Recent Developments in Alternative Dispute Resolution Law

Editors

Carolyn G. Nussbaum

Nixon Peabody LLP
1300 Clinton Square
Rochester, New York 14604
585-263-1000
[email protected]
www.nixonpeabody.com

Christopher M. Mason

Nixon Peabody LLP
Tower 46
55 West 46th Street
New York, New York 10036
212-940-3000
[email protected]
www.nixonpeabody.com


Table of Contents hide

§ 1.1 Introduction

To illustrate the state of arbitration law in 2020, we describe in this chapter selected cases from the United States Supreme Court docket, the federal Circuit Courts of Appeals (and several noteworthy cases from the federal District Courts), and the highest courts of each state that raise unique issues, provide instructive guidance on recurring issues in arbitration law, or are likely to be of interest to the general legal profession.  We also discuss several legislative and regulatory developments and several discussions involving mediation issues.

Starting from the top, as we predicted in this chapter in the 2019 ANNUAL REVIEW OF RECENT DEVELOPMENTS IN BUSINESS AND CORPORATE LITIGATION (ABA 2020), the U.S. Supreme Court did not have a significant volume of arbitration cases in 2020.  The Court issued just one substantive arbitration decision and heard argument on just one potentially significant case in which a decision is expected in 2021.[1]  This, of course, meant that the Court denied review in a number of cases.  Among those, one denial of certiorari in particular may also have been somewhat notable.

This year, at least two issues revealed splits among the Circuits on arbitration issues.  First, numerous decisions considered whether and to what extent delivery workers in the “gig economy,” including those who carry goods the “last mile,” were within the scope of the residual clause of section 1 of the FAA[2] exempting from the Act contracts of “any other class of workers engaged in foreign or interstate commerce” as interpreted by the United States Supreme Court in Circuit City Stores, Inc. v. Adams.[3]  These cases are discussed in section 1.8.1.

In addition, 28 U.S.C.A. § 1782 permits any party or other interested person involved in proceedings taking place before a foreign or international tribunal, or the tribunal itself, to make a request to a U.S. federal district court for an order compelling discovery from a person or entity that resides or is found in the district in which the court sits.  Several decisions this year grappled with the question of whether discovery may be ordered in aid of private foreign and international arbitral proceedings, including the Seventh and Fourth Circuits, which came to conflicting conclusions relating to the same international proceeding.  These cases are discussed below in section 1.17.

2020 also was the year that federal regulators in the Antitrust Division of the Department of Justice (the “Division”) embraced arbitration after a well-publicized success in arbitrating the definition of the relevant product market in a challenged merger.  Capitalizing on that success, the Division issued its Updated Guidance Regarding the Use of Arbitration and Case Selection Criteria in November 2020, signaling an interest in increasing the use of arbitration.[4]

With a deeply divided Congress, and scant chance of abolishing the filibuster, broad-based legislative attacks on the growing use of arbitration agreements appear unlikely.  Still, watch for a renewed battle over the proposed Forced Arbitration Injustice Repeal Act (“FAIR”), a bill that has been introduced in one form or another for many years, and which has already passed the House.  FAIR would invalidate pre-dispute arbitration agreements in the employment, civil rights, consumer, and antitrust contexts, and would require employers to litigate workplace disputes in court.

§ 1.2 Legislative and Regulatory Development

§ 1.2.1 The Department of Labor

Countrywide Fin. Corp., 369 N.L.R.B. No. 12 (Jan. 24, 2020).  Arbitration agreement that does not expressly prohibit filing charges with the National Labor Relations Board (“NLRB”) interfered with employees’ rights to file such charges because a reasonable employee would interpret the exclusive remedy language of the agreement as imposing such a prohibition.

This case arose during the two-year period when Countrywide Home Loans, Inc. (“Countrywide”) required applicants seeking employment to sign an arbitration agreement.[5]  The agreement stated that covered claims included those “arising out of, relating to or associated with the Employee’s employment,” as well as “claims for benefits and claims for violation of any federal, state or other governmental constitution, statute, ordinance, regulation, or public policy” and provided that “[a]rbitration is the parties’ exclusive remedy for covered claims,” although it also stated that “[n]othing in this Agreement shall be construed to require arbitration of any claim if an agreement to arbitrate such claim is prohibited by law.”[6]  At issue was whether this arbitration agreement violated section 8(a)(1) of the National Labor Relations Act (“NLRA”) by interfering with employees’ rights to file charges of violations of the NLRA with the NLRB. The NLRB applied the three-part balancing test of its Boeing Co.[7] decision to conclude that, as reasonably interpreted, Countrywide’s arbitration agreement did interfere with employees’ rights to file charges with the NLRB because employees would reasonably interpret the “exclusive remedy” language to limit their ability to file charges with the NLRB.[8]  This was true even though the arbitration agreement did not explicitly prohibit filing charges with the NLRB.[9]  Applying its own precedent, the NLRB found that there was no legitimate justification to outweigh administration of the NLRA.[10]  The NLRB further applied its precedent to find that the savings clause language, which purported to except claims for which arbitration is “specifically proscribed” by federal law, was too vague to save the arbitration agreement.[11]  The court reasoned that although a reasonable employee would understand that the arbitration agreement does not apply where “prohibited by law,” the reasonable employee cannot be expected to have the legal background to know where the language of the provision would apply.[12] 

§ 1.2.2 The Department of Justice

In March 2020, the Antitrust Division of the Department of Justice (the “Division”) announced it had prevailed in its efforts in an arbitration to secure the divestiture by Novelis, Inc. (“Novelis”) of the North American aluminum production facilities of Aleris Corporation (“Aleris”) as a condition of Novelis’ acquisition of Aleris.  In September 2019, the Division had commenced an antitrust enforcement proceeding under the Clayton Act by filing a complaint against Novelis.  Prior to filing the Complaint, the Division and Novelis had agreed to refer the matter to binding arbitration in the event that the parties were unable to resolve certain issues within a certain period of time.  After preliminary discovery, they agreed to refer the key issue of relevant product market definition to binding arbitration before an arbitrator they had chosen pursuant to their agreement.  After a 10-day hearing, the arbitrator ruled in favor of the government.

The Division first released guidance on the potential use of arbitration in 1996 (the “1996 Guidelines”),[13] after passage of the Administrative Dispute Resolution Act of 1996 (“ADR Act”).[14]  In the wake of the successful Novelis arbitration, the Division released Updated Guidance Regarding the Use of Arbitration and Case Selection Criteria in November 2020 (“Updated Guidance”).[15]  The Updated Guidance addresses “the arbitration agreement, the decision whether to file a complaint in federal district court before the matter is referred to arbitration, selection, compensation and cost shifting, and the training of Antitrust Division staff on the use of arbitration,” as well as the Division’s learnings from the Novelis case.

The Updated Guidance highlights the potential advantages of alternative dispute resolution strategies such as arbitration, including the ability “to eliminate unnecessary civil litigation, shorten the time that it takes to resolve civil disputes, and achieve better case resolutions with the expenditure of fewer taxpayer resources.”[16]  The stated policy will be to “encourage” the use of ADR where it may “shorten the time necessary to resolve a dispute, reduce the taxpayer resources used to resolve a dispute, or otherwise improve the outcome for the United States.”[17]  However, where the prior guidance cautioned that “ADR techniques will likely be difficult to apply during the course of merger investigations,” due to time constraints, this language has been omitted from the Updated Guidance.[18]

The Updated Guidance includes selection criteria the Division will apply when considering arbitration.  While acknowledging that arbitration requires the consent of both parties, arbitration is favored for matters in which an arbitrator would be more efficient or where the expense of bringing suit is overly burdensome in comparison to the consumer benefit, cases in which the issues are clear and can be agreed upon by the parties, where issues are factually or technically complex and would be benefited by an expert factfinder, where litigating in federal court could result in unacceptable delay, or where parties have a particular need to control the scope of relief.[19]  The Updated Guidance also notes that “[a]rbitration also allows the parties to select an arbitrator with relevant expertise, such as in antitrust law or economics, which may allow the parties to streamline their advocacy or eliminate unnecessary expert testimony.”[20]  Conversely, the “lost opportunity to create valuable legal precedent” and where “[t]he public’s interest in the matter is of such significance that resolution by a federal judge in an open forum is necessary” both weigh against arbitration.[21]

A comparison of factors to consider between the 1996 Guidelines and the Updated Guidance reveals similarities and changes.  Several factors that favor arbitration have been repeated, including conservation of resources and technical or factual complexity.[22]  Dropped from the Updated Guidance are considerations that were included in the 1996 Guidelines such as numerosity of parties, divergence of interest among the aggrieved parties, absent stakeholders, an ongoing relationship between the Division and the parties, and a hostile decision maker in the form of an unsympathetic judge.[23]

The Updated Guidance also described the requirements of the arbitration agreement of the parties, derived from the ADR Act, including specifying a maximum award and other conditions limiting the range of possible outcomes.[24]  While the Updated Guidance cautions that the agreement should also address confidentiality of evidence and the proceedings, “[a]t a minimum, it is the policy and the strong preference of the Division that the arbitrator’s decision be made public.”[25]

While the ADR Act provides that the arbitrator can be “any … individual who is acceptable to the parties,” the Updated Guidance suggests the Division will have a strong preference toward “an antitrust specialist or former judge, either with economics training or with extensive experience handling complex antitrust cases,” stressing that a hand-selected arbitrator could bring enhanced expertise on economic issues and expert testimony, which could potentially be dispensed with where the arbitrator already possesses the appropriate knowledge and focused expertise.[26]

More than two decades after passage of the ADR Act, the Novelis case was the first use of arbitration in a merger enforcement action.  It likely will not be the last.

§ 1.2.3  Revised Uniform Arbitration Act

The Uniform Law Commissioners drafted and proposed the original Uniform Arbitration Act (the “UAA”) in 1955.  It provided, among other things, basic procedures for the conduct of an arbitration by agreement.  Forty-nine jurisdictions adopted the original UAA, including the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.[27]  Four states, Alabama, Georgia, Mississippi, and West Virginia, did not enact any version of the original UAA.[28]

In 2000, the Commission revisited and substantially revised the UAA to produce the 2000 Uniform Arbitration Act (the “Revised UAA”).[29]  The Revised UAA allows for consolidation of separate arbitration proceedings, expressly provides for immunity for arbitrators from civil liability, authorizes the award of punitive damages and attorneys’ fees when such an award would be authorized in a civil action, and provides arbitrators with discretion to order discovery, issue protective orders, and decide motions for summary judgment, similar to a judicial proceeding.[30]

Twenty-two states have adopted the Revised UAA, including Alaska, Arizona, Arkansas, Colorado, Connecticut, the District of Columbia, Florida, Hawaii, Kansas, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Utah, Washington, and West Virginia.[31]  No new states have adopted the Revised UAA in 2020, although legislation in Massachusetts was reintroduced in 2019 and given a study order in 2020,[32] while a bill to adopt the Revised UAA was proposed in Vermont in 2019 and is still awaiting a vote as well.[33]  The progress of states enacting the Revised UAA can be tracked at www.uniformlaws.org.

§ 1.2.4 Uniform Mediation Act

The Uniform Mediation Act (the “UMA”), as promulgated by the Uniform Law Commission in 2001 after a joint drafting effort with the American Bar Association’s Dispute Resolution Section,[34] and as amended in 2003 to incorporate the Model Law on International Commercial Conciliation,[35] was not adopted by any new states in 2020.  It continues in effect in the District of Columbia, Hawaii, Idaho, Illinois, Iowa, Nebraska, New Jersey, Ohio, South Dakota, Utah, Vermont, and Washington.[36]  The Act was introduced again in 2019 in Massachusetts, and was given a study order in 2020.[37]  The progress of states enacting the UMA may be tracked at www.uniformlaws.org.

§ 1.2.5 The United Nations Convention on International Settlement Agreements Resulting from Mediation

On August 7, 2019, 46 countries signed on to the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention”).[38]  The initial signatories included (in addition to Singapore, of course) major States such as the United States, China, and India, but did not include, for example, Australia, the European Union, or the United Kingdom.[39]  Since then, Ghana and Rwanda have signed on as well.[40]

As discussed in our 2019 compilation, the Singapore Convention provides, for the first time, an international process for the direct enforcement of cross-border settlement agreements arising out of mediation.[41]  To fall within the scope of the Singapore Convention, a settlement agreement must be in writing, must result from a mediation, must be between two or more parties who have their place of business in different States, and must involve, as the place of business of each party, a State that has acceded to or ratified the Singapore Convention.[42]  There are some substantial exceptions to its coverage, however: the Singapore Convention will not apply to settlement agreements that relate to consumer transactions, or to family law, inheritance issues, or employment law; to settlement agreements that have been approved by a court or concluded in the course of proceedings before a court and that are enforceable as a judgment in the State of that court; or to settlement agreements that have been recorded and are enforceable as an arbitral award.[43]

Mediation is defined under the new Singapore Convention as “a process, irrespective of the expression used or the basis upon which the process was carried out, whereby the parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons (the ‘mediator’) lacking the authority to impose a solution upon the parties to the dispute.”[44]  Presuming that the Singapore Convention does go into effect, a settlement agreement that qualifies will allow a party to use a simplified procedure for enforcement.  That party will provide to the relevant authority in the State where the party seeks to enforce the settlement agreement two basic pieces of evidence: first, a copy of the signed settlement agreement; and, second, proof that the settlement agreement resulted from a mediation.[45]  This latter requirement can be satisfied by a mediator’s signature on the settlement agreement or by a document signed by the mediator confirming that there was a mediation.[46]

Once it receives this evidence, the relevant authority (most likely a court) is required to “act expeditiously.”[47]  Under limited circumstances it may refuse enforcement.  These include proof of the incapacity of a party to the settlement agreement; proof that the settlement agreement is null and void, inoperative, or incapable of being performed; proof that the settlement agreement is not binding, or is not final, according to its terms; proof that the settlement agreement has been subsequently modified; proof that necessary obligations for enforcement of the settlement agreement have not been performed or are not clear and comprehensible; proof that granting relief would be contrary to the terms of the settlement agreement; proof that the mediator committed a serious breach of standards applicable to him, her, or the mediation, without which breach the party seeking to avoid enforcement would not have settled; proof that the mediator failed to disclose circumstances raising justifiable doubts as to his or her impartiality or independence, which failure had a material impact or undue influence on a party, and without which failure the party would not have settled; proof that granting relief would be contrary to the public policy of the State in which enforcement is sought; or proof that the subject matter of the dispute was not capable of settlement by mediation under the law of that State.[48]

While this is not a short list, it is likely that, as with arbitration awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”),[49] enforcement of mediation settlements under the Singapore Convention is likely to be granted in most instances.  Importantly, however, the Convention does not itself define the remedies for breach of a settlement agreement.  Because permissible remedies are different in different countries, parties to international commercial mediation settlements will likely want to specify at least some remedies in their settlement agreements, and in doing so consider whether those remedies will be enforceable in the most likely jurisdictions of enforcement.  Similarly, such parties will want to think carefully about choice of law decisions in their settlement agreements.

§ 1.2.6 State Codes
  • California

While no significant statutes were passed this year by the California state government regarding arbitration, we reported last year on Assembly Bill No. 51 (“AB 51”).[50]  In February, the United States District Court for the Eastern District of California issued a preliminary injunction blocking implementation of AB 51.[51]  AB 51 was passed in 2019 to prohibit employers from requiring employees to waive any right, forum, or procedure established by the California Fair Employment and Housing Act or the California Labor Code.[52]  This includes a bar of any agreement that requires employees to opt out of a waiver or take any affirmative action to preserve their rights to a judicial forum, as would occur in an agreement mandating arbitration of an employment dispute.[53]

AB 51 was set to take effect on January 1, 2020, but was challenged in court by the Chamber of Commerce of the United States of America, among other interested parties, alleging that the FAA preempted AB 51 and all legislation enacted under its mantle of authority.[54]  The District Court agreed with the plaintiffs and enjoined implementation of the laws enacted under AB 51 to preserve the mandate of the FAA.[55]  The court found that the challengers of the bill were likely to succeed on the merits because the FAA preempted AB 51 in two ways.  First, AB 51 imposed restrictions on the formation of arbitration agreements that do not apply to contracts generally, violating the express direction under Section 2 of the FAA requiring courts and state legislatures to “place arbitration agreements ‘on equal footing with all other contracts.’”[56]  Second, AB 51 punished the exercise of a federally protected right to include arbitration agreements in employment contracts, directly impeding the FAA.[57]

The District Court found that the challengers of AB 51 were likely to succeed on their strong arguments for preemption of the FAA, and granted a preliminary injunction blocking the bill from taking effect.  The litigation is continuing.

§ 1.2.7 Rules of the International Chamber of Commerce

On January 1, 2021, the International Chamber of Commerce’s (“ICC”) 2021 Rules of Arbitration (the “2021 Rules”) will become effective.[58]  These rules replace the ICC’s 2017 Rules of Arbitration (the “2017 Rules”).[59]  While the 2021 Rules do not significantly amend the predecessor 2017 Rules, there are several material changes to rules relating to the framework of ICC arbitration.

First, the 2021 Rules addressed virtual proceedings and communications by amending Article 26, which provides the rules for hearings.  Article 26(1) has been updated to explicitly provide the arbitral tribunal with authority to conduct virtual hearings at its discretion either in person or virtually through “videoconference, telephone or other appropriate means of communication.”[60]  Although tribunals were not previously prohibited from conducting virtual hearings, clarifying the rules to explicitly provide this power addresses any doubts that may exist in a time where COVID-19 has led to a shift to the use of virtual proceedings.  By including the “other appropriate means of communication” language, the ICC appears to have drafted this rule to anticipate evolving technology.[61]

The framework of how arbitration is conducted under the ICC Rules has been further changed by amending the rules involving multi-party arbitration.  One of the more significant changes in the 2021 Rules can be found in Article 7, which deals with the joinder of additional parties.  Article 7(5) is a newly added provision that allows parties to make requests for joinder after the confirmation or appointment of any arbitrator in the proceeding.[62]  The 2017 Rules required that all parties, including the party sought to be joined, agree to such joinder, but the 2021 Rules contain no such requirement and instead leave it to the arbitral tribunal to decide the request.[63]  Article 10’s provisions on consolidation of arbitration have also been changed under the 2021 Rules.  Under the 2017 Rules, Article 10 provided that the ICC’s International Court of Arbitration (the “ICC Court”) could consolidate two or more arbitrations where “all of the claims in the arbitrations are made under the same arbitration agreement.”[64]  This language created ambiguity as to whether consolidation was possible only for claims made under the same contract, or if it also applied when claims arise from multiple agreements with mirror arbitration clauses.  The 2021 Rules address this ambiguity by amending Article 10(b) to apply to claims made under the same “agreement or agreements,” so arbitrations may be consolidated where they involve multiple agreements with mirror arbitration clauses.[65]

The 2021 Rules also include multiple changes designed to address potential conflicts of interest in arbitration proceedings.  First, Article 11, which contains general provisions, has been revised with the inclusion of Article 11(7) requiring parties to promptly inform the ICC Secretariat of any agreements where a non-party has an economic interest in the outcome of the arbitration through an agreement to fund a party’s claims or defenses.[66]  This change places the affirmative obligation on parties at the outset to inform of the involvement of litigation funders to address potential conflicts at the outset.  Second, the 2021 Rules provide a new paragraph under Article 12(9) addressing the constitution of the arbitral tribunal.  The ICC Court now has the power to appoint each member of the arbitral tribunal, even if this method differs from what the parties had envisioned in their arbitration agreement.  However, this power is limited to “exceptional circumstances” that would avoid “a significant risk of unequal treatment and unfairness that may affect the validity of the award.”[67]  Third, Article 17 has been renamed to “Party Representation” and now requires parties to immediately notify the Secretariat, arbitral tribunal, and other parties of any change in their representation.[68]  Notably, the tribunal has been given the authority under this rule to exclude new representatives from participating in arbitration if necessary to avoid a conflict of interest with an arbitrator.[69]

Other noteworthy updates in the 2021 Rules include a new provision in Article 36(3) allowing a party to apply to the Secretariat for an additional award for claims made in the arbitral proceeding that the tribunal has omitted to decide.[70]  Additionally, the pecuniary threshold to avoid application of the expedited rules has been increased from $2 million under the 2017 Rules to $3 million under the 2021 Rules for arbitration agreements concluded on or after January 1, 2021.[71]

Lastly, the 2021 Rules reflect an effort to increase transparency, as a party may now, among other things, request that the ICC Court communicate its reasons for reaching its decisions, although the ICC Court is not required to communicate such reasons when exceptional circumstances dictate that it should not.[72]

§ 1.2.8 International Swaps and Derivatives Association (“ISDA”)

ISDA 2020 IBOR Fallbacks Protocol.  Largely unnoticed, a protocol by the International Swaps and Derivatives Association, Inc. (“ISDA”) may have the potential to subject very large numbers of transactions to arbitration if disputes arise.

On October 23, 2020, ISDA published its 2020 IBOR Fallbacks Protocol.  “IBOR” means “Inter-Bank Offered Rate,” that is, rates such as “LIBOR” (the “London Inter-Bank Offered Rate”) that have fallen into disrepute and are in the process of being replaced worldwide by different systems of base rates.  Trillions of dollars (and other currencies) of transactions are subject to IBOR rates.  The largest volume (by notional currency amount) of such transactions are derivatives such as interest rate swaps.  ISDA publishes standard documentation for such transactions and has been in the forefront of moving away from IBORs.

One of the features of ISDA’s approach to this transition has been to create a protocol that would amend existing deals (and apply to future deals) to provide fallbacks for existing IBOR rates and trigger events for such fallbacks generally by party, rather than transaction-by-transaction.[73]  Thus, under the ISDA 2020 IBOR Fallbacks Protocol (the “Protocol”), if any two parties agree to adhere to the Protocol to fix IBOR issues in one of their transactions, they agree to apply it to all of their transactions until one of them withdraws from the Protocol (in which case, only new transactions by that party will not automatically be subject to the Protocol).[74]  Furthermore, each of them, by agreeing to adhere to the Protocol, agrees to have adopted the Protocol for each transaction each of them has with any other entity that has adopted the Protocol.  As the Protocol puts it:

By adhering to this Protocol in the manner set forth in this paragraph 1, each Adhering Party agrees, in consideration of the mutual promises and covenants contained herein, that the terms of each Protocol Covered Document between such Adhering Party and any other Adhering Party will be amended in accordance with the terms and subject to the conditions set forth in the Attachment hereto.[75]

The only way ISDA provides for a party to adopt the Protocol is to send an “Adherence Letter” in a form prescribed by ISDA.[76]  That letter, addressed to ISDA, now contains what might be a surprise to some parties—an arbitration clause.[77]  Traditionally ISDA has required parties to agree that, in using ISDA’s documentation and procedures, they would waive any claims against ISDA.  Paragraph 2 of the Adherence Letter contains such a waiver: “we waive any rights and hereby release ISDA from any claims, actions or causes of action whatsoever (whether in contract, tort or otherwise) arising out of or in any way relating to this Adherence Letter or our adherence to the Protocol or any actions contemplated as being required by ISDA.”[78]

But paragraph 3 of the Adherence Letter further states that:

By adhering to the Protocol, we agree that all claims or disputes arising out of or in connection with adherence to the Protocol shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (the Rules) by three arbitrators, and hereby waive any right to assert any such claims or disputes against ISDA as a representative or member in any class or representative action.  The claimant(s) (as defined in the Rules) shall nominate one arbitrator in the ‘Request for Arbitration’.  The respondent(s) (as defined in the Rules) shall nominate one arbitrator in the ‘Answer to the Request’.  The two party-nominated arbitrators shall then have 30 days to agree, in consultation with the parties to the arbitration, upon the nomination of a third arbitrator to act as president of the tribunal, barring which the International Chamber of Commerce Court shall select the third arbitrator (or any arbitrator that claimant(s) or respondent(s) shall fail to nominate in accordance with the foregoing).[79]

This agreement to arbitrate shall not be affected by the Revocation Notice as described in the Protocol.[80]

To the extent this clause was meant to apply only to claims between ISDA and a party adhering to the Protocol, it would probably seem consistent with ISDA’s purposes and practices.  For example, ISDA is an international association, and applying ICC rules to disputes with it is not illogical.

Nor is this the only foray by ISDA into arbitration issues.  Since 2007, it has indicated that arbitration can be appropriate for dispute resolution in ISDA transactions.  In 2013 it published recommended language for arbitration clauses.  And in 2018, it published updated recommendations for parties who wish to include arbitration provisions in their transactions.[81]  A few ISDA documents for specific transactions—the Schedule to the ISDA 2002 Master Agreement (French law version) and the ISDA/IIFM Tahawwut Master Agreement (English or New York law versions)—also provide for ICC arbitration in Paris, London, or New York, depending on the particular law involved, but can be amended by parties.  As to other documents, the 2018 ISDA guide provides non-binding guidance for arbitration clauses using ICC rules, London Court of International Arbitration (“LCIA”) rules, Dubai International Financial Centre-LCIA rules, American Arbitration Association-International Dispute Resolution Centre rules, Hong Kong International Arbitration Centre rules, Singapore International Arbitration Centre rules, Austrian law arbitration rules, Dutch law arbitration rules, Swiss law arbitration rules, Panel of Recognized International Market Experts in Finance (P.R.I.M.E.) rules, Arbitration Institute of the Stockholm Chamber of Commerce rules, German Arbitration Institute (DIS) rules, and Vienna International Arbitral Centre rules.[82]

In contrast to such flexibility, the Adherence Letter’s provision is mandatory, because to use the Protocol, a party must send ISDA an Adherence Letter.[83]  More importantly, the language in the Adherence Letter is not as clear as it could be as to its purpose.  It provides that “all claims or disputes arising out of or in connection with adherence to the Protocol” shall be arbitrated, not that “all claims or disputes with ISDA arising out of or in connection with adherence to the Protocol” shall be arbitrated.[84]  The independent clause providing that signatories to the Adherence Letter “hereby waive any right to assert any such claims or disputes against ISDA as a representative or member in any class or representative action” is just that—an independent clause—that does not on its face restrict the earlier clause to claims only against ISDA.[85]  Furthermore, paragraph 1 of the Adherence Letter demonstrates that the drafters knew how to write a clause that would not include ISDA, and instead be between only signatories to Adherence Letters (“[a]s between each Adhering Party and us . . . .”), thus implying that the drafters knew how to draft a clause that would be between only ISDA and signatories to Adherence Letters, not between and among them.[86]

While it seems more likely that ISDA did not intend to bind all signatories to Adherence Letters to arbitrate all disputes between them (as opposed to between ISDA and them), the language permits a different conclusion.  And there had been some commentary that ISDA’s earlier positions on arbitration were not entirely effective because they required individual amendments of multiple documents.[87]  Additional guidance or interpretation in 2021 may well be necessary to know for sure—otherwise, counterparties to conventional swap transactions may find themselves arguing over whether they must arbitrate (under ICC rules) issues such as disagreements over payments due when a swap is terminated.

§ 1.3 The United States Supreme Court Docket

We noted last year[88] that we did not expect the Supreme Court’s 2020 arbitration activity to be as heavy as in some past years.  This proved to be true, not only because there was only one case that had been selected for review when we made that prediction, but also because the Court then kept to a smaller than average docket during the year, perhaps because of expectations concerning disputes about the Presidential election.  In the end, the Court issued just one substantive arbitration decision and heard argument on just one potentially significant case in which a decision is expected in 2021.  This, of course, meant that the Court denied review in a number of cases.  Among those, one denial of certiorari in particular may also have been somewhat notable.

GE Energy Power Conversion France SAS v. Outokumpu Stainless USA LLC, 140 S. Ct. 1637 (2020).  Non-signatories to an international arbitration agreement have standing to enforce that agreement in a United States court if they can show a sufficiently strong connection to a signatory.

The Court’s one announced decision in 2020 ended a nagging circuit split and narrowed the differences between domestic and international arbitration.[89]  It did so by making it easier for non-signatories to enforce international arbitration agreements under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”).[90]

GE Energy Power Conversion France SAS (“GE Energy”) manufactured electric motors that a general contractor for Outokumpu Stainless USA (“Outokumpu”) installed in a steel plant now owned by Outokumpu in Alabama.  When the motors failed, Outokumpu sued GE Energy in Alabama state court.  GE Energy removed the case to federal court under 9 U.S.C.A. § 205, which permits removal of cases involving international arbitration,[91] and sought to compel arbitration.

GE Energy had a problem, however: it had no direct contractual relationship with Outokumpu.  The arbitration clause was in the relevant contracts between Outokumpu and its general contractor, not the subcontract between Outokumpu and GE Energy, although the contracts with the general contractor did define the “parties” to include subcontractors.  Given these facts, GE Energy argued that Outokumpu’s claim “arose out of” the agreements with its general contractor; that subcontractors were either parties or intended to be treated as parties in such agreements; that GE Energy was such a subcontractor; and that GE Energy was therefore either a party, or that Outokumpu was equitably estopped from treating it any differently than a party, when it came to arbitration.

The District Court agreed with GE Energy by holding that it qualified as a “party” to the underlying contracts because those agreements defined the terms “Seller” and “Parties” to include subcontractors.[92]  Because the court concluded that both Outokumpu and GE Energy were “parties,” it did not reach or decide the equitable estoppel argument.[93]

On appeal, however, the United States Court of Appeals for the Eleventh Circuit reversed.[94]  It noted that the New York Convention (like the FAA) requires an agreement in writing, but that Article II of the New York Convention also provides that “[t]he term ‘agreement in writing’ shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.”[95]  The Court of Appeals observed that GE Energy might well have had standing to enforce the underlying arbitration clause in a domestic arbitration under the FAA.[96]  But, in its view, the New York Convention’s express reference to “signed by the parties” left less room than under the FAA for theories that would allow non-signatories to arbitrate, whether the specific contract language theory used by the District Court, or theories such as equitable estoppel.[97]  Instead, the Court of Appeals held that “to compel arbitration, the Convention requires that the arbitration agreement be signed by the parties before the Court or their privies.”[98]  Because GE Energy was not an actual signatory to the contracts between Outokumpu and its general contractor, no written agreement existed for GE Energy sufficient to satisfy Article II of the New York Convention.[99]

The Eleventh Circuit’s decision widened an existing circuit split.  Like the Eleventh Circuit, the Ninth Circuit had held that non-signatories could not enforce arbitration agreements under the New York Convention.[100]  Both the First Circuit and the Fourth Circuit had held the opposite.[101]

The Supreme Court resolved this split by first referring to the FAA and its allowance for the invocation of state law doctrines (such as equitable estoppel) applicable to contracts generally.[102]  It next turned to the content of the New York Convention, noting (among other things) that it focuses primarily on arbitral awards, that its Article VII(1) states that the “Convention shall not . . . deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon,” and that only one Article—Article II, in just three sentences—“addresses arbitration agreements.”[103]

Justice Thomas, writing for the Court, then explained that, because the implementing legislation for the New York Convention appears in “Chapter 2 of the FAA,”[104] and because “Chapter 2” provides that “Chapter 1”—the domestic provisions of the FAA—“applies to actions and proceedings brought under” Chapter 2 “to the extent that [Chapter 1] is not in conflict with” Chapter 2 or the New York Convention,[105] this means that the question before the Supreme Court was “whether the equitable estoppel doctrines permitted under Chapter 1 of the FAA . . . ‘conflict with . . . the Convention.’”[106]  He concluded they “do not conflict.”[107]

The most fundamental reason that no conflict exists is that “[t]he text of the New York Convention does not address whether non-signatories may enforce arbitration agreements under domestic doctrines such as equitable estoppel” and “nothing in the text of the Convention could be read to otherwise prohibit the application of domestic equitable estoppel doctrines.”[108]  While Article II(3) of the New York Convention provided that “courts of a contracting state ‘shall . . . refer the parties to arbitration’ when the parties to an action entered into a written agreement to arbitrate and one of the parties requests referral to arbitration,” there is nothing in this provision which restricts “contracting states from applying domestic law to refer parties to arbitration in other circumstances.”[109]  That silence was therefore “dispositive.”[110]

In addition, nothing in the New York Convention rejects the use of domestic law.  For example, because the provisions in Article II of the New York Convention are not comprehensive, they necessarily leave certain matters to domestic law.  “Article II(1) refers to disputes ‘capable of settlement by arbitration,’ but it does not identify what disputes are arbitrable, leaving that matter to domestic law” and “Article II(3) states that it does not apply to agreements that are ‘null and void, inoperative or incapable of being performed,’ but it fails to define those terms,” leaving that to domestic law as well.[111]  “Thus, nothing in the text of the Convention ‘conflict[s] with’ the application of domestic equitable estoppel doctrines permitted under Chapter 1 of the FAA.”[112]

While not dispositive, Justice Thomas also reviewed the negotiation and drafting history of the New York Convention, concluding that it “confirm[s] our interpretation of the Convention’s text.”[113]  He looked as well to the “postratification understanding” by other countries concerning the use of domestic law in enforcing the New York Convention and found that “courts of numerous contracting states permit enforcement of arbitration agreements by entities who did not sign an agreement.”[114]

Because the decision by the Court of Appeals below rested on the theory that only a signatory could enforce the arbitration clauses at issue, that court never reached the issue of whether GE Energy “could enforce the arbitration clauses under principles of equitable estoppel or which body of law governs that determination.”  The Supreme Court therefore remanded the case for further proceedings.

