main image

Archive for the ‘Federal Rules of Civil Procedure’ Category

Compelling Video Conference Testimony | Arbitral Subpoenas |Section 7 of the Federal Arbitration Act Part II | Businessperson’s Federal Arbitration Act FAQ Guide

May 18th, 2020 Arbitral Subpoenas, Arbitration and Mediation FAQs, Arbitration Law, Arbitration Practice and Procedure, COVID-19 Considerations, FAA Chapter 1, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 7, Federal Rules of Civil Procedure, Nuts & Bolts: Arbitration, Section 7, Small Business B-2-B Arbitration, Subpoenas, United States Court of Appeals for the Eleventh Circuit, Video Conference Hearings 3 Comments »
video conference

Whether a Court can compel enforcement of an arbitral subpoena that commands a witness to appear at a hearing by video conference is a critical one, particularly in view of the ongoing COVID-19 pandemic.

The last instalment of this Businessperson’s Federal Arbitration Act FAQ Guide addressed a couple of key questions concerning Section 7 of the Federal Arbitration Act, which authorizes judicial enforcement of arbitral subpoenas that require non-party witnesses to attend and produce documents at arbitration  hearings. That instalment explained, among other things, how Section 7, construed together with Federal Rule of Civil Procedure 45(c), authorize court enforcement of an arbitral subpoena that “command[s] a person to attend” a “hearing,” but “only if”: (a) “the person resides, is employed, or regularly transacts business in person[]” “within 100 miles” of the hearing. . . ; or (b) the. . . hearing is “within the state where the person resides, is employed, or regularly transacts business in person,” and then only if the person “is a party or a party’s officer[,]” or “is commanded to attend a trial and would not incur substantial expense.” Fed. R. Civ. P. 45(c); see 9 U.S.C. § 7.

That means that courts cannot enforce arbitral subpoenas that purport to compel witnesses outside the territorial boundaries of Fed. R. Civ. P. 45(c) to testify and produce documents at a hearing. And the majority of courts have ruled that Section 7 does not authorize arbitrators to issue judicially-enforceable document or deposition subpoenas, something that federal district courts can do in federal court litigation. (See here.)

But these days—as the COVID-19 pandemic changes the way we interact on a day-to-day basis—whether arbitrators can issue subpoenas requiring persons to appear for a video- or teleconference in lieu of a hearing is an important question, irrespective of whether those witnesses could be compelled to appear in person before the arbitrators under Fed. R. Civ. P. 45(c). To that question we now turn.

Continue Reading »

Arbitral Subpoenas | Section 7 of the Federal Arbitration Act | Businessperson’s Federal Arbitration Act FAQ Guide | Nuts and Bolts of Pre-Award Federal Arbitration Act Practice

May 14th, 2020 Arbitral Subpoenas, Arbitration Law, Arbitration Practice and Procedure, FAA Chapter 1, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 7, Federal Rules of Civil Procedure, Nuts & Bolts, Nuts & Bolts: Arbitration, Personal Jurisdiction, Practice and Procedure, Pre-Award Federal Arbitration Act Litigation, Section 7, Subpoenas 4 Comments »
arbitral subpoenas Section 7

This segment of the Businessperson’s Federal Arbitration Act FAQ Guide concerns the enforcement of arbitral subpoenas under Section 7 of the FAA.

Arbitrators can require the parties before them to produce documents, appear for depositions, and testify at hearings. That power is not self-executing but is derived from Federal Arbitration Act-authorized judicial enforcement of arbitration agreements and awards. If, for example, parties do not comply, the arbitrators may, absent contract language to the contrary, impose sanctions, including attorney fee awards or adverse inferences on merits issues.

But resolving disputes often requires testimony and documentary evidence from persons who are not parties to the dispute. Courts have subpoena power and can compel third-party witnesses within their jurisdiction to testify, produce documents, or both. They can enforce that power through contempt sanctions.

Arbitrators have no such inherent power over third parties and FAA-authorized judicial power to confirm (i.e., reduce to judgment) arbitration awards does nothing to impose legally enforceable obligations on persons not lawfully parties to, or otherwise bound by, those arbitration awards.

