As usual during the weeks around Christmas and New Years Day, the courts have been fairly quiet.  But, here are a couple cases of interest and an important journal article.

Delegation of Gateway Issues through the Adoption of Rules; London Maritime Arbitrators Association; “Arising from”

It is now black letter law, except, perhaps, in the context of consumer cases, that the invocation of the rules of the AAA or JAMS delegates the resolution of threshold issues, such as arbitrability, to the arbitrator.  America Chung Nam, LLC v. Mitsui O.S.K. Lines, Ltd., 2023 U.S. Dist. LEXIS 227709 (C.D. Cal. December 19, 2023), holds that, where the parties invoke the rules of the London Maritime Arbitrators Association, those issues remain with the court. The LMAA’s rules provide that “jurisdiction of the tribunal shall extend to determining all disputes arising under or in connection with the transaction the subject of the reference.”  Judge Blumenfeld contrasts those rules with the AAA provisions which provide that “the arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the . . .validity of the arbitration agreement.”  The court opines that “the LMAA Terms merely discuss the scope of disputes subject to arbitration (without specifying who will decide arbitrability challenges).  Because the selected rules do not reflect a clear and unmistakable delegation [see Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002)], the Court must decide whether an arbitration agreement exists.”  Judge Blumenfeld, then, opines that the subject arbitration provision, which “covers disputes ‘arising or in connection with’ the parties’ agreement,” includes all disagreements “in which it underlying facts ‘touch matters’ covered by the agreement.” (Internal citation omitted).  Accordingly, under the provisions of the parties’ Charter Agreement, he compels arbitration of a dispute raising tort claims, including fraudulent inducement and negligence.

Delegation of Issues Related to Non-Signatory

Nicholas Services, LLC v. No. Bombardier, Inc., 2023 U.S. Dist. 229124 (N.D. Miss. December 26, 2023), addresses another delegation question.  Judge Mills holds that, despite the subject agreement’s broad arbitration clause, threshold issues are not delegated to the arbitral panel where those questions relate to non-signatories.  Questions such as equitable estoppel, the court holds, are issues of contract formation, which only the court may decide. Thus, he considers whether a non-signatory to the parties’ warranty and purchase agreements may be compelled to arbitrate its warranty claims. After discussing assignee rights and equitable estoppel, he compels arbitration.

Arbitrating Attorney-Client Disputes

Matthew Corbin has an excellent article in a recent edition of “The Brief,” a publication of the ABA’s Tort Trial and Insurance Practice Section, Finding a Safe Harbor for Arbitration Clauses in Attorney-Client Engagement Agreements, 52 The Brief No. 4, 53 (Summer 2023). In a heavily footnoted review, Corbin takes a deep dive into the ethical opinions of the ABA and State Bars and discusses judicially imposed requirements for an enforceable agreement.  As counsel try to avoid litigating malpractice claims and fee disputes before potentially unsympathetic juries, the case is an important read for the General Counsel of larger firms and for any attorney drafting an engagement letter.  Unfortunately, the article is behind a paywall on the ABA website, but great material, like this, is another reason to join the ABA Section.

Best wishes for 2024.  Thanks for taking the time to read “Highlights” over the past year.  I’m honored by your willingness to do so and hope that I’ve justified your investment. Here’s to a safe, peaceful, and healthy 2024.

David A. Reif, FCIArb
ReifADR
Dreif@Reifadr.com
ReifADR.com