Archive for 2010

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How Will Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp. Change Reinsurance Arbitration Practice?

June 8th, 2010 Arbitrability, Arbitration Practice and Procedure, Authority of Arbitrators, Class Action Arbitration, Consolidation of Arbitration Proceedings, Practice and Procedure, Reinsurance Arbitration, United States Supreme Court Comments Off on How Will Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp. Change Reinsurance Arbitration Practice?

Part IV

A.   Introduction

In Part I (here) we explained why the standard for challenging an award based on its outcome is important in reinsurance arbitration practice.  And, after briefly reviewing pre-Stolt-Nielsen law on outcome-based standards of review, we explained how the Court has established for itself and the lower courts a fairly searching standard of review.  Part II (here) explored the legal and practical implications of that standard of review.    

Part III (here) turned to the other key area that will likely change because of Stolt-Nielsen — consolidated reinsurance-arbitration practice — and discussed the state of consolidation law pre-Stolt-Nielsen.  This Part IV discusses Stolt-Nielsen’s rationale for finding that imposing class arbitration on parties whose agreements are silent on that point is inconsistent with the Federal Arbitration Act, and explores how the Court’s ruling may affect consolidated reinsurance-arbitration practice in general. 

B.   The Supreme Court’s Decides that Imposing Class Arbitration on Parties whose Contracts are Silent on that Score is Inconsistent with the Federal Arbitration Act

When we last left Stolt-Nielsen, the Court had determined  that the arbitrators exceeded their authority by issuing an award that was based on their own notions of public policy gleaned from other arbitral decisions imposing class arbitration in the face of silence.  When a court vacates an award it has to decide whether to remand the matter to the arbitrators, for Section 10(b) of the Federal Arbitration Act authorizes a court to “direct a rehearing by the arbitrators.”  The Court decided not to remand, because “there can be only one possible outcome on the facts,” that is, where the parties’ contracts are undisputedly silent on class arbitration, save for the parties’ agreement to a broad arbitration clause.   The Court then set about to explain why that was so.  Continue Reading »

International Institute for Conflict Prevention and Resolution Newsletter Features Philip J. Loree Jr. Cover Story on Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp.

June 6th, 2010 Arbitration Practice and Procedure, Authority of Arbitrators, Awards, Class Action Arbitration, Class Action Waivers, Consolidation of Arbitration Proceedings, Grounds for Vacatur, United States Supreme Court Comments Off on International Institute for Conflict Prevention and Resolution Newsletter Features Philip J. Loree Jr. Cover Story on Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp.

The June 2010 issue of Alternatives to the High Cost of Litigation, the excellent newsletter of the International Institute for Conflict Prevention and Resolution (”CPR”), featured as its cover story an article I wrote on the United States Supreme Court’s decision in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp.  The article is entitled “Stolt-Nielsen Delivers a New FAA Rule – And then Federalizes the Law of Contracts,” 28 Alternatives 124 (June 2010).   

In it I argue that the Stolt-Nielsen decision is both inexplicably broad and inexplicably narrow in scope, and may provide fodder for those who assert that Congress should enact the Fairness in Arbitration Act of 2009.  I also deconstruct the reasoning of the decision and explore some of its other practical and legal implications.   

Alternatives to the High Cost of Litigation is a subscription-only publication. Subscription information is available at this page, as well as at the publisher’s, John Wiley & Sons’s,  website here.

I would like once again to take this opportunity to thank CPR, and Russ Bleemer, Editor of Alternatives, for their kind assistance and support in featuring my article.   As I have said before, Russ is a keen,  intelligent and professional editor with whom it is a pleasure to work.

How Will Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp. Change Reinsurance Arbitration Practice?

June 4th, 2010 Arbitrability, Arbitration Practice and Procedure, Authority of Arbitrators, Class Action Arbitration, Consolidation of Arbitration Proceedings, Reinsurance Arbitration, Uncategorized, United States Supreme Court Comments Off on How Will Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp. Change Reinsurance Arbitration Practice?

