Justia Arbitration & Mediation Opinion Summaries

Articles Posted in US Court of Appeals for the Second Circuit
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Smarter Tools Inc. (“STI”) appeals the district court’s judgment denying STI’s petition to vacate an arbitral award and granting Chongqing SENCI Import & Export Trade Co., Ltd.’s and Chongqing AM Pride Power & Machinery Co. Ltd.’s (collectively, “SENCI”) cross-petition to confirm that award. The district court agreed with STI that the arbitrator exceeded his authority by failing to provide a reasoned award as requested by the parties. The district court remanded to allow the arbitrator to issue a reasoned award. On remand, the arbitrator issued a final amended award, which STI again challenged in district court on the grounds that the award was not reasoned and that it reflected a manifest disregard of the law, and which SENCI again cross-petitioned to confirm. The district court denied STI’s petition to vacate the award and granted SENCI’s cross-petition to confirm the award.   STI’s primary argument on appeal is that the district court erred in remanding for the arbitrator to issue a reasoned award, in contravention of the doctrine of functus officio and the Federal Arbitration Act. Absent a finding of ambiguity, or a minor clerical error, STI argues, once the district court determined that the arbitrator exceeded its authority by failing to issue a  reasoned award, the only remedy available was vacatur.   The Second Circuit affirmed. The court explained that the original award was found not to provide the reasoned award the parties bargained for; in its amended award, the arbitrator clarified the original award by including a rationale for rejecting STI’s counterclaims; and this clarification is consistent with the parties’ intent that the arbitrator issue a reasoned award. View "Smarter Tools Inc. v. Chongqing Senci Import & Export Trade Co., Ltd." on Justia Law

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International Brotherhood of Electrical Workers, AFL-CIO 20 (“Local Union 97”), a union primarily of electrical workers, executed a memorandum of agreement (“2003 MOA”) detailing a two-pronged approach to providing retiree life insurance benefits. Local Union 97 brought a complaint seeking to compel arbitration of a grievance they submitted alleging that NRG violated the terms of the CBAs by changing the life insurance benefit for the Pre-2019 Retirees to a lump sum of $10,000. The district court held that: 1) the grievance is not arbitrable under the 2019-2023 CBA, 2) the 2003 MOA is not arbitrable, and 3) the grievance is not arbitrable under any of the CBAs covering 2003-2019.   The Second Circuit reversed and remanded and held the grievance is arbitrable under the 2019-2023 CBA because the broad arbitration provision creates a presumption in favor of arbitrability that NRG failed to overcome. The court also held that the parties’ dispute was arbitrable under the Prior CBAs because the 2003 MOA was a supplemental agreement that arguably vested the life insurance benefit for life. View "Local Union 97 v. NRG Energy, Inc." on Justia Law

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Appellant CVG Ferrominera Orinoco, C.A. (“Ferrominera”), appealed from the district court’s judgment confirming a foreign arbitral award and granting attorney’s fees and costs in favor of Petitioner Commodities & Minerals Enterprise Ltd. (“CME”). Ferrominera challenges the judgment on three grounds. First, it argues that the district court lacked personal jurisdiction because CME never served a summons on Ferrominera in connection with its motion to confirm the arbitral award. Second, Ferrominera contends that the district court erred in confirming the arbitral award based on purported lack of jurisdiction by the arbitral panel, issues with the scope of the award, and conflicts with United States public policy. Third, it argues that the district court abused its discretion in awarding attorney’s fees and costs in favor of CME.   The Second Circuit held that a party is not required to serve a summons in order to confirm a foreign arbitral award under the New York Convention. The court concluded that the district court properly enforced the arbitral award, but that it erred in awarding attorney’s fees and costs. Accordingly, the court affirmed in part and vacated in part. The court wrote that CME complied with the service of notice requirements of the New York Convention and the FAA, and the district court properly exercised personal jurisdiction over Ferrominera. Further, the court explained that Ferrominera has not borne its burden to show that the arbitration agreement is invalid where, as here, it has put forth no arguments whatsoever under the applicable law. View "Commodities & Minerals Enterprise Ltd. v. CVG Ferrominera Orinoco, C.A." on Justia Law

