Archive for the ‘Arbitrability’ Category

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Jackson v. Rent-A-Center West, Inc.: Who Gets to Decide Whether an Arbitration Agreement is Unconscionable when the Parties Clearly and Unmistakably Say the Arbitrators Decide Arbitrability?

September 23rd, 2009 Arbitrability, Unconscionability, United States Court of Appeals for the Ninth Circuit 4 Comments »

I.            Introduction

We have explained in prior posts the First Options/AT&T Technologies rule that arbitrators get to decide arbitrability when the parties clearly and unmistakably so agree.  (See, e.g., here and here.)  That’s all well and good, but what happens when:  (a)  two parties sign an arbitration agreement which says, among other things, that the arbitrators shall decide any claim, including any claim concerning the applicability, formation or enforceability of the arbitration agreement; and (b) despite that clear and unmistakable agreement to arbitrate arbitrability, one of the parties challenges the arbitration agreement in court on unconscionability grounds?      

That is, for all practical purposes, what happened in Jackson v. Rent-A-Center West, Inc., ___ F.3d ___, slip op. (9th Cir. Sept. 9, 2009) (here).  And the United States Court of Appeals for the Ninth Circuit ruled 2-1 that the court gets to decide the question.  Continue Reading »

Disputing Publishes Part IVB of our Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp. Guest Post

September 21st, 2009 Arbitrability, Authority of Arbitrators, Class Action Arbitration, Class Action Waivers, Consolidation of Arbitration Proceedings, Guest Posts, Practice and Procedure, United States Court of Appeals for the Second Circuit, United States Supreme Court 1 Comment »

On September 1, 2009 Disputing published Part IVA of our four-part guest post on Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. granted June 15, 2009 (No. 08-1198).  In Part IVA  (here) we considered whether the question in Stolt-Nielsen  was one for the court or the arbitrators to decide, and predicted that at least five Justices of the United States Supreme Court will hold that the court must decide it.  If we are correct, then the Supreme Court will consider on a de novo basis whether the arbitration panel had the authority to impose class arbitration on the Stolt-Nielsen parties. 

Today, Disputing published Part IVB of our guest post (here) in which we consider how the Supreme Court might rule on the merits of the question.  We believe that at least five Justices will rule that the arbitrators should not, in the face of the agreements’ silence, have imposed class arbitration where, as here, there is no basis in the Federal Arbitration Act, New York state law or federal maritime law for implying consent to class arbitration.    

The Supreme Court’s decision in Stolt-Nielsen may have some important ramifications for both commercial and consumer arbitration.  So for advance coverage, tune into Disputing….

Disputing has Published Part IVA of Our Stolt-Nielsen v. AnimalFeeds Guest Post

September 1st, 2009 Arbitrability, Authority of Arbitrators, Class Action Arbitration, Consolidation of Arbitration Proceedings, Guest Posts, United States Court of Appeals for the Second Circuit, United States Supreme Court 4 Comments »

On August 17, 2009 Disputing published Part III of our four-part guest post on Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. granted June 15, 2009 (No. 08-1198) (Part III available here).  In Part III we examined the background of Stolt-Nielsen and identified four issues that the United States Supreme Court will likely confront when it decides the case. 

Today Disputing published Part IVA (here), in which we consider the first issue:  Who decides whether class arbitration can be imposed on the parties when their arbitration agreements are silent on that point?  Put differently, is the question one of arbitrability for the court or one of procedural arbitrability or contract interpretation for the arbitrators?    

Resolution of the question defines the standard of review.  Questions of arbitrability are reviewed de novo on the law and for clear error on the facts.  But if the question is one of procedural arbitrability or contract interpretation, the standard is the deferential one provided by Federal Arbitration Act Section 10, the one applied by both the District Court and the United States Court of Appeals for the Second Circuit. 

The arbitrators in Stolt-Nielsen decided that class arbitration was authorized by the parties’ arbitration agreements even though the agreements said nothing about class arbitration.  We believe that at least five Justices will conclude that this question was one of arbitrability for the Court to decide, and will either decide the issue de novo or remand it to the lower courts to decide. 

The Supreme Court’s decision in Stolt-Nielsen may have some important ramifications for both commercial and consumer arbitration.  So for advance coverage, tune into Disputing….

Disputing has Published Part III of our Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp. Guest Post

August 17th, 2009 Arbitrability, Authority of Arbitrators, Class Action Arbitration, Consolidation of Arbitration Proceedings, Guest Posts, United States Court of Appeals for the Second Circuit, United States Supreme Court Comments Off on Disputing has Published Part III of our Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp. Guest Post

Last week we announced that  Disputing had published Part II of our four-part guest post on Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. granted June 15, 2009 (No. 08-1198) (Disputing post here).  Today, Disputing published Part III, which discusses the background and procedural history of the Stolt-Nielsen case and identifies the key issues that the United States Supreme Court will likely consider in deciding the case.  

The Supreme Court’s decision in Stolt-Nielsen may have some important ramifications for both commercial and consumer arbitration.  And soon-to-be Justice Sotomayor may provide the swing vote in the case.  So for advance coverage, tune into Disputing….