Part III

A.   Introduction

In Part I (here) we explained why the standard for challenging an award based on its outcome is important in reinsurance arbitration practice.  And, after briefly reviewing pre-Stolt-Nielsen law on outcome-based standards of review, we explained how Stolt-Nielsen has established for the lower courts a fairly searching standard of review.  Part II (here) explored the legal and practical implications of that standard of review.    

This Part III turns to the other key area that will likely change because of Stolt-Nielsen:  Consolidated reinsurance-arbitration practice. 

As most reinsurance practitioners know, there is a brief history relevant to this subject and that will be the focus of this post.  For to fully understand the implications of Stolt-Nielsen on consolidated reinsurance-arbitration practice, it is necessary to understand how the pre-Stolt-Nielsen practice evolved. 

Parts IV (here) and V (here, here and here) will address how Stolt-Nielsen will likely change consolidated reinsurance-arbitration practice, and what the implications of those changes are to the industry.  Continue Reading »

Two Upcoming and Notable ADR-Related Events of Interest

June 3rd, 2010 Events, Mediation, Negotiation, Securities Arbitration Comments Off on Two Upcoming and Notable ADR-Related Events of Interest

Our good friends Don Philbin and Victoria Pynchon are presenting this June on ADR-related subjects. 

On June 9, 2010, Don Philbin will be giving a presentation entitled “Deal or No Deal — Negotiation Strategy in Mediations,” as part of a Securities Arbitration & Mediation CLE program sponsored by the City Bar Center for CLE and other organizations.  (The program agenda is here.)  The program will be held at 9:00 a.m. – 12:00 p.m. on June 9, 2010 at the New York City Bar (formerly “The Association of the Bar of the City of New York”), 42 West 44th Street, New York, New York 10036.   A one-hour networking lunch follows, beginning at 12:00 noon.  The program offers California, New York and Illinois CLE credit.  For information about fees and registration, click here or call the New York City Bar at (212) 382-6663.  

Don is an excellent speaker and has a unique, brain-science-oriented approach to negotiation and mediation.  He is also a very experienced arbitrator, mediator, attorney and consultant, whose many contributions to the ADR world include the ADR Highlight Reel (read about it here).   You can read about one of his prior presentations here, and his Forum guest post here and here. 

On June 10, 2010 Victoria Pynchon, along with John W. Tinghitella, is hosting a Negotiation for Women Workshop to be held in Pasedena, California.   The promotional materials for Vickie’s workshop point out some troubling statistics: 

  1. Women are 4 times less likely to negotiate their salaries after college and they lose up to a million dollars over their careers as a result
  2. Women own and manage 40% of all small businesses in the U.S., but obtain only 2 ½% of available venture capital
  3. Women continue to earn 77 cents on every male dollar. Professional women earn even less – women attorneys, for instance, earn only 60 cents on the male lawyer’s dollar

The workshop is designed to give women “the insight and tools to recognize your existing skills and seize the opportunities you’re now overlooking.  This will allow you to negotiate better working conditions, higher salaries, more benefits and better prices for your products and services.” 

For more information about Victoria’s workshop, including registration instructions, click here.  And you can read her recent blog post about the workshop, “Closing the Wage Gap Rocking Your World,” here.

This program comes highly recommended for women young and old, professional and nonprofessional.  Negotiation is a critical part of all of our day-to-day lives and anything that can make us better at it is a worthwhile endeavor.  And Vickie and John Tinghitella are recognized and respected authorities on the subject.

In fact, the program is of such practical value that I recommended it to one of my California-based sisters who lives within a reasonable driving distance of Pasadena.

How Will Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp. Change Reinsurance Arbitration Practice?

June 1st, 2010 Arbitration Practice and Procedure, Authority of Arbitrators, Awards, Grounds for Vacatur, Labor Arbitration, United States Supreme Court Comments Off on How Will Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp. Change Reinsurance Arbitration Practice?

