Sorry for the radio silence over the past week. I was busy with the day job – a couple hearings and an opinion. Oh, yeah – and shoveling snow. Another foot and a half due over the next week. Any ADR services in Florida looking for neutrals?
Mid-employment addition of arbitration clauses
Two cases published this week discuss the addition of arbitration clauses to existing employment relationships. In Gezu v. Charter Communications, 2021 U.S. Dist. LEXIS 23692 (N.D. Tex. Jan. 7, 2021), Plaintiff brought an action seeking damages for Charter’s alleged blindness to alleged discrimination against him based on race and ethnicity and a resulting pretextual termination after he complained. Gezu was already a Charter Communications at-will employee when, on October 6, 2017, defendant sent email notice to its employees that it was instituting a “Solution Channel” program, under which employment-based disputes would follow a process that would ultimately result in arbitration. Employees were given thirty-days to opt out of “Channel”. As is often the case in cases like this one, when Charter sought to enforce the arbitration process in response to Gezu’s suit, he testified that he had no recollection of having opened the email or otherwise accepting the arbitration provision. There was no dispute that he did not opt out.
Magistrate Judge Rutherford addresses two issues. First, applying the “mailbox” rule to an electronic communication, she holds that evidence that the email was sent to all employees raises a presumption that Gezu received the “Solution Channel” program description. His “bare allegation of memory loss is not credible evidence sufficient to rebut the presumption of receipt,” quoting Krohn v. Spectrum Gulf Coast, LLC, 2019 WL 4572833 at *3 (N.D. Tex. Sept. 19, 2019). As proof of “mailing,” Charter presented the affidavit of its Vice President for HR Technology, which established that Gezu was on the distribution list for the relevant email, and that of its Senior Director of Records Management and eDiscovery, to the effect that the announcement was sent to Gezu’s business email and that email click data showed that Plaintiff opened the announcement five times. Thus, the case provides a roadmap for litigators needing to prove receipt of an email to employees. Having found that Gezu received notice of the arbitration provision, the court turns to applicable state substantive law for the proposition that Gezu’s continuing his employment after receipt of the new terms constituted acceptance thereof. With the conclusion that the parties agreed to arbitration of the relevant dispute, the Magistrate Judge recommends that the court grant Defendant’s motion to dismiss the case and compel arbitration.
Sadler v. General Electric Company, 2021 U.S. Dist. LEXIS 24010 (W.D. Ky. Feb. 9, 2021) is to like effect. As in Gezu, the employer-defendant established a process for the resolution of employment disputes, which included arbitration. In the GE program, employees were advised of the program as part of an on-line learning program. Records showed that Sadler completed the training, using a unique identification number and password to access the sessions. Co-plaintiff Krimm, however, was one of three lab technicians who had not acknowledged completion of the program. He testified that he recalled completing the trainings, but candidly described himself as inattentive to at least portions thereof.
You can just push a button, get the video going. You can go over an reach [sic] a book while the video’s playing and then when the video’s done you can click and say ‘I did it’ . . . . “
The court finds Krimm’s denial of notice of arbitration so lacking in credibility that, even under the lenient standards applicable to a summary judgment motion, it finds no material issue of fact and compels arbitration.
Application of Section 1782 to an ICC arbitration
An earlier “ADR Highlights” discussed the Magistrate Judge’s recommendation in In re: Rendon. On Monday, the court adopted that recommendation in a full opinion, In re: Rendon, 2021 U.S. Dist. 23284 (S.D. Fla. Feb. 8, 2021). The case raises the now-familiar question of the application of 28 U.S.C. §1782, which permits a court to order discovery in the U.S. for use in a “proceeding in a foreign or international tribunal,” to foreign arbitrations. (SCOTUS can, may, and should resolve the clear Circuit split on the issue. See Dkt. No. 20-798, pet. for cert. pending from Servotronics, Inc. v. Rolls-Royce, PLC, 975 F. 3d 689 (7th Cir. 2020)). Here, the court is writing on a clean slate, as the 11th Circuit has not set jurisdiction-wide precedent. Faced with addressing the issue afresh, Chief Judge Moore, like the Magistrate Judge, adopts a “functional analysis test,” based on factors set forth in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). One of the factors for determining whether the foreign body before which a dispute is pending is a “tribunal” is whether its decisions are “subject to judicial review,” quoting Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F. 3d 1262 (11th Cir. 2014). The court opines that review under French law of ICC proceedings, such as the one at issue here, is so limited that it “does not constitute substantive review which would include legal or factual conclusions” (Emphasis in original). Accordingly, Chief Judge Moore holds that the ICC arbitration panel does not constitute a “tribunal” for purposes of Section 1782.