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Plaintiffs deliver baked goods by truck to stores and restaurants in designated territories within Connecticut. They brought an action in district court on behalf of a putative class against Flowers Foods, Inc. and two of its subsidiaries, which manufacture the baked goods that the plaintiffs deliver. Plaintiffs allege unpaid or withheld wages, unpaid overtime wages, and unjust enrichment pursuant to the Fair Labor Standards Act and Connecticut wage laws. The district court granted Defendants’ motion to compel arbitration and dismissed the case.   The Second Circuit affirmed the district court’s order compelling arbitration and dismissing the case. The court explained that it concludes that an individual works in a transportation industry if the industry in which the individual works pegs its charges chiefly to the movement of goods or passengers, and the industry’s predominant source of commercial revenue is generated by that movement. Here, because Plaintiffs do not work in the transportation industry, they are not excluded from the FAA, and the district court appropriately compelled arbitration under the Arbitration Agreement. View "Bissonnette v. LePage Bakeries" on Justia Law

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Hudson Valley Federal Credit Union (“HVCU”) appealed from the district court’s ruling denying HVCU’s motion to compel arbitration of Plaintiff’s putative class action claims for breach of contract, breach of the covenant of good faith and fair dealing, and claims under New York law and the Federal Electronic Fund Transfer Act.   The Second Circuit vacated and remanded the district court’s ruling, holding that the record was insufficiently developed for the district court to deny the motion to compel arbitration. The court concluded that the record is insufficiently developed on the issue of whether the parties entered into an agreement to arbitrate and, as a consequence, the court wrote it cannot determine the matter of arbitrability “as a matter of law.” Therefore, the court remanded for the district court to consider further evidence or, if necessary, hold a trial.   The court further explained that it was an error for the district court to engage in the inquiry notice analysis based on the copy of the Internet Banking Agreement, which does not depict the content and design of the webpage as seen by users signing up for online banking. The court wrote that on remand, the district court should consider the design and content of the Internet Banking Agreement as it was presented to users in determining whether Plaintiff assented to its terms. And the district court should assess whether the Account Agreements are clearly identified and available to the users based on the court’s precedents. View "Zachman v. Hudson Valley Federal Credit Union" on Justia Law

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TIG Insurance Company (“TIG”) appeals from a judgment and order of the district court. TIG asserts that Judge Ramos erred in ordering it to arbitrate a coverage dispute with ExxonMobil Oil Corporation (“Exxon”). Even if it was required to arbitrate, TIG contends that Judge Ramos erred in awarding Exxon prejudgment interest when confirming the arbitral award. After entering judgment, and after TIG had appealed, the district court clerk notified the parties that it was brought to Judge Ramos’s attention that he owned stock in Exxon when he presided over the case. Nothing in the record suggests that Judge Ramos was aware of his conflict at the time he rendered his decisions, and the parties do not suggest otherwise. TIG moved in the district court to vacate the judgment. The case was reassigned to a different judge, who denied the motion to vacate. TIG appealed from that denial as well.The Second Circuit affirmed the district court’s denial of Appellant’s motion to vacate and the district court’s order compelling arbitration, reversed in part its decision granting Exxon’s request for prejudgment interest, and remanded to the district court for further proceedings. The court explained that vacatur was not required because this case presents only questions of law, and a non-conflicted district judge reviewed the case de novo. As to the merits, the court held that the district court did not err in compelling arbitration because the parties were subject to a binding arbitration agreement, but that the district court erred in ordering TIG to pay pre-arbitral-award interest. View "ExxonMobil Oil Corporation v. TIG Insurance Company" on Justia Law

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In an appeal from a district court ruling reducing an order of attachment in aid of arbitration. The district court had initially granted an ex parte order in favor of Petitioner, an Iraqi cell phone company (“Telecom”), attaching up to $100 million of the assets of Respondent, a Lebanese bank. Thereafter, the district court exercised its discretion and reduced the amount of the attachment to $3 million in part because of concerns the attachment would have an adverse impact on the Lebanese economy.Telecom appealed arguing that (1) it established a probability of success in the pending arbitration and was therefore entitled to an attachment of $100 million and (2) the district court lacked authority to consider extraordinary circumstances in reducing the attachment.The Second Circuit affirmed to the extent that the district court held that it had the discretion to consider extraordinary circumstances and that Telecom demonstrated a continuing need for the attachment, and to the extent that the district court attached $3 million; vacated to the extent the district court attached only $3 million based on the existence of extraordinary circumstances without considering how those circumstances might change given an attachment greater than $3 million but less than $42 million; and remanded as to (a) Telecom's probability of success, (b) the assessment of extraordinary circumstances, and (c) the amount of the attachment above $3 million. View "Iraq Telecom Ltd. v. IBL Bank S.A.L." on Justia Law