Global Arbitration Review Quotes Loree Reinsurance and Arbitration Law Forum’s Critical Analysis of ReliaStar Life Ins. Co. v. EMC Nat’l Life Co.

August 10th, 2009 Arbitrability, Authority of Arbitrators, United States Court of Appeals for the Second Circuit 2 Comments »

On April 28, 2009 we published “ReliaStar Life Insurance Co. v. EMC National Life Co.: Critical Analysis of an Important Reinsurance Arbitration Decision,”  available here.  On July 13, 2009 the London-based  Global Arbitration Review published an interesting article about the Second Circuit’s decision in ReliaStar, which quoted from our critical analysis:  

Writing shortly after the appeal court’s decision, Philip Loree Jr of New York firm Loree & Loree, said the court had “violated New York contract interpretation rules.” He said that, according to New York law, “to ascertain whether a contract is ambiguous, courts are required to focus on what is said, not what is omitted.” “Given that the pre-eminent purpose of the Federal Arbitration Act is to enforce the parties’ arbitration agreement as written, this case may be one of those rare Second Circuit decisions that warrant rehearing and reversal en banc,” he added.

You can find the article (subscription only) here:  ‘Bad Faith’ Costs Decision Upheld, Global Arbitration Review, July 13, 2009, our summary of the decision here, our critical analysis here, and further commentary here.  Disputing’s coverage of the case can be found here and here.

Disputing Has Published Part II of our Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Co. Guest Post

August 10th, 2009 Arbitrability, Authority of Arbitrators, Class Action Arbitration, General, Guest Posts Comments Off on Disputing Has Published Part II of our Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Co. Guest Post

Last week we announced that  Disputing had published Part I of our four-part guest post on Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. granted June 15, 2009 (No. 08-1198) (post here).  Today, Disputing published Part II, which discusses Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), the case that provides the legal landscape against which the Supreme Court will decide Stolt-Nielsen.   You can read Part II here.   We expect Disputing will publish Part III later this week, with Part IV to follow.  

The Supreme Court’s decision in Stolt-Nielsen may have some important ramifications for both commercial and consumer arbitration.  And soon-to-be Justice Sotomayor may provide the swing vote in the case.  So for advance coverage, tune into Disputing….

Disputing Guest Post: Class And Consolidated Arbitration Under the Federal Arbitration Act: What Issues Will The United States Supreme Court Confront in Stolt-Nielsen, S.A. V. AnimalFeeds Int’l Co.?

August 6th, 2009 Arbitrability, Authority of Arbitrators, Consolidation of Arbitration Proceedings, Guest Posts, United States Court of Appeals for the Second Circuit, United States Supreme Court 3 Comments »

 The Loree Reinsurance and Arbitration Law Forum is delighted to guest post once again on Karl Bayer’s and Victoria VanBuren’s wonderful ADR blog, Disputing.  Because Victoria and I have both written fairly extensively about Hall Street Assoc. v. Mattel, Inc, 128 S. Ct. 1396 (2008), and about two of the most frequently cited cases construing Hall Street’s dictum on manifest disregard of the law — Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349 (5th Cir. 2009) and Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. granted June 15, 2009 (No. 08-1198) –  and because the United States Supreme Court has granted certiorari in Stolt-Nielsen, we thought that our joint-readership might appreciate an analysis of the issues that the Supreme Court will likely address – or at least face — in that case.  That’s what we have set out to do in a four-part guest post, Part I of which was published today.  (Check it out  here.)

As readers may already know, the issue before the United States Supreme Court is whether it is consistent with the Federal Arbitration Act to impose class arbitration on parties whose arbitration agreement is silent on that point.  This is the same issue that the Supreme Court set out to decide in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), but ultimately never did because a plurality of the Court ruled that there was a disputed issue of contract interpretation as to whether the agreements in that case were, in fact, silent on class arbitration, which resulted in a remand to the arbitrator.  But in Stolt-Nielsen the panel ruled, and the parties agreed, that the contracts are silent on this key point, so the Supreme Court will presumably confront the issue head on. 

The Supreme Court’s decision next Term may have some important ramifications for both commercial and consumer arbitration.  And soon-to-be Justice Sotomayor may provide the swing vote in the case.  So for some advance coverage, tune into Disputing….

The Texas Supreme Court Says Court – Not Arbitrator — Gets to Decide Lack of Capacity Issue Notwithstanding the Severability Doctrine

July 21st, 2009 Arbitrability, Authority of Arbitrators, Texas Supreme Court Comments Off on The Texas Supreme Court Says Court – Not Arbitrator — Gets to Decide Lack of Capacity Issue Notwithstanding the Severability Doctrine

Karl Bayer’s and Victoria VanBuren’s Texas-based  Disputing blog recently reported on In re Morgan Stanley & Co., Inc., __ S.W.3d __ (Texas 2009) (No. 07-0665), in which the Texas Supreme Court held that whether a contracting party had the capacity to enter into a contract containing an arbitration agreement was for the court to decide, notwithstanding that, under the severability (a/k/a “separability”) doctrine, a challenge to the validity or enforceability of a contract as a whole, including the arbitration agreement, is generally for the arbitrators to decide under a broad arbitration clause.  Ms. VanBuren did an excellent job summarizing the case and explaining its significance in her post, “Texas Supreme Court Holds that the Court, not the Arbitrator Should Decide the Issue of Capacity to Contract,” and we recommend that anyone interested in learning more about the case read her thoughtful and nicely-written post. 