The Supreme Court’s decision was unanimous.  But Justice Sotomayor issued a separate concurrence, noting a limitation to Justice Thomas’s analysis for the Court: “Any applicable domestic doctrines must be rooted in the principle of consent to arbitrate.”[115]  In her view, this principle “constrains any domestic doctrines under Chapter 1 of the FAA that might ‘appl[y]’ to Convention proceedings (to the extent they do not ‘conflict with’ the Convention).”[116]  For example, some theories of equitable estoppel do not account for this principle, while others do.  As a result, “[l]ower courts must therefore determine, on a case-by-case basis, whether applying a domestic non-signatory doctrine would violate the FAA’s inherent consent restriction.”[117]  Because the Court’s opinion in GE Energy itself is consistent with this “foundational FAA principle,” she joined it in full.

Henry Schein Inc. v. Archer & White Sales, Inc., No. 19‐963 (U.S. argued Dec. 8, 2020).  Who decides whether a dispute falls within a carve-out to an arbitration clause, a court or an arbitrator?

The Henry Schein antitrust dispute (which has been going on for eight years now with no progress on the merits) is a familiar one to the Supreme Court.  As we have previously reported,[118] in 2019 the Supreme Court decided that the FAA does not contain any “wholly groundless” exception that would permit a court to avoid deciding who should decide the issue of arbitrability.[119]  Having remanded the case to the Fifth Circuit for it to determine whether, under the parties’ contract, a court should determine who decides the case, or whether an arbitrator should make that decision, and the Fifth Circuit having decided that a carve-out for injunctive relief disputes from the arbitration clause at issue meant that a case for injunctive relief would not have to go to an arbitrator for a decision on whether the carve-out applied,[120] the case is now back at the Supreme Court.

The arbitration clause at issue in Henry Schein states that “[a]ny dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property of [Pelton & Crane]), shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association.”[121]  While the general rule is that courts decide whether an arbitration clause covers a dispute,[122] if there is “clear and unmistakable evidence” that the parties agreed an arbitrator should decide the issue, then the arbitrator will do so.[123]  But arbitration clauses typically refer a case to arbitration before an arbitration provider such as the AAA or JAMS.  The rules of such organizations typically say that an arbitration they administer will proceed under the organization’s own rules.  And both the AAA and JAMS provide in those rules that arbitrators have power to decide their own jurisdiction.[124]

Against this background, the specific question on which the Court granted certiorari and heard argument at the end of 2020 was “whether a provision in an arbitration agreement that exempts certain claims from arbitration negates an otherwise clear and unmistakable delegation of questions of arbitrability to an arbitrator.”[125]  When the Court decides this issue, it will likely be determining how arbitration clauses (and arbitration rules) are drafted in the future.  Notably, the Court also rejected two other questions.  First, it avoided the question of whether incorporation of AAA rules by reference into a contract constitutes “clear and unmistakable intent to arbitrate arbitrability.”  Most federal Courts of Appeals believe that such rules incorporated by reference into arbitration clauses are “clear and unmistakable evidence” that the parties have elected to have an arbitrator decide whether a dispute is covered by the clause or not.[126]  But some courts disagree.[127]  Second, the Court avoided the question of whether it is an arbitrator or a court which must decide if a non-signatory to an arbitration agreement can enforce it using a theory of equitable estoppel.[128]

Monster Energy Co. v. City Beverages LLC, No. 19‐1333 (U.S. June 9, 2020).  The Supreme Court refuses to clarify when an arbitration award must be vacated for “evident partiality” under Section 10 of the FAA.[129]

As we reported last year[130] the Ninth Circuit recently overturned an arbitration award in favor of the beverage company Monster Energy because a JAMS arbitrator—retired California state judge John W. Kennedy—failed to disclose both his specific ownership interest in JAMS and that JAMS had administered 97 prior arbitrations with Monster Energy.  (Interestingly, he had provided, in addition to a general disclosure, a specific disclosure “that he [had] arbitrated a separate dispute between Monster and a distributor which resulted in an award of some $400,000 against Monster.”)[131]

The Ninth Circuit decision was somewhat surprising to some because, while Monster Energy is a multi-billion-dollar company, its opponent—City Beverages LLC—is itself a large and sophisticated distributor.  In addition, while the solution for arbitrators in California might seem simple (disclose everything you can), the decision was not as clear as it could have been about where the line should be drawn.  And, of course, it left arbitrators elsewhere uncertain of whether they must follow Ninth Circuit precedent.

In a different year, perhaps the Supreme Court would have granted certiorari.  The only time the Court has ever reviewed the “evident partiality” standard in the FAA was 52 years ago in the Commonwealth Coatings case.[132]  There Justice Hugo Black interpreted “evident partiality” as coextensive with the judicial standard for disqualification, holding as a result that an arbitrator must not only be unbiased, “but must also avoid even the appearance of bias.”[133]  The problem, however, was that a concurrence by Justice Byron White also concluded that vacatur of an arbitration award for evident partiality was only appropriate when the arbitrator failed to disclose “a substantial interest in a firm which has done more than trivial business with a party”—a somewhat less stringent test.[134]

Since Commonwealth Holdings, “[t]he First, Second, Third, Fourth, Fifth, and Sixth Circuits [require] those seeking vacatur of an arbitration award for evident partiality to show ‘a reasonable person would have to conclude that an arbitrator was partial to one party to an arbitration.’”[135]  The Ninth and Eleventh Circuits, however, appear to use a less-demanding standard which permits vacatur for only a “reasonable impression of partiality.”[136]  Despite this split, the Supreme Court passed—this time—on an opportunity to clarify the proper standard.

§ 1.4 Who Decides—The Court or the Arbitrator?

§ 1.4.1 Class Arbitration

Catamaran Corp. v. Towncrest Pharmacy, 946 F.3d 1020 (8th Cir. (Iowa) 2020).  Silence on the issue is not sufficient to imply an agreement to arbitrate on a class action basis.

Four pharmacies filed a demand for class arbitration with the AAA in a dispute with Catamaran Corporation (“Catamaran”), a pharmacy benefit manager over reimbursement agreements with Catamaran’s predecessor.[137]  The agreements contained similar provisions agreeing that disputes must be settled by arbitration.  None of the agreements used the word “class” or referred to class arbitration.  Catamaran initiated an action in federal court seeking to prevent the pharmacies from pursuing arbitration on a class-wide basis.  The District Court denied Catamaran’s motion for summary judgment, finding that the agreements required the question of class action arbitration to be determined by an arbitrator.

On appeal, the Eighth Circuit reversed and remanded to the District Court, holding that class arbitration is a substantive question of arbitrability for the court to decide.  On remand, the District Court granted Catamaran’s motion for summary judgment, finding that there was no contractual basis in the reimbursement agreements to support an agreement to class arbitration.  The pharmacies appealed, arguing that the agreements did establish a contractual basis for class arbitration.[138]

On the second appeal, the Eighth Circuit affirmed the District Court’s order, holding that the agreements did not provide for class arbitration.[139]  First, the court found that Supreme Court precedent prohibited compelling a party to submit to class arbitration under the FAA in the absence of a basis to conclude that the party agreed to do so,[140] and that neither silence nor ambiguity on the issue of class arbitration in the agreement to arbitrate provides a sufficient contractual basis to satisfy this inquiry.[141]  The Eighth Circuit rejected the pharmacies’ argument that the Supreme Court had recognized that class arbitration may be implicitly authorized in some cases, finding that precedent held that consent to class-wide arbitrations cannot be inferred solely from the fact that the parties agreed to arbitrate.[142]  Thus, the Eighth Circuit affirmed the District Court’s decision denying the pharmacies’ motion to compel class arbitration.

Marbaker v. Statoil USA Onshore Props., Inc., 801 F. App’x 56 (3d Cir. (Pa.) Feb. 13, 2020).  Where a party has not yet moved to compel arbitration, the issue of whether the party has waived its right to arbitrate is not yet ripe.  Further, neither silence on class arbitration nor a reference to the AAA Rules provide sufficient evidence of an agreement to arbitrate on a class-wide basis where the reference to the AAA Rules do not mention the AAA Supplementary Rules.

Landowners filed a class arbitration demand against Statoil USA Onshore Properties, Inc. (“Statoil”) for unpaid royalties allegedly owed to them under leases in which they agreed to allow oil and gas to be extracted from their property.[143]  The landowners also filed a complaint in federal district court seeking declaratory judgment that the leases permitted class arbitration.  Thereafter, the parties agreed to mediate, and the landowners voluntarily dismissed their lawsuit and agreed to stay the arbitration.  When mediation broke down, the landowners refiled their declaratory judgment suit, now asking the court to declare either that Statoil waived its right to enforce the leases’ arbitration clauses, or that those clauses permit class arbitration.  The District Court granted Statoil’s motion to dismiss the declaratory judgment suit in full, holding that the waiver issue was not ripe and that the leases did not permit class arbitration.  The landowners appealed.[144]

The Third Circuit affirmed the District Court’s decision, first holding that the landowners were not entitled to a declaratory judgment that Statoil waived its arbitration right because the issue was not ripe.[145]  To be sufficiently ripe for determination, the parties’ interests must be adverse, and the requisite adversity was not present here because Statoil had not yet moved to compel arbitration.[146]

The Third Circuit also affirmed the dismissal of the landowners’ request for judgment that the leases permitted class arbitration, holding that the leases did not contain the necessary evidence of an affirmative agreement to class arbitration.[147]  In reaching this conclusion, the court cited to Lamps Plus, Inc. v. Varela and Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., in which the Supreme Court held that there must be an affirmative contractual basis from which to infer that the parties consented to class arbitration before a court can compel a party to arbitrate on a class-wide basis.[148]

The Third Circuit found that the leases at issue fell well short of this standard, as they did not mention class arbitration.[149]  The court held that although it is not essential that an agreement contain the phrase “class arbitration,” the absence of a reference presents a challenge to demonstrating the requisite consent.[150]  A review of the language actually used in the leases did not convince the court that the parties consented to class arbitration because they used bilateral language to describe the leases themselves, as well as the parties.[151]  As a court sitting in diversity, the Third Circuit applied Pennsylvania law to reject the use of extrinsic evidence offered by the landowners because the leases were not ambiguous, as required to consider such evidence.[152]

Lastly, the Third Circuit rejected the landowners’ argument that the agreement to follow the AAA rules included an agreement to incorporate the AAA’s Supplementary Rules, which do refer explicitly to class arbitration.[153]  In reaching this decision, the court applied its own precedent holding that a “short, general reference to the AAA’s rules does not ‘incorporate[ ] a panoply of collective and class action rules,” in light of the structure of the AAA rules, which bury the Supplementary Rules in a chain of cross-references.[154]  It further held that the Supplementary Rules explicitly proscribe consideration of such references when determining whether an arbitration provision allows for class arbitration.[155]

§ 1.4.2 The Validity and Scope of an Arbitration Agreement and Arbitrability

SEIU Local 121RN v. Los Robles Reg’l Med. Ctr., 976 F.3d 849 (9th Cir. (Cal.) 2020).  In all arbitrations, including labor arbitration disputes, absent clear and unmistakable evidence of the parties’ intent to have an arbitrator—rather than the court—decide an issue, the court is responsible for deciding that issue.

The collective bargaining agreement (“CBA”) between a hospital and union provided for a three-step procedure to address grievances, with arbitration as the final step.[156]  The union filed a grievance asserting that the hospital placed certain types of patients with nurses who did not have the appropriate training to care for those patients.[157]  The hospital took the position that the grievance appeared to be a staffing issue, expressly excluded from the grievance procedures under the CBA.[158]  The union filed a complaint in federal court, followed by a motion to compel arbitration.[159]  The District Court determined that the parties were bound by the arbitration provision, but that it had to first determine whether the arbitration provision gave an arbitrator—rather than the court—the authority to decide its own jurisdiction (i.e., to decide if the grievance was subject to the arbitration provision).[160]

The District Court then proceeded to engage in a thorough analysis of Supreme Court and Ninth Circuit precedent on the issue, including in particular its own precedent in United Bhd. of Carpenters & Joiners of Am., Local No. 1780 v. Desert Palace, Inc.[161]  Although the District Court questioned whether Desert Palace was still good law in light of more recent Supreme Court decisions, the District Court concluded that it was bound by its precedent.[162]  Applying Desert Palace, the District Court found that the arbitration provision in the CBA was broad enough to authorize the arbitrator—rather than the court—to determine whether the grievance was arbitrable and therefore granted the union’s motion to compel arbitration without reaching the question of arbitrability.[163]  The hospital appealed.

On appeal, the Ninth Circuit held that the rationale in Desert Palace is “clearly irreconcilable with the reasoning or theory of intervening higher authority” set forth in Granite Rock Co. v. Int’l Bhd. Of Teamsters,[164] which expressly rejected the notion that labor arbitration disputes should be analyzed differently than commercial arbitration disputes.[165]  The panel concluded that it was therefore not bound by Desert Palace.  The dissent, on the other hand, saw no such conflict and construed Granite Rock to address only whether a specific issue is arbitrable, rather than the question of who decides.[166]  The court applied the rule that absent clear and unmistakable evidence of the parties’ intent to have an arbitrator—rather than the court—decide whether SEIU’s grievance is arbitrable, the District Court is responsible for deciding that issue, and reversed and remanded.[167]

Gibbs v. Sequoia Capital Operations, LLC, 966 F.3d 286 (4th Cir. (Va.) 2020); Gibbs v. Invs., LLC, 967 F.3d 332 (4th Cir. (Va.) 2020).  The question of enforceability of delegation provision was for the courts to decide, rather than the arbitrator, and the lower court properly determined the arbitration agreement was unenforceable where choice of law requiring tribal law amounted to a prospective waiver.

Groups of borrowers filed each of these suits against online payday lenders owned by a sovereign Native American tribe and others challenging the legality of the loans, and the defendants moved to compel arbitration.[168]  Although the borrowers claimed the loans would be illegal under state and federal law, the loan agreements provided they would be governed by tribal law.[169]  The agreements also contained a delegation clause stipulating that the parties would arbitrate “any issue concerning the validity, enforceability, or scope [of the loans]” and while borrowers could opt out of arbitration, any dispute resolution had to occur in the tribal court system.[170]  The District Court concluded in each case that because the choice of law provisions would apply tribal law to exclude federal law, including federal statutory claims by the borrowers, the agreements violated the prospective waiver doctrine and were unenforceable.[171]  The lenders appealed.

On appeal, the court first held in each case that because the borrowers sufficiently challenged the enforceability of the delegation clauses, the District Court was correct to consider the threshold enforceability of the arbitration agreements.[172]  Additionally, because the challenge to the delegation provision necessarily encompassed and included arguments that related to the entire arbitration agreement, the District Court did not err by assessing those arguments.[173]  As to the merits of the challenge, because the choice of law and venue provisions amounted to an illegal prospective waiver of a party’s right to pursue statutory remedies, the provision rendered the delegation clause, as well as the entire agreement, unenforceable.[174]  The District Court’s judgment refusing to compel arbitration was affirmed in both cases.

Williams v. Medley Opportunity Fund II, LP, 965 F.3d 229 (3d Cir. (Pa.) 2020).  Whether prospective waiver doctrine applied and rendered entire contract unenforceable, including the delegation clause, was for the court to decide.

Here, as in the Gibbs cases discussed above, borrowers obtained loans from online payday lenders pursuant to loan agreements that provide for mandatory application of tribal law, including in arbitration under the AAA or JAMS.  The borrowers sued the lenders in federal court for violations of federal and Pennsylvania state law.[175]  The choice of law provision called for application of tribal law and “such federal law as is applicable under the Indian Commerce Clause of the United States Constitution.”[176]  The lenders moved to compel arbitration and the District Court denied the motion, ruling that the arbitration agreement was unenforceable because the choice of law would not permit the arbitrator to consider any of the borrowers’ claims based on federal and state law, effecting an impermissible prospective waiver; and that the choice of AAA or JAMS did not provide an available arbitral forum because the arbitrators were required to apply policies and procedures that would not contradict tribal law.[177]

On appeal, the court first held that the issue of enforceability was for the court because the borrowers contended that the entire contract, including the delegation clause, was unenforceable.[178]  To determine whether the prospective waiver doctrine applied, the court examined the law of the forum to interpret the arbitration agreement to identify the law that would apply in arbitration under the agreement, and whether that law would preclude the borrower’s claims.[179]  Under Pennsylvania law, the arbitration agreement clearly provided for application of tribal law.[180]  As such, the arbitration agreement effects an impermissible waiver of statutory rights and is unenforceable.[181]  While the lenders claimed that the borrowers could still pursue their federal racketeering claim in arbitration, the court disagreed that a racketeering claim would be recognized as one under the “federal law as is applicable under the Indian Commerce Clause of the United States Constitution,” which would not capture all federal laws.[182]  Finally, the court held that the prospective waiver of statutory rights rendered the entire arbitration agreement (delegation clause included) unenforceable because the offending provisions were not severable, and affirmed the District Court’s order denying the motion to compel arbitration.[183]

Biller v. S-H OpCo Greenwich Bay Manor, LLC, 961 F.3d 502 (1st Cir. (R.I.) 2020).  Issues of arbitrability, including whether the arbitration agreement survived termination, were for the court to decide, and the arbitration obligation did survive termination and was not unconscionable.

Plaintiffs, a former resident in a long-term care facility and her daughter and attorney-in-fact, sued the facility in state court for injuries caused by medication lapses.[184]  The facility removed the action to federal court and sought to enforce the arbitration provision in the residency agreement.  The District Court denied arbitration, reasoning that when the resident had moved from assisted living to a memory care unit, the original agreement terminated, no other agreement to arbitrate was signed, and thus there was no arbitration agreement to enforce.[185]  The facility appealed.

On appeal, the court first held that the parties’ agreement, which provided that “disputes regarding interpretation, scope, enforceability, unconscionability, waiver, preemption and/or violability of this Agreement,” did not provide clear and unmistakable evidence that the parties agreed to have an arbitrator decide arbitrability, because it did not refer to disputes over the arbitration provision itself.[186]  Accordingly, the court would interpret the arbitration clause to determine whether it gave the arbitrator the authority to decide when the agreement terminated, and the court concluded that it did.[187]  To reach that conclusion, the court determined that the arbitration provision was severable and that the plaintiffs were challenging the entire contract on the grounds that the contract had terminated or that it was unconscionable.[188]  The court also invoked the presumption that arbitration obligations survive termination of the underlying agreement.[189]  However, the court reserved to itself the question of whether the parties had agreed to terminate the arbitration agreement by entering into a substitute agreement and, applying Rhode Island law, found a dearth of evidence to support the plaintiffs’ theory.  Moreover, the claims of unconscionability failed because plaintiffs could not meet the “daunting” standard Rhode Island imposed to show substantive unconscionability.[190]  Accordingly, the Court of Appeals reversed and remanded with a direction to compel arbitration.

Taylor v. Pilot Corp., 955 F.3d 572 (6th Cir. (Tenn.) 2020).  Courts have the authority to determine whether an arbitration agreement was formed before compelling arbitration in accordance with that agreement, even where questions of arbitrability are delegated to the arbitrator.

Employees brought an action against their employer for overtime violations under the Fair Labor Standards Act (“FLSA”) and the District Court granted conditional certification to a collective action.[191]  The employees then filed a motion to compel the employer to produce employment dates of all opt-in plaintiffs.[192]  One week after the motion was filed, the parties reached a partial settlement that resolved the claims of many of the opt-in employee-plaintiffs, and the employer filed a motion to compel the remaining opt-in employee-plaintiffs to arbitrate their claims, based on arbitration agreements the employer claimed each of the opt-in employee-plaintiffs had signed at their time of hire.[193]  There were a number of discrepancies in the information the employer provided, and the employees argued that there was no valid agreement to arbitrate where the opt-in employee-plaintiffs did not sign an arbitration agreement on the date the employer alleged they did.  The District Court granted the employees’ motion to compel the employer to disclose employment dates, and ordered the employer to produce the dates within two weeks.  However, instead of complying with that deadline, the employer filed a motion to reconsider the order compelling production of the dates, arguing that the purported arbitration agreements require the District Court to refer to the arbitrator whether it must produce employment dates and whether the arbitration agreements were validly formed.[194]  The District Court denied the motion to reconsider, and the employer appealed.  Thereafter, the court entered an order denying all outstanding motions by both parties, pending the resolution of the employer’s appeal, including the employer’s pending motion to compel arbitration.[195]  The employer appealed from that order as well.

On appeal, the Sixth Circuit identified the “core” of the parties’ dispute as whether the opt-in employees signed the alleged arbitration agreements, an issue of contract formation.[196]  Some number of employees claimed that they were not employees on the dates indicated on the alleged agreements and thus no binding arbitration agreement was formed.  The employer maintained that because of the broad delegation clauses in the alleged agreements, only an arbitrator can decide this question and that the district court’s orders to the contrary were unlawful denials of its valid petition for arbitration.[197]  Here, however, the court looked at the unusual status of the case and determined that it lacked jurisdiction under Section 16(a)(1)(B) of the FAA because the district court had not yet issued an order denying a petition to order arbitration to proceed, but merely delayed that decision pending the parties’ dispute regarding production of employment start dates.[198]

However, the court went on to discuss the current state of the law on contract formation issues.  Under Henry Schein, Inc. v. Archer and White Sales, Inc.,[199] the court must determine whether a valid arbitration agreement exists before referring a matter to arbitration.  And, under prior Supreme Court precedent, the district court “must resolve any issue that calls into question the formation or applicability of the specific arbitration clause that a party seeks to have the court enforce.”[200]  Left unresolved by these decisions was the question of whether the parties can contractually deprive the court of authority to decide these issues.[201]  Notwithstanding its decision to dismiss the appeal, the Sixth Circuit advised that the case law “strongly suggests” that even where agreements in this case purport to delegate the formation question to the arbitrator’s sole discretion, the precedent from the Supreme Court and the circuit indicate that the district court retains the authority to first satisfy itself that an agreement exists before granting a motion to compel arbitration.[202]  Otherwise, “[t]he FAA’s demand for consent-based arbitration agreements would be severely undermined.”[203]  Accordingly, the appeals were dismissed for want of jurisdiction and the matter was remanded to the District Court.[204]

Blanton v. Domino’s Pizza Franchising LLC, 962 F.3d 842 (6th Cir. (Mich.) 2020).  Incorporation of the AAA Rules provides “clear and unmistakable” evidence that the parties agreed to arbitrate disputes regarding arbitrability.

An employee of one of Domino’s Pizza Franchising LLC’s (“Domino’s”) franchises filed a putative class action against Domino’s, alleging that its franchise agreement violated federal antitrust law and state law.[205]  The employee contended that Domino’s requirement that its franchises agree not to solicit or hire employees from other franchises without the prior consent of their employer was unlawful.  The employee, already employed at one franchise, had obtained a second job from a different Domino’s franchisee in the same area, and signed an arbitration agreement with the second franchise that required him to arbitrate the merits of certain claims relating to his employment according to the AAA National Rules for the Resolution of Employment Disputes (“AAA Employment Rules”).  The first franchise terminated his employment, purportedly believing it was required to do so by Domino’s policy to allow him to work at the second franchise.  Domino’s moved to compel arbitration under the FAA, and the plaintiffs opposed the motion and argued that Domino’s could not enforce the arbitration agreements because only the franchises, and not Domino’s, were parties to the agreements.  The District Court held that employees had agreed to arbitrate both the merits of certain claims as well as the enforceability of the arbitration agreements, and ordered the employees to arbitration.[206]

The Sixth Circuit affirmed the District Court, holding that the parties clearly and unmistakably agreed to arbitrate questions of arbitrability.[207]  First, the court found that Supreme Court precedent requires an arbitrator to resolve disputes regarding arbitrability when there is “clear and unmistakable evidence” that the parties agreed to have an arbitrator resolve such issues.[208]  Here, the Sixth Circuit reasoned that the express incorporation of the AAA Employment Rules amounted to “clear and unmistakable” evidence because such rules provided that “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.”[209]  In reaching this interpretation of the arbitration provision, the court also addressed the question of whether to invoke federal or state law: questions of contract formation and interpretation generally involve state law, while the question of whether a particular agreement satisfies the “clear and unmistakable” standard seems to be one of federal law.[210]  However, the choice of law would not be dispositive here, because the relevant state law (from the state of Washington) had already found that the incorporation of the AAA Employment Rules provided the requisite clear and unmistakable evidence that the parties intended to arbitrate arbitrability.[211]  The court rejected the employees’ argument that the agreements incorporate the AAA Employment Rules only as to claims that fall within the scope of the agreement, finding that the text of the agreements did not limit incorporation of the rules in this way and that the employees’ interpretation was superfluous as the agreements state the arbitrator only has the power to determine the scope of the agreement.[212]  Accordingly, the decision of the District Court was affirmed.

Bowles v. OneMain Fin. Grp., 954 F.3d 722 (5th Cir. (Miss.) 2020).  Where it is alleged that there was no meeting of the minds on an arbitration agreement, the challenge of formation under Mississippi law is properly determined by a court.  However, a challenge that an arbitration agreement is procedurally unconscionable is an issue of enforceability under Mississippi law, which can be resolved by an arbitrator pursuant to a delegation clause.

A former employee of OneMain Financial Group (“OneMain”) was terminated for alleged inappropriate interactions with other employees under her supervision.[213]  She filed suit in federal court alleging age discrimination.  Prior to her termination, the former employee was required by OneMain to review and acknowledge its employment agreement, which provided that any employment-related dispute would be referred to arbitration.  The agreement also contained a delegation clause that delegated responsibility to the arbitrator to resolve “any legal dispute … arising out of, relating to, or concerning the … enforceability … of this Agreement.”[214]  The employee certified that she had reviewed the agreement and agreed to its terms.  OneMain moved to compel arbitration.  In opposition, the employee argued that a valid arbitration agreement was never formed because there was no meeting of the minds.  She also argued that the circumstances surrounding the formation of the agreement rendered it procedurally unconscionable.  The District Court rejected the meeting of the minds argument and held that her procedural unconscionability challenge must be decided by an arbitrator.  The former employee appealed.[215]

The Fifth Circuit affirmed the District Court’s order, first holding that it was proper for the District Court to determine the contract formation issue.[216]  The Fifth Circuit agreed that there was a meeting of the minds sufficient to support formation of an agreement to arbitrate under Mississippi law because it was clearly identified as an arbitration agreement, the former employee certified that she read and understood its terms, and her argument that she did not understand the agreement carried no weight because her unilateral lack of diligence did not preclude contract formation.[217]  The Fifth Circuit further held that the District Court correctly referred the procedural unconscionability argument to the arbitrator for resolution.[218]  This was a challenge of enforceability, rather than formation under Mississippi law, and thus the contractual delegation clause required the issue to be referred to the arbitrator.[219]

Fedor v. United Healthcare Inc., 976 F.3d 1100 (10th Cir. (N.M.) 2020).  Whether an arbitration agreement exists in the first instance is a question to be resolved by the court, regardless of whether the alleged agreement contains a delegation clause or whether a party specifically challenges such a clause.[220]

Plaintiff worked as a care coordinator for United Healthcare, Inc. (“UHC”) from 2013 until 2016.[221]  In 2017, she filed a collective suit alleging that UHC violated state and federal employment law, and eight other former employees of UHC joined her action.  UHC moved to compel arbitration, claiming that the former employees were bound by its policy requiring all employees to settle employment-related claims through arbitration and demonstrating that each former employee had received and signed an arbitration policy when they commenced employment with UHC.  The former employees commenced their employment in different years, and had signed four different versions of the agreements that were applicable at the various times.  UHC claimed the version in effect when it moved to compel arbitration (the “2016 Version”) was the controlling policy.  The 2016 Version contained a delegation clause providing that an arbitrator would resolve disputes regarding the policy’s “interpretation, enforceability, applicability, unconscionability, arbitrability or formation,” or whether the policy was “void or voidable.”[222]  The other three relevant versions of the arbitration policy, which all preceded the 2016 Version, did not include a delegation clause.  The prior versions also differed from the 2016 Version in that they each contained an amendment clause that allowed UHC to unilaterally alter the arbitration policy.  The employees opposed UHC’s motion to compel, arguing that the amendment clause rendered the prior versions illusory, and that the 2016 Version was never agreed to because none of the plaintiffs ever saw or signed it.  Although the District Court held that the prior versions were illusory, it nevertheless compelled arbitration based on the employees’ failure to challenge the delegation clause in the 2016 Version.  The employees appealed, arguing that courts must first determine whether an arbitration agreement was formed before the court can compel arbitration of issues pursuant to a delegation clause.[223]

The Tenth Circuit vacated the District Court’s judgment and remanded, holding that the issue of whether an arbitration agreement was formed must always be decided by a court regardless of whether the alleged agreement contains a delegation clause or whether a party specifically challenges such a clause.[224]  Here, the employees claimed that they never saw or agreed to any aspect of the 2016 Version, which the court found amounts to an issue of formation that cannot be delegated.[225]  The Tenth Circuit reached this decision after considering Supreme Court precedent that held that a court must find that an agreement to arbitrate exists between the parties before it can send a claim to arbitration.[226]  The court also rejected UHC’s argument to affirm on the alternate ground that the prior versions of the agreement were valid, holding that UHC did not file a cross-appeal.[227]

Lavigne v. Herbalife, Ltd., 967 F.3d 1110 (11th Cir. (Fla.) 2020).  For a delegation clause to exist, the court must decide whether there is an agreement to arbitrate.  Equitable estoppel will not apply to compel arbitration of claims against a non-party to an arbitration agreement when the claims against the non-party do not rely on the terms of the arbitration agreement or when the non-party’s misconduct is not founded in or intimately connected with such agreement.

A group of distributors of Herbalife Ltd. and its affiliates (“Herbalife”) filed a federal suit asserting racketeering claims against Herbalife and certain of its top distributors (the “Top Distributors”), alleging that the defendants were engaged in an enterprise to “disseminate misleading and fraudulent income claims,” to “recruit new members into the fraudulent business opportunity scheme,” and to “increase the investment and engagement of those already ensnared in the scheme.”[228]  The Herbalife defendants filed a joint motion to compel arbitration, arguing that each of the agreements with the distributors included a provision incorporating the Herbalife Rules of Conduct (which contain an arbitration provision) and that three of the agreements contained their own arbitration clauses.  The most recent version of the Herbalife Rules of Conduct provided that Herbalife and the distributor agree to arbitrate all disputes between them, including “claims arising out of or relating to any aspect of the relationship between Herbalife and [distributor],” as well as “claims by [distributor] against Herbalife or Herbalife against [distributor] which arise out of or relate in any way to any dispute between [distributor] and another Herbalife [distributor].”[229]  Importantly, references to Herbalife in this clause included its “subsidiaries, affiliates, officers, directors, agents, employees, predecessors in interest, heirs, successors and assigns.”[230]  Under the agreements, arbitration was to be governed by the AAA Rules.  Herbalife prevailed on its motion to compel at the district court.[231]  However, the District Court denied the motion to compel arbitration of the claims against the Top Distributors, who appealed from the District Court’s order.[232]

The Eleventh Circuit affirmed the District Court’s order to deny the Top Distributor’s motion to compel arbitration, holding that the Top Distributors could not enforce the arbitration clauses because they were not parties to any of the distributor agreements.[233]  The court first found that the Top Distributors were not Herbalife’s “subsidiaries, affiliates, officers, directors, agents, employees, predecessors in interest, heirs, successors, or assigns” as those terms were used in the agreements.[234]  Applying California contract law, the Eleventh Circuit then determined that the Top Distributors could not invoke the arbitration provisions in agreements to which they were not parties.[235]

The Eleventh Circuit also rejected the Top Distributors’ argument that the issue of whether there was an agreement to arbitrate claims was a threshold question of arbitrability that must be delegated to an arbitrator pursuant to the AAA Rules.  The court held that because there was no agreement to arbitrate with the Top Distributors, there was nothing to delegate.[236]  Lastly, the Eleventh Circuit held that the doctrine of equitable estoppel could not be invoked to compel arbitration of claims against the Top Distributors.  The court found that, under California law, a non-signatory to an arbitration agreement can only invoke equitable estoppel to compel arbitration in one of two circumstances: “(1) when the plaintiff-signatory ‘must rely on the terms of the written agreement in asserting [its] claims,’; or (2) when the plaintiff-signatory alleges ‘substantially interdependent and concerted misconduct’ by the signatories and non-signatories, and such alleged misconduct is ‘founded in or intimately connected with the obligations of the underlying agreement.’”[237]  Here, the Eleventh Circuit held that the distributors did not mention or discuss any terms of the agreements in the complaint and so were not relying on those agreements.[238]  Second, the court further held that the Top Distributors’ alleged misconduct, which it identified as making misrepresentations in coordination with Herbalife to convince the plaintiffs to spend money, was at least one step removed from the distributor agreements, and thus was not founded in or intimately connected with the obligations of that contract.[239]  Accordingly, the Top Distributors could not compel the distributors to arbitrate their claims.

