Articles Posted in Arbitration & Mediation

by
The Second Circuit affirmed the district court's confirmation of an arbitration award under 9 U.S.C. 9 for petitioners and other individuals. This case involved a dispute between two groups of the Bobov Hasidic Jewish community in Brooklyn that agreed to arbitration before a rabbinical tribunal. The tribunal ruled that petitioners owned the "Bobov" trademark, and the district court confirmed the ruling. The court held that district courts should "look through" a 9 U.S.C. 4 petition to the underlying controversy to determine whether subject matter jurisdiction exists to confirm the arbitration award pursuant to 9 U.S.C. 9. The court held that the district court properly looked through the arbitration petition here to the underlying controversy to determine that it had subject matter jurisdiction. In this case, the district court properly turned aside respondent's non-jurisdictional arguments, found the petition "effectively" unopposed and that no issue of material fact precluded confirmation, and did not err in confirming the award. View "Landau v. Rheinold" on Justia Law

by
Plaintiffs filed suit alleging violations of Vermont and federal law when the terms of their loan agreements provided for interest rates well in excess of caps imposed by Vermont law. Plaintiffs sought an injunction against tribal officers in charge of Plain Green and an award of money damages against other defendants. The Second Circuit affirmed the district court's denial of defendants' motion to dismiss and motion to compel arbitration. The court held that tribal sovereign immunity did not bar this suit because plaintiffs may sue tribal officers under a theory analogous to Ex parte Young for prospective, injunctive relief based on violations of state and substantive federal law occurring off of tribal lands. The court also held that the arbitration clauses of the loan agreements were unenforceable and unconscionable. View "Gingras v. Think Finance, Inc." on Justia Law

by
The Second Circuit affirmed the district court's denial of SquareTrade's motion to compel arbitration in a putative class action seeking to hold SquareTrade accountable for alleged violations of consumer protection laws. The court agreed with the district court and held that the arbitration provision did not become part of the contract because plaintiff did not have reasonable notice of and manifest his assent to it. In this case, the consumer was presented with several documents including the Pre-Sale T&C, the body of the subsequent email, and the Post-Sale T&C, none of them specifically identified as the "Service Contract" governing the purchase, and all containing different sets of terms. Furthermore, the prior course of dealing between the parties did not convince the court that plaintiff was on inquiry notice of the arbitration provision. View "Starke v. SquareTrade, Inc." on Justia Law

by
General Re entered into a Reinsurance Agreement with Lincoln, which allowed General Re to increase premiums only if the increase was founded on a “change in anticipated mortality.”. If General Re exercised that right, Lincoln could “recapture” its life insurance policies, rather than pay increased premiums. General Re increased the premiums. Lincoln elected to arbitrate the rate increase, as provided for in the Agreement. The arbitration panel found that there was a change in the anticipated mortality so that General Re was entitled to increase premiums. The Final Award stated that if Lincoln chose to exercise its right to recapture: “All premium and claim transactions paid by one party to the other following the effective date of the recapture … shall be unwound.” The Award directed the parties to work together in calculating the amounts, and that any disagreement over the calculations should be submitted to the panel, which retained jurisdiction as "necessary to resolve any dispute over the calculation and payment of the amounts awarded.” Lincoln later wrote to the arbitral panel, set forth the parties’ dispute regarding the language of the Final Award regarding Unearned Premiums, and requested that the panel settle the issue. General Re argued the arbitrators lacked authority to reconsider and fundamentally change the methodology ordered in the Award. The panel issued a "Clarification," stating that the Award contained “ambiguities” and that both parties were reading the Award inconsistently with the Agreement. The district court confirmed the Clarification. The Second Circuit affirmed. The doctrine of functus officio, which limits the power of arbitrators to alter an award once the arbitrators have decided the issue, did not bar the panel from clarifying how the parties were to calculate an ambiguous award. View "General Re Life Corp. v. Lincoln National Life Insurance" on Justia Law

