No particular theme to the cases today, but they address a broad variety of issues – often in the same case. One case addresses defaults and LMRA review; another, the applicable Federal Rules and carve-outs; a third, attorneys’ fees; and there is a little more browse and clickwrap.
LMRA and non-appearance
In a short opinion, Judge Koelti addresses the standard for the review of labor arbitration awards and the effect of a failure of the respondent to appear. Trustees of New York City District Council of Carpenters Pension Fund v. Galt Installations, Inc., 2020 U.S. Dist. LEXIS 198714 (S.D.N.Y) (Oct. 26, 2020) arises from the alleged failure of Defendant to remit contributions to the union’s benefit fund, as revealed by an audit of Galt’s records. When Galt did not rectify its underpayment, an arbitrator conducted a hearing at which Defendant did not appear. After reviewing the evidence, the arbitrator found a liability of approximately $125,000. The Union, then, brought this action to confirm that award. Galt, again, failed to appear. The first issue addressed by the court is the effect of that failure. Citing Second Circuit precedent, the court opines that a default judgment is “generally inappropriate” in a proceeding to confirm or vacate an arbitration award, since there is a reviewable record from the arbitration itself; therefore, the application should be treated as a motion for summary judgment, with the analysis based solely on the movant’s submissions. Applying that standard, the court holds that the arbitrator did not simply apply his “own brand of industrial justice” and had an adequate basis for finding that Galt had failed to pay the contracted amounts. It confirms the arbitrator’s award.
Jurisdiction and carve-outs
A common discussion in opinions considering whether a dispute must be arbitrated is the application of standards under Federal Rule 12(b)(6) (failure to state a claim) versus Rule 56 (summary judgment). In Med X Change, Inc. v. Inciris Technologies SAS, 2020 U.S. Dist. LEXIS 199026 (M.D. Fla.) (Oct. 27, 2020), the court, without discussion, instead looks to Rule 12(b)(1), lack of subject matter jurisdiction, as its procedural hook. While the court cites to another Southern District of Florida case, a Rule 12(b)(1) analysis is an unusual approach, although the choice of rule does not affect the court’s ultimate decision to compel arbitration. That holding is driven by the now frequent (awaiting Schein II) analysis that the invocation of the AAA Arbitration Rules, which authorize the arbitrator to decide his or her own jurisdiction, sends gateway questions to the arbitral proceeding. Here, that rules-based delegation was reenforced by a provision in the parties’ agreement giving the arbitrator authority to make a “determination as to the scope of the [agreement’s provisions] to arbitrate. . . .” Based on those two considerations, the court refers to the arbitrator the question of whether a carveout from arbitration of “claims as to which a party may be entitled to equitable relief” permits litigation of Plaintiff’s allegations.
Be careful what you say in emails to opposing counsel. Director’s Guild of America, Inc. v. Voltage Pictures, LLC, 2020 U.S. Dist. LEXIS 198379 (C.D. Cal.) (Oct. 22, 2020) is a routine dispute over the obligation of the Defendant to arbitrate a pension plan contribution grievance. After reviewing the relevant agreements, Judge Anderson compels arbitration. What makes the case interesting is the Guild’s request for counsel fees in connection with its motion. The court, without much discussion, concludes that Voltage’s “frivolous arguments and dilatory tactics. . .justify an award of attorneys’ fees.” In setting out the facts of the case, the court highlights Voltage’s response to a compromise proposal regarding the selection of an arbitrator: “Good luck with obtaining your motion to compel; we look forward to receiving it.”
Schultz v. Ttac Publishing, LLC, 2020 U.S. Dist. LEXIS 198834 (N.D. Cal.) (Oct. 26, 2020) is a standard browsewrap/clickwrap case, in which Judge Gilliam holds that the website’s disclosure of an arbitration clause was insufficiently clear to form a meeting of the minds; therefore, he refuses to compel arbitration. Two things are interesting about the case. First, the layout of the site is not significantly different from that in cases where courts, contrary to Schultz, have found the link to the terms and conditions sufficiently clear to create actual or inquiry notice and, consequently, an agreement to arbitrate. Such varied results bring website clarity into the same realm as the famous quote from Justice Stewart about obscenity in Jacobellis v. Ohio: “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description [“hard-core pornography”], and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that.” Second, the opinion takes a common sense, practical step that other cases have not; it includes a screen shot of the relevant page of the site. This gives context to the court’s description of the layout’s deficiencies.
Both the London Court of International Arbitration and the International Chamber of Commerce have adopted new rules governing proceedings before them. The ICC rules become effective on January 1, 2021. A summary of them can be found on-line at the Kluwer Arbitration Blog (which is a terrific source for keeping up to date on happenings in arbitration, particularly in the international area) http://arbitrationblog.kluwerarbitration.com/2020/10/27/nothing-changes-if-nothing-changes-an-introduction-to-the-2021-icc-rules-of-arbitration/ The LCIA rules apply to arbitrations filed after October 1, unless the parties opt out. They can be found at LCIA.org.
To those of you in Los Angeles, congratulations on the end of your World Series drought – albeit it in a very weird year. See everybody Friday.