MZM Construction Co., Inc. v. N.J. Building Laborers Statewide Benefit Funds, 974 F.3d 386 (3d Cir. (N.J.) 2020).  Where the formation of an arbitration contract that contains a delegation provision has been placed in issue, the court must resolve the dispute unless there is clear and unmistakable evidence that the parties agreed to delegate formation disputes to an arbitrator.

MZM Construction Company (“MZM”) hired workers from a local labor union for a construction project at Newark Liberty International Airport.[240]  MZM’s president signed a one-page, short-form agreement (“SFA”) with the union.  The SFA incorporated by reference a 1999 collective bargaining agreement and its 2002 successor (the “1999 CBA” and “2002 CBA,” and collectively the “CBAs”).  The 2002 CBA required MZM to make contributions to a statewide benefits fund.  It also contained an arbitration clause requiring the parties to agree to arbitrate “questions or grievances involving the interpretation and application” of the agreement as well as a provision that further provided that “[t]he Arbitrator shall have the authority to decide whether an Agreement exists, where that is in dispute.”[241]  After conducting an audit, the union determined that MZM owed about $230,000 in contributions to the union.  When MZM questioned the basis for this alleged liability, the union produced the SFA executed by MZM’s president, as well as an unsigned copy of the 2002 CBA.  The union unilaterally scheduled arbitration.

Thereafter, MZM filed a complaint in federal court seeking to enjoin arbitration and for a declaratory judgment that it was not a signatory to the CBA, had no obligation to arbitrate under any CBA, and was not liable to the union.  The complaint alleged that the SFA was fraudulently executed, so the SFA and incorporation of the CBAs voided any agreement between SFA and the union.  The union moved to dismiss and opposed the injunction, asking the District Court to refer the fraudulent execution claim to arbitration, along with the underlying collection dispute.  The union also argued that MZM presented a claim for fraudulent inducement, not fraudulent execution, which presumes that an agreement exists but is voidable rather than void at the outset, and as such the dispute is required to be sent to an arbitrator.  The District Court entered an order enjoining arbitration during the pendency of the action and denied the union’s motion to dismiss, and the union appealed.[242]

The Third Circuit considered whether the District Court had the power to resolve a question about the formation or existence of a contract where the contract contained a provision expressly delegating authority “to decide whether an Agreement exists” to an arbitrator.[243]  In finding that it did, the Third Circuit noted its prior determination that “courts ‘should not assume that the parties agreed to arbitrate arbitrability unless there is clea[r] and unmistakabl[e] evidence that they did so.’”[244]  The Third Circuit found that MZM had adequately stated a claim for fraudulent execution, which would render any arbitration agreement between the parties void.[245]  The union could not establish clear and unmistakable evidence that the parties agreed to delegate questions of arbitrability to an arbitrator where MZM disputed the existence of such an agreement.[246]  This triggered the authority of the District Court under Section 4 of the FAA to adjudicate the claim of fraudulent inducement.[247]  The Third Circuit was further persuaded by the fact that many other circuits had reached similar determinations.[248]

Wiggins v. Warren Averett, LLC, No. 1170943, 2020 WL 597293 (Ala. Feb. 7, 2020) (unpub.).  When an arbitration provision indicates that the AAA rules apply to the proceedings, substantive arbitrability decisions are to be made by the arbitrator, including whether the arbitration provision may be enforced against a non-signatory to the contract.

An individual physician filed a complaint against an accounting firm for accountant malpractice and the firm moved to compel arbitration, arguing that the individual physician was a third-party beneficiary to its contract with the medical practice requiring arbitration.[249]  The individual physician was a shareholder and employee of the practice and the contract required the accounting firm to prepare the tax returns for the individual physicians.[250]  The physician argued that the arbitration provision applied only to claims made by the practice against the accounting firm, and not to personal claims brought by the individuals.[251]  The trial court granted the motion to compel, and the physician appealed.[252]

On appeal, the physician argued that the dispute was excluded from the scope of the arbitration agreement and the accounting firm argued that because the agreement incorporated the AAA rules, a determination as to whether the claim is subject to the arbitration clause is an issue for the arbitrator to decide, not the court.[253]  The Supreme Court of Alabama held that when an arbitration provision indicates that the AAA rules apply to the proceedings, substantive determinations of arbitrability are to be made by the arbitrator, including whether the arbitration provision may be enforced against a non-signatory to the contract, and thus, the trial court properly granted the motion to compel.[254]

§ 1.4.3 Other Procedural Issues Related to Arbitration

Adams v. Postmates, Inc., 823 F. App’x 535 (9th Cir. (Cal.) 2020).  An arbitration agreement delegates authority to the arbitrator to resolve disputes regarding potential violations of class action waiver that are not excluded from the delegation provision or the arbitration agreement.

Claimants commenced more than 5,000 individual arbitrations against Postmates, Inc. (“Postmates”) in simultaneous filings.[255]  Postmates argued that its arbitration agreements with claimants contained class action waivers, and contended that the court must determine whether claimants had violated the waivers by the mass filings, which it contended amounted to de facto class-wide arbitration proceedings to which the parties had not agreed.[256]  After finding that the arbitration agreement clearly delegated responsibility to the arbitrator to resolve whether the claimants’ conduct violated the class action waivers, the District Court ordered Postmates to proceed with more than 5,000 individual arbitrations.  Postmates appealed.[257]

On appeal, Postmates argued that the arbitration agreement contained an exception to the delegation provisions that required a court to resolve disputes that arise from the class action waivers.  The Ninth Circuit affirmed the District Court’s order, holding that the arbitration agreement delegated authority to the arbitrator to resolve the dispute over the class action waiver.[258]  While the agreement excluded from the delegation provision claims that the class action waiver is “unenforceable, unconscionable, void, or voidable,” this did not cover the present dispute.[259]  As there was no applicable exception to the delegation provision, the court of appeals affirmed the District Court’s conclusion that the arbitrator must determine whether claimants violated the class action waivers.[260]

§ 1.5 What Constitutes an Agreement to Arbitrate?

Baten v. Mich. Logistics, Inc., No. 19-55865, 2020 U.S. App. LEXIS 32558 (9th Cir. (Cal.) Oct. 15, 2020) (unpub.).  Applying state law, court properly determined that no valid arbitration agreement ever existed where parties did not agree on the arbitrator selection process or the rules to govern arbitration process.

The parties entered into an agreement that provided that they would “resolve any disputes directly or with an agreed form of alternative dispute resolution.”[261]  One party had proposed proceeding under the auspices of the AAA, but that proposal was not accepted.  The District Court denied a motion to compel arbitration and this appeal followed.

The court of appeals first noted that it had jurisdiction to consider the interlocutory appeal under Section 16(a)(1)(B) of the FAA, even though the FAA was only invoked in supplemental briefing.[262]  Next the court concluded that it would look to state law to determine whether an agreement to arbitration exists, noting that it was in a minority of circuits to do so, as the First, Second, Sixth and Tenth Circuits would apply federal common law.[263]  Looking at the language in the parties’ contract, the court concluded that the reference to a “form of alternative dispute resolution” could mean other forms of ADR, such as mediation, and did not constitute an agreement to be bound to arbitrate disputes.[264]  Looking at the parties’ communications after the dispute arose, the court similarly found that the requisite agreement to arbitrate was still lacking: the parties never agreed on material terms, such as the mechanism for choosing an arbitrator and the applicable rules governing the arbitration, including the payment of the arbitrator’s fees.[265]  Finally, the court held that merely submitting a “demand to arbitrate” would not establish an implied-in-fact agreement to arbitrate, where the parties could not agree on how or where such an arbitration would proceed.[266]  The majority affirmed the District Court’s denial of the application to compel arbitration, over a dissenting opinion that came to a different conclusion that “the most reasonable reading of ‘an agreed form of Alternative Dispute Resolution’ is that the parties agreed to arbitration,” because interpreting the reference to ADR to include mediation would create a “no man’s land where there is no binding way to resolve any disputes.”[267]

§ 1.5.1 Issues of Contract Formation

In multiple decisions interpreting the same arbitration provision in form contracts between consumers and AT&T Mobility (“AT&T”), the Fourth and Ninth Circuits came to conflicting decisions whether DIRECTV, which was subsequently acquired by AT&T’s parent, could require the consumer to arbitrate claims brought under the Telephone Consumer Protection Act (“TCPA”).[268]  The contracts defined AT&T to includes its “affiliates” without specifying whether that term included after-acquired affiliates.  These cases are discussed below.

Mey v. DIRECTV, LLC, 971 F.3d 284 (4th Cir. (W.Va.) 2020).  In light of the expansive text of an agreement to arbitrate, and other context from the parties’ agreement, claims against an after-acquired affiliate were within the scope of the arbitration provision.

The District Court denied DIRECTV’s motion to compel arbitration of the consumer’s TCPA claims, concluding the dispute was outside of the agreement to arbitrate because the receipt of calls from DIRECTV was not an immediate and foreseeable result of the performance of the contract between the consumer and AT&T for cellular services, and the contract was susceptible of an interpretation imposing a limited duty to arbitrate disputes relating to such cellular services, noting that a construction that was not so limited might be unconscionably overbroad.[269]

On appeal, the court of appeals had no difficulty finding that there was an agreement to arbitrate, and held that there was no reason the term should be limited to only affiliates existing at the time the contract was entered into.[270]  Indeed, the court found the contractual context suggests the opposite, pointing to language binding “successors and assigns,” and rejected the assertion that the contract was ambiguous.[271]  Finally, the court looked at the scope of the agreement to arbitrate to see whether it covered these claims.  Starting with the “heavy presumption” favoring arbitration, the court of appeals suggested that the District Court’s question whether the provision could be limited had asked the wrong question; the correct inquiry was whether the agreement was susceptible to an interpretation that covers the dispute.[272]  In light of the expansive text of the arbitration agreement, requiring arbitration of “any and all disputes between us,” with no limiter to the services provided by AT&T, it did not exclude the TCPA claims against DIRECTV.[273]  The court found additional support for its conclusion in broadly worded categories of claims the agreement specifically listed as included, the contractual instruction to interpret its provisions broadly, and references to permission to send electronic communications to customers.[274]  The court did acknowledge that construing language broadly can lead in the abstract to “troubling hypothetical scenarios” but stressed that the question it was addressing was concrete rather than abstract, tethered to the facts of this dispute.[275]

The dissent would have held that there was no agreement to arbitrate, considering the language of the agreement as a whole, and interpreting the reference to “affiliate” to refer to those entities involved in some way in providing cellular phone services.[276]  In the view of the dissent, the issue was not only about temporal limits on the term “affiliate” to exclude or include future affiliates, but rather that a reasonable person would not anticipate arbitrating with DIRECTV, whose later affiliation with AT&T was “happenstance” and fortuity unconnected to the provision of cell phone service under the contract.[277]  The dissent cited as support the District Court’s decision in Revitch denying DIRECTV’s motion to compel, affirmed shortly thereafter by the Ninth Circuit as discussed immediately below.[278]

Revitch v. DIRECTV, LLC, 977 F.3d 713 (9th Cir. (Cal.) 2020).  Disagreeing with the Fourth Circuit, Ninth Circuit held that there was no agreement to arbitrate claims against an after-acquired affiliate where contract interpretation supporting arbitration would lead to an absurd result.

The District Court denied DIRECTV’s motion to compel arbitration, concluding that the contract between the consumer and AT&T did not reflect an intent to arbitrate the claim now asserted against DIRECTV, and DIRECTV appealed.[279]

On appeal, the Court of Appeals issued three opinions: a majority, a concurrence, and a dissent.  The majority looked to California state law (as provided in the AT&T contract) to answer the threshold issue of whether there is an agreement to arbitrate.  Analyzing the reasonable expectations of the parties, the court concluded that the consumer could not have reasonably expected when he signed his contract with AT&T to obtain cell phone service that he could be forced to arbitrate an unrelated dispute with an entity that did not become affiliated with AT&T until years later.[280]  Thus, this was a case that fell within the California rule that while courts normally look to “the written terms [of the contract] alone,” they will not do so if it would “lead to absurd results.”[281]  While DIRECTV argued that the FAA preempts the absurd results canon under the Supreme Court decision in Lamps Plus, Inc. v. Varela, the majority disagreed.[282]  Because the absurd results canon does not disfavor arbitration agreements compared to other contracts, it concluded that the canon would not be preempted by the FAA.

Significantly, the majority found that there was no agreement to arbitrate and thus never reached the question of the scope of the arbitration clause.[283]  The Ninth Circuit acknowledged that it was creating a split with a recent Fourth Circuit decision that reached the opposite conclusion on nearly identical facts in Mey v. DIRECTV, LLC, discussed above.[284]  The majority here reasoned that it was appropriate to consider hypothetical situations to bolster its conclusion that the parties’ intention was not to form an agreement to arbitrate of the kind that DIRECTV was urging.[285]  Adopting a different approach, the concurrence focused on the language of Section 2 of the FAA, asking whether the underlying controversy to be settled by arbitration was one “arising out of” the contract or transaction in which the consumer agreed to arbitrate.[286]  Concluding that it was not, the concurrence would affirm the District Court on that separate ground.[287]

Like the Fourth Circuit, the dissent here maintained that the issue was not about the existence of the agreement to arbitrate, but rather about the scope of that agreement.[288]  In its view, the “affiliate” language was not ambiguous and, even if it were, any ambiguity should be resolved in favor of arbitration, rendering the absurd results canon inapplicable.[289]  As such, the dissent would have reversed the District Court.

Given the split among the circuits over the rules of interpretation applicable to agreements to arbitrate, this issue may yet resurface.

Hill v. Emple. Res. Grp., LLC, 816 F. App’x 804 (4th Cir. (W.Va.) 2020).  The court properly denied in part employer’s motion to compel arbitration because no reasonable jury could find that the proof satisfies the applicable heightened burden to show an agreement to arbitrate by clear and convincing evidence.

Employer sought arbitration of wage and hour claims of a class of plaintiffs, employees at Applebee’s restaurants, who had opted in to the class.[290]  The employees opposed the motion, arguing that the employer was unable to produce agreements for at least 60 of the opt-in plaintiffs.[291]  The District Court granted the motion only as to potential class members for whom the employer produced signed agreements and the employer appealed.[292]

The court of appeals reviewed the denial of the motion to compel de novo, applying a summary judgment standard to determine whether there were sufficient facts to support the denial, invoking general contract formation principles.[293]  Because the employer asserted that contracts could not be found for certain opt-in employees, the court looked to the missing instruments law of the four states where the plaintiff-employees were employed, which all had heightened standards for proving the existence of missing or lost instruments through parole evidence.[294]  Looking at the employer’s evidence in the record, consisting of an affidavit setting forth the standard corporate employment practice of requiring employees to sign agreements, and the existence of several hundred agreements signed by other class members, the court held that the employer had failed to meet its burden to demonstrate a material issue of fact as to whether the employees had signed agreements.[295]  It had not, for example, provided sufficient context to demonstrate the rate of compliance across the system or testimony from the specific managers at the restaurants involved about individual compliance.[296]  For these reasons, the court affirmed the District Court’s order.[297]

Bacon v. Avis Budget Grp., Inc., 959 F.3d 590 (3d Cir. (N.J.) 2020).  Court properly denied motions to compel arbitration where proof did not show by undisputed facts that customers consented to arbitrate their disputes.

Plaintiff-customers brought putative class action against car rental company and licensees alleging consumer claims and the company moved to compel arbitration.[298]  Some customers had rented cars in the U.S., where the arbitration provision is printed on a jacket into which the signed one-page agreement is folded and given to the customer; one had rented a car in Costa Rica, where the arbitration provision is on the back side of a two-page form, which the customer had not signed; and several plaintiffs had used websites that included an arbitration provision in the terms of use.[299]  The District Court denied the initial motions and directed the parties to engage in discovery on the issue of arbitrability.[300]  After discovery, the defendants filed a new joint motion for summary judgment on the issue of arbitrability.  The District Court denied the motion, holding that the undisputed facts showed that the plaintiffs in the U.S. did not assent to the arbitration provision, a disputed factual issue existed as to whether the plaintiff renting in Costa Rica had reasonable notice of the arbitration provision, and the record for plaintiffs who rented on the website was not sufficiently developed concerning assent, allowing that the issue could be resolved after further discovery either on summary judgment or at trial.[301]

The Court of Appeals affirmed.  First, it held that it had appellate jurisdiction because the District Court’s orders denied motions to compel arbitration, regardless of finality.[302]  Turning to issues of contract formation, the court held the District Court properly denied the motions for summary judgment.  As to the plaintiffs who rented cars in the U.S., the terms of the rental jackets were not adequately incorporated into the rental agreements to create contractual assent under either New Jersey or Florida law.[303]  New Jersey law permits contract terms to be incorporated by reference from a separate document, where (1) the separate document “must be described in such terms that its identity may be ascertained beyond doubt” and (2) “the party to be bound by the terms must have had ‘knowledge of and assented to the incorporated terms.’”[304]  While the Florida standard on incorporation by reference is more lenient than New Jersey law, the defendants’ proof did not meet either standard, in large part because customers did not receive or see the rental jacket until after they had signed the rental agreement.[305]  For the Costa Rica customer, as New Jersey law requires the parties to have “reasonable notice” of the contract terms; the court held that the evidence did not indisputably show that the customer had reasonable notice of the arbitration provision printed on the back side of the rental form, where he had signed the front, but not the back, of the document.[306]  As to customers who used the website, the court held the evidence supporting the motion was not properly authenticated, because the screen shots of the website did not show the sites as they existed when the customers made their reservations, but rather were from data grabs taken over a year later.[307]  Accordingly, the orders denying summary judgment on the issue of arbitrability were affirmed.

Mason v. Midland Funding LLC, 815 F. App’x 320 (11th Cir. (Ga.) 2020) (per curiam).  Presumption in favor of arbitration does not apply to disputes concerning whether an agreement to arbitrate has been made, which is a threshold question to be resolved as a matter of contract law, requiring a specific showing that the party assented to the agreement to arbitrate.

Cardholders brought a putative class action against credit card companies, who sought unsuccessfully to dismiss, and then to compel arbitration.[308]  The cardholders had applied for credit online, a process that allegedly required them to accept terms and conditions including an arbitration agreement, which was then mailed to the cardholder along with their credit card.  The District Court denied the motion.[309]

On appeal, the court distinguished between issues of the scope of an arbitration clause, where the FAA requires doubts to be resolved in favor of arbitration, and disputes concerning whether an agreement to arbitrate has been made, which are matters of contract.[310]  Here, Utah law applied, and provided that a credit agreement is “enforceable without any signature as long as the ‘debtor is provided with a written copy of the terms of the agreement,’ the agreement states that ‘any use of the credit offered shall constitute acceptance of those terms,’ and the debtor ‘uses the credit offered.’”[311]  The court reviewed the District Court’s decision de novo and held that, as to one plaintiff-cardholder, the submissions by the credit card companies fell short of showing that the form of application submitted in support of the motion was the actual application the cardholder accepted and that the online application contained an agreement to arbitrate.[312]  Nor did the submission relating to that cardholder trigger the “mailbox rule” that creates a presumption of receipt where there is evidence of specific office procedures for preparing and mailing notices and receipt of mail from the purported sender at the same address because the proof was not based on personal knowledge where the mailing was conducted by outside vendors.[313]  The District Court had properly employed a summary judgment standard, finding the credit card companies were not entitled to discovery when they did not request a trial and their submissions were insufficient to raise a dispute about any material fact.[314]

However, as to the other named cardholder, the submission did trigger the mailbox rule because the declarant had personal knowledge of the mailing and the cardholder did not rebut the presumption.[315]  Accordingly, the District Court’s order was reversed as to the second named plaintiff-cardholder.

Nicosia v. Amazon.com, Inc., 815 F. App’x 612 (2d Cir. (N.Y.) June 4, 2020).  Where a party has notice of the existence of an arbitration clause, and manifests assent to be bound by the clause through conduct, the party can be compelled to arbitrate.  A consumer filed claims against Amazon.com, Inc. (“Amazon”) claiming that Amazon violated Washington state law and consumer protection laws based on two online purchases he made through Amazon in 2013 of a weight loss product that contained a controlled substance that had been banned by the Food and Drug Administration in 2010.[316]  The District Court granted Amazon’s motion to compel arbitration and dismiss the case, based on an arbitration clause that has been included in Amazon’s online conditions of use since 2011.  The consumer appealed, arguing that he was not bound by the arbitration clause because he never received notice of it or manifested his assent.  The consumer further contended that through its conduct, Amazon waived its right to compel arbitration.[317]

The Second Circuit affirmed the district court’s judgment, holding that the consumer was bound by the arbitration agreement based on principles of notice and assent.[318]  First, the court found that the question of whether the parties had agreed to arbitrate would be governed by Washington law, under which a party may be bound by an arbitration agreement through “inquiry notice,” even without actual notice of the contract term..[319]  The Second Circuit then reasoned that the consumer’s admission that he made at least 27 purchases through Amazon after receiving such notice was a manifestation of assent to arbitration.[320]  The Second Circuit also rejected the consumer’s waiver argument, finding that he failed to show any prejudice, such as specific cost, that resulted from Amazon’s delay in filing its motion to compel.[321]  Thus, the consumer was bound by the agreement to arbitrate.[322]

Skuse v. Pfizer, Inc., 244 N.J. 30 (2020).  Arbitration agreement is valid and binding on employee where employer disseminated notice of arbitration policy through a company-wide email informing employees that continuation of employment would be deemed acceptance of policy and waiver of right to pursue employment discrimination claims in court.

Pfizer, Inc. (“Pfizer”) notified employees through a companywide email of a new arbitration policy and attached a link to the agreement.[323]  Under the policy, if an employee continued to work for Pfizer for 60 days after receipt of the agreement, the employee would be deemed to have accepted and consented to the terms of the agreement.[324]  Plaintiff employee opened the email that attached the agreement, completed a “training module” regarding the arbitration provision, and clicked a box on her computer screen that asked her to “acknowledge” that she was required to assent to the agreement as a condition of her employment.[325]  Plaintiff continued to work for Pfizer for 13 months and subsequently filed suit under New Jersey state discrimination law when her employment was terminated based on her refusal to be vaccinated on religious grounds.[326]  The trial court granted Pfizer’s motion to dismiss the complaint and compel arbitration.[327]  The intermediate appellate division reversed the trial court’s judgment, holding that the agreement was not agreed to, was unenforceable, and that “the wording and method of Pfizer’s training module” was “inadequate to substantiate an employee’s knowing and unmistakable assent to arbitrate and waive his or her rights of access to courts.”[328]

On appeal to the New Jersey Supreme Court, the court applied a de novo standard to its review of the trial court’s determination that the employee’s claims were subject to an enforceable arbitration agreement.[329]  Following a discussion of relevant case law concerning waiver-of-right provisions, the court concluded that Pfizer had clearly informed the employee she would waive her right to pursue claims for employment discrimination in court by continuing her employment for 60 days following receipt of the agreement, noting that the employee was informed through a copy of the agreement itself, multiple emails, the “FAQs” document provided along with the agreement, and the training module.[330]  The court also found that while employees receive large volumes of emails in the workplace that may not be thoroughly reviewed, the employee’s failure to review the communications from her employer did not invalidate the agreement.[331]  Finally, the court found that neither Pfizer’s purportedly misleading labeling of materials provided to employees about the arbitration provision as “training,” nor the request that the employee “CLICK HERE to acknowledge” as opposed to “agree” to the agreement, invalidated the agreement.[332]  In holding that the agreement was valid and binding, the court concluded that the agreement explained to the employee in “clear and unmistakable terms the rights she would forego if she assented to arbitration by remaining employed at Pfizer for sixty day … [the] e-mails, the link to the Agreement contained in those e-mails, the ‘FAQs’ page, and the summaries that appeared on the four pages collectively explained, with the clarity that our law requires, the terms of the Agreement to which [the employee] agreed by virtue of her continued employment.”[333]  Accordingly, the Supreme Court reversed the intermediate court and reinstated the determination by the trial court.

Carrick v. Turner, 298 So.3d 1006 (Miss. 2020).  Discrepancies within agreement do not impact the enforceability of the agreement to arbitrate where the parties’ intent to arbitrate claims is unambiguous.

A client filed a lawsuit against a securities broker and his employer alleging negligent misrepresentation and supervision.[334]  In response, the brokerage moved to compel arbitration based upon its purported agreement with the client containing an arbitration provision.[335]  The client had signed an application to open an account incorporating an account agreement that did not require signatures.[336]  The application contained a clear reference to an arbitration provision in the account agreement, but may have referred to the provision by the wrong paragraph numbers (there were two versions of the account agreement, with the arbitration provision in different-numbered paragraphs, along with slight wording variations, and it was not clear which was provided to the client when she signed her application).[337]  The trial court denied the motion to compel arbitration and the broker and brokerage appealed.[338]

On appeal, the Supreme Court of Mississippi described the two-prong analysis courts must conduct when determining the validity of a motion to compel arbitration under the FAA, asking first whether the parties intended to arbitrate the dispute and then whether any external legal constraints foreclose arbitration of the claims.[339]  Here, despite a possible discrepancy in the numbered paragraph references, the language and execution of the application demonstrated the unambiguous intent of the parties to arbitrate this claim and thus, a valid arbitration agreement existed and the trial court should have compelled arbitration.[340]  To that end, the Supreme Court of Mississippi remanded the case with directions to compel the parties to submit to arbitration and to attempt to determine which version of the agreement, if either, applies, noting that if the court was unable to determine which provision governed, the trial court was to refer to the FAA for guidance regarding specifics of the arbitration.[341]

Jorja Trading, Inc. v. Willis, 598 S.W.3d 1 (Ark. 2020).  A self-help provision, class action waiver, and arbitrator-selection provision in an arbitration agreement did not destroy mutuality of obligation as to preclude formation of a valid contract.

Defendants purchased a car with an installment sales contract, failed to make payments, and surrendered the car.[342]  Plaintiff Jorja Trading, Inc. (“Jorja”), the assignee of the financing contract, sued in small claims court for the remaining balance on the contract and obtained a judgment.[343]  The purchasers appealed, counterclaimed for usury and UCC violations, and sought class certification.  In response, Jorja filed a motion to compel arbitration.[344]  The court denied the motion, holding that the arbitration agreement lacked mutuality of obligation because while it reserved the right to both parties to seek self-help remedies, only the lender would be able to resort to self-help to repossess the vehicle, the class action waiver only applied to limit the buyers’ rights (as only buyers would be pursuing claims as a class), and it allowed the lender to reject the purchasers’ appointment of an arbitrator, and because Jorja had waived its right to arbitration by proceeding in small claims court.[345]

On appeal, the Supreme Court of Arkansas applied ordinary state law principles governing contract formation.  The court started its analysis with the premise that the agreement to arbitrate was bilateral, and that mutuality does not require that every provision within a contract be bilateral.[346]  Requiring every provision in an arbitration agreement to be bilateral would hold arbitration agreements to a more stringent analysis than other contracts, in violation of the FAA.[347]  The court held that the self-help provision in the installment-sales contract did not void the arbitration agreement or negate mutuality.[348]  Likewise, as class action waiver provisions would not invalidate mutuality of obligations in other installment sales contracts, the provision cannot destroy the mutuality merely because it applies to arbitration.[349]  The court disagreed with the lower court’s interpretation of the provision regarding the selection of the arbitrator as unilateral, and found that the arbitration agreement was valid.[350]  Finally, the court found that the agreement specifically provided that a party may seek a monetary judgment in district court without waiving arbitration and, thus, Jorja did not waive the right to arbitrate and the motion to compel should have been granted.[351]

§ 1.5.2 Issues of FAA Preemption

Delisle v. Speedy Cash, 818 F. App’x 608 (9th Cir. (Cal.) 2020) (unpub.).  Court properly applied California law to invalidate agreements to arbitrate that would waive the borrowers’ rights to seek public injunctive relief, but remands to examine McGill factors in light of subsequently enacted law to determine whether requested injunctive relief would still prevent a threat of future harm.

Borrowers requested an injunction under California law barring Speedy Cash from issuing loans greater than $2,500 with an annual percentage rate of interest (“APR”) over 90% and requiring Speedy Cash to issue “corrective advertising” about prior loans.[352]  Speedy Cash sought an order requiring the borrowers to enforce an arbitration provision in the loan agreements that included a waiver of the borrower’ right to seek public injunctive relief in all forums.[353]  The District Court held that the requested injunction would benefit the general public because it would prevent Speedy Cash from continuing to engage in unlawful conduct that threatens future harm and concluded that the plaintiffs had requested public injunctive relief that the California Supreme Court deemed non-waivable in McGill v. Citibank, N.A.[354]  Accordingly, the District Court denied Speedy Cash’s motion to enforce the arbitration agreements and Speedy Cash appealed.

During the appeal, however, a California statute took effect that prohibited finance lenders from issuing certain loans.[355]  The new law raised issues about whether the injunction was still necessary to prevent a threat of future harm.[356]  Speedy Cash also contended that the District Court erred in applying California law to determine the enforceability of the arbitration provision because the loan agreement designated Kansas law as controlling.  The Court of Appeals concluded that California law was properly applied, because California holds a materially greater interest in this litigation, the loans were negotiated and executed in California, the plaintiffs reside in California and California law invalidates contractual waivers of the right to seek public injunctive relief in all forums.[357]  Accordingly, the District Court correctly applied California law, but the order was reversed and remanded in light of the new California statute’s further consideration of whether a public injunctive relief was warranted.

Roberts v. AT&T Mobility LLC, 801 F. App’x 492 (9th Cir (Cal.) 2020) (unpub.).  Denial of arbitration would not be disturbed, as FAA does not preempt McGill rule invalidating agreements that would purport to waive the right to seek public injunctive relief as against public policy.

This case made its second appearance in the Ninth Circuit on an arbitration issue.  Plaintiff-consumers had filed a class action lawsuit against AT&T Mobility LLC (“AT&T”) alleging AT&T used deceptive and unfair trade practices in marketing mobile service data plans as “unlimited.”[358]  The consumers asserted AT&T’s practices violates several California laws and sought, among other remedies, public injunctive relief, which AT&T’s arbitration clause prohibits.[359]  AT&T argued that the FAA preempts California’s public policy in favor of public injunctive relief.  Four years earlier, the district court had compelled arbitration and the Ninth Circuit had affirmed, rejecting the consumer’ argument that compelling arbitration violated their First Amendment right to petition the government.[360]  The consumers asked the District Court to reconsider based on the California Supreme Court’s supervening decision in McGill v. Citibank, N.A.,[361] which held that an agreement, like AT&T’s, that waives public injunctive relief in any forum is contrary to California public policy and unenforceable.  On their motion for reconsideration, the consumers argued that McGill’s holding provided the District Court with a new, intervening basis to deny arbitration.  The District Court agreed and granted the motion to reconsider and denied, in part, AT&T’s motion to compel arbitration.[362]  AT&T appealed.

On appeal, AT&T argued that the appeal should be resolved on a procedural issue—that the district court abused its discretion in reconsidering its initial order compelling arbitration.  The court of appeals disagreed, holding that this was the type of decision in which it should give the district court a substantial margin of discretion to decide the issue, and that the district court’s decision to grant rehearing was not “beyond the pale of reasonable justification,” illogical, implausible or without support.”[363]

Turning then to the merits of the District Court’s decision, the Ninth Circuit pointed to its recent decision in Blair v. Rent-A-Ctr., Inc., holding that the FAA does not preempt the McGill rule, on facts similar to this case.[364]  There, the Court of Appeals held that because the McGill rule is a generally applicable contract defense derived from long-established California public policy in favor of public injunctive relief, the rule fell within the FAA’s saving clause at the first step of the preemption analysis.[365]  Moreover, the McGill rule does not mandate procedures that interfere with arbitration, namely with arbitration’s informality.[366]  Bound by its prior decision in Blair that clauses such as AT&T’s are unenforceable in California under McGill, the Ninth Circuit once again affirmed the District Court’s order, this time denying AT&T’s motion to compel arbitration[367].