Section 7: Arbitral Subpoenas

Continue Reading »

Venue and Hearing Procedure | Application to Compel Arbitration | Businessperson’s Federal Arbitration Act FAQ Guide | Nuts and Bolts of Pre-Award Federal Arbitration Act Practice under Sections 2, 3, and 4 (Part IV)

April 27th, 2020 Application to Compel Arbitration, Arbitration and Mediation FAQs, Arbitration Practice and Procedure, Businessperson's FAQ Guide to the Federal Arbitration Act, FAA Chapter 1, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 4, Federal Courts, Federal Rules of Civil Procedure, Motion to Compel Arbitration, Nuts & Bolts: Arbitration, Personal Jurisdiction, Petition to Compel Arbitration, Practice and Procedure, Small Business B-2-B Arbitration 1 Comment »
hearing procedure venue

This segment of the Businessperson’s Federal Arbitration ACT FAQ Guide focuses on the venue and hearing procedure aspects of compelling arbitration under Section 4 of the Federal Arbitration Act.  

The last instalment discussed the following FAQ related to Section 4 applications to compel arbitration: “What Papers Comprise an Application to Compel Arbitration and how are they Served?”

This segment addresses two FAQs:

  1. How does a Federal Court “Hear” an Application to Compel Arbitration?  
  2. In what Federal Court may an Application to Compel Arbitration be Filed?

Introduction: Section 4 and its Component Parts

As explained in our prior posts, Section 4 consists of 386 words jammed into a single paragraph, but it is easier to digest and follow if we divide it into subparagraphs or subsections, which we do below, using bold and bracketed text: 

[(a) Who may Petition what Court When and for What.] A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement.

[(b) Notice and Service of Petition.] Five days’ notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure.

[(c) Hearing Procedure and Venue.] The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof.

[(d) Jury Trial, where Applicable] If no jury trial be demanded by the party alleged to be in default, or if the matter in dispute is within admiralty jurisdiction, the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose.

[(e) Disposition upon Trial.] If the jury find that no agreement in writing for arbitration was made or that there is no default in proceeding thereunder, the proceeding shall be dismissed. If the jury find that an agreement for arbitration was made in writing and that there is a default in proceeding thereunder, the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.

9 U.S.C. § 4 (bold and bracketed text added).

How does a Federal Court “Hear” an Application to Compel Arbitration?

What we refer to as “Section 4(c)” provides that “[t]he court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.” But, Section 4 continues, “[i]f the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof.” 9 U.S.C. § 4.

Continue Reading »

Service and Notice of Application to Compel Arbitration | Businessperson’s Federal Arbitration Act FAQ Guide | Nuts and Bolts of Pre-Award Federal Arbitration Act Practice under Sections 2, 3, and 4 (Part III)

April 24th, 2020 Application to Compel Arbitration, Arbitrability, Arbitration Agreements, Arbitration Law, Arbitration Practice and Procedure, Enforcing Arbitration Agreements, FAA Chapter 1, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 2, Federal Arbitration Act Section 4, Federal Rules of Civil Procedure, Gateway Disputes, Gateway Questions, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure, Pre-Award Federal Arbitration Act Litigation, Questions of Arbitrability, Small Business B-2-B Arbitration 1 Comment »
notice of application to compel
.

Today’s segment of the Businessperson’s Federal Arbitration ACT FAQ Guide continues to focus on the nuts and bolts of applications to compel arbitration under Section 4 of the Federal Arbitration Act.

The last instalment discussed Section 4 generally, divided the statute into five parts, and addressed an FAQ related to the first of those five parts: “Under Section 4, who May Petition what Court when and for what?”

This segment addresses the following FAQ related to the second of those five parts: “What Papers Comprise an Application to Compel Arbitration and how are they Served?”

Future segments will address FAQs relating to the other three parts of Section 4.  

Applications to Compel Arbitration: Section 4 and its Component Parts

As explained in our prior post, Section 4 consists of 386 words jammed into a single paragraph, but it is easier to digest and follow if we divide it up into subparagraphs or subsections, which we do below, using bold and bracketed text: 

[(a) Who may Petition what Court When and for What.] A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement.

[(b) Notice and Service of Petition.] Five days’ notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure.

[(c) Hearing Procedure and Venue.] The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof.

