Archive for the ‘Grounds for Vacatur’ Category

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Interesting Article on Arbitrator Power to Retain Jurisdiction

December 17th, 2009 Association of Insurance and Reinsurance Run-Off Companies (AIRROC), Authority of Arbitrators, Awards, Commercial and Industry Arbitration and Mediation Group, Functus Officio, Grounds for Vacatur Comments Off on Interesting Article on Arbitrator Power to Retain Jurisdiction

On June 28, 2009 we published a post concerning an article we wrote for AIRROC Matters about KX Reinsurance Co. v. General Reinsurance Corp., 08 Civ. 7807 (SAS), 2008 WL 4904882 (S.D.N.Y. Nov. 18, 2008) (Scheindlin, J.), where the court held that an arbitration panel exceeded its authority when, after resolving all the issues the parties submitted, it nevertheless retained jurisdiction.  A copy of our post is here. 

Around the time we published that post, my friend, colleague and fellow LinkedIn Commercial and Industry Arbitration and Mediation Group member, Theresa Hajost, told me that she had an article in the works that would treat in a very comprehensive fashion the issue of arbitrator authority to retain jurisdiction.  (For those of you who do not already know her, Theresa is a partner at the Washington, D.C. office of Halloran & Sage LLP, where she practices insurance and reinsurance litigation and arbitration.)  I thought that was a great idea and told her so. 

Theresa recently published the article, Does An Arbitrator’s Retention of Jurisdiction After The Issuance of a Final Award Subject That Award To Vacatur?,  in ADR Choices (Volume I Issue 10) (published by DRI).  We highly recommend it as it surveys and discusses cases from all over the country on the issue of an arbitrator’s authority to retain jurisdiction, organizes those cases into helpful categories and offers  insightful comments on the subject.  It is an excellent resource for anyone who is interested in arbitral power, or who is confronted with a scenario where there is a question concerning an arbitration panel’s authority to remain constituted post award.  You can read the article using the link Halloran & Sage has kindly provided here.

Great job, Theresa!

Arbitration Nuts & Bolts: Vacating Arbitration Awards — It’s All in the Agreement

December 8th, 2009 Awards, Grounds for Vacatur, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure, Reinsurance Arbitration 2 Comments »

Part I:  Introduction

An arbitration award is effectively a contract resulting from a contract.  Two parties agree to appoint arbitrators, submit their dispute to arbitration and abide by the award.  The parties ordinarily consent to entry of judgment on the award, and it can be confirmed under Section 9 of the Federal Arbitration Act (or a state law equivalent when the Federal Arbitration Act doesn’t apply).  Alternatively it may be enforced through the plenary and summary  procedures applicable to ordinary contracts (subject to any special rules governing arbitration awards).  

So what happens when things go awry — or at least seem to have gone awry — and the arbitration award is or appears to be fundamentally unfair, divorced from the contract or the result of fraud, bias, or some form of prejudicial misconduct on the part of the arbitrators?  Section 10 of the Federal Arbitration Act provides a safety net in the form of a motion or petition  to vacate the award.  (State arbitration statutes and law applicable in actions to enforce arbitration awards generally provide similar recourse, but our focus here is on the Federal Arbitration Act.) Continue Reading »

Burlage Update: On Rehearing California Court of Appeal Affirms Trial Court Decision Vacating Award

October 24th, 2009 California State Courts, Grounds for Vacatur, Procedural Misconduct 1 Comment »

On October 15, 2009 we discussed the controversy about the California Court of Appeal, Second Appellate District’s decision in Burlage v. Superior Court of Ventura Cty., ___ Cal. App. 4th ___, slip op. (Cal. App. 2d Dist. Aug. 31, 2009), opinion following rehearing  ___ Cal. App. 4th ___, slip op. (Cal. App. 2d Dist. October 20, 2009)  (A copy of the August 31, 2009 opinion is here, and a copy of our post is here.)  We are happy to report that on October 20, 2009 the Court issued its opinion following rehearing, which affirms the trial court’s decision vacating the award.  (A copy of the opinion following rehearing is here.)

The opinion following rehearing is substantially the same as the August 31, 2009 opinion, save for a few additional paragraph the majority added to respond further to Perren, J.’s dissenting opinion.  Perren, J.’s dissent was reissued without material change. 