Belton v. GE Capital Retail Bank, 961 F.3d 612 (2d Cir. (N.Y.) 2020).  A dispute concerning the violation of a bankruptcy court’s discharge order framed as contempt is not arbitrable.

Two debtors opened credit card accounts with lenders (the “Banks”).[368]  When the debtors fell behind on their credit card payments, the Banks eventually “charged off” the delinquent debt and reported the change in the status of the debt to major credit reporting agencies.  In turn, those agencies updated the debtors’ credit reports to indicate their severely delinquent and outstanding credit card debt.  Eventually, both debtors filed for bankruptcy.  At the completion of the liquidation processes, the bankruptcy court entered a discharge order, which operated as an injunction against future collection attempts.  Thereafter, the debtors initiated adversary proceedings against the Banks seeking a contempt citation and damages based on allegations that the Banks’ failure to update the debtors’ credit reports violated the bankruptcy court’s discharge order.  In response, the Banks moved to enforce mandatory arbitration clauses in the debtors’ credit card account agreements.  The bankruptcy court denied the Banks’ motions, finding that the dispute was not arbitrable because of an inherent conflict between the bankruptcy code and the FAA, and the District Court affirmed.[369]  The Banks appealed, arguing that Supreme Court precedent rejected the notion that inherent conflict between statutory purpose and arbitration is independently sufficient to displace the FAA’s mandate that courts enforce arbitration agreements.[370]

The Second Circuit affirmed the district and bankruptcy courts’ orders denying the motion to compel the dispute over the discharge order.[371]  The Second Circuit disagreed with the Banks’ interpretation that Supreme Court precedent held that inherent conflict is not sufficient by itself to displace the FAA.[372]  The court found that, although the Supreme Court required courts to favor statutory text and legislative history over an inherent conflict when considering whether Congress intended to override the FAA’s mandate, Epic Sys. Corp. v. Lewis did not preclude the independent use of an inherent conflict to resolve such disputes when statutory text and legislative history are ambiguous.[373]  The Second Circuit reasoned that here, the bankruptcy code was ambiguous as to whether disputes about discharge orders were arbitrable in the context of contempt proceedings.[374]  Thus, the court found that it was bound by its own precedent in a nearly identical case that an inherent conflict did exist between the FAA and bankruptcy code with regard to discharge orders.[375]  In In re Anderson, the Second Circuit had held that an inherent conflict existed because discharge orders are integral to the bankruptcy process, their enforcement requires continuing court supervision, and the bankruptcy court’s power to enforce its own orders is integral to the code’s central structure, without considering the bankruptcy code’s text or legislative history.[376]  Bound by its precedent, the Second Circuit affirmed the District Court’s order denying the motions to compel arbitration.[377]

Robertson v. Intratek Computer, Inc., 976 F.3d 575 (5th Cir. (Tex.) 2020).  The federal whistleblower statute does not contain a Congressional command to override the FAA’s mandate to enforce arbitration agreements, and claims under the whistleblower law that are within an arbitration agreement must be arbitrated.

Plaintiff employee signed an arbitration agreement as a condition to beginning employment with Intratek Computer, Inc. (“Intratek”), to provide information and technology services to United States Department of Veterans Affairs (“VA”).[378]  The agreement required arbitration of any claims against Intratek and its officers, agents and employees relating to his employment.  Intratek fired the employee, and shortly thereafter he filed a whistleblower complaint with the VA’s Office of the Inspector General alleging that Intratek’s CEO bribed VA officials to secure lucrative government contracts.  The whistleblower complaint included allegations that Roger Rininger, a VA employee, had allegedly accepted the bribes.[379]

The employee filed suit in federal district court against Intratek, its CEO, and Rininger, alleging that Intratek violated the federal whistleblower statute[380] by firing him for reporting the bribes.  Intratek and its CEO moved to stay the suit and compel arbitration, and the employee effectively agreed to stay the case as it pertained to Rininger.  The District Court referred the matter to a magistrate judge who found that all of the employee’s claims, including those against Rininger, were subject to arbitration and should be dismissed.  The District Court adopted the magistrate judge’s report and recommendation, and dismissed all of the employee’s claims in favor of arbitration.[381]

The Fifth Circuit affirmed the District Court’s decision to dismiss the claims against Intratek and its CEO pursuant to the arbitration agreement, holding that the whistleblower statute does not override the FAA’s mandate to enforce arbitration agreements.[382]  The court, applying Supreme Court precedent, held that the employee must show “a contrary congressional command” in a purportedly conflicting federal statute to override the FAA’s mandate.[383]  The Fifth Circuit rejected the employee’s urging to find such a mandate in the whistleblower statute provision allowing either party to seek a jury trial.[384]  The court’s interpretation of the statute was that a jury trial is one way to vindicate a whistleblower’s statutory rights, but not itself a right or remedy created by the statute.  The Fifth Circuit also determined that the whistleblower statute’s legislative history lacked any congressional command to avoid arbitration.[385]  According to the court, the employee’s claims against Intratek and its CEO under the whistleblower statute, and for wrongful termination and tortious interference, were clearly covered by the arbitration agreement, which applied to any claims under federal and state law.[386]

However, the Fifth Circuit reversed the district court’s decision to dismiss the claims against Rininger, who, as a VA official, never signed an employment contract or any arbitration agreement with Intratek.[387]  As there was no arbitration agreement to enforce and the employee had never moved to compel arbitration of the claims against Rininger, its decision compelling arbitration of those claims was clearly erroneous.[388]

Sparks v. Old Republic Home Protection Company, Inc., 467 P.3d 680 (Okla. 2020).  Under reverse preemption of the McCarran-Ferguson Act, state law exempting contracts, which reference insurance from arbitration was enacted for the purpose of regulating insurance and preempts the application of the FAA.

Homeowners purchased a home warranty from Old Republic Home Protection (“OHRP”) that included a provision requiring disputes to be resolved by arbitration under the FAA.[389]  After damage to their home, OHRP selected the repair company.  Homeowners claimed the repairs were negligently performed, and filed a suit for breach of contract against OHRP.[390]  OHRP moved to compel arbitration, and the trial court denied the motion.[391]  After the motion was denied, OHRP amended its answer to allege that it was not an insurance company and the warranty contract was not an insurance contract.

OHRP appealed, arguing that the FAA controlled and preempted the application of Oklahoma Uniform Arbitration Act.[392]  The intermediate Court of Civil Appeals affirmed the trial court’s order, concluding that the Oklahoma Uniform Arbitration Act[393] prevented the trial court from compelling arbitration because the contract “referenced insurance” within the meaning of the Oklahoma statute and did not intend to exempt contracts made pursuant to other laws governing home services.[394]

On a writ of certiorari to the Supreme Court of Oklahoma, the court analyzed the interplay between the McCarran-Ferguson Act,[395] which authorized reverse preemption of federal statutes giving individual states the right to enact laws to regulate insurance, and the FAA.[396]  The court held that the Oklahoma Uniform Arbitration Act exempting contracts that reference insurance from arbitration is a state law regulating the business of insurance and thus, under the McCarran-Ferguson Act, the state law prevails over the FAA.[397]  The Supreme Court of Oklahoma held that the home warranty plan met the definition of insurance and was therefore exempt from the application of the Oklahoma Uniform Arbitration Act, pursuant to the application of the McCarran-Ferguson Act.[398]

§ 1.6 Jurisdiction Under the Federal Arbitration Act

Burgess v. Lithia Motors, Inc., 196 Wn.2d 187 (2020).  Once an arbitration begins under the FAA, judicial intervention is limited to ruling on gateway disputes, such as whether the arbitration clause is enforceable, and addressing the award at the conclusion of arbitration.

Plaintiff employee filed suit in state superior court against her former employer alleging discrimination, harassment, and wrongful termination.[399]  The case was moved to arbitration on the employer’s request pursuant to the arbitration provision in the parties’ employment agreement.[400]  During the arbitration, the employee claimed that the employer failed to timely respond to interrogatories and moved in the arbitration forum to compel discovery responses.[401]  After the arbitrator denied the motion, the employee returned to state court and filed a motion to vacate the arbitrator’s order, terminate the arbitration, and issue a case scheduling order.[402]  The employee argued that the employer had breached the arbitration agreement by failing to comply with discovery deadlines and the arbitrator had breached the arbitration agreement by failing to enforce the Federal Rules of Civil Procedure.[403]  The state court denied the motion, holding that the enforceable arbitration clause deprived the court of jurisdiction to address the employee’s motion.[404]

The intermediate state court of appeals granted the employee’s request for review and certified the following question to the Washington Supreme Court: “Does the superior court have jurisdiction to address an employee’s contractual breach argument based upon acts alleged in the course of binding arbitration, or is the superior court’s jurisdiction in a contractual arbitration limited to issues occurring before and after—but not during—the proceeding…”[405]  The Supreme Court analyzed a number of federal court cases that determined that the FAA generally restricts judicial involvement to the “bookends of arbitration” and precludes any judicial intervention once arbitration begins.[406]  The court next analyzed the statutory provisions that govern the interplay between judicial and arbitration proceedings under the FAA, and rejected the employee’s argument that Section 2 of the FAA authorized the court to resolve a breach of the arbitration agreement challenge during ongoing arbitration.[407]  The court concluded that once arbitration begins under the FAA, “the court’s authority to resolve the dispute is transferred to the arbitrator.  Judicial intervention is generally precluded during arbitration proceedings.”[408]  Because neither party challenged the validity of the arbitration agreement beforehand, and the final arbitration award had not yet been issued, the court could not intervene and rescind the arbitration agreement and thus, the superior court correctly determined that it was precluded from reviewing the employee’s motion.[409]

§ 1.6.1 Federal Appellate Jurisdiction Under Section 16 of the Federal Arbitration Act

Noe v. City Nat’l Bank, No. 20-1230, 2020 U.S. App. LEXIS 31088 (4th Cir. (W.Va.) Sept 30, 2020) (per curiam).  Appellate jurisdiction existed where District Court denied request for alternative relief to stay the action pending arbitration, and to the extent that the motion presented unresolved factual questions, the court should have considered matters outside the pleadings and held a summary hearing to resolve any issues.

Bank customer brought a class action lawsuit challenging the imposition of overdraft fees.[410]  In response, the bank moved to dismiss on the grounds that the pleading was insufficient and, in the alternative, asked the court to stay the action pending arbitration.  The District Court denied the motion, based on a question whether subsequent agreements modified the obligation to arbitrate contained in the original depository agreement that the court deemed unfit for resolution on a motion to dismiss.[411]

On the bank’s appeal, the court first examined its jurisdiction and concluded that the bank’s alternative request that the “matter be stayed pending referral of the matter to arbitration” equated to a motion seeking enforcement of a purported arbitration agreement and, thus, appellate jurisdiction existed to review the denial of that request, under Section 16(a)(1)(b) of the FAA.[412]  Proceeding to the merits of the appeal, the court held that the District Court had erred in denying the motion.  If the District Court had treated the motion as one to compel and stay pending arbitration, the court would not have been limited to a review of the pleadings before it.[413]  And, if after considering the bank’s evidence the District Court concluded that a genuine issue of material fact prevented it from deciding the issue of arbitrability, the court would have been required to hold a hearing to resolve the factual dispute.[414]  Accordingly, the District Court erred in denying the motion without determining arbitrability and the Court of Appeals vacated the District Court’s order denying arbitration and remanded to the District Court to determine whether the claims should be referred to arbitration with the direction that, if there are unresolved questions of material fact, the court should hold “an expeditious and summary hearing” to resolve those issues.[415]

Hermosillo v. Davey Tree Surgery Co., 821 F. App’x 753 (9th Cir. (Cal.) 2020).  District Court’s order compelling classwide arbitration staying non-arbitrable claims and neither explicitly dismissing nor staying the remainder of the claims failed to rebut the presumption that claims that were not explicitly dismissed by the District Court were stayed and thus, not final and immediately appealable under the FAA.

Employees brought claims in state court against employer, who removed the case to federal court and moved to compel arbitration pursuant to provision in employment applications and a stand-alone arbitration agreement.[416]  The court granted the motion to compel arbitration on a classwide basis pursuant to the employment applications, but stayed claims that were not arbitrable under the California Private Attorney General Act (“PAGA”).  The order did not explicitly stay or dismiss the arbitrable claims, but ordered the clerk to administratively close the file, and directed the parties to notify the court after the arbitration proceedings were completed.[417].  The employer appealed the portion of the order directing classwide arbitration, requesting reversal and an order compelling arbitration on an individual basis.

The court started with the rule that orders compelling arbitration are not immediately appealable under Section 16 of the FAA, unless the underlying claims are dismissed so that the order constitutes a final decision with respect to the arbitration.[418]  Because the order in this case did not explicitly dismiss all of the claims, the court assumed the claims not dismissed were stayed, and that it lacked appellate jurisdiction.[419]  While the employer argued that the order compelling class arbitration constitutes an order denying arbitration on an individual basis, the court disagreed because the court would then be required to consider the merits of the appeal, rendering the limitations on appellate jurisdiction meaningless.[420]  Instead, the court held that the employer could have pursued an interlocutory appeal, or asked the District Court to reconsider its ruling or sought clarification, or it could have appealed that part of the order denying individual arbitration; instead, it appealed the portion of the order that required arbitration.[421]  Accordingly, the appeal was dismissed for lack of appellate jurisdiction.

Torgerson v. LCC Int’l, No. 20-3020, 2020 U.S. App. LEXIS 25155 (10th Cir. (Kan.) 2020).  There is no appellate jurisdiction over an order denying a motion to decertify collective claims in arbitration because the order staying the action pending arbitration was not final and the orders did not deny an application to compel arbitration.

Employees filed a lawsuit against employer alleging violations of the FLSA.[422]  Based on the arbitration provision in the employment agreements, the employer filed a motion to dismiss or, in the alternative, to stay proceedings and compel arbitration.  The District Court granted the employer’s request to stay the case and ordered the parties to arbitrate their dispute.  However, the court declined to consider the employer’s request to decide whether the operative employee agreements permitted collective arbitration, as well as the employees’ motion for conditional certification of their FLSA class claims, as those were issues to be resolved by the arbitrator.[423]

The named employee then submitted a demand to the AAA, seeking to assert a collective action on behalf of himself and others similarly situated, and the employer filed a “Motion for Clause Construction” in the arbitration, asking the arbitrator to dismiss the collective action claims.[424]  The arbitrator entered an order that the arbitration provision was valid and enforceable and covered the employees’ FLSA claims, and authorized the employees to proceed on a collective basis.[425]  The arbitrator denied the employer’s request, describing the order as a non-final decision that pertains to opt-in collective action under the FLSA.  Thus, it was not a final ruling under the AAA rules as to whether an arbitration may proceed as an opt-out class action, and the proceedings would not be stayed to permit judicial review.[426]

The employer filed a federal court action seeking to vacate the arbitrator’s “Clause Construction Award.”  The District Court, citing Rule 3 of the AAA’s Supplementary Rules for Class Arbitrations, predicted that the court of appeals would conclude that a district court has jurisdiction to review an arbitrator’s order holding that the parties’ arbitration agreement allows a claimant to assert FLSA claims on a collective basis, but denied the petition to vacate, holding that the arbitrator had not exceeded his authority in concluding the parties’ agreement authorized collective arbitration of the employees’ FLSA claims.[427]  The employer did not appeal that award.

The arbitrator issued an order conditionally certifying a class of employees, and also granted the employer’s motion dismissing several opt-in employees.  Several months later, the employer filed a motion to decertify the class, citing the Supreme Court’s supervening decision in Lamps Plus, Inc. v. Varela.[428]  The arbitrator denied that motion as well, holding that the arbitration provision at issue here unambiguously established the parties’ agreement to arbitrate on a collective basis.  The employer returned to federal court, and asked the District Court to direct the parties to arbitrate on an individual and not collective basis.  The District Court denied the motion.[429]  The employer appealed.

On appeal, the court held that none of the subsections of Section 16 of the FAA authorized interlocutory review of the arbitrator’s refusal to decertify the FLSA class.[430]  The district court case remained stayed pending arbitration and thus the order appealed from was not final within the meaning of Section 16(a)(3) of the FAA.[431]  Lamps Plus did not apply because the district court did not “compel class arbitration”: it compelled arbitration, but left for the arbitrator to decide whether the employees could proceed collectively.[432]  Further, the employer was not appealing the order compelling arbitration, but instead, the district court’s order denying its motion to vacate the arbitrator’s refusal to decertify collective arbitration of the FLSA claims, and so Section 16(a)(1)(C) would not provide a basis for appellate jurisdiction.[433]  Finally, there was no jurisdiction under Section 16(a)(1)(D) because the employer was not appealing from the district court’s order refusing to vacate the arbitrator’s Clause Construction Award, but rather from the district court’s order denying its motion to vacate the arbitrator’s order refusing to decertify the collective arbitration, although the court declined to say whether such jurisdiction would have existed for such an appeal.[434]

Before dismissing the appeal for lack of jurisdiction, the court noted that, following the conclusion of the arbitration, any party could return to the district court to seek a review of the award under the criteria laid out in Section 10 of the FAA.[435]

Jin v. Parsons Corp., 966 F.3d 821 (D.C. Cir. 2020).  Where a trial court finds that a genuine issue of material fact exists as to whether an arbitration agreement was ever formed, the FAA requires that the court proceed summarily to trial solely to resolve the issue of formation before granting or denying the motion to compel arbitration.

Jin O. Jin (“Jin”) was a long-time employee of Parsons Corporation (“Parsons”) who sued Parsons for employment discrimination in federal district court.[436]  Parsons moved to compel arbitration, asserting that it instituted an Employee Dispute Resolution (“EDR”) program in 1998 that contained an agreement to arbitrate.  Parsons also asserted that it had sent an email to its employees to notify them that it had updated the EDR and asked them to complete a certification that they received the arbitration agreement.  The email also stated that continuing to work for Parsons after failing to sign the arbitration agreement constituted acceptance.  Parsons presented evidence that it sent this email to Jin on four occasions and that, although Jin never signed the agreement, his continued employment with Parsons for years thereafter amounted to acceptance.  Jin submitted as declaration evidence that he had no recollection of the EDR or receiving any emails from Parsons about an updated EDR, and that he never reviewed or signed the arbitration agreement.  The District Court denied Parsons’ motion to compel, concluding that a genuine dispute of material fact existed as to whether Jin intended to be bound by the agreement to arbitrate, and thus, as to whether an agreement was ever formed between the parties.  Parsons appealed.[437]

On appeal the Court acknowledged that Section 4 of the FAA requires a court to conduct a summary trial when the existence of a valid agreement to arbitrate is in issue.[438]  The Court of Appeals held that the District Court erred by denying Parsons’ motion to compel before definitively resolving the issue of whether an arbitration agreement was formed and remanded with an order to hold the motion in abeyance pending resolution of the formation issue through a limited trial.[439]  In reaching this decision, the D.C. Circuit first resolved a challenge to its jurisdiction over this interlocutory appeal from a decisions to deny a motion to compel arbitration.[440]  While the District Court’s ruling had some similarities to a denial of a motion for summary judgment based on issues of fact, from which there is no right to take an interlocutory appeal, the court held that it had jurisdiction under the plain language of 9 U.S.C. §16(a)(1)(A)-(B), which provides a right to appeal from an order denying a petition under the FAA.[441]  The court was also persuaded by similar interpretations from other circuits exercising jurisdiction in the same circumstances.[442]

INTL FCStone Fin. Inc. v. Jacobson, 950 F.3d 491 (7th Cir. (Ill.) 2020).  Court’s order requiring arbitration, designating an arbitration forum, and staying the case to address related issues is not appealable.

Defendants, commodities futures investors, maintained trading accounts with INTL FCStone Financial Inc. (“FCStone”), a clearing firm that handled the confirmation, settlement, and delivery of transactions.[443]  After extraordinary volatility in the natural gas market wiped out the investors’ account balances with FCStone, leaving some defendants in debt, lawsuits were filed.[444]  The investors alleged Commodity Exchange Act violations against FCStone; FCStone sought payment from investors with negative balances.  The investors filed arbitration proceedings against FCStone before the FINRA and FCStone responded with a declaratory judgment action claiming the parties must arbitrate their disputes before the National Futures Association, pursuant to the investors’ arbitration agreements and Commodity Futures Trading Commission (“CFTC”) regulations, arguing FINRA lacks jurisdiction over the underlying disputes, and seeking to compel arbitration under Section 4 of the FAA and enjoin the FINRA arbitrations.[445]  The investors complained that FCStone was seeking an impermissible anti-arbitration injunction.  The District Court ruled for FCStone (although it denied the request for injunctive relief) and directed the investors to arbitrate before the NFA.[446]

On appeal, the Seventh Circuit had no difficulty concluding that it had no jurisdiction over the appeal because it was not from a decision denying arbitration, but rather an order compelling arbitration.[447]  Moreover, there was no jurisdiction under § 1292(a)(1) of the Judicial Code, allowing interlocutory appeals of orders granting injunctions, which is superseded by Section 16(b) of the FAA in any event.[448]  Finally, as the action was stayed, there was no appellate jurisdiction under Section 16(a)(3).[449]

§ 1.7 Nonsignatories to an Arbitration Agreement

This past year, a number of cases were decided addressing whether corporate successor predecessors and after-acquired affiliates could compel, or be compelled, to arbitrate claims.  In addition to the decisions discussed in this section, significant decisions touching this issue are discussed above in sections 1.5.1 and 1.8.2.

§ 1.7.1  Can Nonsignatories Compel Signatories to Arbitrate?

Hart v. Charter Communs., Inc., 814 F. App’x 211 (9th Cir. (Cal.) 2020).  Successor by merger and its parent can enforce arbitration agreement between subscriber and predecessor internet provider where subscriber has reasonable notice of the agreement.

Plaintiff subscriber brought consumer claims in a putative class action against internet service provider and its parent alleging that the corporate predecessor misled consumers who enrolled in automatic bill payment.[450]  Provider moved to compel arbitration.  The District Court granted the motion, holding that the subscriber had had inquiry notice of the subscriber agreement with the predecessor through its billing statements and assented to the agreement by continuing to accept internet services and that the provider’s successor by merger and its parents could enforce the terms of the agreement, including the arbitration clause.[451]

The Court of Appeals held that the successor could enforce the arbitration agreements under California contract law, because there was “sufficient identity of parties.”[452]  Under Delaware law (the law of incorporation of the corporate entities), the successor assumed all of the rights and obligations of the acquired entity and therefore it had the authority to enforce the arbitration agreement between plaintiff and the predecessor.[453]  Its parent could also enforce the agreement because the consumer brought identical claims against each of them.[454]  The subscriber was on reasonable inquiry notice of the agreement from references in billing statements that were sufficiently clear and conspicuous to provide a reasonably prudent subscriber with constructive notice of the contract terms.[455]  Accordingly, the Court of Appeals affirmed the District Court’s order.

VIP, Inc. v. KYB Corp., 951 F.3d 377 (6th Cir. (Mich.) 2020).  As arbitration is matter of contract, a court must resolve threshold questions of whether there is an agreement to arbitrate with a non-signatory.

Plaintiff-retailers stock and sell various automotive replacement parts online and in retail stores.  They purchase shock absorbers manufactured and distributed by defendants through buying groups, and then resell the products to consumers.[456]  The buying group agreements themselves do not contain an arbitration provision.  However, the agreements require the retailers to honor the terms of the manufacturer’s limited warranty to consumers and the limited warranty mandates arbitration before the AAA.”[457]  The retailers brought an action in federal court alleging that defendants and other shock absorber manufacturers engaged in a myriad of anticompetitive activities in the auto parts industry, and the defendants moved to compel arbitration under the terms of the limited warranty, arguing that the arbitrator should determine issues of arbitrability under the AAA Rules.[458]  The district court disagreed and the defendants appealed.

On appeal, the court held that it is first required to satisfy itself that the agreement at issue encompasses the dispute between the parties before it, even assuming that the agreement the defendants were relying on unmistakably and clearly delegated issues of arbitrability to the arbitrator.[459]  Where there is a dispute about the formation of the parties’ arbitration agreement, the court must resolve the disagreement.[460]

Applying state law principles of contract construction, the court of appeals held that there was no plain language reading of the arbitration provision in the limited warranty that evidenced an intent to bind anyone to arbitration other than “original retail purchasers.”[461]  In fact, the warranty differentiated between “original retail purchasers” and “authorized [] product sellers.”[462] Accordingly, because the retailers, as product sellers, did not agree to any type of arbitration with the manufacturer, there was no agreement to arbitrate and no arbitration agreement to enforce.[463]

Landry v. Transworld Systems Inc., 485 Mass. 334 (2020).  A non-party to an arbitration agreement must present clear and unmistakable evidence of an intent to be bound to enforce the provision as a third-party beneficiary.

A debtor filed a class action complaint against a debt collector that had acquired the debt asserting violations of the consumer protection act and debt collection regulations.[464]  In response, the debt collector moved to compel arbitration, citing an arbitration provision in the agreement between the debtor and the original creditor that had assigned the debt to the collector.[465]  The Superior Court denied the motion to compel, reasoning that the debt collector, a non-signatory, did not present clear and unmistakable evidence that the plaintiff had agreed to arbitrate his claims as against the debt collector.[466]  The debt collector appealed.

The Supreme Court of Massachusetts analyzed the six theories under which a non-signatory may enforce a contract such as an arbitration agreement against a signatory.[467]  The Supreme Court held that the arbitration provision at issue was, at a minimum, ambiguous as to whether or not the debt collector could enforce it and susceptible to multiple interpretations.[468]  As a result, the debt collector was required to, and had not, put forth the clear and definite evidence of intent required to enforce the arbitration provision as a third-party beneficiary and thus the Superior Court properly denied the debt collector’s motion to compel.[469]

§ 1.7.2 Can Signatories Compel Nonsignatories to Arbitrate?

Burgess v. Johnson, No. 19-5098, 2020 U.S. App. LEXIS 34930 (10th Cir. (Okla.) 2020).  Trustee cannot invoke permissive arbitration provision in trust agreement to compel beneficiaries to arbitrate disputes.

Beneficiaries of trust created under Oklahoma law sued trustee, alleging he had breached his fiduciary duty by converting trust assets.[470]  The trustee moved to compel arbitration, based on a provision in the declaration of trust that conveyed to the trustee the power “[t]o compromise, contest, submit to arbitration or settle all claims by or against, and all obligations of, the Trust estate or the Trustees[.]”[471]  The District Court denied the application and the trustee appealed.[472]

On appeal, the court reviewed the issue de novo, and applied the state law of contract construction.  Noting that the provision tracked Oklahoma statutory language, the court cited to a Texas decision that had concluded that virtually identical language drawn from a Texas statute merely authorized a trustee to exercise a full range of options to protect the interests of the trust.[473]  However, the language could not be construed to grant the trustee power to compel other parties to arbitrate their claims.[474]  While the trust declaration could have included language requiring beneficiaries to arbitrate any disputes, this clause could not be interpreted to accomplish that result.  Here, the District Court did not abuse its discretion by determining there were no triable issues.  Accordingly, the order denying the motion to compel arbitration was affirmed.[475]

GGNSC Administrative Services LLC v. Schrader, 484 Mass. 181 (Mass. 2020).  Claims against nursing home for wrongful death are derivative of claims the decedent would have had, and thus arbitration agreement executed by resident’s attorney in fact are binding on personal representative of estate and statutory beneficiaries.

After decedent died in the care of a nursing home, her daughter, as personal representative, brought a wrongful death claim against the nursing home.[476]  The nursing home sued in federal court to compel arbitration and the daughter opposed, contending that the arbitration agreement was both procedurally and substantively unconscionable, and in the alternative that the agreement could not bind the decedent’s beneficiaries, who had not signed the contract.[477]  The district court found that the agreement was valid and enforceable and that because the wrongful death action was derivative of the decedent’s own rights, the arbitration agreement bound the estate on behalf of the wrongful death beneficiaries.[478]

On appeal, the First Circuit certified two questions to the Massachusetts Supreme Judicial Court: first, whether the state wrongful death statute provides rights to statutory beneficiaries that are derivative of or independent from what would have been the decedent’s own action, and second, whether the decedent’s arbitration agreement binds the decedent’s statutory beneficiaries of the wrongful death action.

As a matter of first impression, the Supreme Judicial Court of Massachusetts held that a cause of action for wrongful death brought by a personal representative was derivative and not independent of the rights the decedent would have had to sue for the conduct, consistent with the majority of other states that have considered the question.[479]  The court then determined that there were no contract defenses to enforcement and no bar to enforcement based on public policy or unconscionability. Finally, the court responded to the second certified question with the conclusion that the arbitration agreement signed by the decedent’s attorney in fact was binding upon the personal representative as well as the decedent’s statutory beneficiaries.[480]

§ 1.8 Scope of Arbitration Agreement

§ 1.8.1  Scope of Arbitration Clauses in Labor and Employment Actions

Numerous decisions in 2020 considered whether and to what extent delivery workers in the “gig economy,” and particularly those who carry goods the “last mile,” were within the scope of the residual clause of section 1 of the FAA[481] exempting from the Act contracts of “any other class of workers engaged in foreign or interstate commerce” as interpreted by the United States Supreme Court in Circuit City Stores, Inc. v. Adams.[482]  These decisions are discussed below.

Grice v. United States Dist. Court, 974 F.3d 950 (9th Cir. (Cal.) 2020).  District court’s decision that Uber drivers were not within the arbitration exemption in section 1 of the FAA was not clearly erroneous as required to obtain a writ of mandamus.

Uber drivers had filed a putative class action alleging that the company failed to safeguard the personal information of drivers and riders and mishandled a data security breach in which that information was stolen by online hackers.[483]  Uber moved to compel arbitration under its agreements with the drivers, who argued that they fell within the exemption in Section 1 of the FAA for “any other class of workers engaged in foreign or interstate commerce.”[484]  The District Court held that rideshare drivers who pick up and drop off passengers at airports do not fall within this residual category and therefore may be judicially compelled to arbitrate in accordance with the terms of their contracts[485].  The Uber drivers petitioned the appellate court for a writ of mandamus vacating the District Court’s decision.

First noting that a writ of mandamus is a drastic and extraordinary remedy requiring a showing that the District Court’s decision amounts to “clear error as a matter of law,”[486] the court went on to hold that where no prior binding authority prohibits the District Court’s ruling, or where the issue in question has not yet been addressed by any circuit court in a published opinion, the ruling cannot be clearly erroneous.[487]  Turning to the prior decisions from district and circuit courts that have analyzed whether rideshare drivers fall within the scope of the residual clause in Section 1, the court emphasized that no circuit has held that rideshare drivers, as a class, are engaged in foreign or interstate commerce.[488]  Based largely on the high bar required for a writ of mandamus, the Court of Appeals ruled that “even accepting that there are some tensions between the District Court’s ruling and recent circuit cases” regarding interpretation of the residual exemption in Section 1 of the FAA, that is not enough to render the District Court’s decision clear error as a matter of law, as required for mandamus.[489]

Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. (Wash.) 2020).  Drivers involved in the “last mile” delivery of products were within the scope of residual clause of Section 1 of the FAA exempting transportation workers who are engaged in the movement of goods in interstate commerce, even if they do not cross state lines themselves.

Individual drivers who contract with Amazon to make “last mile” deliveries of products from Amazon warehouses to the customer’s location using their own transportation brought a class action challenging their classification as independent contractors rather than employees and alleging wage and hour violations.[490]  Amazon moved to compel arbitration of the claims of those drivers who had not opted out of the arbitration provision in the contracts.  The Amazon terms of service (TOS) provides that it is governed by “the law of the state of Washington without regard to its conflict of laws principles, except for [the arbitration provision], which is governed by the Federal Arbitration Act and applicable federal law.”[491]  In denying Amazon’s motion to compel, the District Court concluded that the drivers fall within the scope of the FAA’s transportation worker exemption pursuant to § 1 because they deliver goods shipped from across the United States.[492]  The court further held that as the TOS bars application of Washington state law to the arbitration provision, and the FAA did not apply, there was no valid agreement to arbitrate and denied the motion to compel.[493]  Amazon appealed from the denial of the motion to compel arbitration.