[(d) Jury Trial, where Applicable] If no jury trial be demanded by the party alleged to be in default, or if the matter in dispute is within admiralty jurisdiction, the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose.

[(e) Disposition upon Trial.] If the jury find that no agreement in writing for arbitration was made or that there is no default in proceeding thereunder, the proceeding shall be dismissed. If the jury find that an agreement for arbitration was made in writing and that there is a default in proceeding thereunder, the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.

9 U.S.C. § 4 (bold and bracketed text added).

What Papers Comprise an Application to Compel Arbitration and how are they Served?

The question of what papers comprise an application to compel arbitration and how are they served arises out of what we refer to as “Section 4(b),” which states:

Five days’ notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure.

. .  .  . 

9 U.S.C. § 4.

These two sentences should be interpreted in conjunction with Section 6 of the Federal Arbitration Act and the Federal Rules of Civil Procedure. Also relevant is whether the application to compel is an independent proceeding, or is simply a motion made in an existing action.

Section 6: Application treated as a Motion

Like all other applications for relief under the Federal Arbitration Act, an application to compel arbitration, when brought as an independent legal proceeding in federal district court, is a summary or expedited proceeding, not a regular lawsuit.  Rule 81(a)(6)(B) of the Federal Rules of Civil Procedure provides that the Federal Rules “to the extent applicable, govern proceedings under the following laws, except as these laws provide for other procedures.  .  . (B) 9 U.S.C., relating to arbitration.  .  .  .”

Section 6 of the FAA “provide[s] for.  .  . procedures” other than those applicable to ordinary civil actions because it requires applications for relief under the FAA to be made and heard as motions:

Any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise .  .  .  expressly provided [in the Federal Arbitration Act].

9 U.S.C. § 6.

While Section 6 of the Federal Arbitration Act and Fed. R. Civ. P. 81(a)(6)(B) establish that Federal Rules of Civil Procedure pleading rules applicable to full-blown lawsuits do not apply to applications to compel arbitration, those Rules, and also local court rules, govern motion practice, and are thus made applicable by Section 6 to applications to compel arbitration, unless otherwise provided in the Federal Arbitration Act.

Requirement of Five Days’ Notice

What we refer to as “Section 4(b)” states, in part: “Five days’ notice in writing of such application shall be served upon the party in default.”

That means: (a) notice of the application to compel arbitration must be in writing; (b) it must be dispatched or delivered in a prescribed manner to the opposing party (i.e. “served”); and (c) it must be so dispatched or delivered at least five days before the hearing date on the motion. 

Papers Comprising Application to Compel Arbitration 

Continue Reading »

Can a Party Obtain Post-Judgment Relief from a Confirmed Arbitration Award Procured by Fraud?

May 26th, 2015 Arbitration Practice and Procedure, Arbitration Risks, Asbestos-Related Claims, Bad Faith, Confirmation of Awards, Corruption or Undue Means, Definition of Occurrence, Federal Courts, Federal Rules of Civil Procedure, Final Awards, Grounds for Vacatur, United States Court of Appeals for the Second Circuit, United States District Court for the Southern District of New York Comments Off on Can a Party Obtain Post-Judgment Relief from a Confirmed Arbitration Award Procured by Fraud?

Introduction

Relief from an Arbitration Award Procured by Fraud

yay-14955744-digital

Section 10(a)(1) of the Federal Arbitration Act authorizes Courts to vacate arbitration awards that were “procured by fraud, corruption or undue means.”  9 U.S.C. § 10(a)(1). (For a discussion of Section 10(a)(1), see L. Reins. & Arb. Law Forum post here.) But a motion to vacate an arbitration award procured by fraud (or otherwise) is subject to a strict three-month deadline, and Section 10, unlike certain of its state-law counterparts, does not provide for tolling of the three-month deadline on the ground the challenging party did not know or have reason to know it had grounds to allege the arbitration award was procured by fraud. Compare 9 U.S.C. § 10(a)(1) with 2000 Revised Uniform Arbitration Act § 23(b) (Uniform Law Comm’n 2000) (If “the [movant] alleges that the award was procured by corruption, fraud, or other undue means, [then, in that].  .  .   case the [motion] must be made within 90 days after the ground is known or by the exercise of reasonable care would have been known by the [movant].”);  1955 Uniform Arbitration Act § 12(b) (Uniform Law Comm’n 1955) ( “[I]f predicated upon corruption, fraud or other undue means, [the motion to vacate] shall be made within ninety days after such grounds are known or should have been known.”).

