Posts Tagged ‘Arbitrability’

« Older Entries
Newer Entries »

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 »

Shipkevich v. Staten Island Univ. Hosp., 14 Penn Plaza LLC v. Pyett, and the “Clear and Unmistakable” Rule

June 30th, 2009 Arbitrability, Authority of Arbitrators, United States District Court for the Eastern District of New York, United States Supreme Court 1 Comment »

 On April 4 we reported on 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456 (2009) (Thomas, J.), and published a follow-up post on April 7, 2009 (posts available here and here).     The question before the Court was whether “a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate [Age Discrimination in Employment Act (“ADEA”)] claims is enforceable as a matter of federal law.”   The Court told us the answer was “yes.”   

That answer, of course, begs the question whether any particular collective bargaining agreement (“CBA”) “clearly and unmistakably” requires arbitration of statutory claims.  The Court in Shipkevich v. Staten Island Univ. Hosp., No. 08-CV-1008 (FB)(JMA), 2009 WL 1706590 (E.D.N.Y. June 16, 2009) recently considered, among other things, whether the CBA before it clearly and unmistakably required arbitration of claims under  Title VII of the Civil Rights Act of 1964 (“Title VII”), New York State civil rights legislation, and New York City’s Human Rights Law, and said the answer was “no.”  So let’s take a brief  look at Shipkevich to get some perspective on what “clear and unmistakable” means.  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 »

The Tenth Circuit Tackles a Narrow Arbitration Clause: Chelsea Family Pharmacy, PLLC v. Medco Health Solutions, Inc.

June 8th, 2009 Arbitrability, Authority of Arbitrators, United States Court of Appeals for the Tenth Circuit Comments Off on The Tenth Circuit Tackles a Narrow Arbitration Clause: Chelsea Family Pharmacy, PLLC v. Medco Health Solutions, Inc.

 Introduction

Arbitrability disputes come in various forms.  Some involve broad arbitration clauses, some narrow clauses, and some clauses that are neither broad nor narrow.  Chelsea Family Pharmacy, PLLC v. Medco Health Solutions, Inc., ___ F.3d ___ (10th Cir. 2009) (available here) provides a relatively simple illustration of how courts may decide controversies concerning relatively narrow arbitration clauses and the results that may ensue.  Continue Reading »

Reinsurance Nuts & Bolts: Honorable Engagement Clauses

May 18th, 2009 Arbitrability, Authority of Arbitrators, Nuts & Bolts, Nuts & Bolts: Reinsurance, Reinsurance Arbitration 1 Comment »

Introduction

In today’s Nuts & Bolts post we take a brief look at honorable engagement clauses, which are sometimes referred to as “honorable undertaking” clauses.  Honorable engagement clauses are, for practical purposes, a species of choice of law clause.   Generally, they confer upon arbitration panels a degree of freedom to depart from the strict rules of law and evidence, and to interpret the contract as an honorable engagement rather than literally according to its terms.  They are premised on the now arguably outmoded historical concept that a reinsurance contract is more than a contract, but an honorable undertaking, a deal that  is closed when the parties shake hands over a cocktail (or three), and one by which the parties are honor-bound to abide.  They also recognize that reinsurance is an arcane business with its own peculiar set of customs, practices and norms, and that, if the parties so agree, arbitrators should be reasonably free to apply these norms in deciding a case, even if a court faced with the same facts would or could not. 

Honorable engagement clauses are more common in older reinsurance contracts than in those written today.  But many reinsurance disputes arise out of long-tail asbestos or environmental claims arising out of decades-old contracts, a great many of which contain these clauses.  And the clauses can have some significant implications in those disputes. 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 »

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 »

ReliaStar Life Insurance Co. v. EMC National Life Co.: Second Circuit Holds That Life Reinsurer Must Pay Ceding Company Attorney and Arbitrator Fees Notwithstanding Contract Language to the Contrary

April 21st, 2009 Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, Reinsurance Arbitration, United States Court of Appeals for the Second Circuit 3 Comments »

Introduction

On April 9, 2009 the United States Court of Appeals for the Second Circuit decided a case that may significantly expand the power of arbitrators to award attorney and arbitrator fees in cases involving reinsurance and other contracts.  The Court 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.”  ReliaStar Life Ins. Co. v. EMC National Life Co.,  ___ F.3d ___, ___ (2009) (Raggi, J.).  This post briefly discusses the majority and dissenting opinions.  Our critical analysis will be provided in a subsequent post.  Continue Reading »

Arbitration Fairness Act or Lawyers’ Full Employment Act?

April 18th, 2009 Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court Comments Off on Arbitration Fairness Act or Lawyers’ Full Employment Act?

What Does the Arbitration Fairness Act of 2009 Have to Say About Commercial and Industry Arbitration Involving Sophisticated Parties? 

 Part V:  Summing Up

This is the final part of our multi-part post on the Arbitration Fairness Act of 2009 (the “Fairness Act”).  We did not address all aspects of the Fairness Act, but focused our attention on whether the Act may change the status quo in arbitrations involving only sophisticated, commercial entities. 

So what does the Arbitration Fairness Act of 2009 have to say about commercial and industry arbitration involving sophisiticated parties?  If you have been following our last six posts, you know the answer is not clear, and that the only thing that can be said with any degree of certainty is that the Fairness Act will result in litigation between sophisticated parties concerning the continuing viability of two fairly settled principles of arbitration law — severability and what we refer to as the Own Jurisdiction Rule.  That may be good news to some and bad news to others.  Continue Reading »

What does the Arbitration Fairness Act of 2009 Have to Say About Commercial and Industry Arbitration Involving Sophisticated Parties? (Part IV)

April 16th, 2009 Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court Comments Off on What does the Arbitration Fairness Act of 2009 Have to Say About Commercial and Industry Arbitration Involving Sophisticated Parties? (Part IV)

Will the Arbitration Fairness Act of 2009 Apply to Nondomestic Agreements and Awards Falling Under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards?

Introduction

In Parts I and II we discussed how the Arbitration Fairness Act of 2009 (the “Fairness Act”)  will likely lead to litigation concerning whether, and if so, to what extent, Proposed Section 2(c) abrogates: (a) the severability doctrine; and (b) the rule that arbitrators may determine their own jurisdiction if the parties clearly and unmistakably agree, with that determination subject only to deferential judicial review (the “Own Jurisdiction Rule”).    In Parts IIIA-C  we discussed two constructions of Proposed Section 2(c):  one that would abrogate severability and the Own Jurisdiction Rule in all cases falling under Chapter 1 of the FAA  (the “Broad Construction”); and one that would limit the scope of Proposed Section 2(c) to Chapter 1 cases where one of the parties contends that the arbitration agreement requires arbitration of a consumer, employment, franchise or statutory civil rights dispute (the “Narrow Construction”). 

In this Part IV we consider whether Proposed Section 2(c) of the Fairness Act applies to agreements and awards falling under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” or the “Convention”), which are governed by Chapter 2 of the FAA.  While the matter is not entirely free from doubt, Proposed Section 2(c) of the Fairness Act will probably be construed not to apply to awards and agreements falling under the New York Convention.  Thus, the doctrine of severability and the Own Jurisdiction Rule will probably continue to apply in cases falling under FAA Chapter 2, even if courts adopt the Broad Construction of the Fairness Act in cases governed by Chapter 1.       Continue Reading »

« Older Entries
Newer Entries »