On appeal, the panel agreed with the First Circuit and held that the delivery workers were exempt under the residual exception in Section 1 of the FAA because they were transportation workers engaged in interstate commerce when they made “last mile” deliveries of goods in the stream of interstate commerce.[494]  Considering the plain meaning of the relevant statutory text, case law interpreting the exemption’s scope and application, and the construction of similar statutory language, the panel held that Section 1 of the FAA exempts transportation workers who are engaged in the movement of goods in interstate commerce, even if they do not cross state lines themselves.[495]  The lengthy dissent took the opposite approach, reasoning that for the narrow exemption in Section 1 to apply, the worker must belong to a “class of workers” that crosses state lines in the course of making deliveries, based on statutory interpretation and problems of application that would result in inequities among similarly situated delivery workers.[496]

Amazon had also argued that, even if the workers were exempt from the FAA, the arbitration provisions could be enforced under Washington state law or other federal law.  However, the panel additionally held that there were no other federal laws that would govern and, even under a severability analysis, the plain language of the TOS would prohibit applying Washington law to the arbitration provision.[497]  In the absence of any law governing the arbitration provision, the court concluded there was no valid agreement and affirmed the District Court.[498]

Wallace v. Grubhub Holdings, Inc., 970 F.3d 798 (7th Cir. (Ill.) 2020).  Contracts with drivers delivering meals locally were not within the exemption under Section 1 of the FAA because the interstate movement of goods was not a central part of the job description of the class of the drivers.

In two suits, drivers for Grubhub in various cities filed suit claiming wage and hour violations.[499]  Grubhub moved to compel arbitration in each case based on agreements signed by the drivers, who contended that they fell within the scope of the residual clause in Section 1 of the FAA as “workers engaged in interstate commerce.”[500]  Each of the district courts held that the drivers had to demonstrate that the interstate movement of goods was a central part of the job description of the class of workers to which they belonged, that the drivers had not done that and granted the motions to compel arbitration.  The appeals from the two decisions were consolidated.

The Court of Appeals defined the issue as “not whether the individual worker actually engaged in interstate commerce, but whether the class of workers to which the complaining worker belonged engaged in interstate commerce.”[501]  Describing the exception in Section 1 as narrow, it is not enough that the goods have moved across state lines in some way; rather, the workers must be connected not simply to the goods, but to the act of moving those goods across state or national borders.[502]  As the drivers had not shown that the interstate movement of goods was a central part of the job description of the class of workers to which they belong, the contracts did not fall within the residual clause of section 1 and the district courts’ orders compelling arbitration were affirmed.[503]

Waithaka v. Amazon.com, Inc., 966 F.3d 10 (1st Cir. (Mass.) 2020).  Last mile delivery driver for an e-retailer was within the category of transportation workers whose contracts were exempt from the FAA, and class action waiver was unenforceable under state law.

The facts of this case were identical to those in Rittman v Amazon, discussed above, as was the outcome.  However, the reasoning of the First Circuit varied slightly from the Ninth Circuit.

Individual drivers who contract with Amazon to make “last mile” deliveries of products from Amazon warehouses to the products’ destinations using their own transportation brought a class action challenging their classification as independent contractors rather than employees and alleging wage and hour violations.[504]  Amazon moved to compel arbitration of the claims of those drivers who had not opted out of the arbitration provision in the contracts or in the alternative to transfer the case to Washington, where similar other cases were pending.[505]  The Amazon terms of service (TOS) provides that they are governed by “the law of the state of Washington without regard to its conflict of laws principles, except for [the arbitration provision], which is governed by the Federal Arbitration Act and applicable federal law.”[506]  The TOS also contained a class-action waiver.  The employee here delivered packages entirely within the state of Massachusetts and did not cross state lines in the course of his work.[507]  The District Court concluded that the agreement was exempt from the FAA, that Massachusetts law therefore governed the enforceability of the arbitration provision, and that the provision was unenforceable based on Massachusetts public policy.  However, the court granted Amazon’s alternative request to transfer the case, which has since occurred.[508]  Amazon appealed.

On appeal, the court first concluded that the agreements were within the residual clause of section 1 of the FAA for “workers … engaged in interstate commerce,” focusing on the meaning of the phrase “engaged in.”[509]  The court then delved an analysis of statutes contemporaneous with the FAA, the sequence of the text of the exemption, the FAA’s structure, and the purpose of the exemption and the FAA itself.[510]  Using the nearly identical text of the Federal Employers’ Liability Act (FELA)[511] and the case law interpreting that statute, and the text, structure, and purpose of the FAA, the court concluded that the last-mile delivery workers who haul goods on the final legs of interstate journeys are transportation workers “engaged in . . . interstate commerce,” regardless of whether the workers themselves physically cross state lines, because their work transports goods or people “within the flow of interstate commerce” and their contracts were not governed by the FAA.[512]

Turning next to the class action waiver, the court determined that Massachusetts would treat the class waiver provisions in the agreement as contrary to its fundamental public policy and that, based on conflict-of-laws principles, the contractual choice of Washington law would be unenforceable if it would permit such waivers, and accordingly individual arbitration could not be compelled pursuant to the applicable state law.[513]  Therefore, the District Court’s denial of the motion to compel arbitration was affirmed.[514]

Eastus v. ISS Facility Servs., 960 F.3d 207 (5th Cir. (Tex.) 2020).  Airport services employee who supervised ticketing and gate agents line and incidentally handled baggage was not within the scope of the transportation worker exemption in Section 1 of the FAA and was required to arbitrate disputes with her employer.

Plaintiff employee was employed at an airport, where she primarily supervised airline ticketing and gate agents and occasionally handled baggage services.[515]  She brought discrimination claims against her employer and the airlines and defendants moved to compel arbitration based on her employment contract.  The employee argued that she was exempt from the FAA under the residual clause of Section 1.[516]  The District Court held that plaintiff’s job was related to transporting passengers, that the handling of luggage was incidental to her primary duties, and that she herself was therefore not involved in the movement or transportation of goods in interstate commerce in the same way that railroad workers and seamen are, and ordered her to arbitrate her claims.[517]

On appeal, the court considered whether the employee was “engaged in interstate commerce” within the meaning of Circuit City, which it interpreted to exempt from the FAA “only contracts of employment of transportation workers.”[518]  In the court’s view, based on precedent in the Fifth Circuit, the key question in the appeal was whether the worker needs to be engaged in the movement of goods; the panel concluded that element is required and that plaintiff could not meet that test, because while the passengers moved in interstate commerce, plaintiff’s role preceded that movement and, at most, could be construed as loading or unloading airplanes.[519]  Accordingly, the exemption did not apply to her and the decision of the District Court was affirmed.[520]

Darrington v. Milton Hershey Sch., 958 F.3d 188 (3d Cir (Pa.) 2020).  Where collective bargaining agreement clearly and unmistakably waived the employees’ right to sue in state or federal court for disputes alleging discrimination under either federal or state law, arbitration was required.

Former houseparents sued their former employer, a residential school, alleging discrimination under both federal and state law.[521]  The CBA between the houseparents’ union and the school required arbitration of disputes.[522]  The District Court denied the school’s motion to compel arbitration because it found that the CBA did not clearly and unmistakably waive the employees’ right to sue for discrimination in state or federal court.[523]  The school appealed.

On appeal, the court first determined that the federal claims were within the scope of the CBA’s arbitration provision.  A federal statutory discrimination dispute falls within the scope of a CBA’s arbitration provision “when (1) the arbitration provision clearly and unmistakably waives the employee’s ability to vindicate his or her federal statutory right in court; and (2) the federal statute does not exclude arbitration as an appropriate forum.[524]  As the plaintiffs’ federal claims were arbitrable, they were within the scope of the provision.[525]  As to the state law claims, because the FAA preempts any state rule that “facially or covertly” prohibits arbitration,[526] and Pennsylvania had not yet explained what standard would govern the waiver of a judicial forum, the court examined the most onerous standard available and asked whether the CBA contained a clear-and-unmistakable-waiver of a judicial forum.[527]  To meet this standard, an arbitration provision’s waiver of a judicial forum for statutory claims must merely be “particularly clear” and “explicitly stated.”[528]  Here, the broad terms of the CBA’s arbitration provision clearly and unmistakably included within its scope the plaintiffs’ claims, and the decision of the District Court denying the motion to compel arbitration was reversed.[529]

§ 1.8.2 Scope of Arbitration Clauses in other Contracts

Cordoba v. DIRECTV, LLC, 801 F. App’x 723 (11th Cir. (Ga.) 2020).  Decision denying arbitration of claim based on nonconsensual disclosure of subscriber information in litigation reversed, because claim was derivative of, and thus arose out of, subscriber relationship and was arbitrable under subscriber agreement.

During the course of litigating a TCPA class action, DIRECTV allegedly shared its customers’ personal information with its expert witness.[530]  The district court granted plaintiffs’ motion to add an additional plaintiff and class representative along with new claims by that representative that such disclosure was nonconsensual, and therefore, in violation of the Satellite Television Extension and Localism Act of 2010 (“STELA”).[531]  DIRECTV responded by moving to compel arbitration under the arbitration provision in the customer agreement for “claims arising out of or relating to any aspect of the relationship between us, whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory.”[532]  The district court denied the motion, finding that “DIRECTV ha[d] not established that the claim arises from the customer agreement” and thus the STELA claim was not within the scope of the agreement’s arbitration provision.[533]

On appeal, the Eleventh Circuit reversed.  Without addressing whether the relevant arbitration provision was so broad as to encompass “all claims and disputes” as DIRECTV contended, it held more narrowly that, based on the limited facts of this matter, the plaintiffs’ STELA claim indeed fell within its purview.[534]  The claim was a direct derivative of the “relationship” with DIRECTV, because if not for the subscriber relationship with DIRECTV, the factual predicate for a STELA claim would not exist.[535]  Necessarily then, the STELA claim arose out of the subscriber’s relationship with DIRECTV as contemplated by the arbitration clause and that claim was subject to arbitration.[536]  Accordingly, the court reversed and remanded.

Solo v. United Parcel Serv. Co., 947 F.3d 968 (6th Cir. (Mich.) 2020).  A party cannot be compelled to arbitrate under an arbitration clause that was not in effect at the time its dispute arose in the absence of agreement that such arbitration clause applies retroactively.

Several customers filed a putative class action against United Parcel Service Co. (“UPS”) seeking damages for, inter alia, breach of contract for allegedly overcharging for liability insurance in excess of the price set out in the UPS Terms and Conditions of Service (“TOC”).[537]  UPS moved to dismiss the complaint on the grounds that there was no breach of the TOC.  In the final paragraph of its motion, UPS stated that it reserved the right to move to compel arbitration and that its motion to dismiss did not waive its contractual right to arbitrate.[538]  The version of the TOC in effect at the time the customers mailed the packages at issue did not contain an arbitration clause but UPS referenced an arbitration clause in an amended terms of service that became effective thereafter.[539]  UPS also stated in its motion to dismiss that, because of the different versions of the TOC, it did not have sufficient information to know whether its arbitration clause could apply in this action.[540]

The District Court granted the motion to dismiss.  On appeal, the Sixth Circuit reversed the dismissal and remanded, finding the language of the TOC was ambiguous.  On remand, UPS filed an answer raising the obligation to arbitrate as its first affirmative defense, and sought limited discovery on the issue of arbitration.  The District Court rejected any limitation on discovery, and after conducting six months of full discovery, UPS moved to compel arbitration.  The District Court denied the motion, holding that UPS had waived its right to arbitrate.  UPS appealed again.[541]

The Sixth Circuit affirmed the District Court’s decision, first holding that UPS could not compel arbitration because the arbitration clause in the Amended UPS Terms did not apply retroactively to cover the shipments at issue.[542]  To find that the parties agreed to resolve their disputes under the arbitration clause, the court first had to find an agreement to arbitrate and then determine that this dispute was within its scope.[543]  The Sixth Circuit reasoned that the arbitration clause did not apply retroactively here because both versions of the terms contained critical language that “the shipper agrees that the version of the Terms . . . in effect at the time of shipping will apply to the shipment and its transportation.”[544]  The court rejected UPS’s argument that the boilerplate merger clauses in each document do not render an arbitration provision applicable from one contract to another.[545]

The Sixth Circuit further held that the evidence supported the district court’s finding that UPS waived its right to arbitrate.[546]  “[A]lthough ‘we will not lightly infer a party’s waiver of its right to arbitration,’ we may find waiver if a party (1) ‘tak[es] actions that are completely inconsistent with any reliance on an arbitration agreement; and (2) ‘delay[s] its assertion to such an extent that the opposing party incurs actual prejudice.’”[547]  The Sixth Circuit pointed to UPS’s motion to dismiss seeking a decision in court on the merits, which it vigorously litigated for two years as completely inconsistent with reliance on the arbitration clause.[548]  The court also pointed to prejudice the plaintiffs who incurred the expenses of defending against the merits-based motion to dismiss, appealing that decision, and then engaging in months of full discovery.[549]  The Sixth Circuit rejected UPS’s argument that it was plaintiffs who refused to limit discovery to arbitration issues, because UPS received the subject of the limited discovery after one month, but participated in another five months of merits discovery before moving to compel.[550]

§ 1.9 Validity or Invalidity of Various Provisions

Kramer v. Enter. Holdings, No. 19-16354, 2020 U.S. App. LEXIS 35671 (9th Cir. (Cal.) 2020).  While California law forbids a contract that forces a party to waive the right to seek public injunctive relief in any forum, court properly compelled arbitration of claims requesting damages for class and seeking injunctive relief in only general terms.

Customer filed a class action complaint in California state court, alleging that Enterprise improperly stored personal data from class members’ cell phones and other mobile devices when they paired their devices with their rental cars.  Enterprise removed the case to the District Court and moved to compel arbitration based on an arbitration provision in the rental agreement.[551]  The District Court granted the motion and the customer appealed, arguing that the arbitration agreement is unenforceable under California law because it denies him the right to seek public injunctive relief.[552]

Under the “McGill rule,”[553] California law courts will not enforce a contract that requires a party to waive the right to seek public injunctive relief in any forum, including an arbitration forum.  The rule is not preempted by the FAA.[554]  Here, however, the court concluded that the complaint did not seek public injunctive relief within the meaning of McGill because it specifically requested damages and asked only for injunctive relief “as the Court deems appropriate.”[555]  This remedy is in the nature of private, rather than public, injunctive relief.[556]  As McGill did not apply, the arbitration agreement was enforceable and the court affirmed the order compelling arbitration.

Shivkov v. Artex Risk Sols., Inc., 974 F.3d 1051 (9th Cir. (Ariz.) 2020).  Agreement to arbitrate will not be invalidated based on claims that purported fiduciaries had a duty under state law to point out the agreement, which survived termination of the underlying contract.

Plaintiffs were eighty-one individuals and companies that had entered into agreements with some of the defendants to create captive insurance companies that would purportedly bring tax benefits.[557]  The IRS disagreed.  Plaintiffs brought a putative class action and the defendants who established the structures moved to compel arbitration, relying on an arbitration clause in their agreements.[558]  Plaintiffs argued the clauses were unenforceable, arguing the defendants were fiduciaries and had failed to point out and fully explain the clauses and also argued the clauses had not survived the termination of the individual agreements.[559]  The District Court rejected these arguments and granted the motion to compel, ordering individual arbitrations and plaintiffs appealed.

On appeal, the court first addressed the enforceability of the arbitration provisions, and found no authority to suggest that these defendants had a fiduciary duty in connection with “purely commercial aspects” of an arbitration clause.[560]

Next, the court addressed the assertion that any agreement to arbitrate did not survive termination of the underlying agreements.[561]  Although the Supreme Court has not addressed the issue of post-termination arbitration of disputes in the FAA context, it has addressed this issue in the collective bargaining context and recognized a “presumption in favor of post-expiration arbitration of matters unless ‘negated expressly or by clear implication’ [for] matters and disputes arising out of the relation governed by contract.”[562]  The Supreme Court explained that “[w]e presume as a matter of contract interpretation that the parties did not intend a pivotal dispute resolution provision to terminate for all purposes upon the expiration of the agreement.”[563]  To hold otherwise would mean that a party could simply wait “until the day after the contract expired to bring an action regarding a dispute that arose while the contract was in effect.”[564]  The presumption applies where the parties’ dispute has “its real source in the contract.”[565]  Five circuits have addressed the issue and agreed.[566]  Turning to the case at hand, the Court of Appeals held that the presumption applied, notwithstanding the argument that the arbitration agreement was not expressly included in the list of provisions that would survive termination, looking at the agreement as a whole in light of the liberal policy favoring arbitration.[567] 

Turning to the issue of class arbitration, the court followed numerous other courts of appeals that have held that the availability of class arbitration is a gateway issue for the court to decide.[568]  Looking at the parties’ contracts, the court then concluded that a reference in the agreement to arbitrate to the AAA did not incorporate the rules of the AAA and did not provide clear and unmistakable evidence of an intent to delegate the gateway issue of class arbitration to the arbitrator.[569]  As the agreements were silent regarding class arbitration, there was no agreement to arbitrate on a class wide basis and the court affirmed the District Court’s decision compelling individual arbitration.[570]

Stover v. Experian Holdings, Inc., 978 F.3d 1082 (9th Cir. (Cal.) 2020).  Where plaintiff did not allege standing to pursue future injunctive relieve, California law against arbitration clauses that preclude public injunctive relief did not bar enforcement of an arbitration clause and class action waiver against a consumer attacking marketing of a credit scoring product.

In 2014, plaintiff signed up with Experian Holdings (“Experian”) for its “Experian Credit Score” service providing her with regular updates on her credit score as calculated by Experian.  As part of her purchase, she agreed to Experian’s terms and conditions (and to any changes to them in the future if she accessed the “Product Website” at Experian).[571]  The 2014 terms and conditions contained an arbitration clause providing that she would be required, “to the fullest extent permitted by law,” to arbitrate all claims arising out of her purchase of the service.[572]  The clause also included a provision in which she waived any right to participate in a class action for such claims.[573]

One month after she signed up for the service, plaintiff cancelled her subscription.  Four years later, she accessed the Experian website.[574]  By that time, Experian had changed the arbitration clause to exclude from its coverage claims under the Fair Credit Reporting Act (“FCRA”)[575] and similar state or federal laws about information in credit reports.[576]  The next day, the plaintiff sued Experian for allegedly violating the FCRA as well as California and Florida unfair competition laws.[577]  She based her claims on the theory that Experian had marketed its credit score as information on which lenders would rely in making decisions about creditworthiness when, in fact, the score used a formula that very few or no lenders actually used.[578]

Experian moved to compel arbitration and the trial court agreed, applying the 2018 arbitration clause, but holding that the plaintiff’s claims did not involve information in a credit report, and therefore were not excluded from arbitration.[579]  Plaintiff appealed, arguing that the 2018 carve-out applied or that, in any event, Experian’s earlier arbitration clause was unenforceable under California law because California forbids contract terms waiving a party’s right to seek public injunctive relief in court.[580]

The Ninth Circuit disagreed.  First, the plaintiff had not shown that, simply by accessing the Experian website, she had agreed to the 2018 arbitration clause.[581]  It therefore held that the trial court should have applied the 2014 arbitration clause (which contained no carve-out for FCRA claims).[582]  Second, while the 2014 arbitration clause was broad, it did not (because of its “to the fullest extent provided by law” language) on its face prohibit judicial resolution of all claims for public injunctive relief from a court.[583]  In addition, as applied, the clause would not bar the plaintiff from seeking public injunctive relief from a court, either.  This was because the plaintiff had not alleged that she would desire, or be likely, to purchase the Experian Credit Score Service again (much less that if she did, she would be misled in doing so).[584]  As a result, she had failed to allege Article III standing to seek an injunction against Experian’s allegedly deceptive future advertising.

While the plaintiff had made a request in her appellate reply brief for leave to amend her complaint to add allegations of Article III standing, the Ninth Circuit denied that request as untimely.[585]  It also doubted that the plaintiff could validly amend to allege the necessary facts for such standing.[586]

B&S MS Holdings, LLC v. Landrum, 302 So.3d 605 (Miss. 2020).  An arbitration provision and waiver contained in the operating agreement of an LLC is valid and enforceable.

A majority member of limited liability company (“LLC”) sought judicial dissolution and the minority member responded with a motion to dismiss, or in the alternative to compel arbitration in accordance with an arbitration provision contained in the entity’s operating agreement.[587]  The majority member argued that Mississippi Code Section 79-29-123(3)(m) prohibited an operating agreement from contracting away the power of a court to decree dissolution.[588]  The trial court held that operating agreements were to be treated like contracts and members of an LLC have the authority to agree to binding arbitration and to waive their right to judicial dissolution.[589]  The Supreme Court of Mississippi affirmed, holding that while Mississippi Code Section 79-29-123 provides that an operating agreement may not vary the court’s power to decree dissolution in certain circumstances, Mississippi Code Section 79-29-803 states that a trial court may decree dissolution, not that it must do so.[590]  Because the members agreed to expressly waive their right to maintain an action for a decree of dissolution in the LLC’s operating argument, the Supreme Court affirmed the order of the Chancery Court ordering the parties to submit to binding arbitration.[591]

§ 1.10 Class Actions and Arbitration

Class Action Waivers Enforceable or Unenforceable

Laver v. Credit Suisse Sec. (USA), LLC, 976 F.3d 841 (9th Cir. (Cal.) 2020).  FINRA Rule prohibiting class arbitration and enforcement of arbitration agreements directed at members of putative or certified class claims does not apply to invalidate general class action waivers in an agreement that also contains a separate arbitration clause.

Plaintiff, a financial adviser formerly employed by Credit Suisse Securities, USA (“CSSU”), filed a putative class action against his former employer alleging breach of contract and other state law claims.[592]  The employment contracts between CSSU and its financial advisers provided for deferred compensation unless the advisers resigned or were terminated for cause, and contained a “Change in Control” provision, which provided that they would retain their right to unvested deferred compensation in the event of certain corporate transactions.[593]  CSSU entered into a “recruiting agreement” with Wells Fargo, shutting down the CSSU financial advisory operations, and providing that Wells Fargo would recruit financial advisers formerly with CSSU.[594]  The plaintiff alleged that CSSU was circumventing the “Change in Control” provision in his employment contract as CSSU would only pay deferred compensation to those CSSU financial advisers Wells Fargo chose to hire.[595]

CSSU moved to dismiss the suit and compel arbitration, arguing that the financial advisers were bound by their agreement to CSSU’s Employee Dispute Resolution Program, which contained an arbitration clause and a general class waiver.  The arbitration clause required CSSU employees to arbitrate employment related claims.  The class waiver provided that: “An employee’s agreement to abide by the terms of the [CSSU program] includes an agreement not to serve as a class representative or class member or act as a private attorney general in any dispute with [CSSU].”[596]  FINRA Rule 13204(a)(1) prohibits arbitration of class actions, and Rule 13204(a)(4) precludes enforcement of an arbitration agreement against a member of a certified or putative class action until certification is denied, the class is decertified, or the member opts out or is excluded from the class.  The financial advisor argued that FINRA Rule 13204(a)(4) precluded CSSU’s motion to dismiss.  The District Court disagreed with the financial adviser and dismissed the action in favor of arbitration.

The Eleventh Circuit affirmed, holding that the prohibition in FINRA Rule 13204(a)(4) was inapplicable here because CSSU was not attempting, in the first instance, to enforce the arbitration provision.[597]  Rather, CSSU was seeking dismissal of the class action claims under the general class action waiver, which precluded class actions in any forum, and was a conceptually distinct agreement from an agreement to arbitrate.[598]  Once the class action claims were dismissed, a motion to compel arbitration of individual claims would not run afoul of Rule 13204.  According to the court, Rule 13204(a)(4) only bars agreements to arbitrate class actions.[599]  As the general class action waiver here was not an agreement to arbitrate a class action, it was not barred under the text of Rule 13204(a)(1).[600]

On appeal, the Eleventh Circuit also disagreed with the financial consultant’s contention that Rule 13204 barred class action waivers, finding that such an interpretation would entirely bar the enforcement of agreements to arbitrate claims that could be maintained as part of a putative or certified class.[601]  The Eleventh Circuit also found that the consultant failed to establish a clear and manifest intent that Rule 13204 prohibited class waivers, since it never mentions or addresses waivers.  Moreover, Rule 13204’s final sentence that its provisions “do not otherwise affect the enforceability of any rights under the [FINRA] Code of Arbitration Procedure for Industry Disputes] or any other agreement,” evidenced a lack of clear and manifest intent to bar separate class waivers.[602]

As the class waiver was enforceable, the court held that the District Court had properly dismissed the class claims.[603]  Left with only individual claims, the District Court correctly ordered arbitration of those claims.  In reaching this decision, the Eleventh Circuit aligned itself with the Second Circuit, which came to a similar decision in a materially identical dispute.[604]

§ 1.11 Waiver of Arbitration

Brickstructures, Inc. v. Coaster Dynamix, Inc., 952 F.3d 887 (7th Cir. (Ill.) 2020).  A party waives its right to arbitrate when it acts inconsistent with its right to pursue arbitration by withdrawing its request for arbitration and will generally not be permitted to rescind its waiver and renew its request.

Brickstructures, Inc. and Coaster Dynamix, Inc. joined forces to create a LEGO-compatible roller coaster set.[605]  When the venture soured, Brickstructures filed a federal lawsuit and Coaster Dynamix unsuccessfully moved to dismiss and then raised the parties’ agreement to arbitrate on a second motion to dismiss as a challenge to venue.[606]  When threatened with sanctions by Brickstructures, Coaster Dynamix withdrew its arbitration demand and the court denied the remainder of its motion to dismiss.[607]  Coaster Dynamix moved shortly thereafter to compel arbitration and the District Court denied the resurrected request on the grounds that the earlier withdrawal amounted to a waiver of the right to arbitrate.[608]

On appeal, the Seventh Circuit agreed.  Describing the question of waiver as a mixed question of fact and law, and granting deference to the district court’s assessment of the facts, the court held there was no clear error in the District Court’s finding that Coaster Dynamix waived its right to arbitrate.[609]  While parties do not waive their right if they take certain actions before seeking to compel arbitration, such as moving to dismiss or requesting a transfer of venue, Coaster Dynamix voluntarily chose to withdraw its initial motion seeking arbitration and was not entitled to rescind that waiver based on these facts.[610]

Davis v. White, 795 F. App’x 764 (11th Cir. (Ala.) Jan. 7, 2020) (per curiam).  Where a party files a motion to dismiss for failure to state a claim, it seeks judgment on the merits that is inconsistent with the intent to arbitrate and waives its right to pursue arbitration.

A local municipality entered into agreements with an outside individual to own and operate its sewer system through private sewer companies that would provide sewer services to homes through utility services agreements with residents.[611]  The utility services agreements contained mandatory arbitration provisions.[612]  Three families filed separate law suits against the individual and the sewer companies asserting, inter alia, violations of their civil rights by state actors under federal law,[613] state-law trespass, and state-law deprivation of property rights.[614]  Among other things, the residents asserted claims alleging that that the sewer companies shut off the families’ water for delinquency by placing a lock on the water line, charged them substantial fees after falsely accusing them of tampering with the lock, and threatened them with criminal prosecution for failure to pay bills.[615]

The sewer Companies filed motions to dismiss, arguing that the residents failed to meet pleading standards for each claim and failed to state any plausible claim to relief.[616]  The residents opposed the motion, and litigation proceeded over the course of approximately one year, including issuing scheduling order, selecting a bench trial date, litigating discovery disputes, and filing amended complaints, which the District Court deemed implied motions to amend.  The District Court granted the implied motions to amend the complaints, found that they stated plausible claims to relief as amended, and terminated the sewer companies’ motions to dismiss as moot.[617]  Instead of answering the amended complaints, the sewer companies immediately filed an appeal, which the Eleventh Circuit denied as premature.  The residents then moved for the clerk’s entry of a default judgment against the sewer Companies for their failure to answer the amended complaint.  In response, the sewer Companies indicated an intent for the first time to submit the disputes to arbitration.  More than 18 months after the initial complaints were filed, the sewer Companies moved to compel arbitration and to stay proceedings pending arbitration.[618]  The residents argued that the sewer Companies had waived any right to arbitration by substantially engaging in litigation and causing the residents prejudice.[619]  The District Court agreed and denied the motions to compel and stay.  The sewer companies appealed.[620]

The Court noted that in Johnson v. Keybank Nat’l Ass’n (In re Checking Account Overdraft Litig.),[621] the Eleventh Circuit had previously found that “[w]aiver occurs when, under the totality of the circumstances, ‘both: (1) the party seeking arbitration substantially participates in litigation to a point inconsistent with an intent to arbitrate; and (2) this participation results in prejudice to the opposing party.’”[622]  The Eleventh Circuit applied this rule here and found that the sewer companies acted inconsistently with an intent to arbitrate by filing motions to dismiss for failure to state a claim, opposing the implied motions to amend, and filing a frivolous appeal to a ruling that was clearly not immediately appealable.[623]  Although not every motion to dismiss is inconsistent with an intent to arbitrate, a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is merits-based, and therefore inconsistent.[624]  Further, the sewer companies’ extensive participation in litigating the claims prejudiced the residents by causing them to incur litigation costs that arbitration was designed to alleviate.[625]  Accordingly, the court of appeals affirmed the District Court’s order denying the motions to compel.[626]

Jeoung Lee v. Evergreen Hospital Medical Center, 195 Wash. 2d 699 (2020).  Party waived its right to compel arbitration by litigating the case in court for nine months before raising the issue of arbitration.

Employees brought a putative class action against employer for failure to give required rest and meal breaks.[627]  Several months after the action was commenced, the employer moved to compel arbitration, arguing that the claims arose under the relevant collective bargaining agreement.  The trial court denied the motion to compel arbitration and the Court of Appeals affirmed, holding that the employees’ claims were statutory and not subject to arbitration, and that the employer waived arbitration by litigating the case for nine months before moving to compel.[628]  In affirming the Court of Appeals, the Supreme Court of Washington held that the employer knew of its right to arbitrate the employees’ claims, chose to litigate the case in court, and that transferring the case to arbitration at this point in the litigation would prejudice the plaintiffs.[629]

§ 1.12 Arbitration Agreements and Unconscionability

§ 1.12.1 Language or Agreement Not Unconscionable

Innovative Images, LLC v. Summerville, 848 S.E.2d 75 (Ga. 2020).  Engagement letter for legal services containing a mandatory arbitration provision was neither unconscionable nor void as against public policy.

Plaintiff, a limited liability company, sued its former attorney for legal malpractice.[630]  In response, the attorney moved to dismiss and compel arbitration in accordance with the parties’ engagement agreement, which included a mandatory arbitration clause.  The trial court denied the attorney’s motion and held that the arbitration was “unconscionable” and unenforceable because it violated Rule 1.4(b) of the Georgia Rules of Professional Conduct.[631]

The Court of Appeals reversed the trial court’s ruling and held that the arbitration clause was not void against public policy or unconscionable.[632]  In affirming the ruling of the Court of Appeals, the Supreme Court of Georgia held that regardless of whether the attorneys violated Georgia Rules of Professional Conduct 1.4(b) (“GRPC”) by entering into an engagement agreement with a mandatory arbitration clause without obtaining the client’s informed consent by explaining the advantages and disadvantages of the same to the client, the clause was not void as against public policy.  The alleged failure to obtain informed consent went to the process of entering into the contract, and not the actual agreement.[633]  As to the latter, binding arbitration agreements are generally not in contravention of the public policy of the state, as the Georgia Arbitration Code demonstrates a public policy favoring arbitration, and nothing about the attorney-client relationship would alter that policy, particularly as the State Bar and the courts established a fee arbitration program.[634]  Moreover, the client had not sustained its burden to show that the arbitration provision was substantively or procedurally unconscionable.  Even if the agreement involved a violation of the ethical rules, there was no evidence that it was procured by fraud, so the judgment of the Court of Appeals holding that the arbitration clause was enforceable was affirmed[635] 

Goff v. Nationwide Mut. Ins., 825 F. App’x 298 (6th Cir. (Ohio) 2020).  Arbitration agreement allowing employer to change the rules and procedures of the arbitration without notice to the employee was enforceable as the provision was not procedurally unconscionable because it did not pertain to the formation of the arbitration agreement.

Employee signed an agreement requiring arbitration of disputes and allowing the employer to change, alter, amend or otherwise modify the arbitration rules and processes at any time.[636]  After he was terminated, the employee filed an action in federal court and the employer moved to compel arbitration, which the District Court granted.[637]

On appeal, applying Ohio law, the court limited its review to the issue of unconscionability, the sole defense that the employee raised in response to the employer’s motion to compel.[638]  To invalidate the arbitration provision as unconscionable, Ohio law required the employee to demonstrate both procedural and substantive unconscionability.  Procedural unconscionability requires a showing that the “totality of the circumstances indicate that ‘the individualized circumstances surrounding the contract were so unfair as to cause there to be no voluntary meeting of the minds.’”[639]  “While the employee alleged there was an imbalance of power. the Court of Appeals affirmed the District Court, holding that any imbalance was not sufficient to warrant a finding of unconscionability based on the employee’s “relative sophistication,” ten-year employment history, and familiarity with the program.[640]

§ 1.12.2 Language or Agreement Unconscionable

A party attempting to prevent enforcement of an arbitration provision based on unconscionability has the heavy burden of showing both procedural and substantive unconscionability.  Additional cases that rejected arguments of unconscionability are discussed above in Section 1.4.2. Choice of Law: § 1.4.2: The Validity and Scope of an Arbitration Agreement and Arbitrability.

