It has been a busy two days on the opinion filing front. In order to flag all the cases of interest, the descriptions are more abbreviated than usual. I hope I have led you to read some interesting cases in full.
Loss of a designated forum
When the defendant in De Pompo v. IRINOX N.A., Inc., 2020 U.S. Dist. LEXIS 199455 (S.D. Fla.) (Oct. 27, 2020) refused to pay a share of the initial arbitration fee, the AAA closed the case and declined to administer any future employment matters involving IRINOX. Defendant moved that the court, which had previously stayed the litigation pending arbitration, appoint an arbitrator. Plaintiff countered that the litigation should be dismissed, alleging that the defendant’s failure to pay the fee was merely “gamesmanship.” Judge Bloom analyzes whether the choice of the AAA as a forum is integral to the parties’ agreement or “merely an ancillary logistical concern.” Distinguishing two Eleventh Circuit precedents holding that the unavailability of a tribal forum invalidated an agreement to arbitrate, the Court severs the forum selection provision and appoints an arbitrator itself. The case is a great source for citations from the Eleventh Circuit and the U.S. District Courts in Florida on the issue of a failed forum selection.
Confirmation of an award under the New York Convention
It would have been interesting to be a fly on the wall during the negotiations surrounding forum selection in the arbitration clause at issue in Devas Multimedia Private, Ltd. v. Antrix Corp., Ltd., 2020 U.S. Dist. LEXIS 199568 (W.D. Wash.) (Oct. 27, 2020). The clause provided that any dispute between the parties would be arbitrated “in accordance with the rules and procedures of the ICC (International Chamber of Commerce) or UNCITRAL.” (Emphasis added). When the project under which Antrix, a corporation wholly owned by the Republic of India, was to build, launch and operate two communication satellites for the Plaintiff’s use, failed, Devas commenced arbitration under the rules of the ICC; Respondent invoked the rules of UNCITRAL and sought an order from the Supreme Court of India directing that the parties proceed thereunder. On a first-to-file basis, the Supreme Court rejected Antrix’s position and ordered that the ICC rules would govern. In September 2015, the ICC’s panel entered an award in favor of Devas in the amount of $582 Million, plus interest. While the parties battled as to whether the court in New Delhi or the court in Bangalore had jurisdiction over the matter and after a one-year stay of this U.S. confirmation proceeding, the District Court stepped in, lifted its stay, and heard Antrix’s application to confirm the award. The court, Zilly, J., rejects the only two grounds which it considers relevant under the New York Convention for refusing to confirm an award – the arbitral authority or procedure was not in accordance with the parties’ agreement or enforcement would be contrary to U.S. public policy. Accordingly, it confirms the award. Although the case is fact specific, it is good reading for its discussion of the issues raised when a U.S. court considers enforcing an award against a foreign sovereign. Also, for any civil procedure fans, there is a good discussion of what constitutes “minimum contacts” for purposes of long-arm jurisdiction.
Arbitration clauses and class actions – Two cases discuss the effect of arbitration clauses on class actions.
Adequacy of representation and typicality
Andrews v. Ring, LLC, 2020 U.S. Dist. LEXIS 199322 (C.D. Cal.) (Sept. 17, 2020) arises out of allegedly deceptive advertising for a doorbell security system. The court had previously denied defendant’s motion to compel Andrews, the representative plaintiff, to arbitrate his claim, finding there was insufficient evidence to establish an agreement to do so. However, Plaintiff’s win was Pyrrhic, as Judge Klausner here holds that Andrews’ claims are no longer typical of those of the class, which includes members who signed arbitration agreements, and that he lacks standing to adequately represent those class members in challenging their alleged arbitration obligations. Accordingly, the court denies class certification.
Notice to absent class members
Ortiz v. Trinidad Drilling, LLC., 2020 U.S. Dist. LEXIS 200263 (W.D. Tex.) (Oct. 28, 2020) fleshes out the issue of notice to absent class members who may have signed agreements to arbitrate the underlying dispute. In In re: J.P. Morgan Chase & Co., 916 F.3d 494 (5th Cir. 2019), the Court of Appeals had held that a district court abused its discretion in directing notice to such parties, who, by reason of the arbitration agreement, were not potential participants in a collective wage and hour litigation. Holding that J.P. Morgan permits the court to move forward with conditional certification, Magistrate Judge Chestney here orders defendants to produce the agreements of those class members whom it claims have an obligation to arbitrate and the contact information for those who did not sign such agreements. The order also authorizes notice to absent class members, presumably only those who have not signed arbitration agreements or whose agreements the court finds unenforceable, although the opinion is not clear on this point.
Quick Hits –
Rule based competence-competence
Extensive case law holds that invoking the AAA’s rules, which empower the arbitrator to decide his or her own jurisdiction, refers gateway issues to arbitration. That principle has been applied to other arbitral forums, such as the ICC, where their rules contain similar provisions. Add the Hong Kong International Arbitration Centre (HKIAC) to that list, Pak v. Eocell, Inc., 2020 U.S. Dist. LEXIS 201076 (N.D. Cal.) (Oct. 28, 2020).
One party arbitration
There is a “buyer beware” inherent in the selection of an unusual “arbitration forum.” In Transcontinental Gas Pipe Line Co., LLC v. Permanent Easement for 2.59 Acres, 2020 U.S. App. 33924 (3rd Cir.) (Oct. 28, 2020), the Court of Appeals affirms the District Court’s vacating of an award issued by an arbitrator appointed by the Heal My People Arbitration Association, finding that “there is no discernable agreement between the parties to arbitrate the dispute described by [defendant].” The panel cites to three other decisions vacating awards issued by that tribunal, one of which characterizes Heal My People as “a sham arbitration service that preys upon unsuspecting debtors by issuing fraudulent and false arbitration awards.”
Nursing home arbitrations
Laibow v. Menashe, 2020 U.S. Dist. LEXIS 200636 (D.N.J.) (Oct. 28, 2020) gives a timeline for the short-lived regulatory prohibition against health care arbitration issued by the Centers for Medicare and Medicaid Services.
Appellate jurisdiction under the FAA
Vita Pharmed SA v. Infinitelabs, LLC., 2020 U.S. App. LEXIS 33818 (11th Cir.) (Oct. 27, 2020), dismissing the appeal of an order compelling arbitration and staying the related litigation, is a reminder of the specific appellate jurisdictional standards of 9 U.S.C. 16. For example, one may appeal from the denial of an application to compel arbitration, but not from the grant of such an order. Parties who are compelled to arbitrate should consider the effect of Section 16 in determining whether to ask the court to dismiss the underlying case or to merely stay it pending completion of the arbitration. Does dismissal create an appealable final judgment, while staying the case precludes immediate review?
Mustard v. Infowars, LLC., 2020 U.S. Dist. LEXIS 200258 (W.D. Tex.) (Oct. 27, 2020) addresses the issue of a party who refuses to participate in mediation, despite a court rule calling for such referrals. Ms. Mustard opposed mediation of her case, arguing that further discovery was necessary and that, because of the Covid-19 crisis, any mediation should be done remotely. Opining that, despite the existence of a Local Rule providing for mediation, “the role of the court is not to force parties to forgo their right to a trial and settle a case,” the court denies defendant’s motion to compel mediation.
A source for news on ADR activities
John Jay College’s Dispute Resolution Center maintains a listserv with over thirty-seven hundred members that follows the ADR scene, largely in New York, but also in the world at large. The site has an interesting history, having begun in order to bring ADR professionals together after the tragedy on 9/11. You can find more information and join at NYC-DR@listserver.jjay.cuny.edu.
Have a good weekend, everyone, and be safe.