Justia Arbitration & Mediation Opinion Summaries

Consolidating several appeals, the Supreme Court addressed the effect of a municipality's financial distress and recovery planning on an arbitration award agreed to pursuant to the Policemen and Firemen Collective Bargaining Act (Act). For approximately twenty years, the City of Scranton has been designated a distressed municipality under the Municipalities Financial Recovery Act. Pursuant to the Recovery Act, the City has its Commonwealth-mandated financial advisors who assist in creating a financial recovery plan (essentially a budget). In the most recent collective bargaining agreements between the City of Scranton and its Police and Firefighter Unions expired at the close of 2002. Negotiations as to future terms and work conditions for union members resulted in impasses. Accordingly, pursuant to the Act, arbitrators were selected to establish appropriate terms and conditions. Throughout the arbitrations, the City maintained that the arbitrators lacked legal authority to award relief impinging on the City's financial recovery plan. The City attempted to resist paying the ensuing award that resulted from the arbitration. The Commonwealth Court found that it was required to vacate the awards, holding that they did not conform to the City's Recovery Plan and would result in increased financial and operational burdens on an already distressed municipality. The Unions appealed to the Supreme Court. The Court focused on the distinction between the terms "arbitration award" and "arbitration settlement": the City argued that it was not mandated to pay "awards" but "settlements." The Supreme Court found the term "settlement" ambiguous, and the plain meaning could include the "award" given by the arbitrators in this case. Accordingly, the Court reversed the Commonwealth Court's order that the award negatively impacted the City's Recovery Plan. View "City of Scranton v. Firefighters Local Union" on Justia Law

This action came before the court following the insolvency and proposed rehabilitation of a Delaware insurance company. At issue was whether the arbitration clause in the reinsurance agreements between the insolvent insurance company and the reinsurer were enforceable against the receiver under Delaware law. If so, the question became whether this court should, in its discretion, require the parties to honor their agreement to arbitrate in light of the ongoing rehabilitation of the insurer. The court held that Delaware law permitted enforcement of the arbitration clause of the reinsurance agreements against the receiver and that the parties should be required to arbitrate their competing claims to the disputed cash. In addition, the court ordered a partial stay of the proceedings pending resolution of the arbitration. View "In the Matter of The Rehabilitation of Manhattan Re-Ins. Co." on Justia Law

IPS appealed the district court's denial of its motion to compel arbitration and stay plaintiffs' claims against it. Plaintiffs cross-appeal, disputing the preemption of their claims under the Employment Income Security Act (ERISA), 29 U.S.C. 1001 et seq., and alleging a lack of federal jurisdiction. The court found that jurisdiction was proper and affirmed the district court's denial of IPS's motion to compel arbitration. View "Ehlen Floor Covering, Inc., et al. v. Innovative Pension Strategies, Inc." on Justia Law

This case arose when plaintiff hired defendant to move some of his household goods from southern California to the United Arab Emirates (UAE). When the UAE officials discovered plaintiff's box of firearms and ammunition, they arrested him, imprisoned him for 11 days, and tricked him into pleading guilty to smuggling firearms. Plaintiff alleged that he was facing deportation from the UAE and sued defendant based on various tort and contract theories. At issue was whether defendant could compel plaintiff to arbitrate pursuant to the contract's foreign arbitration clause in its shipment contract. The court affirmed the judgment of the district court and held that the district court correctly interpreted the Carmack Amendment, 49 U.S.C. 14706, to preclude foreign arbitration clauses and the Carmack Amendment, having been enacted subsequent to the federal arbitration statutes, controlled this case. View "Smallwood v. Allied Van Lines, Inc., et al." on Justia Law

This case stemmed from a property dispute between the parties. White Springs appealed the district court's confirmation of an arbitration award in favor of Glawson, challenging the grant of attorneys' fees, expert fees, and prejudgment interest and sought to vacate or modify the arbitration award under the Federal Arbitration Act (FAA), 9 U.S.C. 10, 11. The court held that the arbitration panel had the power to decide Glawson's claims for attorneys' fees and that Glawson properly submitted the issue to the panel. The court was unable to grant White Springs' request that the court review the legality of the award of expert fees and prejudgment interest on the ad valorem taxes, as the FAA did not permit it to do so. Therefore, the court found no basis to overturn any portion of the panel's final arbitration award. View "White Springs Agricultural v. Glawson Investments Corp." on Justia Law

