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Posts Tagged ‘United States Court of Appeals for the Seventh Circuit’

Pine Top Receivables, LLC v. Banco De Seguros Del Estado: The Seventh Circuit Exorcises some Ghosts of Reinsurance Past, but has it Summoned an Erie Ghost of Reinsurance Future?    

November 19th, 2014 Appellate Jurisdiction, Appellate Practice, Arbitrability, Arbitration Practice and Procedure, Contract Interpretation, FAA Chapter 3, Foreign Sovereign Immunities Act, Insolvency Proceedings, Inter-American Convention on International Commercial Arbitration, McCarran-Ferguson Act, Nuts & Bolts: Reinsurance, Panama Convention, Practice and Procedure, Pre-Answer Security, Reinsurance Litigation, United States Court of Appeals for the Seventh Circuit, United States Supreme Court Comments Off on Pine Top Receivables, LLC v. Banco De Seguros Del Estado: The Seventh Circuit Exorcises some Ghosts of Reinsurance Past, but has it Summoned an Erie Ghost of Reinsurance Future?    

In Pine Top Receivables, LLC v. Banco De Seguros Del Estado, ___ F.3d ___, Nos. 13-1364/2331, slip op. (7th Cir. Nov. 7, 2014) (per curiam) the United States Court of Appeals for the Seventh Circuit addressed a trio of issues that—once upon a time at least—arose fairly frequently in reinsurance litigation: pre-answer security; immunity from posting security, courtesy of the Foreign Sovereign Immunities Act (the “FSIA”), 28 U.S.C. § 1602-11 (2013); and the effect of the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-­15 (2013), this time whether a state pre-answer security statute can reverse preempt the FSIA.

It did so in the somewhat unusual context of Chapter 3 of the Federal Arbitration Act, which implements the Inter-American Convention on International Commercial Arbitration (a/k/a the “Panama Convention”). That raised an arcane issue of appellate jurisdiction, which appears to have been caused by Congress failing to amend the appellate jurisdiction provisions of Chapter 1 (codified at 9 U.S.C. § 16 (2013)) to reflect Congress’ enactment of Chapter 3.

Throw in an assignment agreement between the insolvent cedent and a contract interpretation dispute over whether the cedent’s assignee purchased the right to compel arbitration under the reinsurance treaties between the insolvent cedent and the Uruguay-owned reinsurance company, and we have something that might appear to resemble a perfect storm of reinsurance and arbitration-related issues. Continue Reading »

New York Law Journal Article: “Arbitrator Evident Partiality Standard Under Scrutiny in ‘Scandinavian Re'”

May 20th, 2011 Appellate Practice, Arbitration Practice and Procedure, Ethics, Evident Partiality, Grounds for Vacatur, Practice and Procedure, Reinsurance Arbitration, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Seventh Circuit, United States District Court for the Southern District of New York, United States Supreme Court Comments Off on New York Law Journal Article: “Arbitrator Evident Partiality Standard Under Scrutiny in ‘Scandinavian Re'”

On May 18, 2011 the New York Law Journal published in its Outside Counsel section an article I wrote, which argues that the United States Court of Appeals for the Second Circuit should reverse the district court’s judgment in Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co.,  No. 09 Civ. 9531(SAS), 2010 WL 653481, at *8 (S.D.N.Y. Feb. 23, 2010), appeal pending No. 10-910-cv (2d Cir.). 

The article is reprinted below with permission, and I would like to thank Elaine Song, a member of the New York Law Journal’s editorial staff, for her assistance and work in getting this published in New York’s leading legal trade publication.   Continue Reading »

The Seventh Circuit Issues a Landmark Reinsurance Arbitration Opinion in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.): Part II

February 24th, 2011 Arbitrability, Arbitration Agreements, Arbitration Practice and Procedure, Authority of Arbitrators, Evident Partiality, Practice and Procedure, United States Court of Appeals for the Fifth Circuit, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Seventh Circuit Comments Off on The Seventh Circuit Issues a Landmark Reinsurance Arbitration Opinion in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.): Part II

I.  Introduction

Part I (here) briefly discussed Chief Judge Frank H. Easterbrook’s decision in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.), No. 09-3682, slip op. (7th Cir. Jan. 31, 2011), and its implications on the pending Second and Fifth Circuit appeals in  Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co, No. 09 Civ. 9531(SAS), 2010 WL 653481 (S.D.N.Y. Feb. 23, 2010), and Dealer Computer Svcs., Inc. v. Michael Motor Co., No. H-10-2132, slip op. (S.D. Tex. December 29, 2010).  This Part II examines in some detail Trustmark’s background and rationale, and Part III will focus on Trustmark’s implications on the Scandinavian Re and Dealer Computer appeals.

