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.
Posts Tagged ‘Class Arbitration’
Update on Federal Arbitration Act Cases Pending in the United States Supreme Court
September 29th, 2009 Awards, Class Action Arbitration, Class Action Waivers, Consolidation of Arbitration Proceedings, United States Court of Appeals for the Ninth Circuit 1 Comment »Today the United States Supreme Court is considering whether to grant certiorari in three cases that concern 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). The first is The Coffee Beanery, Ltd. v. WW, LLC, 300 Fed. Appx. 415 (6th Cir. 2008), petition for cert. filed May 11, 2009 (08-1396), in which the United States Court of Appeals for the Sixth Circuit held that manifest disregard survived Hall Street as an independent ground for vacatur, and that an award in favor of a franchisor must be vacated because the arbitrator manifestly disregarded Maryland franchise law requiring franchisors to disclose certain types of prior criminal convictions. The Sixth Circuit also found that the franchisor’s failure to disclose the conviction vitiated the arbitration clause contained in the franchise contract, a holding that seems questionable in light of Buckeye Check Cashing v. Cardegna, 546 U.S. 440, 449 (2006).
The second case is Grain v. Trinity Health, 551 F.3d 374 (6th Cir. 2008), petition for cert. filed May 19, 2009 (08-1446), in which the Sixth Circuit held that the arbitrators’ failure to enforce the parties’ choice of Michigan law as respects the issue of costs and attorney fees — characterized as manifest disregard of the law — was not a valid ground for modifying an arbitration award under Federal Arbitration Act Section 11.
The third is Improv West Associates v. Comedy Club, Inc., 553 F.3d 1277 (9th Cir. ), petition for cert. filed June 8, 2009 (08-1529), in which the United States Court of Appeals for the Ninth Circuit held that manifest disregard of the law remained viable after Hall Street because it fell within the ambit of Federal Arbitration Act Section 10(a)(4), and vacated an award on the ground that the arbitrator’s interpretation of applicable state law was “fundamentally incorrect,” albeit made in good faith.
The briefs in support of and in opposition to both petitions, as well as the lower court decisions, can be obtained by visiting one of our favorite blogs, the SCOTUSblog, here and here. It will be interesting to see whether the United States Supreme Court decides to grant certiorari in any or all of these cases.
On a related matter, Petitioners’ and amici merits briefs in 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) can be accessed via the American Bar Association’s website, here. Respondent’s briefs are due later in October and oral argument has been scheduled for December 9, 2009. (See Russ Kunkel’s LawMemo Arbitration Blog here). We have written extensively on Stolt-Nielsen, which concerns whether class arbitration may be imposed on parties whose contracts are silent on that point. (Posts available here, here, here, here, here, here, here, here and here.)
Finally, we are following the petition for certiorari filed in the American Express Merchants’ Litigation (blogged here), which has not yet come up for conference. The Amex Merchants’ Litigation concerns whether class arbitration waivers comport with federal antitrust policy.
We shall keep readers apprised of developments as and when they occur. . . .
Guest Post: The Argument for Judicial Power to Void Mandatory Arbitration Agreements and Class Action Waivers on State Public Policy Grounds
August 17th, 2009 Class Action Arbitration, Class Action Waivers, Commercial and Industry Arbitration and Mediation Group, Massachusetts Supreme Judicial Court 1 Comment »By Professor Peter Friedman
In my recent two-part guest post published in Disputing about recent state court decisions striking down mandatory arbitration clauses and class action waivers in consumer, online transactions, I concluded that those courts were “acting in legitimate ways [by requiring contract] disputes to be resolved in ways that provide relief for and deterrence of wrongdoing.” (Part I here; Part II here) In particular, I applauded the New Mexico Supreme Court and the Supreme Judicial Court of the Commonwealth of Massachusetts for making explicit the purely public policy grounds for invalidating mandatory arbitration clauses and class action waivers in consumer transactions. See Feeney v. Dell Inc., ___ Mass. ___ (July 2, 2009); Fiser v. Dell Computer Corp., ___ P.3d ___ (N.M. June 27, 2009). The courts concluded that the provisions deprived consumers of any meaningful remedies for the defendants’ alleged breaches of contract and that those provisions were therefore in conflict with strong state policies in favor of consumer protection.
It is worth examining more closely, however, my reasons for believing the courts in these cases were acting in judicially legitimate ways. It might be suggested, for example, that, if a court could strike these particular provisions down on public policy it had articulated without explicit statutory support, there would be nothing to stop courts from striking down any arbitration provisions on judicially formulated public policy grounds. Continue Reading »