This action arose from a transaction involving the sale of equity in a Texas-based dental practice management company to a Chicago-based private equity firm. At issue was whether the purchasers' ability to raise the forum selection clause issue in Texas provided them with an adequate remedy at law, undermining the basis for equity jurisdiction, and if not, whether the terms of the forum selection clause were broad enough to reach the Texas claims. The court held that the forum selection clause did not provide purchasers an adequate remedy at law, and therefore, the court had subject matter jurisdiction over their claims. The court also held that the forum selection clause here, which applied to any claims arising under or relating to the transaction, was sufficiently broad in scope that the purchasers were likely to succeed in showing that it provided exclusive jurisdiction in Delaware over the claims brought by the sellers in Texas. Accordingly, the court granted purchasers' motion for preliminary injunction. View "ASDC Holdings, et al. v. The Richard J. Malouf 2008 All Smiles Trust, et al." on Justia Law

This case arose when Cat Tech sought indemnification from its insurers after Cat Tech damaged several components of a hyrotreating reactor owned by Ergon Refining, Inc. and arbitrators entered an award against Cat Tech for the damage. Insurers subsequently denied the claim, contending, inter alia, that the "your work" exclusion found in the policies precluded coverage for damage to the reactor. The district court found that insurers had no duty to indemnify Cat Tech. The court held that the information contained in the arbitration award was insufficient to properly apply the "your work" exclusion. As such, the court concluded that the district court erred when it relied on the award in granting insurer's summary judgment motion. On remand, the district court should conduct any additional fact-finding necessary to determine whether the damage suffered by Ergon's reactor was limited only to those components upon which Cat Tech worked, or instead included other components unrelated to Cat Tech's operations. Accordingly, the judgment was reversed and the case remanded for further proceedings. View "American Home Assurance Co, et al. v. Cat Tech L.L.C." on Justia Law

UBS appealed the denial of their motion for a preliminary injunction enjoining defendants from proceeding with an arbitration before the Financial Industry Regulatory Authority (FINRA), and alternatively requiring that the arbitration proceed in New York County. In the arbitration, defendants sought damages for UBS's alleged fraud in connection with defendants' issuances of auction rate securities. The court held that defendants were entitled to arbitration because they became UBS's "customer" under FINRA's rules when they undertook to purchase auction services from UBS. The court also held that the enforceability of the forum selection clause was a procedural issue for FINRA arbitrators to address and that the district court lacked jurisdiction to resolve it. View "UBS Financial Servs, Inc. v. West Virginia University Hosp." on Justia Law

In 1992 two companies began a joint venture to develop peptide compounds. The agreement provides that inventions created by joint efforts are jointly owned, but inventions attributable to a single party are owned by that party and that disputes will be arbitrated. In court-ordered arbitration, a panel decided that a certain group of patents are jointly owned, but that another group is owned by defendant. The district court confirmed those rulings, but vacated a ruling in defendant's favor on foreign patents. Holding that appeal is authorized by 9 U.S.C. 16(a)(1)(E), and that the dispute does not concern patent law, but is a contract issue, the Seventh Circuit reversed. The Federal Arbitration Act authorizes a court to vacate an award for any of four reasons, 9 U.S.C. 10(a); a conclusion that the arbitrators disregarded the law by failing to discuss the foreign patents separately from the domestic patents did not justify vacating the award. The judge mistakenly inferred from silence that the arbitrators must have had an extra-contractual ground; the arbitrators had no reason to discuss the foreign patents separately from the domestic patents. View "Affymax, Inc. v. Ortho-McNeil-Janssen Pharmaceuticals, Inc." on Justia Law

Timothy C. Allsopp appealed a trial court's denial of his motion for relief from a judgment entered in favor of James and Kisha Bolding. The Boldings sued Naysa Realty and Investments, LLC, Deleana Davis, Keller-Williams Realty Co., and Allsopp. The Boldings alleged breach of fiduciary duty, and three counts of fraud arising out of real-estate transactions in Madison County. Davis was a principal in Naysa Realty and was employed by Keller-Williams as a real-estate agent. Davis advised the Boldings, who were purchasing property, to give Allsopp power of attorney to sign certain closing documents on their behalf. A default judgment was entered against Allsopp, with leave for the Boldings to prove damages against him later. Allsopp argued on appeal that the evidence against him was insufficient to support the judgment against him. Upon review, the Supreme Court found the evidence sufficient to support the trial court's decision and affirmed the judgment in the Boldings' favor. View "Allsopp v. Bolding" on Justia Law