Part II

A.   Introduction

In Part I (here) we explained why the standard for challenging an award based on its outcome is important in reinsurance arbitration practice.  And, after briefly reviewing pre-Stolt-Nielsen law on outcome-based standards of review, we explained how Stolt-Nielsen has established a fairly searching, standard of review.  This Part II explores the legal and practical implications of that standard of review.    

B.   Legal Implications of the Stolt-Nielsen Decision’s Manifest Disregard of the Agreement Standard of Review

1.  Courts May Interpret Stolt-Nielsen’s Outcome-Based Standard of Review Liberally

Reinsurance-  and other commercial-arbitration awards are now subject to the same standard of review as labor-law awards – and in Stolt-Nielsen, the Court applied that standard of review pretty liberally.  The Court has put to rest the notion that Federal Arbitration Act Section 10(a)(4) vacatur is limited to questions concerning whether the arbitrators decided a matter falling within the scope of the parties’ arbitration agreement or submission.   The outcome of the arbitration is now subject to at least some, limited scrutiny. 

The focus will now be on whether the arbitrators interpreted, applied and enforced the contract, and applied applicable law or norms.  Express or implied reliance on extra-contractual considerations, such as public policy, may spoil an award, unless those extra-contractual considerations are grounded in applicable law.  Not heeding clear and unambiguous contract language, effectively deleting or disregarding contractual provisions or otherwise rewriting the contract may also subject the award to vacatur.  Continue Reading »

How Will Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp. Change Reinsurance Arbitration Practice?

May 25th, 2010 Arbitrability, Arbitration Practice and Procedure, Authority of Arbitrators, Awards, Class Action Arbitration, Class Action Waivers, Consolidation of Arbitration Proceedings, Grounds for Vacatur, Practice and Procedure, Reinsurance Arbitration, United States Court of Appeals for the Second Circuit, United States Supreme Court Comments Off on How Will Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp. Change Reinsurance Arbitration Practice?

Part I

A.     Introduction 

Shortly before the United States Supreme Court decided Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., ___ U.S. ___, slip op. (April 27, 2010), we wrote about the implications the case might have on reinsurance arbitration practice.  (See our post here.)  But since then, you have not heard much from us, other than our brief report (here) about the Supreme Court vacating and remanding to the United States Court of Appeals for the Second Circuit the American Express Merchants’ Litigation judgment for further consideration in light of Stolt-Nielsen.   One — but by no means the only — reason is that after Stolt-Nielsen was decided, we wrote a comprehensive article on it, which will be published in a subscription-only publication in June. 

But that article – while comprehensive in scope – is directed at folks interested in the Federal Arbitration Act in general, not necessarily those interested in reinsurance arbitration in particular.  And that’s what we want to cover in this multi-part series:  Stolt-Nielsen’s implications on reinsurance arbitration practice. 

Stolt-Nielsen affects reinsurance arbitration in two very important ways.   First, it has set a fairly liberal standard of review that now applies to commercial arbitration awards in cases where a party asserts that the arbitrators exceeded their powers under Federal Arbitration Act Section 10(a)(4) because of the award’s outcome.  That, as we shall see, has all sorts of implications for persons involved in reinsurance arbitrations.

Second, it has changed the rules applicable to consolidated-reinsurance-arbitration practice – or at least it requires a wholesale reevaluation of those rules.  That, too, has a number of important implications for reinsurance-arbitration practice.   

This Part I of the series explains why the standard for challenging an award based on its outcome is important in reinsurance arbitration practice.  And, after briefly reviewing pre-Stolt-Nielsen law on outcome-based standards of review, it explains how Stolt-Nielsen has established for the lower courts a fairly searching standard of review.  Part II (here) will delve into what the implications of that standard of review will likely be. 