Morgan Stanley illustrates that the severability doctrine —  first espoused by the United States Supreme Court in Prima Paint v. Conklin Mfg. Corp., 388 U.S. 395, 403-04 (1967) and later clarified in Buckeye Check Cashing v. Cardengna, 546 U.S. 440, 449 (2006) — is not without its limits.  Severability is a legal fiction, which Courts apply for the purpose of determining whether arbitrators have the authority to determine certain disputes concerning the enforceability or validity of a contract containing an arbitration clause.  It deems the arbitration clause to be an agreement which stands on its own footing from the contract in which it is contained.  Continue Reading »

Feeney v. Dell Inc.: A Critical Analysis

July 17th, 2009 Arbitrability, Class Action Arbitration, Class Action Waivers, Massachusetts Supreme Judicial Court 3 Comments »

Introduction

In part I of a two-part post (here), we summarized the Supreme Judicial Court of Massachusetts’ decision in Feeney v. Dell Inc., ___ Mass. ___, slip op. (July 2, 2009).  The Court there refused to enforce an arbitration agreement in a consumer contract because it contained a class action waiver that the Court found violative of Massachusetts public policy favoring class actions under G.L., c. 93A, and which the Court found not to be severable from the remainder of the arbitration agreement.  The Court also refused to enforce on public policy grounds a choice-of-law clause providing that Texas law — which apparently permits class action waivers — would govern the parties’ agreement.  In this part II we discuss whether the decision comports with the Federal Arbitration Act.

The critical issue in Feeney was whether a state public policy against class action waivers was preempted by the Federal Arbitration Act, the preeminent purpose of which is to enforce according to their terms arbitration agreements falling within its scope.  With all due respect to the SJC, we think Feeney was a tough case and that the preemption issue was a close call.  The Court obviously worked hard to justify the outcome and drilled down on the preemption issue, but at the end of the day its arguments simply proved too much.  Continue Reading »

Feeney v. Dell Inc.: The Massachusetts Supreme Judicial Court Says Class Action Waiver in Arbitration Agreement Governed by the Federal Arbitration Act Violates Massachusetts Public Policy

July 16th, 2009 Arbitrability, Class Action Arbitration, Class Action Waivers, Massachusetts Supreme Judicial Court 3 Comments »

Introduction

The validity of class action waivers in arbitration agreements is a controversial subject at the moment.  There is an obvious tension between the pro-enforcement policies of the Federal Arbitration Act and competing state and federal policies favoring class action arbitration or litigation as a vehicle for vindicating consumer rights.  The United States Supreme Court may provide some hint of where it stands on this issue when it decides the Stolt-Nielsen case (blogged here and here), which raises the related issue whether imposing class action arbitration is consistent with the Federal Arbitration Act when the parties’ contract is silent on that score.  And the Supreme Court may directly address the issue of whether class action waivers comport with federal policy if it decides to grant certiorari in the American Express Merchants’ Litigation (blogged here).  Today we examine a case in which the question was whether a state policy in favor of consumer class actions could trump the enforcement of an arbitration agreement containing a class-action waiver. 

On July 2, 2009, in Feeney v. Dell Inc., ___ Mass. ___, slip op. (July 2, 2009), the Massachusetts Supreme Judicial Court (the “SJC”) ruled that a class action waiver contained in a consumer arbitration agreement violated a fundamental Massachusetts public policy favoring class actions, even though the parties had agreed that Texas law, which allows class action waivers, would govern their agreement.  This violation of Massachusetts public policy, said the Court, rendered the arbitration agreement unenforceable because the class action waiver was unenforceable and could not be severed from the remainder of the arbitration agreement.  But, in an interesting turn of events, the Court dismissed the consumers’ claims with leave to replead, because they failed to state a claim under Mass. G.L., c. 93A, the applicable consumer protection law. 

The case is somewhat different from other decisions voiding class action waivers because the agreement was voided on state public policy grounds, rather than on state unconscionability grounds, and because the court refused to enforce not only the class action waiver but also a choice-of-law clause indicating the parties’ desire that Texas, not Massachusetts, law would govern the class action waiver issue.  The case gives rise to serious questions concerning federal preemption of Massachusetts state policy. 

In this part I of a two-part post, we summarize the Feeny case.  In part II, which will follow tomorrow or the next day, we shall provide our critical analysis.  Because the publicly available copy of the case does not feature official pagination, we have eliminated jump cites, but provide after quotes pertinent information about internal citations, quotations and the like.    Continue Reading »

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