There were no major decisions at the end of last week.  So, “Highlights’” focuses today on some practice-oriented opinions.

Litigation Waiver

Sometimes you have to do what you have to do. Pinnacle Constructors Group LLC v. SSC Tuscaloosa Apartments LLC, 2024 U.S. App. LEXIS 14718 (11^th Cir. June 18, 2024)(per curiam by Judges Newsom, Brasher and Abudu), holds that a party does not waive the right to compel arbitration just because it follows legally mandated litigation steps.

Plaintiff entered into an agreement with the defendant to complete work on a construction project.  Their agreement included a broad arbitration clause. When a dispute arose, the parties mediated their issues, but failed to reach a settlement.  The next day, Pinnacle sent notice of a lien upon the property and, a week later, it commenced a state court suit to enforce that lien.  SSC, in turn, filed a demand for arbitration.  After removing the case to federal court, Defendant filed a counterclaim.  Pinnacle moved to dismiss that counterclaim or compel arbitration thereof. The District Court denied the motion to compel, holding that Pinnacle waived arbitration because it had “substantially participated [in] litigation.” (Brackets in opinion).

The Court of Appeals applies a de novo review.  It, then, reverses the judgment below, holding that Pinnacle’s involvement in the judicial process did not rise to the level of a waiver of any arbitration rights.  “The key ingredient in the waiver analysis,” the court opines, “is fair notice to the opposing party and the [d]istrict [c]ourt of a party’s arbitration rights and its intent to exercise them.” (brackets in opinion, internal citation omitted).  It holds that such notice exists here.  In a footnote to its complaint, Pinnacle had specifically stated that it was filing suit merely in order to reserve its lien rights under state law, that it acknowledged the existence of the arbitration clause and SSC’s demand to arbitrate thereunder, and that it intended to respond to that demand.  Pinnacle’s participation in the litigation was closely cabined; it only moved to dismiss as to parties who were not signatories to the arbitration provision and its participation in a Rule 26(f) conference was “Rules-mandated.”  While undertaking its limited defense of the counterclaim, Pinnacle filed an answer in the arbitration proceeding.  Finally, Plaintiff acted quickly by moving to compel arbitration only two months after it filed suit.  In short, “viewing the facts ‘under the totality of the circumstances’” (citation omitted), the panel holds that there was no waiver.

The practice tip – if you claim that you have a right to arbitrate, reaffirm that position early and at every juncture of the case.  Make it clear to opposing counsel and the court that you are not there to litigate the case to a resolution on the merits.

Quick Hits

Arbitrations Are Private, Not Confidential

While the proceedings in an arbitration are not open to the public, the results thereof may be.  Major League Baseball Players, Association v. Arroyo, 2024 U.S. Dist. LEXIS 107411 (S.D. N.Y. June 17, 2024)(Liman, J.), joins the long line of cases denying a motion to seal the documents filed in support of a motion to compel or vacate an arbitration.  Here, both parties requested the sealing of the Notice of Discipline which triggered the arbitration and the award therein, along with any reference to the “specific findings or holdings of either document.”  The court denies the motion, opining that “under both the First Amendment and the common law, there is a presumption of immediate public access to judicial documents.” Since the petition to compel, memoranda and other documents purporting to support confirmation, and the language and holdings of the award itself “directly affect the Court’s adjudication of [the] petition,” the court holds that the public is entitled to access thereto.  Judge Liman recognizes that, in limited circumstances, there may be “countervailing” factors outweighing the presumption of public access.  Accordingly, he allows the parties to renew their motion “with limited, targeted, and well-supported requests to seal.”

Timing for Petitions to Vacate under the FAA; Equitable Tolling

Allen Cohrs/Allen Cohrs Farms v. Agrilogic Insurance Services, LLC, 2024 U.S. Dist. LEXIS 108317 (May 8, 2024)(Bray, M.J.), is a reminder that the Federal Arbitration Act’s three-month time frame for serving a motion to vacate an award, 9 U.S.C. § 12, prevails over any different schedule to which the parties agree.  Cohrs and Agrilogic arbitrated over the amounts due under a federal common crop insurance policy which Defendant had issued to Plaintiff.  The policy provided that any suit seeking judicial review of the arbitration award “must be filed no later than one year after the date the arbitration decision was rendered.”  The award at issue here was rendered on May 2, 2022, and the application to vacate was filed in April 2023, thus complying with the contractual provision.  However, the Magistrate Judge recommends dismissing the petition to vacate as untimely.  The court applies the provisions of the FAA, as “the Policy here involves commerce.” (Citations omitted).  Therefore, “the court concludes that, because the FAA applies to Cohr’s motion to vacate the Final Award, the FAA’s procedural and substantive provisions are binding on Cohrs, including the three-year notice requirement.”

So, what option is available if the client comes to you after the running of the three-month statutory limit and wants to vacate an adverse arbitration award?  Judge Bray’s opinion suggests that counsel should consider the availability of equitable tolling, since the party asserting the running of the statute of limitations has itself agreed to a longer time frame in the agreement.  In the instant case, Judge Bray rejects that argument, relying upon the Fifth Circuit’s holding in Cigna v. Huddleston, 986 F. 2d 1418 (5^th Cir. 1993).  However, he acknowledges that there is a Circuit split on the question, citing to Move, Inc. v. Citigroup Global Markets, Inc., 840 F. 3d 1152 (9^th Cir. 2016), and cases assembled therein.  Be sure to look at the applicable law in the Circuit covering your dispute.

This has been a weekend of comebacks – Scottie Scheffler’s five under round to win the Traveler’s Championship in sudden death; the Edmonton Oilers’ comeback from three down to tie up the Stanley Cup.  At the risk of being sappy, I’m reminded that sports really do teach us to be optimistic and keep fighting.   

David Reif, FCIArb
Reif ADR
Dreif@reifadr.com
Reifadr.com