II.  Trustmark Background

The following facts were gleaned from both the district court and Seventh Circuit opinions (the district court opinion is reported at 680 F. Supp. 2d 944 and can be found here): Continue Reading »

The Seventh Circuit Issues a Landmark Reinsurance Arbitration Opinion in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.)

February 23rd, 2011 Arbitration Practice and Procedure, Authority of Arbitrators, Evident Partiality, Grounds for Vacatur, Practice and Procedure, United States Court of Appeals for the Fifth Circuit, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Seventh Circuit Comments Off on The Seventh Circuit Issues a Landmark Reinsurance Arbitration Opinion in Trustmark Ins. Co. v. John Hancock Life Ins. Co. (U.S.A.)

Chief Judge Frank H. Easterbrook of the United States Court of Appeals for the Seventh Circuit is not only a brilliant judge, writer and law professor, but a master of (among many other things) arbitration law.  He understands better than most judges how commercial arbitration is supposed to work, what the Federal Arbitration Act is supposed to achieve, and how to implement the Act to ensure the parties get not only what they bargained for, but also the potential to realize the benefits that private, voluntary dispute resolution can offer.  His arbitration-law opinions are clearly written, imbued with common and commercial sense, and seem purposely designed to make sometimes elusive concepts readily understandable to courts, arbitrators, parties and counsel.  They tend to ensure that the objective, reasonable expectations of the parties are enforced, not frustrated.  Continue Reading »

More on Final Awards: Board of Trustees of the University of Illinois v. Organon Teknika Corp. LLC

August 20th, 2010 Appellate Practice, Arbitration Practice and Procedure, Final Awards, Functus Officio, Practice and Procedure, United States Court of Appeals for the Seventh Circuit Comments Off on More on Final Awards: Board of Trustees of the University of Illinois v. Organon Teknika Corp. LLC

A.   Introduction

Regular readers have heard us preach about the importance of knowing arbitration law cold (here), understanding and identifying when an arbitration award is final (here), and being keenly aware of Federal Arbitration Act deadlines (here).  The United States Court of Appeals for the Seventh Circuit recently decided a case that illustrates these points well.  See Board of Trustees of the University of Illinois v. Organon Teknika Corp. LLC, ___ F.3d ___, slip op. (7th Cir. July 27, 2010) (Easterbrook, C.J.). 

The Court held that, in the circumstances, an arbitration award was final notwithstanding a provision in the award that said the arbitrator reserves his right to change his mind.  But there is more to it than that.  Continue Reading »

The Agency Model of Arbitral Power: University of Chicago Law School Law and Economics Professor Tom Ginsburg Explains Why Deferential Review Does Not Necessarily Make Arbitration an Effective Substitute for Adjudication

April 7th, 2010 Authority of Arbitrators, Awards, Grounds for Vacatur, United States Court of Appeals for the Seventh Circuit, United States Supreme Court Comments Off on The Agency Model of Arbitral Power: University of Chicago Law School Law and Economics Professor Tom Ginsburg Explains Why Deferential Review Does Not Necessarily Make Arbitration an Effective Substitute for Adjudication

In George Watts & Son v. Tiffany & Co., 248 F.3d 577 (7th Cir. 2001), then Circuit Judge (now Chief Judge) Frank H. Easterbrook of the United States Court of Appeals for the Seventh Circuit said:   “What the parties may do, the arbitrator as their mutual agent may do.”  248 F.3d at 581.   Chief Judge Easterbrook made this statement in the course of defining the “manifest disregard” standard of review.  Applying his “agency model,” he concluded that “the ‘manifest disregard’ principle is limited to two possibilities:  an arbitral order requiring the parties to violate the law.  .  . , and an arbitral order that does not adhere to the legal principles specified by contract, and hence unenforceable under § 10(a)(4).”   Id. 