Part III (here) will provide the background necessary to understand how Stolt-Nielsen affects the law applicable to consolidated reinsurance arbitration.  Part IV (here) will delve into the details of how Stolt-Nielsen changes – or at least requires reconsideration of – the legal status quo in this area.  And Part V will discuss the implications of all of this.   

We do not set out to discuss the background of Stolt-Nielsen in any detail or to provide a play-by-play of how the Court decided the case.  If you are a regular reader you probably already know the background in detail, and our upcoming article does a pretty good job of mapping out the Court’s reasoning.  Instead, we focus our attention on the aspects of the decision that are relevant to the two key subjects of discussion. 

But before we delve into what Stolt-Nielsen has to say about the standard of review, we pause briefly to address why the standard of review applicable to an outcome-based challenge is so important in reinsurance and other forms of commercial arbitration.  Continue Reading »

United States Supreme Court Vacates Judgment in American Express Merchants’ Litigation

May 12th, 2010 Arbitration Practice and Procedure, Authority of Arbitrators, Class Action Arbitration, Class Action Waivers, Consolidation of Arbitration Proceedings, United States Court of Appeals for the Second Circuit, United States Supreme Court Comments Off on United States Supreme Court Vacates Judgment in American Express Merchants’ Litigation

The Supreme Court has issued a summary order in the American Express Merchants’ Litigation that suggests that it believes that Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 559 U.S. ___ , slip op. (2010)  renders class arbitration waivers enforceable despite public policy and other challenges.  Readers may recall that on May 29, 2009 American Express filed a petition for a writ of certiorari in the American Express Merchants’ Litigation, in which the United States Court of Appeals for the Second Circuit held that a provision in an arbitration agreement forbidding class action arbitration was invalid and unenforceable under federal public policy grounds in the circumstances presented by the case.  See Re American Express Merchants’ Litigation, 554 F.3d 300 (2d Cir. 2009), vacated and remanded sub. nom., American Express Co. v. Italian Colors Restaurant, No. 08-1473 (May 3, 2010). 

On May 3, 2010 the United States Supreme Court issued a summary order in American Express Co. v. Italian Colors Restaurant, No. 08-1473 granting certiorari, summarily vacating the judgment of the United States Court of Appeals for the Second Circuit, and remanding it “for further consideration in light of” Stolt-Nielsen.   Justice Sonia M. Sotomayor “took no part in the consideration or decision” of the petition.   Italian Colors, No. 08-1473 (May 3, 2010) (summary disposition). 

It will be interesting to see what the Second Circuit does with the case on remand.

Richard Faulkner and Philip J. Loree Jr. Quoted in Business Insurance on Rent-A-Center West v. Jackson

May 8th, 2010 Uncategorized Comments Off on Richard Faulkner and Philip J. Loree Jr. Quoted in Business Insurance on Rent-A-Center West v. Jackson

Our friend Richard Faulkner, a partner in the Richardson, Texas law firm of Blume Faulkner, P.L.L.C., I, and others were quoted in a Business Insurance article on the Rent-A-Center West v. Jackson case pending in the United States Supreme Court.  The article is available here. 

Richard’s quote was “The 9th Circuit’s decision flies in the face of virtually every well-reasoned decision on arbitrability and jurisdiction[.]”  I could not agree with him more. 

For those of you that do not know Richard, he has decades of experience in the arbitration, mediation and ADR fields and is a contributing author to Elkouri & Elkouri, How Arbitration Works (6th Ed.).   His practice includes acting as a neutral arbitrator or mediator, serving on construction dispute boards, and representing clients in domestic and international arbitration-law-related matters.   Recently he represented Dub Herring Ford Lincoln-Mercury, Inc. before the United States Supreme Court as an amicus curiae in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., which was decided on April 27, 2010. 

My more modest sound bite was: “There’s a lot of attention being paid to this case because it’s very frequent that you have challenges to arbitration agreements on unconscionability grounds made by employees and consumers.” 