Once an award has been confirmed, it has the same force and effect as any other judgment of the court. See 9 U.S.C. § 13. Federal Rule Civ. P. 60(b) provides that “[o]n motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or
proceeding for the following reasons:.  .  .  (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party.  .  .  .” Fed. R. Civ. P. 60(c) provides that “[a] motion under Rule 60(b) must be made within a reasonable time—and for reasons (1), (2), and (3) [i.e., fraud, misrepresentation or misconduct] no more than a year after the entry of the judgment or order or the date of the proceeding.” Fed. R. Civ. P. 60(c).

So can a challenging party obtain relief from a confirmation judgment if: (a) an award-challenging party contends the Court entered judgment oin an arbitration award procured by fraud; (b) by extension, the judgment confirming the award was itself procured by fraud; (c) the award-challenging party did not know or have reason to know it was at the wrong end of an arbitration award procured by fraud until after the three-month statute of limitations for vacating an award had elapsed; and (d) the award-challenging party makes a timely motion for post-judgment relief under Fed. R. Civ. P. 60(b)? According to a district court judge of the U.S. District Court for the Southern District of New York, the answer is “no.”

 

Arrowood Indem. Co. v. Equitas Insurance Ltd., No. 13-cv-7680 (DLC), slip op. (S.D.N.Y. May 14, 2015)

No Post-Judgment Relief from Arbitration Award Procured by Fraud (Alleged or Otherwise)

Background

yay-677177

Arrowood arose out of an excess-of-loss treaty Arrowood’s predecessor(s) in interest had entered into with Underwriters at Lloyd’s in the 1960s. The terms of the treaty were apparently part of, or incorporated into, a “Global Slip,” which the Court, without much elaboration, described as “a complex contractual  reinsurance program.” The Global Slip was first negotiated in 1966 and effective January 1, 1967 through December 31, 1968. It was apparently renewed a number of times thereafter, though the court does not say for what period or periods. The renewal agreements were “substantially similar” although they “contain[ed] new contractual language.” Slip op. at 2.

The Global Slip covered (apparently among other things) losses in excess of $1 million incurred under Arrowood’s casualty insurance policies under three different types of coverage. At issue was “Common Cause Coverage,” which covered losses arising out of an “occurrences” during the contract term, provided the occurrence or occurrences were the “probable common cause or causes” of more than one claim under the policies. The Global Slip also contained a “First Advised” clause, which said that “this Contract does not cover any claim or claims arising from a common cause, which are not first advised during the period of this Contract.”

yay-1299629-digitalLike so many other liability insurers, Arrowood began receiving, adjusting and settling asbestos bodily injury claims beginning in the 1980s. Underwriters at Lloyd’s London insisted that Arrowood present its asbestos reinsurance claims on a per claimant per exposure-year basis, absorbing one $1 million retention each year against the total asbestos claim liabilities allocated to that year under the Underwriters’ per claimant per exposure-year allocation methodology.

In 2008 Arrowood, after reviewing the contract language, stopped using exclusively the Underwriters-prescribed asbestos personal-injury claim reinsurance allocation methodology, which it had followed for almost 25 years, and began presenting a number of claims under the Common Cause Coverage provision of the Global Slip . Because those claims were not, “first advised” in the years 1967 or 1968, the Underwriters denied them.

The Arbitration and Confirmation Proceedings

One of the parties demanded arbitration in October 2010, and a tripartite panel was appointed. The Underwriters argued, among other things, that: (a) the parties’s 25-year course of dealing evidenced a binding agreement on how asbestos claims would be presented to the Underwriters; (b) some claims fell exclusively under employer’s liability coverage; and (c) Common Cause Coverage  did not apply because the requirements of the First Advised Clause were not satisfied. Continue Reading »

What can a Federal Arbitration Act Practitioner Learn from an ERISA MPPAA Pension Plan Arbitration Case?