Chief Judge Easterbrook’s “agency” model of arbitral authority is instructive.  Just as agents derive their authority by the consent of the principal (subject to the rules of apparent and implied authority), arbitrators derive their authority from the parties via the arbitration agreement and the submission.  Subject to any restrictions in the arbitration agreement, the arbitrators’ powers to resolve a dispute under a broad arbitration agreement are arguably co-extensive with those of the parties that appointed them. 

But the model is not perfect.  First, unlike agents, arbitrators are not subject to the control of their principals and owe them no fiduciary duties.  Second, analogizing arbitrators as agents of the parties in the way Chief Judge Easterbrook does effectively empowers arbitrators not only to decide cases, but to negotiate settlements that the parties could have entered into.  It therefore does not require arbitrators to even arguably interpret the contract or apply the law:  As long as the arbitrators do not require the parties to violate the law, and as long as the arbitrators are at least arguably faithful to the parties’ expressed choice-of-law, if any, they can reach whatever decision they wish, whether by application of facts to legal norms or by a compromise settlement that may or may not be rooted in the parties’ agreement.    That arguably does not comport with the parties’ presumed, legitimate expectations.  For the arbitrator’s job is to decide cases; settlement is a matter for the parties, and should be subject to the parties’ control. 

University of Chicago Law School Professor Tom Ginsburg has written an excellent white paper that argues that the deferential standard of review espoused by Watts and other courts does not necessarily make arbitration an attractive substitute for litigation.  See Tom Ginsburg, John M. Olin Law & Economics Working Paper No. 502 (2d Series), The Arbitrator as Agent: Why Deferential Review Is Not Always Pro-Arbitration  (Dec. 2009) (copy available here).  He argues that a more searching standard of review would make the market for arbitrators more transparent, and thus more effective.  He advocates using Chief Judge Easterbrook’s agency model as an analytical framework for allowing parties to choose whether they prefer a very deferential standard of review, like that prescribed in Watts; something akin to de novo review, like that available in litigation; or something in between the two.  Professor Ginsburg is in the process of publishing in the University of Chicago Law Review an article based on his white paper. Continue Reading »

United States Supreme Court Update: Union Pacific Railroad Co. v. Brotherhood of Locomotive Engineers & Trainmen (08-604)

December 10th, 2009 Labor Arbitration, United States Supreme Court Comments Off on United States Supreme Court Update: Union Pacific Railroad Co. v. Brotherhood of Locomotive Engineers & Trainmen (08-604)

On October 11, 2009 we reported on two labor arbitration cases pending before the United States Supreme Court:  Union Pacific Railroad Co. v. Brotherhood of Locomotive Engineers & Trainmen (08-604) (arising under the Railway Labor Act (“RLA”), 45 U.S.C. §§151 et seq.) and Granite Rock Co. v. International Brotherhood of Teamsters (08-1214) (arising under Labor Management Relations Act (“LMRA”) Section 301).  (Post here)  On December 8, 2009 the Supreme Court issued its unanimous opinion in Union Pacific (here).

The Court affirmed the decision of the United States Court of Appeals for the Seventh Circuit to the extent it held that the National Railroad Adjustment Board (the “Board”)  failed “to conform or confine” its orders “to matters within … the [Board’s] jurisdiction.  .  .  .”  See 45 U.S.C. § 153 First (q).  As readers may recall from our previous post, the Board had denied for lack of subject matter jurisdiction certain employee grievance claims on the ground that the claimants had not complied with a Board rule requiring them to prove that the pre-grievance, statutory requirement of a “conference” between the parties had been met, even though there was no bona fide dispute that conferences had taken place.  See 45 U.S.C. §§ 152.  The Seventh Circuit ruled that the Board not only acted outside its jurisdiction, but violated due process.  The Court ruled that the Seventh Circuit should not have reached the due process question, including whether an RLA arbitration award can be overturned solely on the ground that it violated due process.  

As we observed in our October 11, 2009 post, Union Pacific is not a contractual arbitration case, but effectively an administrative law one, and the Court’s ruling will likely have little or no effect on Federal Arbitration Act jurisprudence.  The Granite Rock case – which does involve contractual arbitration, albeit under Section 301 of the LMRA – is still pending before the Court, with oral argument slated for January 19, 2009.