§ 1.13 Other Procedural Issues in Arbitration

Wash. Nat’l Ins. Co. v. OBEX Grp. LLC, 958 F.3d 126 (2d Cir. (N.Y.) 2020).  Federal court had subject matter jurisdiction over petition to enforce summonses to require non-parties to attend arbitration, based on diversity of citizenship between party enforcing subpoenas and the subpoenaed witnesses, the lack of diversity among the parties to the arbitration was no determinative.

Petitioner, one of the claimants in the underlying arbitration seeking reinsurance from several reinsurance companies, brought an action in district court to enforce subpoenas issued by the arbitration panel to testify and bring documents after respondents failed to appear under Section 7 of the FAA, invoking the court’s diversity jurisdiction.[641]  The respondent-witnesses moved to dismiss the petition, arguing, first, that the court was required to “look through” the petition to the location of the parties to the underlying arbitration, who were not diverse.[642]  The witnesses also argued that the additional parties to the arbitration were indispensable parties to the federal action to enforce the subpoenas and their joinder would destroy diversity.[643]  Addressing the merits of the petition, the witnesses asserted that the subpoenas required impermissible pre-hearing discovery and privileged information, and were duplicative, overbroad, and burdensome.[644]  In the underlying arbitration, after the claimants had served an initial subpoena, with which the witnesses complied and produced documents without a hearing, the claimants served further subpoenas directed to the witnesses to produce additional documents, returnable at a hearing.[645]  In response, the witnesses demanded compensation, which claimants refused.[646]  The witnesses did not appear at the noticed hearing and the panel issued an order granting leave to claimants to pursue judicial intervention to obtain compliance.[647]  The District Court denied the witnesses’ motion to dismiss the petition and then denied their motions for reconsideration and to quash as well.[648]  The witnesses ultimately produced responsive documents without a hearing in the arbitration and the parties to the underlying arbitration subsequently settled their dispute.[649]

Noting that the subsequent events had not mooted the dispute, the court held that the “look through” analysis applies only for those court proceedings predicated on federal question jurisdiction under 28 U.S.C.A. § 1331.  Where diversity jurisdiction is invoked, diversity is to be determined based upon the citizenship of the parties in the action before it.  In this case, the citizenship that was relevant was that of the petitioner who had issued the subpoena and the witnesses resisting the subpoena, as well as any indispensable parties.[650]  The court then held that the other parties to the arbitration proceeding were not indispensable because the District Court could (and did) afford complete relief notwithstanding the absence of the other parties to the arbitration.[651]  As to the argument that subpoenas may not be used to obtain pre-hearing discovery in arbitration, the court noted that the subpoenas were returnable at a noticed hearing that was dispensed with at the request of the witnesses.[652]  Finally, as to the witnesses’ objections to the breadth of the subpoenas, the court held that Section 7 of the FAA did not require the District Court to evaluate the merits of those objections under the Federal Rules of Civil Procedure, without deciding whether the District Courts have the power to do so.[653]

§ 1.14 Confirmation and Vacatur of Arbitration Awards

American Intl. Specialty Lines Ins. Co. v. Allied Capital Corp., 35 N.Y.3d 64 (N.Y. 2020).  Arbitration panel did not exceed its authority by reconsidering an initial determination titled “Partial Final Award” that addressed some of the issues submitted for arbitration, but not all, and without deciding whether the doctrine of functus officio was still valid, as the rule would not apply where reconsidered award did not resolve all of the issues in the arbitration.

Ciena Capital LLC and Allied Capital Corporation settled a federal qui tam action with the government involving allegations of loan origination fraud and subsequently sought payment from their insurer for their defense costs and indemnification for the settlement under two insurance policies issued by American International Specialty Lines Insurance Company (AISLIC).[654]  AISLIC denied coverage and the insureds demanded arbitration under the arbitration clauses contained in the insurance policies, seeking damages for the refusal to defend and indemnify.[655]  AISLIC argued that the amounts claimed were not a “loss” within the meaning the policies, and that the legal invoices submitted by the insureds appeared to be for unrelated legal work not covered by the policies.[656]  The parties moved for summary disposition with the insureds noting that the exact amount owed to them for defense costs would be the subject of a subsequent evidentiary hearing should the panel determine that AISLIC was liable.[657]  The parties and the panel never agreed to a partial summary disposition, but the panel issued a “Partial Final Award” holding that only the insurance policy covering Allied Capital was applicable, the federal settlement did not constitute a covered loss for which indemnification was available, and that Allied Capital was entitled to defense costs, and left the question of damages for defense costs to be resolved after a separate evidentiary hearing.[658]  Prior to the evidentiary hearing, the insureds sought reconsideration of the Partial Final Award, arguing that the panel erred in concluding that the settlement did not constitute a covered loss and AISLIC opposed on both procedural grounds that the panel did not have the authority to reconsider the Partial Final Award under the doctrine of functus officio and on the merits.[659]  The functus officio doctrine recognizes that the authority of arbitrators to take action terminates after issuing a final award.  The panel issued a Corrected Partial Final Award holding that the settlement did constitute a covered loss and rejected AISLIC’s argument that functus officio precluded reconsideration.[660]  The panel conducted an evidentiary hearing on damages and issued a Final Award granting Allied Capital damages for the settlement and defenses, less offsets paid to Ciena.[661]

AISLIC sought vacatur of the Corrected Partial Final Award and Final Award and reinstatement and confirmation of the original Partial Final Award, arguing that the doctrine of functus officio precluded the panel’s reconsideration of the Partial Final Award.  The trial court denied the petition and confirmed the Final Award.[662]  The intermediate Appellate Division reversed, with one justice dissenting, granted AISLIC’s petition and vacated the Corrected Partial Final Award and Final Award, holding that the parties agreed to a determination as to liability which they expected would be final and under the doctrine of functus officio it was improper and in excess of the panel’s authority to reconsider the Partial Final Award.[663]

The Appellate Division granted leave to the insureds to appeal to the Court of Appeals.  On appeal, the Court of Appeals recognized New York’s strong public policy in favor of arbitration and the limitation imposed by CPLR Article 75 on judicial involvement in arbitration.[664]  The Court of Appeals discussed the doctrine of functus officio, which has historically terminated the authority of arbitrators to take additional actions after issuing a final award.[665]  The insureds argued on appeal that the doctrine of functus officio is no longer valid under New York law and was grounded upon anti-arbitration sentiments that are no longer valid under arbitration law.[666]  The Court of Appeals did not decide whether the doctrine still existed under New York law, but held that if functus officio did apply, it would only apply after a final award and not to the issuance of a Partial Final Award, which was not final because it did not resolve the entire arbitration.[667]  The court held that even if parties may agree to bifurcate arbitration proceedings and obtain awards that are final as to some issues but not others, that had not happened here, as AISLIC never consented to bifurcate the proceedings.[668]  “Absent an express, mutual agreement between the parties to the issuance of a partial and final award, the functus officio doctrine would have no application in this case.”[669]  The Court of Appeals therefore rejected the argument that the arbitration panel exceeded its authority by reconsidering the Partial Final Award, reversed the Appellate Division, and confirmed the Final Award.[670]

§ 1.14.1 Jurisdictional Issues

Transcon. Gas Pipe Line Co LLC v. Permanent Easement for 2.59 Acres, No. 19-2738 & 19-3412, 2020 U.S. App. LEXIS 33924 (3d Cir. (Pa.) Oct. 28, 2020).  Court had jurisdiction to affirm vacatur under Section 10(a)(4) of the FAA because the arbitrator exceeded his powers where the parties never agreed to arbitrate.

The underlying litigation involved a condemnation dispute between Transcontinental Gas Pipeline Company (“Transco”), authorized by the federal government to construct a natural gas pipeline, and Regec, which owned properties condemned by Transco to obtain rights-of-way.[671]  Regec, proceeding pro se, made multiple filings attacking the court and “questioning the premise of virtually every aspect of the proceedings.”[672]  The District Court struck Regec’s multiple filings on several occasions and imposed sanctions.  One of the struck filings included a copy of a “foreign final judgment via arbitration award” purportedly issued by an organization called the Healing My People Arbitration Association for approximately fifty million dollars.[673]  Regec then sought to confirm the award, Transco moved to vacate the award, and the District Court granted Transco’s application “primarily on its conclusions that ‘the parties never agreed to arbitrate and so the arbitrator here had no jurisdiction,’ and that ‘Transco received no notice of the ex parte arbitration proceeding or opportunity to be heard, and . . . suffered prejudice as a result.’”[674]  Regec appealed.

On appeal, the Court of Appeals first examined a number of jurisdictional issues, and concluded that the District Court had jurisdiction to consider the motion to vacate on several grounds including diversity jurisdiction, as well as supplemental jurisdiction under 28 U.S.C.A. §1376 (a) based on the original jurisdiction over the underlying claims brought under the Natural Gas Act.  The court also examined whether Transco had properly served its motion to vacate, sent by email and first class mail, under Section 12 of the FAA, which requires service by a marshal.[675]  Such service was not required here because Regec was already a party before the district court.

As to the merits, the appellate court considered the District Court’s conclusions as a ruling under Section 10(a)(4) that the arbitrator has exceeded his powers.  Noting that “proving entitlement to relief under § 10(a)(4) will in the main be a terribly difficult task, for it is not enough to show that the arbitrator ‘committed an error—or even a serious error,’” the court found that the standard was easily satisfied in this case.[676]  Without a valid agreement to arbitrate, the arbitrator had no power to act.  The court also noted in dicta that it remains an open question whether manifest disregard of the law provides grounds for vacatur, in light of a split among the circuits not yet addressed by the Third Circuit, but did not need to reach that issue to affirm the District Court’s decision.[677]

Badgerow v. Walters, 975 F.3d 469 (5th Cir. (La.) 2020).  Applying “look-through” analysis, federal courts have subject matter jurisdiction over a removed petition to vacate an arbitration award where the entire controversy between the parties is one over which they would have had jurisdiction.

A panel of FINRA arbitrators issued an award dismissing the employee’s claims against her employer and three of its principals.[678]  The employee filed a petition in Louisiana state court to vacate that arbitration award, as to the principals only.  The defendants in the state court proceeding removed the action to vacate to federal court, and the employee moved to remand, asserting that the federal court lacked subject matter jurisdiction over the petition to vacate, because the claims she had asserted in the arbitration against the principals were state law tort claims.  The District Court held that it did have subject matter jurisdiction over the petition to vacate and denied remand and ruled on the merits of the petition to vacate, denying the employee’s claims with prejudice.[679]  The employee appealed only the jurisdiction of the federal court over the petition to vacate.

In Vaden v. Discover Bank, the Supreme Court adopted the so-called “look-through” analysis for determining federal jurisdiction in actions to compel arbitration under Section 4 of the FAA.[680]  The Fifth Circuit has held that applications brought under Sections 9, 10, and 11 of the FAA are also to be analyzed under the look-through approach endorsed in Vaden.[681]  Vaden emphasizes a broad view of the underlying controversy, asking “whether the whole controversy between the parties—not just a piece broken off from that controversy—is one over which the federal courts would have jurisdiction.”[682]  Applying the look-through analysis, the Court of Appeals held that the District Court correctly found that the employee’s claim against her employer in the FINRA arbitration was a federal law claim, that all of her claims against the principals and the employer in the arbitration arose from the same common nucleus of operative facts, and that under the principle of supplemental jurisdiction, federal jurisdiction exists over her state law tortious interference and whistleblower claims as well.[683]  Therefore, the District Court properly held that the federal court had jurisdiction over the employee’s state court petition to vacate the award as to the principals, and affirmed the denial of remand to the state court.[684]

Teamsters Local 177 v. UPS, 966 F.3d 245 (3d Cir. (N.J.) 2020).  Court has jurisdiction to confirm an arbitration award where employer has accepted award and agreed to abide by it, even in the absence of a live dispute, as the underlying dispute remains until an award is confirmed.

Union sought confirmation of an award in its favor, and the employer opposed confirmation and filed a cross-motion to dismiss, arguing that there was no subject-matter jurisdiction because the employer agreed to abide by the award and correct any subsequent violations and thus there was no case or controversy as required by Article III of the Constitution.[685]  The District Court denied the union’s motion to confirm and granted the employer’s motion to dismiss on the ground that it lacked subject-matter jurisdiction, acknowledging a circuit split on whether a court may confirm an award absent an active dispute.[686]

On appeal, the Third Circuit agreed with the Second Circuit that FAA not only authorizes, but mandates, that district courts confirm arbitration awards by converting them into enforceable judgments through a summary proceeding, even in the absence of a new dispute[687]  Rejecting the employer’s argument that the union has not suffered and will not suffer an injury where the employer has agreed to abide by the award, the appellate court held that under the FAA, a party’s injuries are only fully remedied by the entry of a confirmation order.[688]  The court reversed and remanded to the District Court with instructions to confirm the award absent statutory grounds for vacatur.[689]S

§ 1.14.2 Standards for Affirmance or Vacatur of Arbitration Awards

EB Safe, LLC v. Hurley, No. 19-38592020, 2020 U.S. App. LEXIS 33066 (2d Cir. (N.Y.) Oct. 20, 2020) (unpub.).  Court properly rejected challenge that the fee award in the parties’ arbitration was in manifest disregard of the law because it was clear that the arbitrators applied a reasonableness standard and provided a colorable justification for the fee award.

EB Safe, LLC (“EB Safe”), majority owner of Fiduciary Network, LLC (“Fiduciary”), commenced an arbitration against Mark Hurley, its former CEO and founder, seeking a declaration that Hurley was precluded from participating as a bidder in a process to sell Fiduciary under the Fiduciary LLC Agreement, and Hurley counterclaimed seeking a declaration regarding the authority of the committee tasked with supervising the sale.[690]  During the arbitration, EB Safe asked the Fiduciary board to investigate Hurley, based on his recent arrest for domestic violence, and then called for his suspension.  Hurley added claims to the arbitration challenging EB Safe’s contractual rights to investigate or suspend him.[691]  The arbitrators issued a unanimous award determining that Hurley was not precluded from participating in the sale process, but finding the EB Safe board was not prohibited from investigating and suspending him.[692]  The arbitrators also determined that Hurley was the prevailing party and awarded him fees under the Fiduciary LLC Agreement, but significantly reduced the amount he had requested.  The District Court confirmed the award on the parties’ competing applications to confirm the parts of the award that favored them, denied EB Safe’s motion to vacate the fee award, and entered judgment for the fees the arbitrators had awarded.[693]  EB Safe appealed, claiming that the award of fees was in manifest disregard of the law and that Hurley had procured the fee award by fraud through perjury during the arbitration.

Applying a de novo standard of review for findings of law and clear error to findings of fact, the Court of Appeals rejected both of EB Safe’s grounds for vacatur.  As to manifest disregard, the court noted that manifest disregard of the law would be grounds for vacatur where “(1) ‘the law that was allegedly ignored was clear, and in fact explicitly applicable to the matter before the arbitrators,’ (2) ‘the law was in fact improperly applied, leading to an erroneous outcome,’ and (3) ‘the arbitrator [knew of the law’s] existence, and its applicability to the problem before him.’”[694]  Granting deference to the arbitrators’ decision, the court found that the arbitrators applied a proper reasonableness standard in determining the amount of the fees awarded and had provided a colorable justification for their award.[695]  The court had no issue rejecting EB Safe’s fraud argument.  The standard for vacatur for fraud requires a showing of (1) fraudulent activity; (2) that could not have been discovered, even with the exercise of due diligence; and (3) materially related to an issue in the arbitration.[696]  Vacatur for perjury should be granted only where it is “abundantly clear” that the award was obtained through perjury.[697]  Here, the court concluded that inconsistencies in Hurley’s testimony had little or no significance in the arbitration and had not been shown to have resulted from intentional conduct, so the District Court’s judgment was affirmed.[698]

Salinas v. McDavid Houston-Niss, L.L.C., No. 20-20003, 2020 U.S. App. LEXIS 32842 (5th Cir. (Tex.) Oct. 13, 2020).  Court properly confirmed arbitration award, including an award of fees where state law permitted prevailing party to recover fees.

Automobile dealership sought to confirm arbitration award against customer who claimed dealership had represented it would insure her vehicle, where the car was totaled in a collision just three days after it was purchased.[699]  After the District Court confirmed the award, and denied the customer’s motion to vacate the award, the customer appealed.[700]

On appeal, the court methodically rejected each of the customer’s arguments, noting that the standard of review of arbitration awards is “exceedingly deferential,” resolving all doubts in favor of arbitration.[701]  As the arbitration provision in the purchase agreement stated that “[e]ach party shall be responsible for its own attorney[’s] . . . fees, unless awarded by the arbitrator under applicable law,” the arbitrator had properly awarded the dealership its attorney’s fees pursuant to the Texas Civil Practice and Remedies Code, which allows the prevailing party to recover reasonable attorney’s fees for claims asserted in contract.[702]  Accordingly, the decision of the District Court was affirmed.

Kohn Law Grp., Inc. v. Jacobs, 825 F. App’x 465 (9th Cir. (Cal.) 2020).  Arbitration award properly confirmed over claims that arbitrator had exceeded her powers and acted in manifest disregard of the law.

Law firm appealed from the District Court’s decision confirming an arbitration award.  On appeal, noting the deferential standard of review of arbitration decisions, the court rejected the law firm’s claims that the award should be vacated in part.  Contrary to the firm’s objections, the arbitrator had not exceeded her authority by interpreting a provision in a different way than what the firm urged.[703]  The Court of Appeals did not question whether manifest disregard of the law would be grounds to vacate an award, but explained that the party challenging an arbitration award must show that the arbitrator understood and correctly stated the law, but proceeded to disregard it.[704]  That burden will not be sustained where the arbitrator thoughtfully examined the law and applied it to the facts, as had occurred in this arbitration.  The court affirmed the judgment confirming the arbitration award.[705]

Floridians for Solar Choice, Inc. v. Paparella, 802 F. App’x 519 (11th Cir. (Fla.) 2020) (per curiam).  Award was properly confirmed, including an award of attorneys’ fees entered after the 30-day deadline in the AAA Rules.

Consultant entered into a contract with Floridians for Solar Choice, Inc. (“FSC”) to obtain signatures to support a proposed ballot initiative for a solar energy amendment to the Florida Constitution.[706]  A dispute arose over whether FSC agreed to pay the consultant for unexpected expenses, and after an arbitration under the AAA Commercial Rules, as their contract provided, the arbitrator ruled in favor of FSC.  The District Court confirmed the award to PSC for damages, interest, costs and fees.[707]

On appeal, the court rejected the consultant’s argument that FSC had committed fraud by changing its theory of damages in its post-hearing brief hearing to increase the amount it sought.[708]  The increase was supported by the record, and the arbitrator was not mislead where he had rejected the same objection on a post-award motion for rehearing.[709]  Nor was there any merit to the consultant’s objection that it was entitled to a three-arbitrator panel under the AAA Rules based on the amount sought, where the parties had stipulated to a single arbitrator and the consultant did not object until FSC moved for an award of attorneys’ fees.[710]  Finally, there was no error in the arbitrator’s belated award of attorneys’ fees.  The initial award found that FSC was entitled to an award of its reasonable attorneys’ fees under a contractual prevailing party provision, and the parties agreed that the amount of the fees would be addressed after the hearing.  At best, the failure to include an express reservation of jurisdiction in the award to address fees was a “clerical error” and the arbitrator was not deprived of authority to decide the issue of fees after the 30-day deadline in the AAA Rules to issue an award after a hearing.[711]  As a matter that can be waived, forfeited or contracted around, that deadline is not jurisdictional, the parties had agreed that the matter of fees would be addressed after the hearing, and the arbitrator did not exceed his authority when he entered an award of attorneys’ fees more than 30 days after the hearing concluded.[712]  Accordingly, the judgment of the district court was affirmed.

Auto Equity Loans of Delaware, LLC v. Baird, 232 A.3d 1293 (Del. 2020) (unpub.).  Questionable legal support or a misreading of the law alone are insufficient to vacate an arbitration award.

Borrowers of high-interest loans invoked arbitration provision and brought three arbitrations against their lender, asserting claims that the loans were usurious under Pennsylvania law, the state where they all resided.[713]  The lender claimed that the law of Delaware – where the loans were made – controlled, and that the loans were not usurious under Delaware law.  The arbitrator applied Pennsylvania law, after acknowledging that he had changed his mind after ruling otherwise in a prior arbitration, declared the loans usurious and awarded damages to the borrowers.  The lender brought an action in Delaware state court to vacate the three awards based on the arbitrator’s manifest disregard of the law.  The Delaware court agreed with the lender, found that the arbitrator’s choice of law analysis was clearly erroneous and the legal errors amounted to a manifest disregard of the law and vacated two of the awards.[714]  On appeal, the intermediate Superior Court reversed, finding that the arbitrator had some basis for applying Pennsylvania law and thus had not manifestly disregarded the law.

The Delaware Supreme Court affirmed the Superior Court decision, even though it found the choice-of-law analysis by the arbitrator and Superior Court “doubtful.”[715]  Noting the deferential standard to be applied when reviewing arbitration awards, the court described the burden of demonstrating that an arbitrator exceeded his powers by manifestly disregarding the law to be a “steep hill to climb,” requiring a showing that “the arbitrator (1) knew of the relevant legal principle, (2) appreciated that this principle controlled the outcome of the disputed issue, and (3) nonetheless willfully flouted the governing law by refusing to apply it.”[716]  The arbitrator’s analysis here may have been dubious, but questionable legal support or a misreading of the law are not sufficient to vacate an arbitration award.[717]  On the basis that by choosing arbitration the lender had accepted the heavy burden required to vacate an arbitration award, the Supreme Court affirmed the Superior Court’s reinstatement of the two vacated awards.[718] 

Cinatl v. Prososki, 307 Neb. 477 (2020).  Courts are required to give extraordinary level of deference to arbitration awards, and have no discretion to deny confirmation under the Uniform Arbitration Act where there is no pending application for vacatur or modification of the award.

Buyer of orthodontics practice brought a claim against the estate of the seller, claiming fraud and seeking rescission of the acquisition.[719]  After a hearing, the arbitrator issued an award in favor of the seller’s estate based largely on the seller’s continued operation of the practice for two years after the acquisition, and the buyer sought vacatur, arguing that the arbitrator exceeded his authority by rendering a decision based upon issues and defenses that had not been raised in the pleadings, including estoppel, laches, statute of limitations and waiver.[720]  The trial court denied the application, holding that the arbitrator had not substantially relied on the equitable defenses cited by the buyer.[721]  In its decision, the court noted that it did not have the written arguments the parties had presented to the arbitrator.  The buyer then filed a motion seeking to vacate the court’s decision and for a new trial and a motion to prepare the record from the arbitration hearing, and the seller’s estate filed an application to confirm the arbitration award.[722]  The trial court rejected the motion for a new trial, holding that the arbitrator’s decision was not necessarily grounded in the defenses of laches or estoppel, and confirmed the arbitration award.[723]  The buyer appealed.[724]

On appeal, after addressing appellate jurisdiction issues, the Supreme Court of Nebraska addressed the grounds set forth in the Nebraska Uniform Arbitration Act (“UAA”) for vacatur, noting the “extraordinary level of deference” given to arbitration awards.[725]  The Supreme Court held that the trial court properly denied vacatur as there was no merit to the argument that the arbitrator decided the matter based on unpleaded defenses and, even if he had, the court did not err in rejecting the application.[726]  Having rejected the application for vacatur, the trial court had no discretion to refuse the application to confirm the award under the UAA, which uses mandatory language.[727]  Accordingly, the judgment confirming the award was affirmed.

§ 1.14.3 Scope of Review of Award

Gherardi v. Citigroup Global Mkts., Inc., 975 F.3d 1232 (11th Cir. (Fla.) 2020).  Judicial review of arbitration award does not permit the court to examine the legal merits of the arbitrators’ award where they arguably construed the contract.

Bank employee obtained a significant award from his former employer.[728]  The employee moved to confirm and the employer moved to vacate the award.  The bank argued that, as an at-will employee, the panel had exceeded their authority by ignoring the employment agreements and awarding the employee damages for wrongful termination.[729]  The District Court determined that the arbitrators “exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made,” within the meaning of Section 10(a)(4) of the FAA,[730] and granted the motion to vacate.

The Court of Appeals reversed.  Noting that § 10(a)(4)‘s language is to be interpreted “narrowly—very narrowly” and that judicial review of arbitration decisions is “among the narrowest known to the law,”[731] the sole question for the court was “whether the arbitrators (even arguably) interpreted the contract, not whether [they] got its meaning right or wrong.”[732]  Because this was not a case where the arbitrators flagrantly defied the terms of the parties’ contract, nor an expansion beyond the arbitrable issues, the court reversed.[733]  The dissent took a different view, reasoning that the arbitrators exceeded their powers by issuing an award that appeared to “flatly contradict” the express language of the employee handbook.[734]

Diverse Enters., Co., L.L.C. v. Beyond Int’l, Inc., No. 19-51121, 2020 U.S. App. LEXIS 29650 (5th Cir. (Tex.) Sept. 17, 2020).  An award of attorneys’ fees at an hourly rate in excess of the actual amount charged did not exceed the arbitration panel’s contractual authority and was not grounds for vacatur.

Distribution agreement contained a broad arbitration clause as well as a provision granting the prevailing party its reasonable attorneys’ fees.[735]  The panel ruled in favor of plaintiffs on virtually every issue and entered an award, including an amount for attorneys’ fees.  Initially, the parties stipulated to an hourly rate for the plaintiffs’ fees that, unbeknownst to the defendant, exceeded the rate the plaintiffs were actually charged.  When plaintiffs moved to confirm the award, defendant argued the arbitrators had exceeded their authority by awarding fees in excess of the amount actually incurred, and that the award contained “an evident material miscalculation of figures or evident material mistake” in violation of Section 11(a) of the FAA.[736]  The District Court confirmed the award, concluding that the panel did not exceed its authority, noting the “exceedingly deferential” standard of review and the lack of limiting language in the parties’ agreement concerning the arbitrator’s authority.[737]

On appeal, the court stressed the limited role of the courts in reviewing arbitration awards, including the requirement to resolve all doubts about the authority of the arbitrators in favor of arbitration.[738]  Based on the broad arbitration provision and the prevailing party clause, the court held that the word “reasonable” did not necessarily limit the authority of the arbitrators to only award the amount of fees that plaintiffs had actually incurred.[739]  Accordingly, the Court of Appeals affirmed the decision confirming the award.[740]

Bay Shore Power Co. v. Oxbow Energy Sols., LLC, 969 F.3d 660 (6th Cir. (Ohio) 2020).  Where parties’ agreement to arbitrate expressly excluded any determination of attorneys’ fees, but a separate contract provision allowed the prevailing party to seek reimbursement of its attorneys’ fees, the court was not precluded from considering an award of fees to prevailing party.

Customer brought an arbitration and obtained an arbitration award against supplier under a long-term supply agreement.[741]  The arbitration provision expressly carved out and excluded attorneys’ fees from the damages and costs that the panel could award, and such fees were to be born equally by the parties.[742]  However, a separate provision in the contract allowed the prevailing party to seek reimbursement of its attorneys’ fees.[743]  The customer filed suit to confirm the award and recover its fees incurred in the arbitration under the prevailing party provision.  The District Court confirmed the award but granted summary judgment to the supplier on the claim for attorneys’ fees, finding that the agreement was ambiguous as to whether an award of fees was available and thus there was no meeting of the minds allowing a prevailing party to recover fees.[744]

On appeal, the Court of Appeals first determined the threshold issue of arbitrability and the extent to which the parties had delegated authority to resolve their disputes to the arbitrator.[745]  Because the parties did not delegate the issue of attorneys’ fees to the arbitrators’ discretion, the motion for attorneys’ fees was not an impermissible attempt to modify the panel’s binding arbitration award, but rather was an effort to vindicate a separate contract right with respect to an issue that was not delegated to the arbitrators.[746]  The provisions of the contract could be reasonably read together to allow the court to consider an award of fees, and the District Court’s ruling to the contrary was accordingly reversed.[747]

Star Dev. Grp., LLC v. Darwin Nat’l Assur. Co., 813 F. App’x 76 (4th Cir. (Md.) 2020).  Where the parties expressly reference state arbitration law in an agreement, that law applies to review of the arbitrator’s decision.

Property owner and construction and development manager brought an action in state court to recover delay damages from the general contractor and its surety they had incurred during the construction of a hotel.[748]  The action was removed to federal court and moved to arbitration as the contract prescribed arbitration of disputes to be governed by the Maryland Uniform Arbitration Act.  The arbitration panel issued an award in favor of the general contractor.[749]  The parties then returned to federal court with competing petitions to confirm and vacate the award.  The District Court confirmed the award, and granted the general contractor its fees for both the costs of the petition to confirm and the defense of the vacatur application.[750]

On appeal, the court first turned to the choice of law, and the District Court’s holding that the proceedings were governed by the Maryland state arbitration law, rather than the FAA.  Reviewing the choice of law de novo, and applying the law of the forum, the Court of Appeals had little difficulty affirming the District Court.  While a generic choice-of-law provision stating generally that a contract is subject to state law is typically insufficient to invoke state arbitration law, here, the choice of law provision expressly provided that the arbitration itself would be subject to the state arbitration statue and the parties’ choice of state law would not be preempted by the FAA.[751]  As such, the state statute would govern the request for vacatur.

In addition to the grounds provided under the FAA, the Maryland statute allows vacatur (1) if the award “manifestly disregards” the law or (2) if the award is “completely irrational,”[752] although the scope of the latter ground has been cast into doubt.[753]  Regardless, under any formulation of the standard, the arguments for vacatur fell far short.[754]  The District Court’s decision was affirmed.

Mid Atl. Capital Corp. v. Bien, 956 F.3d 1182 (10th Cir. (Colo.) 2020).  Court may correct only those miscalculations of figures that appear on the face of an arbitration award and cannot look beyond the face of the award.

FINRA arbitration panel issued an award in favor of investors and against brokerage for damages, attorneys’ fees and required the investors to reassign ownership of certain investments to the brokerage.  The brokerage moved to amend the award based on “an evident material miscalculation of figures,” under Section 11(a) of the FAA, claiming that the award had double counted certain damages.[755]  The District Court denied the motion because the alleged error did not appear on the face of the arbitration award.  However, the District Court amended the award in several respects and both parties appealed.

In the amended final judgment, in addition to ordering the brokerage to pay the investors certain damages, the court ordered that prejudgment interest would accrue on the damages portion of the award and that post-judgment interest would accrue at the federal rate specified in 28 U.S.C.A. § 1961.  Lastly, the court ordered the investors to reassign to the brokerage their ownership interests in the investments, including any distributions that they had received since the arbitration award due to the investments.

On appeal, the court held that § 11(a) embodies a face-of-the-award limitation, based on the FAA’s purpose, history, and structure, bolstered by the narrow and deferential standard of review of arbitration awards.[756]  Here, the brokerage did not satisfy that burden to show an error; even if the panel inadvertently awarded damages on both measures of recovery presented as alternatives methods of calculating damages, that mistake was not evident on the face of the award.[757]  As to the investors’ complaints regarding the assessment of interest and fees, the Court of Appeals held that these issues rested on the panel’s interpretation of the investors’ contract and were within the authority of the panel.[758]  Finally, the District Court had not erred in applying the federal post-judgment interest rate or in requiring the investors to reassign post-award distributions to the brokerage, along with their investments.[759]  Accordingly, the judgment was affirmed.[760]

Interactive Brokers LLC v. Saroop, 969 F.3d 438 (4th Cir. (Va.) 2020).  When considering whether an arbitration panel manifestly disregarded the law, the court’s role is to determine whether the panel did its job, not how well it did its job.