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Esso Exploration and Production Nigeria Limited, (“Esso”) the Nigerian subsidiary of an international oil corporation, asked federal courts in the United States to enforce an arbitral award of $1.8 billion, plus interest, against the Nigerian National Petroleum Corporation (“NNPC”) that Nigerian courts have partially set aside. Courts in Nigeria previously set aside the Award in part. Nonetheless, Esso seeks enforcement of the entire Award under the New York Convention. NNPC urges dismissal of Esso’s suit for lack of personal jurisdiction and on the basis of forum non-conveniens, and it opposes the petition for enforcement on the merits.   The Second Circuit determined affirmed the district court’s rulings because its factual determinations were meticulous and its legal conclusions sound. The court held that NNPC has standing on cross-appeal to challenge the denial of its motion to dismiss, even though the district court ruled in its favor on the merits. NNPC has such standing because our partial vacatur on the merits revives the action against it, and it may face an adverse ruling on remand. On considering NNPC’s challenges to the district court’s denial of its motion to dismiss for want of personal jurisdiction and forum non-conveniens.   The court wrote that although the district court should have broadened its analysis under the Pemex standard, it ultimately agreed with its conclusion that U.S. courts owe the Nigerian judgments setting aside the Award comity.  The court concluded, however, that the district court went too far by refusing to enforce not only those parts of the Award that the Nigerian courts set aside but also those parts of the Award that remain viable under the Nigerian judgments. View "Esso Expl. and Prod. Nigeria Ltd. v. Nigerian Nat'l Petroleum Corp." on Justia Law

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Plaintiff, sued her former employer, alleging a variety of employment law violations. Defendant moved to dismiss her suit and to compel arbitration. Defendant supported the motion by presenting an arbitration agreement bearing what appeared to be the worker’s electronic signature. In a sworn declaration, however, the worker categorically and specifically denied that the signature was hers. She also pointed to other circumstantial evidence as to its inauthenticity. The district court concluded that the worker’s evidence was insufficient to create a triable issue of fact, and so granted the restaurant’s motion.   The Second Circuit vacated the district court’s grant of Defendant’s motion to dismiss and to compel arbitration. The court held that the district court erred when it disregarded Plaintiff’s sworn declaration as “nothing more than a de facto extension of [her] pleadings.”The court explained that it resolves agreement-formation questions by applying the law of the state at issue. Here, under New York law, when moving to compel arbitration, “[t]he party seeking . . . arbitration bears an initial burden of demonstrating that an agreement to arbitrate was made.” As such, the burden shifted to Plaintiff, who needed to counter with at least “some evidence . . . to substantiate [her] denial” that an agreement had been made. Here, Plaintiff’s detailed accounting, under oath, is “some evidence” that she did not agree to arbitration. Thus, there is a triable issue of fact as to whether she ever received, or became aware of, Defendant’s arbitration agreements, regardless of whether she ultimately signed them. View "Barrows v. Brinker Restaurant Corporation" on Justia Law

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Petitioner appealed the district court's order entered dismissing his petition to vacate an arbitration award. The Federal Arbitration Act ("FAA") requires that notice of a motion to vacate an arbitration award be served within three months of the date the arbitration award is filed or delivered. Counsel sent notice of the petition to vacate the arbitration award to Respondent late on the last day of the three-month period, but counsel did so by email. The district court granted Respondent’s motion to dismiss, concluding that service was improper and untimely. On appeal, Petitioner contended that service was proper because Respondent had agreed to email service in the underlying arbitration and that the consent carried over to the judicial proceedings to vacate the award.     The Second Circuit affirmed the district court’s ruling dismissing the petition and held that email service of a notice of a petition to vacate was ineffective under 9 U.S.C. Section 12 and Fed. R. Civ. P. 5. The court reasoned that Section 12 contains no exception to the three-month limitations period. Further, under Rule 5, a party may serve papers by email only if the person being served has "consented" to service by email "in writing."  Here, Petitioner’s counsel had not asked Respondent’s counsel for consent to email service, and Respondent’s counsel had not provided consent to email service in writing, as required by Rule 5. Further, AAA Employment Arbitration Rules and Mediation Procedures 38(a)-(b) does not contemplate email service. View "Dalla-Longa v. Magnetar Capital LLC" on Justia Law