The Supreme Court is expected to issue its decision in this controversial case by the end of this term in late June.  We believe there is a good chance that at least five members of the Court will vote for a reversal, but that outcome is by no means a foregone conclusion.  Whatever the result, you will certainly hear about it here at the Forum.

The United States Supreme Court Decides Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp.!

April 27th, 2010 Arbitrability, Authority of Arbitrators, Class Action Arbitration, Consolidation of Arbitration Proceedings, Grounds for Vacatur, United States Supreme Court Comments Off on The United States Supreme Court Decides Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp.!

As we predicted in prior posts, the United States Supreme Court reversed the judgment of the United States Court of Appeals for the Second Circuit in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., holding (5-3) that it was inconsistent with the Federal Arbitration Act to impose class arbitration on parties whose agreements were concededly silent on that point.  We are in the process of analyzing the decision (copy here), and intend to post a comprehensive, critical analysis soon.

The LinkedIn Commercial and Industry Arbitration and Mediation Group Reaches 700 Member Mark

April 27th, 2010 ADR Social Media, Commercial and Industry Arbitration and Mediation Group Comments Off on The LinkedIn Commercial and Industry Arbitration and Mediation Group Reaches 700 Member Mark

On May 21, 2009 Disputing and the Loree Reinsurance and Arbitration Law Forum announced the formation of the LinkedIn Commercial and Industry Arbitration and Mediation Group (post available here), an open forum for the discussion of industry and commercial ADR.   At that time the group was 29 members strong, and if someone had told me that there was even a chance the group might reach the 700 member mark in a year or less, then I probably would have burst out laughing.  But my amusement would have been sorely misplaced, because yesterday the group reached the 700 member mark after being in existence for just over eleven months.  And we expect it will continue to grow.       

Some LinkedIn groups are a little dull, featuring little or no meaningful discussion and plenty of shameless self promotion.  But this group is a lively one that enjoys debating issues and sharing information and experiences.  Discussions have been frequent and spirited, the group is internationally and professionally diverse, and group members have access to several ADR blog feeds, as well as articles posted by other group members.  It is an excellent networking and learning opportunity for anyone interested in commercial and industry ADR.

The Group is co-managed by Don Philbin, Jr., Karl Bayer, Robert Bear, Victoria Van Buren and me.  Sharing the burden of group management makes it easier to keep up a steady flow of discussion and interaction. 

But the Group’s greatest strength is its membership, which is bright, talented, accomplished, friendly and willing to share to insights and information concerning arbitration, mediation, negotiation and other forms of dispute resolution.  It is a fine example of how social media can foster excellent professional networking communities.    

Membership in the group is recommended to those interested in keeping abreast of current events pertinent to arbitration (including consumer and international arbitration), tracking judicial and legislative developments relevant to arbitration law, learning more about the subject, or simply sharing information.  We are proud to have as members a number of commercial and industry arbitrators, attorneys, law professors, industry people and arbitration professionals.   

Membership is also recommended if you are a mediator, a business person who utilizes mediation to resolve disputes, an attorney who represent clients in mediation or a person interested in learning about mediation or sharing information on the subject.  The group’s membership features a number of highly-accomplished mediators, dispute resolution professionals, ADR bloggers and professors.  Not being a mediator myself, I have learned much about mediation simply through group discussions.      

We welcome new members both from the United States and other countries.  The only requirement for membership is a bona fide interest in ADR.  The group is not a forum for, and does not permit, advertising or blatant self-promotion, so our members need not be concerned about being subject to sales pitches, and the like. 

If you are already a member of LinkedIn, please click here to apply for membership in the group. If you are not a LinkedIn member, click here, and you will be guided through the process of creating a profile (which does not need to be completed in one step).  Once your profile is started, and you have a log-in name and password, you can apply for membership in the group (which entails no more than clicking on a button).  Joining LinkedIn is free, as is joining the group. 

We hope you’ll join up!

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