The additional paragraphs the majority added to address the dissenting opinion are set forth for our readers’ convenience below:

We disagree with the dissent’s suggestion that the arbitrator considered the lot-line adjustment evidence in the in limine motion.  In the context of the case, we agree with the discerning comments of our colleagues in Gonzales v. Interinsurance Exchange (1978) 84 Cal.App.3d 58, 63:  “One cannot ‘consider’ what one has refused to ‘hear.’  Legally speaking the admission of evidence is to hear it, and the weighing of it is to give it consideration.”

The situation here is different than that in Hall v. Superior Court, supra, 18 Cal.App.4th 427.  In Hall, a party wished to reopen the arbitration hearing with additional evidence.  After hearing the party’s offer of proof, the arbitrator announced that his decision would be the same even with the proffered evidence.  The appellate court concluded the arbitrator did not prevent the losing party from fairly presenting his defense.  (Id. at p. 439.)  The trial court’s ruling to vacate the arbitration award was reversed, however, because “[w]here . . . a party complains of excluded material evidence, the reviewing court should generally focus first on prejudice, not materiality.  To find substantial prejudice the court must accept, for purposes of analysis, the arbitrator’s legal theory and conclude that the arbitrator might well have made a different award had the evidence been allowed.”  (Ibid.)  Unlike Hall, the trial court here found on substantial evidence that “[t]he Arbitrator’s refusal to admit these subsequent circumstances directly affected the issue of damages, thereby substantially prejudicing  Defendant’s [Spencer’s] ability to dispute the amount of damage suffered by Plaintiffs [the Burlages].”

It may be argued that to avoid the imposition of section 1286.2, arbitrators will simply admit evidence to insulate their decisions from review.  We do not subscribe to this cynical view.  It is through judicial review that the law is shaped and developed.  Arbitrators do not subvert this process because a court might vacate an award.  Arbitrators base their decisions on a careful analysis of the law and facts.  They, like the arbitrator here, are professionals who conduct themselves according to the canons of ethics and the high degree of integrity their profession demands.

Slip op. at 6-7 (opinion following rehearing).

We shall keep readers apprised of any further developments as and when they occur.

SCOTUS Denies Certiorari in All Three Federal Arbitration Act Manifest Disregard Cases Considered at Last Week’s Conference

October 5th, 2009 Awards, Grounds for Vacatur, United States Court of Appeals for the Ninth Circuit, United States Court of Appeals for the Sixth Circuit, United States Supreme Court Comments Off on SCOTUS Denies Certiorari in All Three Federal Arbitration Act Manifest Disregard Cases Considered at Last Week’s Conference

Last week we reported that the United States Supreme Court was considering three petitions for certiorari concerning whether manifest disregard of the law remains a viable ground for vacating or modifying an arbitration award after Hall Street Assoc., L.L.C. v. Mattel , Inc, 552 U.S. ___, slip op. (March 25, 2008) (post here).  Today the Court denied certiorari in all three cases:  The Coffee Beanery, Ltd. v. WW, LLC, 300 Fed. Appx. 415 (6th Cir. 2008) (08-1396);  Grain v. Trinity Health, 551 F.3d 374 (6th Cir. 2008) (08-1446); and Improv West Associates v. Comedy Club, Inc.,  553 F.3d 1277 (9th Cir. ) (08-1529).

Seventh Circuit Says Panel did not Exceed its Powers by Appointing a Replacement Arbitrator in a Manner not Specified in the Parties’ Agreement: WellPoint, Inc. v. John Hancock Life Ins. Co.

September 9th, 2009 Authority of Arbitrators, Awards, Grounds for Vacatur, Reinsurance Arbitration, United States Court of Appeals for the Seventh Circuit Comments Off on Seventh Circuit Says Panel did not Exceed its Powers by Appointing a Replacement Arbitrator in a Manner not Specified in the Parties’ Agreement: WellPoint, Inc. v. John Hancock Life Ins. Co.