by
ICA insures workers compensation claims. The Underwriters provide ICA with reinsurance under treaties, which require that disputes be adjudicated by a three-member arbitration panel: one party-appointed arbitrator for each party, and the neutral umpire. Each party bears the expense of its own arbitrator and is permitted to engage in ex parte discussion with its party-appointed arbitrators during discovery. Underwriters declined ICA's request for coverage. ICA demanded arbitration and appointed Campos as its arbitrator. At the organizational meeting, each arbitrator was asked to disclose pre-existing or concurrent relationships with a party. Campos disclaimed any appreciable link to ICA. Before the conclusion of the arbitration, Campos let pass several opportunities for additional disclosures. The district court subsequently found that Campos’s relationships with ICA’s representatives were considerably more extensive than disclosed. The district court vacated the panel's award of damages under the Federal Arbitration Act, 9 U.S.C. 10(a)(2). The Second Circuit vacated, holding that a party seeking to vacate an award must sustain a higher burden to prove evident partiality on the part of an arbitrator who is appointed by a party and who is expected to espouse the perspective of the appointing party. The district court weighed the conduct of ICA’s party-appointed arbitrator under the standard governing neutral arbitrators. An undisclosed relationship between a party and its party-appointed arbitrator constitutes evident partiality, such that vacatur is appropriate, if the relationship violates the contractual requirement of disinterestedness or prejudicially affects the award. View "Certain Underwriting Members of Lloyds of London v. Insurance Company of the Americas" on Justia Law

by
The Second Circuit affirmed the bankruptcy court's denial of Credit One's motion to compel arbitration on the basis of a clause in the cardholder agreement between Credit One and debtor. The court held that debtor's claim was not arbitrable because the dispute concerned a core bankruptcy proceeding and arbitrating the matter would present an inherent conflict with the goals of the Bankruptcy Code. In this case, the successful discharge of debt was not merely important to the Bankruptcy Code, it was its principal goal. The court explained that an attempt to coerce debtors to pay a discharged debt was thus an attempt to undo the effect of the discharge order and the bankruptcy proceeding itself. View "In re Orrin S. Anderson" on Justia Law

by
Employees of Wells Fargo filed putative class arbitrations before the American Arbitration Association, seeking unpaid overtime from Wells Fargo. The Second Circuit affirmed the district court's denial of Wells Fargo's petitions seeking to compel bilateral, rather than class, arbitration. The court assumed without deciding that the question whether an arbitration clause authorized class arbitration was a so-called "question of arbitrability" presumptively for a court, rather than an arbitrator, to decide. Therefore, applying Missouri's arbitration and contract law, the court held that the parties overcame this presumption by clearly and unmistakably expressing their intent to let an arbitrator decide whether they agreed to authorize class arbitration. View "Wells Fargo Advisors, LLC v. Sappington" on Justia Law

by
Employees of Wells Fargo filed putative class arbitrations before the American Arbitration Association, seeking unpaid overtime from Wells Fargo. The Second Circuit affirmed the district court's denial of Wells Fargo's petitions seeking to compel bilateral, rather than class, arbitration. The court assumed without deciding that the question whether an arbitration clause authorized class arbitration was a so-called "question of arbitrability" presumptively for a court, rather than an arbitrator, to decide. Therefore, applying Missouri's arbitration and contract law, the court held that the parties overcame this presumption by clearly and unmistakably expressing their intent to let an arbitrator decide whether they agreed to authorize class arbitration. View "Wells Fargo Advisors, LLC v. Sappington" on Justia Law

by
Plaintiff filed a putative class action alleging that Uber engaged in illegal price fixing. After the district court denied Uber's motion to compel arbitration, holding that plaintiff did not have reasonably conspicuous notice of and did not unambiguously manifest assent to Uber's Terms of Service when he registered. The Second Circuit vacated the district court's judgment, holding that the Uber App provided reasonably conspicuous notice of the Terms of Service as a matter of California law, and plaintiff's assent to arbitration was unambiguous in light of the objectively reasonable notice of the terms. The court remanded to the district court to consider whether defendants have waived their rights to arbitration and for any further proceedings. View "Meyer v. Uber Technologies, Inc." on Justia Law

by
In 2015, Swain was fired from his job with Hermès managing the company’s New Jersey boutique at the Mall at Short Hills. Swain, a New Jersey resident, sued Hermès in New Jersey state court, asserting claims under New Jersey state law for discrimination and hostile work environment on the basis of sexual orientation, retaliation, and breach of contract. Swain named Hermès, and Bautista, who worked with Swain at the Short Hills Hermès store, as defendants. Asserting federal jurisdiction based on diversity of citizenship, Hermès filed a petition in federal district court to compel arbitration under Federal Arbitration Act section 4, naming Swain as the only respondent and citing a dispute resolution protocol that he had allegedly signed. The Second Circuit affirmed, in favor of Hermès. Swain did not contest the arbitrability of his dispute or that Swain and Hermès were citizens of different states. The court rejected Swain’s argument that it should “look through” the petition to the underlying dispute, as defined in Swain’s New Jersey lawsuit, and conclude that complete diversity is lacking because Swain and Bautista, who is adverse to Swain in his state court litigation in New Jersey, are both citizens of that state. View "Hermès of Paris, Inc. v. Swain" on Justia Law