Rendon asserts as a second ground for his application his intention to bring claims to both a Columbian regulator, the Superintendence of Industry and Commerce, and a Columbian civil court. Thus, he argues, even if the ICC is not a “tribunal,” his request for discovery from Abbott Labs should be granted as the regulator and court qualify as such. Again, the court relies upon Intel, now focusing on the factors which a court, once it has determined that the foreign body hearing the case is a “tribunal,” should consider in deciding whether to exercise its discretion and grant a discovery request. As adopted by the Eleventh Circuit in In re: Clerici, 481 F. 3d 1324 (11th Cir. 2007), the factors are: (1) whether the entity or person from whom discovery is sought is a participant in the foreign proceeding; (2) the receptivity of the foreign government, court or agency to U.S. federal-court judicial assistance; (3) whether the Section 1782 requests conceal an “attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country;” and (4) a catch-all examination as to whether the request “is otherwise ‘unduly intrusive or burdensome.’” The court walks through each of those considerations in a detailed way which goes beyond the scope of this blog, but is well worth reading by anyone professionally or individually interested in Section 1782. Finally, the court holds that the proceedings before Colombian authorities are so speculative as to fall outside “reasonable contemplation.” While a proceeding need not be pending, Judge Moore holds, “it must be more than speculative. . . . ,”quoting Consorcio Ecuatoriano. For those reasons, he denies the request for discovery.
Some opinions are fun to read. They are clear, well-written, and richly cited. This is one of them. I commend it to you for your next coffee break.
Kompetenz – Kompetenz
Eco Brands, LLC v. Eco Brands, LLC, 2021 U.S. Dist. LEXIS 23430 (S.D. Fla. Feb. 5, 2021) is a derivative action (thus, the odd citation) arising out of a claim for theft of a corporate opportunity by certain owners and officers of the Plaintiff. Looking to the rules of the Arbitral Court of the Chambers of Commerce of the Dominican Republic, the court holds that the arbitration’s gateway issues are delegated to the arbitrator. Most of us will not arbitrate under the Dominican Republic’s Chamber of Commerce rules. However, the case has a wider interest to those involved in international arbitration, as it discusses the relationship among very localized sets of rules, a larger convention (in this case, the Panama Convention), and the FAA.
Time for moving to vacate an award under the FAA
Milberg, LLP v. Drawrah, Ltd, 2021 U.S. App. LEXIS 3521 (2nd Cir. Feb. 9, 2021) is a reminder of the strict three-month time frame for commencing an action to vacate an arbitration award under the FAA by making service on the proposed respondent. The court stands for two propositions. On the draconian side, it is a reminder that the deadline applies even if vacatur “is interposed as a defense against a motion to confirm the award.” In a kinder and gentler tone, it recognizes that concepts of fairness and equity may extend the deadline when foreign respondents must be served. Unfortunately for Milberg, the court holds that the doctrine does not save the plaintiff here.
For those looking for a good discussion of the relation between arbitration and state law and a compendium of relevant case law and journal discussions, the Note in the current Harvard Law Review, Note: State Courts and the Federalization of Arbitration Law, 134 Harv. L. Rev. 1184 (Jan. 2021) is worth reading. Because of the usual heavy footnoting in such scholarship (175 of them), it is also a good starting place for any research you need to do while briefing related issues. After reading, see if you agree with the Note’s conclusion that increased reliance on the FAA is resulting in a “lamentable, but unavoidable federalization of state contract law.”
Second COVID shot this afternoon, but sore arm and flu-like symptoms or not, I hope to see you Friday.
David A. Reif
 No, I do not know whether I cited the Review correctly under the infamous Blue Book – and don’t really care.