May 5th, 2015 Appellate Practice, Arbitration Practice and Procedure, Arbitration Risks, Awards, ERISA, Federal Arbitration Act Enforcement Litigation Procedure, Federal Courts, Federal Rules of Civil Procedure, Judicial Review of Arbitration Awards, Labor Arbitration, Managing Dispute Risks, MPPAA Arbitration, Practice and Procedure, United States Court of Appeals for the Fourth Circuit Comments Off on What can a Federal Arbitration Act Practitioner Learn from an ERISA MPPAA Pension Plan Arbitration Case?

 Fourth Circuit Says Proceeding to Overturn ERISA MPPAA Pension Plan Dispute Arbitration Award is Commenced by Filing a Complaint—not a Federal Arbitration Act Application, Petition or Motion

Introduction

 yay-12694086-digital

“Sorry, I’m a bit of a stickler for paperwork. Where would we be if we didn’t follow the correct procedures?”

Sam Lowry (played by Jonathan Pryce ), Brazil (1985)

Dystopian-future bureaucratic procedure may be one thing, but federal court litigation procedure is quite another—not because of where we might or might not be if we don’t follow it—but simply because not following it can have disastrous consequences. That is true in spades in Federal Arbitration Act enforcement litigation, where proceedings to enforce arbitration agreements and awards are governed by a strange amalgam of procedural rules derived from the Federal Arbitration Act, the Federal Rules of Civil Procedure and district court local rules. See Fed. R. Civ. P. 1, 2, 3, 6(c), 7, 8, 9, 10, 12, 15, 43(c) & 81(a)(6)(B); 9 U.S.C. §§ 6, 9, 10, 11, 12 & 13; see, e.g., IFC Interconsult v. Safeguard Int’l Partners, 438 F.3d 298, 308-09 (3rd Cir. 2006); Productos Mercantiles Industriales, S.A.  v. Faberge USA, Inc., 23 F.3d 41, 46 (2d Cir. 1994).

On April 21, 2015 the U.S. Court of Appeals for the Fourth Circuit decided Freight Drivers and Helpers Local Union No. 557 Pension Fund v. Penske Logistics LLC,  ___ F.3d ___, No. 14-1464, slip op. (4th Cir. April 21, 2015), a case that helps illustrate the risks associated with assuming that the Federal Rules of Civil Procedure’s liberal pleading and amendment rules apply to applications for relief under the Federal Arbitration Act. As it turns out, the appellant did nothing wrong by assuming that the Federal Arbitration Act’s procedural rules did not trump Federal Rules of Civil Procedure, because the case fell under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), and the district court erred by interpreting the MPPAA to require compliance with Federal Arbitration Act litigation procedure rules.

The MPPAA was enacted to strengthen the Employee Retirement Income Security Act (“ERISA”)’s provisions designed to protect multi-employer pension plans (i.e., collectively bargained pension plans funded by multiple employers, which are generally participants in the same industry).  It features a mandatory arbitration requirement applicable to disputes about collectively bargained pension plans funded by multiple employers, including disputes about an employer’s withdrawal liability—that is the amount an employer must contribute to  the fund when it stops participating in it.

It requires a party seeking judicial review of an award to do so in 30-days and, as we’ll see, it contains a provision that at first glance appears to make the Federal Arbitration Act’s litigation procedure rules applicable to judicial review of an MPPAA arbitration award. The Court held that under the MPPAA, the Federal Arbitration Act governed only arbitration procedure, not litigation procedure, and that accordingly, the award challenger’s amended complaint related back to the timely-filed original one.

yay-608942-digitalEndingFreight Drivers illustrates how important compliance with Federal Arbitration Act procedures can be, especially given the short limitation periods applicable to motions to confirm, vacate, modify and correct awards.  Had the Federal Arbitration Act’s litigation procedures applied, then the plaintiff’s “amended complaint” might have been deemed time-barred on the ground that Fed. R. Civ. P. 15(c)’s relation-back provisions apply to pleadings only, and under the Federal Rules of Civil Procedure, and the Federal Arbitration Act, the amended complaint had to be deemed to be a motion, not a pleading. As we’ll see, that’s what the district court concluded, and the Fourth Circuit decided the case on the sole ground that the Federal Arbitration Act did not apply to MPPAA litigation procedure. Continue Reading »