The Seventh Circuit recently decided an important case concerning what happens when Party A asks its party-appointed arbitrator to resign, the agreement is silent on how the vacancy should be filled, the remaining two arbitrators devise and implement a procedure for appointing a replacement, Party B (whose arbitrator did not resign) reserves its right to challenge the replacement procedure, and the Panel ultimately renders an award in favor of Party A.  The Court held that the Panel did not exceed its powers by adopting and implementing — in the face of the agreement’s silence, and in the absence of Party B seeking court intervention under Federal Arbitration Act Section 5 – a procedure that allowed Party A to replace its party-appointed arbitrator and continue with the arbitration.  See WellPoint, Inc. v. John Hancock Life Ins. Co., ___ F.3d ___, slip op. (7th Cir.  August 7, 2009) (Slip op. here).  Continue Reading »

KX Reinsurance Company v. General Reinsurance Corp.: Arbitrators May Not Retain Jurisdiction After Deciding All Submitted Issues

June 28th, 2009 Association of Insurance and Reinsurance Run-Off Companies (AIRROC), Authority of Arbitrators, Awards, Functus Officio, Grounds for Vacatur, Practice and Procedure, Reinsurance Arbitration, United States District Court for the Southern District of New York 1 Comment »

 Arbitration clauses in reinsurance contracts  typically recognize either expressly or impliedly that an arbitration proceeding has a beginning and an end.   The process usually begins with a demand for arbitration and the selection of an arbitration panel, and ends with the arbitrators holding a hearing on the merits and issuing a final award.  At that point the parties generally expect that the arbitrators will step down, and that any future dispute will be the subject of a new arbitration proceeding, perhaps with a different panel. Continue Reading »

The AAA Commercial Rules and the Pig in a Poke: Gilbert Street Developers, LLC v. La Quinta Homes, LLC

June 24th, 2009 Arbitrability, Authority of Arbitrators, California State Courts, Grounds for Vacatur 3 Comments »

Introduction

Under the Federal Arbitration Act and federal labor law, arbitrators can decide arbitrability questions subject only to deferential review, provided the parties “clearly and unmistakably” delegate that power to them.  California’s state arbitration law follows this familiar federal rule. 

On June 11, 2009 the California Court of Appeal, Fourth District, Division 3, held that the parties to an arbitration agreement did not “clearly and unmistakably” agree to arbitrate arbitrability by incorporating the Commercial Rules of the American Arbitration Association into their contract, because at the time the parties agreed to arbitrate, the rules were silent on whether arbitrators could decide arbitrability questions.  See Gilbert Street Developers, LLC v. La Quinta Homes, LLC, ___ Cal. Rptr.3d ___, slip op (Cal. App. 4th Dist. June 11, 2009) (certified for publication) (copy available here).  The Court so held even though the parties agreed that the arbitration would be “conducted in accordance with the Rules of the American Arbitration Association existing at the date [of the arbitration].  .  .  . ,” and by the date of the arbitration the rules had been amended to provide expressly that the arbitrators had the authority to determine their own jurisdiction.  See slip op. at 2-3.  The Court also held that the operation of a “buyout” clause in the parties’ agreement did not fall within the scope of the parties’ arbitration clause because it involved discretionary matters, which were expressly excluded from arbitration.  See slip op. at 15-16.  Continue Reading »

Hall Street Meets Pearl Street: Stolt-Nielsen and the Federal Arbitration Act’s New Section 10(a)(4)

May 29th, 2009 Arbitrability, Authority of Arbitrators, Awards, Grounds for Vacatur, Practice and Procedure, United States Court of Appeals for the Second Circuit 11 Comments »

Introduction

Victoria VanBuren’s May 4, 2009 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? (available here), looked at the scope of Section 10(a)(4) in the Fifth Circuit after Hall Street Assoc. v. Mattel, Inc., 128 S. Ct. 1396 (2008) and Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349 (5th Cir. 2009). Today we look at the scope of Section 10(a)(4) in the Second Circuit after Hall Street met Pearl Street in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. filed Mar. 26, 2009 (No. 08-1198), in which the Second Circuit said that, notwithstanding its prior case law suggesting otherwise,  “manifest disregard of the law” is not an independent basis for vacating an arbitration award foreclosed by Hall Street, but one encompassed within Section 10(a)(4)’s prohibition against arbitrators “exceed[ing] their powers.  .  .  .”  As we shall see, the Second Circuit justified that holding by taking a more expansive view of Section 10(a)(4) than it previously had, a view that may also permit challenges based on “manifest disregard of the agreement.”  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 »

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