution of the United States, a State constitution, or a Federal or State statute, or public policy arising therefrom.  Continue Reading »

Guest Post: Hall Street Meets S. Maestri Place: What Standards of Review will the Fifth Circuit Apply to Arbitration Awards Under FAA Section 10(a)(4) after Citigroup?

May 4th, 2009 Awards, Grounds for Vacatur, Guest Posts, United States Court of Appeals for the Fifth Circuit 5 Comments »

Introduction

I am delighted to be invited to guest-blog today by Philip J. Loree Jr. of the Loree Reinsurance and Arbitration Law Forum.  I was thrilled that Phil jumped right on it when I suggested that we should guest-post on each others blogs in the near future. 

Phil did an outstanding job discussing the Arbitration Fairness Act of 2009 (read the post here) last week as a guest-blogger at Disputing.  He suggested that I  explore the topic of “manifest disregard of the law,” in light of the United States Supreme Court decision Hall Street Associates, LLC v. Mattel, Inc. 128 S.Ct. 1396 (2008), and the Fifth Circuit ruling in Citigroup Global Markets, Inc. v. Bacon, ___ F.3d ___ (5th Cir. 2009).  So, after conquering some initial, mild trepidation about my first guest-blogging experience, here I am.  Continue Reading »

Guest Blogger Victoria VanBuren Discusses the Role of Federal Arbitration Act Section 10(a)(4) After Citigroup Global Markets, Inc. v. Bacon

May 4th, 2009 Awards, Guest Posts, United States Court of Appeals for the Fifth Circuit 1 Comment »

Today we are honored and delighted to feature “Hall Street Meets S. Maestri Place: What Standards of Review will the Fifth Circuit Apply to Arbitration Awards Under FAA Section 10(a)(4) after Citigroup?”, a guest-blog post submitted by Victoria VanBuren, the blogmaster of Disputing, an excellent ADR blog.  We look forward to featuring more of her posts in the future. 

Victoria is an up and coming young attorney who works for Dispute Resolution Expert Karl Bayer.  Based in Austin, Texas, Karl’s team focuses on litigation, arbitration, and mediation of intellectual property, environmental, and health care disputes.  (Learn more about Karl Bayer’s practice here and read Victoria’s bio here.)  Victoria, a graduate of the University of Texas School Of Law, is currently pursuing a degree in computer science, and is a member of several ADR and other legal-services-oriented associations.  Victoria has done a wonderful job keeping Disputing loaded with up-to-date cases, legislation, and relevant articles on matters pertinent to arbitration and other forms of dispute resolution.  Her efforts are particularly impressive when you consider that she graduated from law school only a few years ago, is an active networker and business developer, and is pursuing a computer science degree on top of all of that.  Keep your eyes on this rising star! Continue Reading »

Update: Another Way to Subscribe to the Loree Reinsurance and Arbitration Law Forum

May 3rd, 2009 Feed, General, Subscribe Comments Off on Update: Another Way to Subscribe to the Loree Reinsurance and Arbitration Law Forum

Further to our post of earlier today, here is yet another way to subscribe to the Forum.  The following steps allow you to subscribe to our feed through the Favorites section of your Internet Explorer (“IE”) browser.  Whether or not they will work for other browsers is beyond my ken: 

  1. Click on this link:  http://feeds2.feedburner.com/Loreelawfirmcom. 
  2. When the feed page appears, click on View Feed XML. 
  3. When the new feed page appears, click on Subscribe to this feed. 

You should now be able to access the feed by clicking on the star-shaped icon at the left side of one of your IE toolbars and selecting Feeds.

Good luck!

How to Subscribe to the Loree Reinsurance and Arbitration Law Forum

May 3rd, 2009 Feed, General, Subscribe Comments Off on How to Subscribe to the Loree Reinsurance and Arbitration Law Forum

If you are interested in viewing the Forum via a Real Simple Syndication (“RSS”) feed, subscribing is very easy (and, of course, free).  Click on the following link:  http://feeds2.feedburner.com/Loreelawfirmcom.   You’ll see a feed page and can subscribe through Google or another reader service through the links provided on that page. 

Outlook 2007 has a very useful feature that allows you to receive e mails containing our posts and those of other blogs.   First, copy the feed URL (http://feeds2.feedburner.com/Loreelawfirmcom), and in Outlook go to Tools –> Account Settings –> RSS Feeds –> New.  Hit the Control key (Ctrl) together with the letter v (i.e., Ctrl-v) and the URL will be pasted in the space provided in the pop-up window.  Click OK and you’ll see an RSS Feed Options window.  Click OK and you will receive e mails containing several of our prior posts and new e mails as new items are posted.   

Good luck!

Nuts & Bolts: Limitation Periods for Motions to Vacate, Modify, Correct and Confirm Domestic Arbitration Awards Falling Under Chapter 1 of the Federal Arbitration Act

May 1st, 2009 Awards, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure Comments Off on Nuts & Bolts: Limitation Periods for Motions to Vacate, Modify, Correct and Confirm Domestic Arbitration Awards Falling Under Chapter 1 of the Federal Arbitration Act

Introduction

Today we briefly review the limitation periods applicable to motions to vacate, modify, correct and confirm arbitration awards.  Our discussion is limited to domestic awards falling solely under Chapter 1 of the Federal Arbitration Act and is not intended to be exhaustive.  In a future Nuts & Bolts feature we will discuss the rules applicable to non-domestic awards falling under Chapters 2 and 3 of the Federal Arbitration Act.   Our discussion is also limited to the rules that apply in federal courts within the United States Court of Appeals for the Second Circuit in diversity cases where the Federal Arbitration Act governs arbitration matters and New York law governs all other matters.   The rules may be interpreted differently by other circuits and, even within the Second Circuit, outcomes may vary depending on, among other things, which state’s law applies.

Limitation periods for motions to vacate or for other forms of relief under the Federal Arbitration Act and New York’s arbitration statute are construed quite strictly and practitioners should carefully abide by them.  Sometimes it is unclear whether a limitation period has accrued or been tolled.  In that event practitioners should err on the side of caution.  If there is a question whether the period for filing an application has accrued, assume that it has, and file and serve your papers within the shortest allotted period.  If there is a question whether the period has been tolled, assume that it has not, and do whatever it takes to toll it.  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 »

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