A group of investors opened accounts with an online broker dealer, signing contracts with mandatory arbitration provisions that provided that “[a]ll transactions are subject to rules and policies of relevant markets and clearinghouses, and applicable laws and regulations.”[761]  The investors hired a third-party investment manager, who executed trades of a certain high-risk security through the investors’ portfolio margin accounts with the broker, which executed the investment manager’s strategy.[762]  FINRA Rule 4210(g) prohibits trades through portfolio margin accounts of the high-risk security traded here.[763]  At first, the investment strategy was successful, but after a substantial drop in the market, the value of the investors’ margin accounts fell below the minimum required amounts.  Pursuant to the parties’ contracts, the broker auto-liquidated the investors’ accounts, leaving the investors with an obligation to pay the broker $384,000 for the leverage the broker provided to acquire the now-liquidated investments.[764]

The investors filed an arbitration with FINRA to recover their claimed losses, but they did not assert a claim based on FINRA Rule 4210(g).  The broker counterclaimed for payment of the debt.  The parties did not request a reasoned decision from the panel.  The arbitration panel found for the investors, awarding them the value of their accounts at the time of liquidation, but did not specify which cause of action formed the basis of liability.  The panel dismissed the broker’s counterclaim based on its violation of FINRA Rule 4210(g).[765]  The broker successfully challenged the award in District Court, and the panel issued a modified award with a brief explanation for the award of damages, which it calculated as the value of the account on a date when the account was holding cash, with no open investment positions, and rejecting the broker’s counterclaim based on the violation of Rule 4210(g).[766]  The broker then returned to the District Court seeking vacatur of the modified award, and the District Court granted the broker’s motion to vacate, reasoning that there was a “a manifest disregard of the law because the law is clear that there is no private right of action to enforce FINRA rules.”[767]  The investors appealed.

The Fourth Circuit vacated the District Court’s judgment, finding that it erred by vacating the modified arbitration award.[768]  The court applied its own precedent to find that the manifest disregard standard is met only upon a showing that “(1) the disputed legal principle is clearly defined and is not subject to reasonable debate; and (2) the arbitrator refused to apply the legal principle.”[769]  The Fourth Circuit found that the arbitration panel did not manifestly disregard the law for three reasons.  First, the panel did not base its award on violation of a FINRA Rule for which there is no private right of action, but merely based its rejection of Broker’s counterclaim on such a violation.[770]  Second, because the panel did not specify which cause of action the award was predicated on, the broker was required to show manifest disregard as to all of the causes of action, and the Fourth Circuit found that there was no manifest disregard as to the breach of contract cause of action because the parties’ contracts contained an obligation to comply with FINRA Rules.[771]  Third, the arbitration panel did not manifestly disregard the law by awarding damages based on the value of the accounts on the date selected by the panel because this arguably returned the parties to the status quo before the broker’s alleged wrongful liquidation or high-risk trading, under Connecticut law, which governed the parties’ contracts.[772]

In addressing the dissent, the Fourth Circuit was careful to specify that although the arbitration panel’s application of damages law may not be the best reading of the law, the court’s job is to determine merely whether the panel did its job and not whether it did its job well.[773]  The dissent would have affirmed the District Court’s order on the ground that his was a “rare circumstance” for vacatur because no theory of compensatory damages would have permitted an award based on the specific date selected by the panel with no sufficient explanation as to why or consideration as to what came before or after such date.[774]

Blondeau v. Baltierra, No. 20282, 2020 Conn. LEXIS 203 (Sept. 24, 2020).  Judicial review of an arbitration award based on an unrestricted submission to arbitration is limited to a determination of whether the arbitrator exceeded her powers by issuing an award that fell outside of the scope of the submission or manifestly disregarded the law.

Spouses entered into a premarital agreement that included a French choice of law provision and an agreement to arbitrate any claim for marriage dissolution, to be guided by the laws of Connecticut except that the French Civil Code would apply to any claim regarding the enforceability of the premarital agreement and the determination of what property fell within the scope of the premarital agreement.[775]  The arbitrator issued an opinion designating the parties’ home as joint property, applying Connecticut law to determine how equity in the home would be distributed and to his order for payment of the children’s living expenses as well as expenses of childcare, health insurance, and life insurance.[776]  The wife moved before the arbitrator for articulation/clarification/reargument of the arbitration award, arguing that the arbitrator had failed to apply French law to the division of equity in the property, as the premarital agreement required, which the arbitrator denied.[777]  The husband filed an application in court to confirm the award and the wife filed a motion to vacate, which the trial court granted, holding that the arbitrator exceeded her powers and manifestly disregarded the law by failing to comply with the parties’ arbitration agreement to apply the law of France to the division of property.[778]

The husband appealed, arguing that the trial court lacked subject matter jurisdiction to consider the wife’s motion to vacate on numerous grounds, including because the arbitrator neither exceeded her authority under the arbitration agreement nor manifestly disregarded the law.[779]  The husband also argued that the wife was not aggrieved by some of the arbitrator’s award that she was now seeking to vacate.  The court examined several jurisdictional challenges the parties raised, and concluded that any party to an arbitration agreement can seek vacatur of an arbitration award, regardless of whether the party is aggrieved.[780]  Turning to the merits of the competing applications to vacate and confirm, the court differentiated between restricted and unrestricted submissions to arbitration.  In the former, the breadth of issues delegated to the arbitrator is limited and subject to the court’s de novo review.  In an unrestricted submission, the award is final and binding and not subject to review for errors of fact and law.[781]  Applying the standards for an unrestricted submission, the Supreme Court held that judicial review of the arbitration award is limited to a determination of only whether the arbitrator exceeded her powers by issuing an award that fell outside of the scope of the submission or manifestly disregarded the law.[782]  The Supreme Court held that neither ground for judicial intervention existed in this case, noting that although the wife’s legal interpretation may be correct, it is not “obviously correct based on the explicit requirements of the premarital agreement” as would be required to permit a court to vacate the arbitration award.[783]  Finally, the court held that the wife did not and could not waive the state statutory prohibition against arbitration of issues related to child support and that portion of the award was severable and properly vacated, and in all other respects the decision of the trial court was reversed and the award confirmed.[784]

§ 1.15 Preclusive Effect of Arbitration Awards

Tex. Brine Co., L.L.C. v. Am. Arbitration Ass’n, Inc., 955 F.3d 482 (5th Cir. (La.) 2020).  The FAA provides the exclusive remedy for claims arising from arbitral bias and seeking reimbursement for arbitration fees and expenses, and collateral attacks are not allowed.

In 1975, Texas Brine Company, L.L.C. (“Texas Brine”) entered into a contract to supply brine to a customer.[785]  Many years later, the contract was amended to include an arbitration agreement, and the contract was thereafter assigned to Occidental Chemical Corporation (“Oxy”).  After a dispute arose between Texas Brine and Oxy in 2012, Texas Brine invoked the arbitration clause.  Three arbitrators were selected, and each was required to disclose conflicts of interest and acknowledge a continuing duty to disclose any further conflicts.  Four years later, Texas Brine learned that one of the arbitrators failed to disclose that he was serving as counsel in an unrelated matter opposite Texas Brine’s arbitration attorneys.  Texas Brine also learned that another of the arbitrators was representing the first conflicted arbitrator in a related legal malpractice action.  Neither arbitrator had disclosed this information.  Texas Brine moved to remove both arbitrators, and the AAA denied the motions.  Eventually, the AAA removed one of the arbitrators after he made an offensive comment, Texas Brine renewed its urging to remove the other, and both remaining arbitrators resigned.  Thereafter, Texas Brine filed a motion in Louisiana state court to vacate all rulings that had been issued by the arbitral panel and for reimbursement of fees and expenses paid to the AAA, and the state court granted the motion.

Texas Brine then filed suit against the AAA and the conflicted arbitrators in Louisiana state court, requesting more than $12 million in damages and equitable relief based on claims of fraud in connection with the arbitration proceedings.  The AAA, the only out-of-state defendant, removed the case to federal court before the in-state defendants could be served, a process referred to as “snap removal,” and moved to dismiss.  The District Court denied Texas Brine’s motion to remand based on a challenge to “snap removal,” and granted the motions to dismiss.  Texas Brine filed the instant appeal.[786]

The Fifth Circuit affirmed the refusal to remand, following similar decisions in other circuits.[787]  At the outset, it reasoned that the plain language of 28 U.S.C.A. § 144(a), known as the forum-defendant rule, prohibits removal when an in-state party has been “properly joined and served” as a defendant.[788]  Here, because the in-state arbitrator defendants had not been served before the AAA removed the case, “snap removal” was permissible.[789]

The court also held that the Louisiana action amounted to an impermissible collateral attack on the arbitration award for three reasons.[790]  First, it reasoned that Texas Brine’s allegations of wrongdoing relating to the conflicts of interest resembled the same wrongdoing that led the Louisiana court to vacate the arbitration award in the first state court proceeding.[791]  The court ruled that a proceeding under section 10 of the FAA for vacatur based on evident arbitrator bias is a party’s exclusive remedy for undisclosed conflicts.[792]  Second, section 10 provides the remedy for harm that manifests in the arbitration award.[793]  Texas Brine’s argument that the conflict provided a strategic disadvantage and tainted the arbitration were the same kinds of harm that are remedied through vacatur under section 10.[794]  Third, Texas Brine’s request for reimbursement of the costs and fees paid during arbitration amounted to a collateral attack on the award.  Thus, the Fifth Circuit affirmed the District Court’s decision dismissing the action.[795]

Gulf LNG Energy, LLC v. Eni USA Gas Marketing LLC, No. 22, 2020, 2020 Del. LEXIS 380 (Nov. 17, 2020).  Even where the parties have agreed to a broad arbitration clause, courts have jurisdiction to enjoin arbitration of claims that amount to an effort to collaterally attack a final award the court previously confirmed.

The parties entered into an agreement for the use of a facility to receive, store, regasify and deliver liquefied natural gas (“LNG”) that contained an arbitration clause.[796]  In 2016, defendant Eni USA Gas Marketing LLC (“Eni”) filed the “First Arbitration” with the AAA, and the panel issued a final award finding that the purpose of the parties’ agreement had been substantially frustrated as a result of a radical and unforeseeable change in the domestic natural gas market, declaring that the agreement terminated as of March 1, 2016, and directing Eni to compensate plaintiff Gulf LNG Energy, LLC (“Gulf”) for the value of partial performance under the agreement.[797]  Gulf sued in the Court of Chancery to confirm the award and the court entered judgment confirming the award.

A few months later, in June 2019, Eni filed a Second Arbitration against Gulf seeking declaratory relief and damages, alleging breaches of the agreement and negligent misrepresentation as a result of Gulf’s wrongful conduct in the First Arbitration.[798]  Gulf responded by bringing an action in the Court of Chancery under the FAA and Delaware state law seeking a permanent injunction and a declaratory judgment that Eni was barred from pursuing the Second Arbitration.[799]  The Court of Chancery rejected Eni’s arguments that it did not have jurisdiction to enjoin claims that it determined to be collateral attacks on the Final Award, and enjoined Eni from bringing the negligent misrepresentation claim, but entered judgment for Eni allowing it to pursue the breach of contract claims in the Second Arbitration.[800]  The court reasoned that the panel in the First Arbitration never ruled on the merits of Eni’s contract claim, the claims were not an impermissible attack on the final award and it would be up to the panel in the Second Arbitration to determine whether the contract claim was arbitrable and whether it was precluded.

On appeal to the Delaware Supreme Court, Gulf argued that the Court of Chancery erred in refusing to enjoin all claims in the Second Arbitration as improper attacks on the final award, and Eni cross-appealed, contending that the Court of Chancery lacked jurisdiction to enjoin the Second Arbitration in light of the parties’ broad arbitration clause, and that the enjoined misrepresentation claims were not a collateral attack on the final award in the First Arbitration.[801]  In finding that the court had jurisdiction to enjoin Eni from pursuing the Second Arbitration, the Supreme Court held that Sections 10 and 11 of the FAA provide the exclusive means to vacate, modify or correct a final arbitration award and thus courts can enjoin or dismiss follow-on proceedings instituted in court or arbitration, such as in the instant case, that constitute collateral attacks on a confirmed arbitration award in direct contravention of the FAA.[802]  As the Supreme Court reasoned, “[w]hen the parties agreed that the FAA controls review of an arbitration award, they signed up for a court to apply an exclusive procedure and the restrictions that accompany it.”[803]  Even where the parties have agreed to a broad arbitration clause, the courts retain jurisdiction “to dismiss litigation or enjoin a second round of arbitration to vindicate the policies of finality and limited review of arbitration awards embedded in the FAA . . . ”[804]  The Supreme Court also rejected Eni’s characterization of its claims in the Second Arbitration as independent of the final award in the First Arbitration.  Rather, modifying the judgment of the lower court, the Supreme Court found that Eni was seeking, through the Second Arbitration, to effectively appeal the final award outside of the FAA’s review process.  It determined that the correct analysis was not whether res judicata applied, and the panel had addressed the claim Eni was pursuing, but instead whether Eni’s ultimate objective was to attempt to “rectify” a harm it suffered as a result of the final award in the First Arbitration.[805]  Here, because Eni was attempting to litigate once again whether the agreement was terminated and the remedy for that termination, the Second Arbitration constituted an improper collateral attack on the final award.[806]  The court concluded that because Eni’s claims sought to revisit the core issues addressed in the First Arbitration, and to modify the final award, the claims were a collateral attack on the final award and should be enjoined.[807]  Over a dissent that would have referred all issues of arbitrability to the panel in the Second Arbitration, the Supreme Court affirmed in part, reversed in part and remanded to the Court of Chancery with instructions to enter an injunction preventing Eni from pursuing all claims in the Second Arbitration.[808]

§ 1.16 Mediation

Accent Delight Int’l Ltd. v. Sotheby’s, No. 18-CV-9011 (JMF), 2020 U.S. Dist. LEXIS 230272 (S.D.N.Y. Dec. 8, 2020).  A party seeking discovery of private mediation materials must satisfy a heightened standard of need.

The plaintiffs (working for a Russian billionaire) hired a private art dealer, Yves Bouvier, to help the billionaire assemble a “world-class” art collection.[809]  But Mr. Bouvier, rather than acting as an agent and advisor, “improperly and secretly, acting as a dealer,” allegedly bought some of that “art himself and [resold] . . . it to Plaintiffs at a higher price.”[810] One of those works was Leonardo da Vinci’s Christ as Salvator Mundi.

Plaintiffs claimed that the auction house Sotheby’s was part of this scheme.  In particular they asserted that Sotheby’s had facilitated the sale of Christ as Salvator Mundi from a group of sellers to Mr. Bouvier for $83 million, and that Mr. Bouvier then sold the painting to the plaintiffs for $127.5 million.[811]  Plaintiffs also alleged that Sotheby’s assisted Mr. Bouvier “to justify th[is] fraudulent price.”[812]

Sotheby’s had not waited for these claims before addressing the sale, however.  In 2016 it had sued for a declaratory judgment that it had not breached its obligations to the original seller group in the sale to Mr. Bouvier.  And even before that lawsuit, Sotheby’s had begun a mediation with that original seller group, using former United States District Court Judge Barbara Jones as their mediator.  Sotheby’s, the original sellers, and Judge Jones agreed in writing that the mediation would be “a settlement negotiation deemed private and confidential.”[813]

The mediation was successful and led to a settlement agreement.  In 2020, the plaintiffs suing Mr. Bouvier decided it would be to their advantage to see the settlement agreement and mediation materials in the mediation between Sotheby’s and the original sellers.  They served a subpoena to that effect, which Sotheby’s moved to quash.[814]

The court quashed the subpoena as to the settlement agreement itself, but not the mediation materials requested.  Sotheby’s then objected to the production of various documents, including communications between its counsel and counsel for the original sellers, and communications between it and the mediator.  In reply, the plaintiffs moved to compel production of those documents.[815]

In deciding the motion to compel, the court first addressed whether a party seeking materials from a private mediation must meet the three-part test announced in In re Teligent,[816] for proof of “‘(1) a special need for the confidential material, (2) resulting unfairness from a lack of discovery, and (3) that the need for the evidence outweighs the interest in maintaining confidentiality.’”[817]  In the In re Teligent case, the mediation in question had been court annexed and subject to an order of confidentiality.[818]  Sotheby’s, in contrast, had only a private agreement as to confidentiality.[819]

The only two full decisions to have addressed whether the standard from In re Teligent applied to private mediations had reached different conclusions.[820]  The court in Accent Delight sided with the decision in Dandong, for several reasons.

First, the “the Second Circuit itself has applied the heightened Teligent standard in relation to a confidential private mediation,” albeit in a summary order.[821]  Second, the In re Teligent decision did not depend on the existence of a court order, but “on the rationale that promising confidentiality in mediation promotes the free flow of information that may result in the resolution of a dispute.”[822]  Third, “providing weaker protections to communications during a confidential private mediation than to communications during a court-sponsored mediation would discourage parties from agreeing to engage in private mediation.”[823]  According to the court, “in many cases, particularly more complex cases, private mediation (which is often conducted with a paid, highly experienced mediator who can devote more time to the matter) may be . . . more likely to succeed than[] . . . [court]-sponsored mediation,” and “when successful, [private mediation] lightens the court’s docket.”[824]  (but citing no proof of different success rates between public and private mediation).  Finally, applying a heightened standard would be consistent with decisions in other Circuits, both those that have formally created a general mediation privilege, [825] and those that have simply recognized a heightened standard for disclosure.[826]

Applying the heightened standard from In re Teligent meant that the plaintiffs would lose their motion to compel.  The court emphasized that the plaintiffs had to show more than mere relevance.[827]  While they had established that much, they had failed to show that they could not “obtain the information in [the] withheld documents”—not the documents themselves—from sources other than the mediation.[828]  Because the plaintiffs had access to the actual parties to the mediation, and to those parties’ other documents, they could not meet this requirement.

§ 1.17 International Arbitration

In a series of cases in 2020, decisions from the Second, Fourth, Sixth and Seventh Circuits deepened the split among the Circuits over whether district courts have the authority to compel discovery for use in private foreign arbitrations under 28 U.S.C.A. § 1782(a), which authorizes a district court to order a person within the district to give testimony or provide evidence for use in foreign litigation, either in response to letters rogatory or on application of a person with an interest in the litigation “for use in a proceeding in a foreign or international tribunal.”[829]  In March, the Fourth Circuit held that § 1782 should be interpreted to allow domestic discovery for use in a private arbitration in the United Kingdom.[830]  Six months later, the Seventh Circuit reached the opposite conclusion, rejecting an application for discovery for use in the same underlying private arbitration.[831]  In between these two cases, the Second Circuit examined the same issue and found no basis on which to disturb its prior precedent that no such authority exists.  Finally, the Sixth Circuit joined the Fourth Circuit in holding that § 1782 may be used in aid of private tribunals.  We discuss these cases below.

Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (7th Cir. (Ill.) 2020) (Servotronics I) and Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 214 (4th Cir. (S.C.) 2020) (Servotronics II).  Deepening a split among the Circuits, Seventh Circuit and Fourth Circuit reach different conclusions on whether district courts have authority to compel discovery for use in the same private foreign arbitration.

The underlying dispute in each of Servotronics I and II was a claim for indemnification for losses to a Dreamliner aircraft when its engine caught fire during testing in South Carolina.  Boeing, the aircraft manufacturer, made a claim against Rolls-Royce, which manufactured the engine.  After Boeing and Rolls-Royce settled, Rolls-Royce sought indemnification from Servotronics, which manufactured a valve in the engine.  The contract between Rolls-Royce and Servotronics required arbitration in England under the auspices of the Chartered Institute of Arbiters (“CIArb”).[832]  Servotronics sought discovery in the U.S. from Boeing in two locations, invoking 28 U.S.C. § 1782(a).  In Servotronics I, Servotronics requested subpoenas to obtain testimony from Boeing employees located in South Carolina, which the District Court denied (Servotronics I).[833]  In Servotronics II, Servotronics filed an ex parte application in the federal district court in Illinois asking the court to issue a subpoena to compel Boeing to produce documents located within the district for use in the British arbitration.[834]  The court initially granted the application, and then, after Rolls-Royce moved to intervene and to quash the subpoena, joined belatedly by Boeing, the judge reversed course and quashed the subpoena after concluding that § 1782(a) did not authorize federal courts to provide discovery assistance to private foreign arbitrations.[835]

Section 1782 of Title 28 governs the authority of district courts to provide discovery assistance in litigation in foreign and international tribunals and empowers a district court to order a person within the district to give testimony or provide evidence for use in foreign litigation, either in response to letters rogatory or on application of a person with an interest in the litigation “for use in a proceeding in a foreign or international tribunal.”[836]  As the applications at issue were filed by a party to a pending proceeding, and not by letters rogatory from the arbitral forum, both courts of appeals focused their inquiry on whether the reference to “tribunal” in Section 1782 includes private arbitral panels.[837]

The issue was one of first impression in each of the Fourth and the Seventh Circuit, but had been addressed by several other circuits–with conflicting results.  In older decisions, the Second and Fifth Circuits had concluded that domestic federal courts may provide assistance only to state-sponsored foreign tribunals.[838]  After those decisions, the Supreme Court decided Intel Corp. v. Advanced Micro Devices, Inc.,[839] which held that a U.S. District Court could entertain an application under § 1782 to assist proceedings before the Commission of the European Communities, a public entity.  More recently, the Sixth Circuit concluded that Intel supported a broad statutory interpretation that would allow domestic discovery for use in private foreign arbitrations.[840]  Servotronics argued in both cases that Intel interpreted Section 1782 broadly and flexibly, casting doubt on the continuing validity of the older cases.  Boeing and Rolls-Royce took the opposite view, arguing that the potentially broad discovery available under Section 1782(a) would conflict with the narrow scope of discovery available in arbitrations under the FAA.[841]

Ultimately, the Fourth Circuit concluded that the CIArb was a foreign or international tribunal within the meaning of Section1782(a), because the UK law provides regulation and oversight of arbitrations such that the arbitration is the product of government-conferred authority to a potentially greater extent than in the U.S.[842]  The Fourth Circuit also minimized Boeing’s concerns of conflict with the FAA, reasoning that the role of the district court is to function as a “surrogate” for the foreign tribunal, exercising its discretion to limit the evidence requested and to be received.[843]  In fact, the court in Servotronics I questioned whether it could even consider the impact of Section 1782 on the FAA, interpreting Intel to reject any suggestion that an applicant “must show that United States law would allow discovery in domestic litigation analogous to the foreign proceeding.”[844]  The court refused, however, to direct that Servotronics’ request be granted, and instead reversed and remanded to the district court to determine whether to issue the requested subpoenas, in the exercise of its discretion.

Six months later, the Seventh Circuit diverged from the reasoning of the Fourth Circuit and came to the opposite conclusion in Servotronics II.  In the Seventh Circuit’s view, both common and legal parlance were not helpful, as the phrase “foreign or international tribunals” could be plausibly interpreted to support the position of either side.[845]  However, “context” provided a different outcome: Section 1782 uses the phrase “foreign or international tribunal” three times, and harmonizing those uses “suggests that a more limited reading of § 1782(a) is probably the correct one: a ‘foreign tribunal’ in this context means a governmental, administrative, or quasi-governmental tribunal operating pursuant to the foreign country’s ‘practice and procedure.’”[846]  Buttressing that conclusion, the court also pointed out that the narrow reading would avoid conflict with the FAA.[847]  Finally, the Seventh Circuit rejected Servotronics’ argument that the Supreme Court in Intel adopted a broader view of “arbitral tribunals,” concluding that nothing signaled a view that arbitral tribunals should be read to include private arbitral tribunals.[848]

Hanwei Guo v. Deutsche Bank Sec., 965 F.3d 96 (2d Cir. (N.Y.) 2020).  Based largely upon its own precedent, Second Circuit holds that Section 1782(a) did not authorize permit discovery for use in private international commercial arbitrations.

The petitioner (Hanwei Guo) had invested in companies through a series of transactions that he asserted were misleading, extortionate, and fraudulent[849].  Eventually, following a series of mergers, one of the investments became part of a global music streaming services company.  Guo initiated arbitration against a number of entities before the China International Economic and Trade Arbitration Commission (“CIETAC”), and sought discovery from four investment banks related to their work as underwriters for the streaming services company.  The respondents in the arbitration intervened to oppose the request.  The District Court denied Guo’s application based on its conclusions that (1) it was bound by its precedent in Nat’l Broad. Co. v. Bear Stearns & Co. holding § 1782 does not apply to private foreign arbitrations,[850] which remained good law in the wake of the Supreme Court’s decision in Intel; and (2) CIETAC was “closer to a private arbitral body than it is to a ‘governmental . . . tribunal[]’ or ‘other state-sponsored adjudicatory bod[y].’”[851]

The Second Circuit agreed.  Contrary to Guo’s insistence, it reasoned that NBC has not been overruled or otherwise undermined by the Supreme Court’s decision in Intel, and therefore remains good law.[852]  Just as the Seventh Circuit would conclude in Servotronics II, the Second Circuit decided that Intel considered only whether the Directorate General-Competition, a public entity, qualified as a tribunal within § 1782(a) and had not addressed whether foreign private arbitral bodies would also qualify as tribunals under the statute.  Moreover, the language that Guo, like Servotronics, relied on in Intel to support its argument is a passing reference in dicta, consisting of a parenthetical quotation of a footnote in an article by a law professor.[853]  The court doubted that “such a fleeting reference in dicta could ever sufficiently undermine a prior opinion of this Court as to deprive it of precedential force,” noting that even the Sixth Circuit, in reaching an outcome contrary to NBC, refused to ascribe such significance to the language in question. [854]

The court then turned to consider whether CIETAC was a private tribunal, and held that it was “clear” that CIETAC arbitrations are private international commercial arbitrations falling outside the ambit of § 1782, in large part because they derive their jurisdiction exclusively from the agreement of the parties.[855]

Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710 (6th Cir. (Tenn.) 2019).  A privately contracted-for commercial arbitration proceeding is a “foreign or international tribunal” as used in 28 U.S.C.A. § 1782(a), allowing an interested party to seek domestic discovery in the U.S.

Abdul Latif Jameel Transportation Company Limited (“ALJ”), a Saudi corporation, was involved in a foreign private commercial arbitration against FedEx Corporation (“FedEx”) and sought to subpoena FedEx documents and to depose one of its representatives in the United States.[856]  ALJ filed an application in the United States District Court for the Western District of Tennessee invoking 28 U.S.C.A. § 1782(a).[857]  The District Court denied the application, holding that the phrase “foreign or international tribunal” did not encompass the privately contracted-for commercial arbitration, which operated under the rules of the Dubai International Financial Centre-London Court of International Arbitration (“DIFC-LCIA”).  ALJ appealed, arguing that the phrase “foreign or international tribunal” does include the arbitration at issue and that its discovery request should be granted.[858]

The Sixth Circuit reversed and remanded for the district court to determine whether the application for discovery should be granted.[859]  The heart of the dispute, it found, centered not on whether the DIFC-LCIA arbitration was “foreign or international” in nature, but whether it involved a “tribunal.”[860]  The court reasoned that the arbitration panel here fit the meaning of a “tribunal” as used in § 1782(a), based on the statutory text, the meaning of such text based on dictionary definitions and common usage, and the statutory context and history of the provision.[861]  After finding that several legal and common dictionaries define “tribunal” broadly to include private arbitration but left room for interpretation, the court turned to common usage of the word in legal writing.[862]  According to the court, American judges and lawyers have long used and understood “tribunal” to include privately contracted-for arbitral bodies with the power to bind contracting parties.[863]  Lastly, Congress did not proscribe private arbitrations from the meaning of “tribunal” in its other usage of the word in the same legislative chapter that contains § 1782(a).[864]  Thus, the statutory text of § 1782(a) was found to include privately contracted-for commercial arbitration.[865]

Further, the Sixth Circuit interpreted the Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc. as determining that § 1782(a) provides for discovery in non-judicial proceedings.[866]  The Sixth Circuit based its interpretation on the Supreme Court’s conclusion that an executive and administrative body of the European Union was a tribunal under § 1782(a).[867]  It also pointed to the Supreme Court’s note that this provision was amended to replace “any judicial proceeding in any court in a foreign country” with the current language “in a proceeding in a foreign or international tribunal,” which it interpreted as Congress providing the possibility of U.S. judicial assistance in administrative and quasi-judicial proceedings.[868]  Recognizing that its decision conflicts with decisions of the Fifth[869] and Second[870] Circuits, it was “unpersuaded” by the reasoning of those courts.  Rather it supported its conclusion with an analysis of legislative history as well as policy and efficacy considerations.  Having found that the District Court “may” order discovery, the court remanded to the District Court to consider what discovery was appropriate under the Intel factors.[871]

§ 1.17.1 Review of Awards in International Arbitration

Vantage Deepwater Co. v. Petrobras Am., Inc., 966 F.3d 361 (5th Cir. (Tex.) 2020).  Public policy exception to confirmation of arbitral award did not apply where a party claimed that the underlying contract was procured by bribery, rather than that the award itself, or where enforcement of the award itself would not violate public policy.

Oil and gas companies entered into a contract to provide offshore drilling services.  A Brazilian investigation subsequently revealed that the contractor’s shareholders had paid bribes to Petrobras to procure the contracts, as part of a larger scheme.[872]  The project was subject to a series of contracts, the last of which was signed after an initial media article reporting allegations of bribery, and provided for arbitration of any disputes under the ICDR of the AAA with a purported waiver of any rights of “any form of appeal, review or recourse to any court or judicial authority.”[873]  Petrobras terminated the contract, and the parties proceeded to arbitration.  After the hearings began, Petrobras moved to disqualify one of the three arbitrators, claiming he appeared partial, had incorrectly summarized evidence, and had dozed off; the AAA investigated and denied the motion.[874]  The hearings resumed and the panel issued an award against Petrobras, with one of the arbitrators dissenting and claiming unfairness in the proceedings that denied Petrobras fundamental fairness and due process.[875]

The parties filed competing motions to confirm and to vacate and Petrobras sought leave to depose the dissenting arbitrator and, two months later, requested leave to serve a subpoena on the AAA.[876]  Petrobras claimed that the award violated public policy because the underlying contracts had been procured through bribery and that the panel had failed to issue a reasoned award, required by the contract, as to some of the claims.[877]  The District Court denied the discovery and granted the petition to confirm the award and entered judgment on the award, relying on the arbitrators’ findings that, first, Petrobras had not proved bribery and, second, Petrobras had knowingly ratified the contract.  Accepting those fact findings, the District Court rejected the public policy challenge because Petrobras had not met its burden to show that the tribunal’s contract interpretation violated public policy.

Petrobras appealed.  The confirmation proceedings were subject to Sections 301-307 of the FAA, which govern nondomestic awards subject to the Inter-American Convention on International Commercial Arbitration of January 30, 1975 (the “Panama Convention”).[878]  The Court of Appeals first addressed the validity of the contractual waiver of review or appeal.[879]  Noting that waivers of all rights of federal court review are not enforceable, the court concluded that it did not need to decide the validity of the waiver if the District Court judgment could be affirmed on the merits.[880]

Turning then to the merits, the Panama Convention allows a country to refuse to recognize or execute an arbitration decision under the Convention if “the recognition or execution of the decision would be contrary to the public policy” of that country.[881]  Petrobras renewed its public policy argument that the contract had been procured through bribery.  Under the New York Convention, the tribunal’s rulings are entitled to deference; that standard applied here, where Petrobras’ claim was that the underlying contract violated public policy, as opposed to where the award itself, or enforcing the award, would violate public policy.[882]  While Petrobras claimed that the panel had applied a flawed definition of ratification on which the District Court relied in rejecting the public policy defense, that claim is that the panel made a mistake of fact or law, which would not provide grounds to refuse to confirm the award.[883]

Finally, the court examined the challenge to the award based on the refusal to allow discovery of the dissenting arbitrator or the AAA, claimed to be necessary to resolve the claim the award should be vacated based on evident partiality and misconduct.[884]  The court held that the District Court did not abuse its discretion in concluding that such discovery requests were barred by the rules of the forum, which were incorporated in the parties’ agreement to arbitrate.[885]

The review of the award itself was governed by the FAA, the law of the place where the award was made.[886]  Examining each of the bases asserted for vacatur, including the claim that the award against the guarantor was not reasoned, purportedly in violation of the parties’ agreement, the court upheld and affirmed the District Court’s decision that vacatur was not warranted.[887]

EGI-VSR, LLC v. Coderch, 963 F.3d 1112 (11th Cir. (Fla.) 2020).  Award properly confirmed under FAA and principles of international comity, with modifications to the calculations as permitted under the FAA.

Shareholder appealed from District Court judgment confirming an award of a Chilean arbitrator enforcing a shareholders’ agreement and requiring the controlling shareholders to buy back shares from EGI-VSR, LLC (“EGI”) under a contractual put provision.[888]  The controlling shareholder challenged service of the confirmation proceeding in Brazil under Brazilian law, and claimed the relief the District Court ordered had improperly modified the award.[889]

Service of the confirmation proceeding had been made under the Inter-American Convention on Letters Rogatory (“Convention on Letters Rogatory”).[890]  After several unsuccessful attempts to effect service, EGI obtained authority from a Brazilian court to make alternate service on the doorman at the shareholder’s residence.[891]  On appeal, the Court of Appeals affirmed the determination of the District Court that it would be improper for an American court to review a decision by the Brazilian court that service of process was carried out in accordance with Brazilian law, under principles of international comity.[892]  Turning to the merits of the decision to confirm the award, the court sustained in part the controlling shareholder’s objection that the District Court had erred when calculating the conversion of the price of EGI’s stock into U.S. dollars.  Applying U.S. law, based upon the invocation of the FAA, the Court of Appeals held that the proper day to use to calculate the share price was the day the cause of action arose under the FAA, which was the day the award was issued.[893]  Additionally, as the award was for specific performance directing the purchase of EGI’s shares, the court vacated the District Court’s order and remanded with instructions to recalculate the purchase price and require the parties to perform their obligations under the shareholders’ agreement by paying the purchase price and tendering the shares.[894]

Process & Indus. Devs. v. Fed. Republic of Nig., 962 F.3d 576 (D.C. Cir. 2020).  District court erred in requiring Nigeria to brief the merits of a petition to confirm an arbitration award before addressing immunity under the collateral order doctrine where underlying claim of immunity was colorable.

A dispute between the Federal Republic of Nigeria and Process and Industrial Developments Ltd. (“P&ID”) arising out of the construction of a natural gas processing facility in the Federal Republic of Nigeria was arbitrated under the parties’ contract in London.[895]  Nigeria unsuccessfully challenged the liability determination in the United Kingdom courts, and then in the Nigerian courts, which set it aside as inconsistent with Nigerian law.[896]  P&ID, which did not appear in the Nigerian proceeding, asked the arbitral panel to hold that the Nigerian court had no jurisdiction, and the panel agreed, considered damages and entered an award in favor of P&ID.  P&ID then filed a petition to confirm the award in the U.S. under the FAA, and Nigeria responded by invoking the Foreign Sovereign Immunities Act (“FSIA”).[897]  The District Court granted P&ID’s request and ordered Nigeria to present all its defenses—both jurisdictional and merits—in a single response to the petition to confirm.[898]  Nigeria appealed the briefing order, and P&ID then moved to dismiss the appeal for lack of jurisdiction.

On appeal, the court first determined that it had jurisdiction to review what P&ID characterizes as nothing more than a briefing order under the collateral order doctrine.  Because the District Court conclusively rejected Nigeria’s assertion of immunity from having to defend the merits in this case by requiring consolidated briefing and Nigeria’s immunity defense is at least colorable enough to support appellate jurisdiction.[899]  While the FAA seeks to streamline confirmation proceedings, “it does not prevent a foreign sovereign from seeking what the FSIA guarantees—resolution of an immunity assertion before the sovereign can be compelled to defend the merits.”[900]  Because immunity would afford complete protection from suit, the colorable assertion of immunity must be resolved before a foreign sovereign may be required to address the merits.[901]  Accordingly, the Court of Appeals denied the motion to dismiss the appeal and reversed the decision of the decision of the District Court.[902]

Earth Sci. Tech, Inc. v. Impact UA, Inc., 809 F. App’x 600 (11th Cir. (Fla.) 2020) (per curiam).  By incorporating United Nations Commission on International Trade Law (UNCITRAL) rules into their arbitration agreement, the parties agreed to submit the issue of the arbitrability of their dispute to the arbitrators because UNCITRAL Rule 23 provides that the arbitral tribunal has the power to rule on its own jurisdiction.

An exclusive distribution agreement to provide CBD oil for distribution provided for international arbitration through JAMS International using UNCITRAL rules in New York, New York.[903]  After a dispute arose, the supplier filed an arbitration demand, and distributor filed a state court action, which was removed to federal court, and stayed pending arbitration.  The parties disputed whether tort claims for conversion and tortious interference were within the scope of their broad arbitration clause.  The tribunal held the tort claims were arbitrable and proceeded, ultimately entering an award in favor of the supplier.  Back in court, the distributor sought to vacate the award claiming, among other things, that the tort claims were beyond the scope of the agreement to arbitrate.  The District Court granted the supplier’s motion to confirm the award.

On appeal, the court rejected the distributor’s challenge under Section 10(a)(4) of the FAA, because the arbitration is governed by the Panama Convention, which does not recognize § 10(a)(4) as a basis for refusing to enforce an arbitration award.  Under Section 202 of the FAA,[904] arbitration awards arising out of commercial relationships that are not purely domestic are subject to the provisions of the applicable convention.[905]  Section 302 of the FAA incorporates § 207, and requires federal courts to confirm an arbitration award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the applicable convention.[906]  Article 5 of the Panama Convention provides limited exceptions to object to confirmation of an arbitration award, and none of those grounds were applicable here.[907]  As to the complaints about arbitrability, the parties agreed to submit the issue of arbitrability to the arbitrators by incorporation of the UNCITRAL rules, which empower tribunals to rule on their own jurisdiction.[908]  Dismissing the distributor’s other complaints about the award as outside the scope of deferential permissible review of arbitration awards, the court affirmed the District Court’s judgment.[909]

OJSC Ukrnafta v. Carpatsky Petro. Corp., No. 19-20011, 2020 U.S. App. LEXIS 14264 (5th Cir. (Tex.) 2020).  Federal court has jurisdiction to review international arbitration award, which is not subject to vacatur on any of the multiple challenges presented to contract formation, damages computation, and the preclusive effect of award.

Carpatsky Petroleum Corporation (“Carpatsky”), at the time a Texas company, signed a joint activity agreement (JAA) with Ukrnafta, Ukraine’s recently privatized state oil-and-gas enterprise, to develop a gas condensate field in Ukraine.[910]  Ukrainian law governed the JAA, and any disputes would be resolved by an international commercial arbitration tribunal in Kiev.  Thereafter, Carpatsky merged into a newly formed Delaware entity with the same name.  A few years later, the parties amended the JAA to provide for arbitration in Stockholm; Carpatsky signed with the seal from its Texas predecessor.[911]

After disputes arose, Carpatsky filed an arbitration in Stockholm, describing itself as a Delaware corporation.[912]  After initially answering the arbitration, Ukrnafta challenged jurisdiction, claiming that there was no agreement to arbitrate based on the change in Carpatsky entities, and filed suit in Texas state court, asserting claims of negligent misrepresentation, fraud, misappropriation of trade secrets, tortious interference with existing contracts, and unjust enrichment.  Carpatsky removed the case to federal court, asserting that the suit related to an arbitration agreement falling under the New York Convention.[913]  The federal court denied Ukrnafta’s attempt to seek injunctive relief and to remand the case to state court.  In the meantime, the arbitration panel rejected the challenge to its jurisdiction.  Ukrnafta then sued Carpatsky in Sweden and Ukraine, and obtained a ruling in Ukraine that the agreements executed after the change in Carpatsky entities were void, including the agreement to arbitrate in Stockholm.  Undeterred, the Stockholm tribunal proceeded, entered an award in favor of Carpatsky, and held that the Carpatsky corporation formed in Delaware was a party to the JAA, as the successor to the original Texas company under Delaware law.[914]  Carpatsky returned to the federal courts to confirm the award.  After the Swedish courts ruled against Ukrnafta, the Texas federal court confirmed the arbitration award, rejecting numerous challenges, and granted summary judgment dismissing Ukrnafta’s state law claims on preclusion grounds.[915]  Ukrnafta appealed both rulings.

On appeal, first considering Ukrnafta’s jurisdictional challenge, the Fifth Circuit reaffirmed the rule that federal jurisdiction exists whenever removal is based upon a “nonfrivolous connection” to an international arbitration agreement.[916]  Section 205 of the FAA is “one of the broadest removal provisions . . . in the statute books,” and thus removal may be proper even where it turns out that there is no arbitration agreement.[917]

Next, the court methodically dismissed each of the challenges to the arbitration award, deciding that Sweden, the place of the arbitration, had primary jurisdiction, despite the Ukraine choice of law provision, which does not overcome the “strong presumption that designating the place of the arbitration also designates the law under which the award is made.”[918]  With only secondary jurisdiction, the United States courts can deny enforcement of an award only on a ground set forth in Article V of the New York Convention.[919]

None of the challenges by Ukrnafta provided valid grounds to deny enforcement.  Any challenge to jurisdiction of the tribunal was both without merit, as well as waived by Ukrnafta’s submission to the jurisdiction of the tribunal.[920]  As to the merits of the award, the tribunal’s ruling that the JAA’s limitation of liability was unenforceable did not offend basic notions of due process or exceed the terms of the submission to the tribunal.[921]  Arguments based on this determination, as well as the panel’s other conclusions, amounted to impermissible challenges to the tribunal’s decision on the merits of the dispute.[922]

Lastly, the court considered the argument that recognition of the awards would violate principles of comity because Ukrainian law would not enforce a contract that country’s courts have deemed illegal.[923]  However, American policy favors arbitration, which “applies with special force in the field of international commerce.” [924]  Giving a party’s home court veto power over a recognition action in the U.S. would undermine that policy.[925]  Accordingly, the judgment was affirmed.

Soaring Wind Energy, L.L.C. v. Catic USA Inc., 946 F.3d 742 (5th Cir. (Tex.) 2020).  Where domestic arbitration involve claims of breach by a foreign entity on foreign soil and where the award is rendered against foreign entities, U.S. Federal Courts have jurisdiction over applications to confirm and vacate awards, which awards may be afforded high deference based on agreement between the parties and general principles favoring arbitration.

Catic USA (“Catic”) and Tang Energy Group (“Tang”) formed Soaring Wind Energy, LLC (“Soaring Wind”) and entered into an agreement providing for arbitration of disputes.[926]  The agreement provided that each member that is a party to the dispute could name its own arbitrator, and those selected as arbitrators would themselves choose an additional arbitrator (or two additional arbitrators if necessary to achieve an odd number of arbitrators).[927]  The panel would have the authority to grant injunctive relief and enforce specific performance and to issue a final, court-enforceable decision, though it would lack authority to award “special, exemplary, punitive or consequential damages.”[928]  A dispute arose over financing for Soaring Wind and Tang demanded arbitration against several members, including Catic, along with Catic’s Chinese affiliates, who had not signed the agreement.  Seven arbitrators were selected by the parties, other than the Catic affiliates who refused to participate, and the seven arbitrators chose two additional arbitrators.  Catic then sued preemptively in federal court, claiming the panel was improperly constituted, arguing both that fundamental fairness and the parties’ agreement required each side of the dispute to select an arbitrator, who would then select a third and final arbitrator.[929]  The District Court dismissed those claims for lack of subject matter jurisdiction under the FAA.  Catic made similar arguments before the arbitration panel, which determined for itself that it was constituted according to the agreement’s unambiguous terms.[930]  The panel conducted hearings in Texas and awarded Soaring Wind $62.9 million in damages against Catic (and its Chinese affiliates) and ordered that Catic be divested of its shares in Soaring Wind without compensation.[931]  The parties filed competing applications in federal court to vacate and confirm, and the court bifurcated the case against the Chinese affiliates upon Tang’s application and entered judgment confirming the award against Catic.

The Court of Appeals first turned to subject matter jurisdiction, sua sponte, asking whether the divestiture of Catic’s membership destroyed diversity jurisdiction over the action and whether jurisdiction existed under the New York Convention.[932]  As to the latter inquiry, the court examined whether there was sufficient “foreign character” to the parties’ agreement, finding Catic’s status as an affiliate of a Chinese corporate empire beside the point.[933]  This appeared to be a close question: the agreement itself made no reference to China or any Chinese citizen, place or entity.[934]  Going beyond the face of the agreement, the court found there was a sufficient relation to China to establish federal jurisdiction under the New York Convention because the claimed breach was triggered by the actions of a Chinese entity on foreign soil and the award was against these Chinese affiliates.[935]

As to the merits of the arguments for confirmation or vacatur, the court granted the requisite deference to the panel’s findings, and held that the panel was constituted in accordance with the parties’ agreement.[936]  Catic claimed that the arbitrators exceeded their authority by awarding lost profits and divestiture of its interest, because those damages were effectively punitive damages, which were precluded by the parties’ agreement.[937]  But the agreement here permitted the arbitrators to award injunctive relief.[938]  While conceding that Catic’s theory that divestment effectively doubled the damages and was therefore “substantively indistinguishable” from punitive damages was “well taken,” the broad scope of authority given to the panel, combined with the deference to arbitration, still warranted affirmance of the District Court’s decision confirming the award.[939]


[1] See § 1.3, infra.

[2] 9 U.S.C.A. § 1 (West 2020).

[3] Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113 (2001).

[4] See § 1.2.2.

[5] Countrywide Fin. Corp., 369 N.L.R.B. No. 12, at *2-4 (Jan. 24, 2020).

[6] Id.

[7] Boeing Co., 365 N.L.R.B. No. 154 (2017).

[8] Countrywide Fin. Corp., 369 N.L.R.B. No. 12, at *4 (Jan. 24, 2020).

[9] Id.

[10] Id. at *3 (citing Prime Healthcare Paradise Valley, LLC, 368 N.L.R.B. 10, at *6-7.).

[11] Id. at *4 (citing Everglades College, Inc. d/b/a Keiser University, 368 N.L.R.B. No. 123, at *3-4).

[12] Id.

[13] Dept. of Justice, Office of the Senior Counsel for Alternative Dispute Resolution, Policy on the Use of Alternative Dispute Resolution, and Case Identification Criteria for Alternative Dispute Resolution, 61 Fed. Reg. 36895 (July 15, 1996).

[14] Administrative Dispute Resolution Act of 1990, Pub- L. No. 101-551, 104 Stat. 2736-48.

[15] U.S. Dept. of Justice, Antitrust Division, Updated Guidance Regarding the Use of Arbitration and Case Selection Criteria (Nov. 12, 2020), https://www.justice.gov/atr/page/file/1336516/download.

[16] Id. at 1.

[17] Id.

[18] Compare 61 Fed. Reg. 36895 at 36896 and Updated Guidance at 1-2.

[19] Updated Guidance at 2-3.

[20] See Updated Guidance at 1-2.

[21] Id. at 3.

[22] 61 Fed. Reg. 36895 at 36898.

[23] Id.

[24] Updated Guidance at 3 (citing 5 U.S.C.A. § 575(a) (West 2020)).

[25] Id. at 4.

[26] Compare 5 U.S.C.A. § 573(a) and Updated Guidance at 4.

[27] See Uniform Law Commission, Arbitration Act (2000), available at https://www.uniformlaws.org/viewdocument/final-act-1?CommunityKey=a0ad71d6-085f-4648-857a-e9e893ae2736&tab=librarydocuments (last visited Feb. 7, 2021).

[28] Id. See also Thomas E. Carbonneau, The Law and Practice of Arbitration 209 (5th ed. 2014).

[29]  See Uniform Law Commission, Arbitration Act (2000), supra n.27.

[30] Id.

[31] See Uniform Law Commission, Arbitration Act (2000) Enactment Map, available at https://www.uniformlaws.org/committees/community-home?communitykey=a0ad71d6-085f-4648-857a-e9e893ae2736&tab=groupdetails (last visited Feb. 7, 2021).

[32] See Commonwealth of Massachusetts (191th Gen. Ct.), Bill H. 49 (Mass. 2019), https://malegislature.gov/Bills/191/H59 (last visited Feb. 7, 2021).

[33] See Vermont General Assembly, Bill H.288 (Vt. 2019), https://legislature.vermont.gov/bill/status/2020/H.288 (last visited Dec. 20, 2020).

[34] See Uniform Law Commission, Uniform Mediation Act, available at https://www.uniformlaws.org/committees/community-home?CommunityKey=45565a5f-0c57-4bba-bbab-fc7de9a59110 (last visited Feb. 7, 2021).

[35] The Model Law on International Commercial Conciliation is a 2002 product of the United Nations Commission on International Trade Law (“UNCITRAL”).  The 2003 amendment to the UMA provides that “unless there is an agreement otherwise, the UNCITRAL Model Act applies to any mediation that is an ‘international commercial mediation.’” Given the announcement and initial signature of the Singapore Convention on mediation, see infra § 1.2.7, it will be interesting to see if the UMA is amended to accommodate this development.

[36] See Uniform Law Commission, supra n.27.

[37] Id. See also Commonwealth of Massachusetts (190th Gen. Ct.), Bill H. 60, https://malegislature.gov/Bills/191/H60 (last visited Feb. 7, 2021).

[38] The Singapore Convention is another product of UNCITRAL.  The text is available at https://www.uncitral.org/pdf/english/commissionsessions/51st-session/Final_Edited_version_in_English_28-8-2018.pdf (last visited Feb. 7, 2021).

[39] The initial signatory States were: Afghanistan, Armenia, Belarus, Benin, Brunei Darussalam, Chad, Chile, China, Colombia, Congo, Democratic Republic of the Congo, Ecuador, Eswatini, Fiji. Gabon, Georgia, Grenada, Guinea-Bissau, Haiti, Honduras, India, Islamic Republic of Iran, Israel, Jamaica, Jordan, Kazakhstan, The Republic of Korea, Lao People’s Democratic Republic, Malaysia, Maldives, Mauritius, Montenegro, Nigeria, North Macedonia, Palau, Paraguay, Philippines, Qatar, Samoa, Saudi Arabia, Serbia, Sierra Leone, Singapore, Sri Lanka, Timor-Leste, Turkey, Uganda, Ukraine, United States of America, Uruguay, Bolivarian Republic of Venezuela.

[40] See United Nations, United Nations Commission on International Trade Law, available at https://uncitral.un.org/en/texts/mediation/conventions/international_settlement_agreements/status (last visited Feb. 7, 2021).

[41] See Carolyn G. Nussbaum and Christopher M. Mason, Alternative Dispute Resolution Law § 1.2.7, 2019 ANNUAL REVIEW OF RECENT DEVELOPMENTS IN BUSINESS AND CORPORATE LITIGATION (ABA 2020) (“2019 ADR Annual Review”).

[42] Id. at art. 1(1).

[43] Id. at arts. 1(2), 1(3).

[44] Id. at art. 2(3).

[45] Id. at art. 4(1)(a)-(b).

[46] Id. at art. 4(1)(b)(i)-(ii).

[47] Id. at art. 4(5).

[48] Id. at arts. 5(1) and 5(2).

[49] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517.

[50] See 2019 ADR Annual Review, supra n.41 at § 1.2.8.

[51] Chamber of Commerce of the United States v. Becerra, 438 F. Supp. 3d 1078 (E.D. Cal. 2020).

[52] See California Legislative Information, text of Assembly Bill No. 51, available at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB51 (last visited Feb. 7, 2021).

[53] See A.B.51, 2019-2020, Reg. Sess., § 3 (Cal. 2019).

[54] Id.

[55] Id.

[56] Id. at 1096.

[57] Id. at 1099.

[58] See International Chamber of Commerce, 2021 Arbitration Rules, available at https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/rules-of-arbitration-2021/#article_b5 (last visited Feb. 7, 2021).

[59] Id.

[60] Id. art. 26(1).

[61] Id.

[62] Id. at art. 7(5).

[63] Id.; see also International Chamber of Commerce, ICC Arbitration Rules 2017 & 2021 – Compared Version, available at https://iccwbo.org/content/uploads/sites/3/2020/12/icc-2021-2017-arbitration-rules-compared-version.pdf (last visited Feb. 7, 2021).

[64] Id. at art. 10(b).

[65] Id.

[66] Id. at art. 11(7).

[67] Id. at art. 12(9).

[68] Id. at art. 17(1).

[69] Id.

[70] Id. at art. 36(3).

[71] Id. at app’x VI, art. 1(2)(b).

[72] Id. at app’x II, art. 5(1)-(3).

[73] International Swaps and Derivatives Association, Inc. ISDA 2020 IBOR Fallbacks Protocol (Oct. 23, 2020), available at http://assets.isda.org/media/3062e7b4/08268161-pdf/ (last visited Feb. 7, 2021).

[74] Id.

[75] Id. at ¶ 1(a).

[76] Id. at ¶ 1(b).

[77] Id. at Exhibit 1.

[78] Id.

[79] Id.

[80] Id.

[81] See International Swaps and Derivatives Association, Inc., 2018 ISDA Arbitration Guide (2018), available at https://www.isda.org/a/5kDME/ISDA-2018-Arbitration-Guide.pdf (last visited Jan. 15, 2021).

[82] Id. § 3.3, at 15-17 & Appx. A-L.

[83] ISDA 2020 IBOR Fallbacks Protocol, supra n.73 at ¶ 1(b).

[84] Id. at Exhibit A.

[85] Id.

[86] Id. at ¶ 1(a).

[87] See Stephen Trevis, Arbitration Trending in the Derivatives Context: Perspectives, Kluwer Arbitration Blog (March 7, 2020), available at http://arbitrationblog.kluwerarbitration.com/2020/03/07/arbitration-trending-in-the-derivatives-context-perspectives/ (last visited Feb.. 7, 2021).

[88] See 2019 ADR Annual Review, supra n.41 at § 1.3.

[89] GE Energy Power Conversion France SAS v. Outokumpu Stainless USA LLC, 140 S. Ct. 1637 (2020).

[90] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517.

[91] See 9 U.S.C.A. § 205 (West 2020).

[92] Outokumpu Stainless USA LLC v. Converteam SAS, No. CV 16-00378-KD-C, 2017 WL 401951, at *4 (S.D. Ala. Jan. 30, 2017), rev’d, 902 F.3d 1316 (11th Cir. 2018), rev’d, 140 S. Ct. 1637 (2020).

[93] See id. at *1 n.1.

[94] See Outokumpu, 902 F.3d 1316 (11th Cir. (Cal.) 2018), rev’d, 140 S. Ct. 1637 (2020).

[95] Id. at 1325 (citing Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31 (2009)).

[96] Id. at 1327.

[97] Id. at 1326-27.

[98] Id. at 1326.

[99] Id.

[100] See Yang v. Majestic Blue Fisheries, LLC, 876 F.3d 996, 1001-02 (9th Cir. (Guam) 2017).

[101] See Aggarao v. MOL Ship Mgmt. Co., 675 F. 3d 355, 375 (4th Cir. (Md.) 2012); Sourcing Unlimited, Inc. v. Asimco Int’l, Inc., 526 F.3d 38, 48 (1st Cir. (Mass.) 2008).

[102] See GE Energy, 140 S. Ct. at 1645 (citing, e.g., 9 U.S.C.A. § 2 (West 2020) and Volt Information Scis., Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 474 (1989)).

[103] GE Energy, 140 S. Ct. at 164.

[104] 9 U.S.C.A. §§ 201-08 (West 2020).

[105] 9 U.S.C.A. § 208 (West 2020).

[106] GE Energy, 140 S. Ct. at 1644.

[107] Id. at 1645.

[108] Id.

[109] Id.

[110] Id.

[111] Id. (citations omitted).

[112] Id.

[113] Id. at 1646.

[114] Id. (citing, e.g., 1 G. Born, International Commercial Arbitration § 10.02, at pp. 1418-84 (2d ed. 2014)).  Justice Thomas and the Court did not decide whether the Executive Branch’s interpretation of the New York Convention “should affect our analysis,” however.  Id. at 1647.  Noting that “[w]e have never provided a full explanation of the basis for our practice of giving weight to” such interpretation, or “the limitations of this practice, if any,” the Court concluded that because its “textual analysis” of the New York Convention was consistent with the Executive branch’s interpretation, “there is no need to determine whether the Executive’s understanding is entitled to ‘weight’ or ‘deference.’”  Id. (citation omitted).

[115] Id. at 1648 (Sotomayor, J., concurring).

[116] Id. (citations omitted).

[117] Id.

[118] See 2019 ADR Annual Review, supra n.41 at § 1.3.

[119] Henry Schein Inc. v. Archer and White Sales Inc., 139 S. Ct. 524 (2019) (“Henry Schein I”).

[120] See Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274, 277 (5th Cir. (Tex.) 2019), cert. granted, 141 S. Ct. 107 (U.S. June 15, 2020) (No. 19‐963).

[121] Henry Schein I, 139 S. Ct. at 528.

[122] Id. at 531.

[123] First Options of Chicago Inc. v. Kaplan, 514 U.S. 938, 944 (1995).

[124] See, e.g., AAA Commercial Arbitration Rule 7(a), available at https://www.adr.org/Rules (last visited Feb. 7, 2021).

[125] Petition for Writ of Certiorari, Henry Schein, Inc. v. Archer and White Sales, Inc., 141 S. Ct. 107 (U.S. June 15, 2020) (No. 19‐963).

[126] See Henry Schein I, 139 S. Ct. at 531.

[127] See, e.g., More on Delegating the ‘Who Decides’ Question, 38 Alternatives 87, 89-90 (June 2020) (discussing Missouri and Florida decisions which held that incorporation by reference in arbitration rules is not clear enough to constitute delegation to an arbitrator of the issue of who decides).

[128] See, e.g., Brief for the Cross‐Respondent in Opposition, Archer and White Sales, Inc. v. Henry Schein, Inc., No. 19‐1080 (U.S. Apr. 1, 2020).

[129] 9 U.S.C.A § 10(a)(2) (West 2020).

[130] See 2019 ADR Annual Review, supra n.41 at § 1.15.2.

[131] Martin v. NTT Data Inc., 2020 WL 3429423, No. 20‐CV‐0686, at *16-17 (E.D. Pa. Jun. 23, 2020).

[132] See Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145 (1968).

[133] Id. at 150.

[134] Id. at 151-52.

[135] Petition for Writ of Certiorari, Monster Energy Co. v. City Beverages LLC, 141 S. Ct. 164 (U.S. June 9, 2020) (citations omitted) (No. 19‐1333).

[136] Id. at 22 (citations omitted).

[137] Catamaran Corp. v. Towncrest Pharmacy, 946 F.3d 1020, 1024 (8th Cir. (Iowa) 2020).

[138] Id. at 1022.

[139] Id. at 1024.

[140] Id. at 1022-23 (citing Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 682 (2010)).

[141] Catamaran Corp., 946 F.3d at 1023 (citing Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1416-17 (2019)).

[142] Id. at 1024 (citing Stolt-Nielsen S.A., 559 U.S. at 685).

[143] Marbaker v. Statoil USA Onshore Props., Inc., 801 F. App’x 56, 59 (3d Cir. (Pa.) 2020).

[144] Id. at 58-59.

[145] Id. at 59.

[146] Id. (citing Lamps Plus, 139 S. Ct. at 1416; Stolt-Nielsen, 559 U.S. at 682-85 (2010)).

[147] Id. at 61.

[148] Id.

[149] Marbaker, 801 F. App’x at 60.

[150] Id. at 60-61.

[151] Id. at 61.

[152] Id. (citing Zuber v. Boscov’s, 871 F.3d 255, 258 (3d Cir. (Pa.) 2017) (citation omitted)).

[153] Id. at 61.

[154] Id. (quoting Chesapeake Appalachia, LLC v. Scout Petro., LLC, 809 F.3d 746, 761, 762 (3d Cir. (Pa.) 2016)).

[155] Marbaker, 801 F. App’x at 61-62.

[156] SEIU Local 121RN v. Los Robles Reg’l Med. Ctr., 976 F.3d 849 (9th Cir. (Cal.) 2020).

[157] Id. at 851.

[158] Id.

[159] Id. at 852.

[160] SEIU Local 121RN v. Los Robles Reg’l Med. Ctr., No. 2:18-cv-03928-SVW-RAO, 2019 U.S. Dist. LEXIS 40795 (C.D. Cal., Jan. 15, 2019).

[161] United Bhd. of Carpenters & Joiners of Am., Local No. 1780 v. Desert Palace, Inc., 94 F.3d 1308 (9th Cir. (Cal.) 1999).

[162] SEIU Local 121RN, 2019 U.S. Dist. LEXIS 40795, at *18.

[163] Id.

[164] SEIU Local, 976 F.3d at 861 (citing Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287, 297 (2010)).

[165] Id.

[166] Id. at 856.

[167] Id. at 861.

[168] Gibbs v. Sequoia Capital Operations, LLC, 966 F.3d 286, 290 (4th Cir. (Va.) 2020); Gibbs v. Invs., LLC, 967 F.3d 332 (4th Cir. (Va.) 2020).

[169] Id.

[170] Gibbs v. Sequoia Capital Operations, LLC, 966 F.3d at 290; Gibbs v. Invs., LLC, 967 F.3d at 336.

[171] Id.

[172] Gibbs v. Sequoia Capital Operations, LLC, 966 F.3d at 290-291; Gibbs v. Invs., LLC, 967 F.3d at 337-338.

[173] Gibbs v. Sequoia Capital Operations, LLC, 966 F.3d. at 292; Gibbs v. Invs., LLC, 967 F.3d at 339.

[174] Gibbs v. Sequoia Capital Operations, LLC, 966 F.3d at 292-94; Gibbs v. Invs., LLC, 967 F.3d at 344-345.

[175] Williams v. Medley Opportunity Fund II, LP, 965 F.3d 229, 233 (3d Cir. (Pa.) 2020).

[176] Id. at 236.

[177] Id.

[178] Id. at 238.

[179] Id.

[180] Id. at 239.

[181] Id. at 241.

[182] Id. at 242.

[183] Id. at 243-244.

[184] Biller v. S-H OpCo Greenwich Bay Manor, LLC, 961 F.3d 502, 506-507 (1st Cir. (R.I.) 2020).

[185] Id. at 508.

[186] Id. at 510.

[187] Id. at 511.

[188] Id. at 511-512.

[189] Id. at 512-514.

[190] Id. at 517-518.

[191] Taylor v. Pilot Corp., 955 F.3d 572, 574 (6th Cir. (Tenn.) 2020).

[192] Id. at 574.

[193] Id. at 575.

[194] Id.

[195] Id. at 575-76.

[196] Id. at 576.

[197] Id.

[198] Id.

[199] Henry Schein I, 139 S. Ct. at 530.

[200] Taylor, 955 F.3d at 576 (citing Granite Rock Co., 561 U.S. at 297 (2010)).

[201] Id. at 576-577.

[202] Id. at 577.

[203] Id.

[204] Id. at 582.

[205] Blanton v. Domino’s Pizza Franchising LLC, 962 F.3d 842 (6th Cir. (Mich.) 2020).

[206] Id. at 843.

[207] Id. at 852.

[208] Id. at 844 (citing First Options of Chi, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)).

[209] Blanton, 962 F.3d at 845.

[210] Id. at 846-47.

[211] Id. at 848.

[212] Id. at 847.

[213] Bowles v. OneMain Fin. Grp., 954 F.3d 722, 728 (5th Cir. (Miss.) 2020).

[214] Id. at 724.

[215] Id. at 724-25.

[216] Id. at 726.

[217] Id.

[218] Id. at 726-27.

[219] Id. at 727-728.

[220] Fedor v. United Healthcare Inc., 976 F.3d 1100, 1105 (10th Cir. (N.M.) 2020).

[221] Id. at 1023.

[222] Id. at 1104.

[223] Id. at 1103-04.

[224] Id. at 1105, 1108.

[225] Id. at 1107.

[226] Id. at 1106-07 (citing Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 297 (2010)).

[227] Id. at 1107.

[228] Lavigne v. Herbalife, Ltd., 967 F.3d 1110, 1115 (11th Cir. (Fla.) 2020).

[229] Id. at 1116 (internal citations omitted).

[230] Id.

[231] Id. at 1117, n.4.

[232] Id. at 1115-17.

[233] Id. at 1117-18.

[234] Id. (citing Westra v. Marcus & Millichap Real Estate Inv. Brokerage Co., 129 Cal. App. 4th 759, 763 (Cal. Ct. App. 2005).

[235] Lavigne, 967 F.3d at 1118.

[236] Id.

[237] Id. at 1118-19 (citing Goldman v. KPMG, LLP, 173 Cal. App. 4th 209, 217 (Cal. Ct. App. 2009)).

[238] Lavigne, 967 F.3d at 1119.

[239] Id.

[240] MZM Construction Co., Inc. v. N.J. Building Laborers Statewide Benefit Funds, 974 F.3d 386 (3d Cir. (N.J.) 2020).

[241] Id. at 393.

[242] Id. at 392-395.

[243] Id. at 396.

[244] Id. at 398 (quoting Sandvik AB v. Advent Int’l Corp., 220 F.3d 99, 111 (3d Cir. (Del.) 2000).

[245] Id. at 406.

[246] Id. at 401.

[247] Id. at 406.

[248] Id. at 401-02.

[249] Wiggins v. Warren Averett, LLC, No. 1170943, 2020 WL 597293 *1 (Ala. Feb. 7, 2020).

[250] Id.

[251] Id.

[252] Id.

[253] Id. at *2.

[254] Id. at *3-4.

[255] Adams v. Postmates, Inc., 823 F. App’x 535, 535-36 (9th Cir. (Cal.) 2020).

[256] Id.

[257] Id.

[258] Id. at 36.

[259] Id.

[260] Id.

[261] Baten v. Mich. Logistics, Inc., No. 19-55865, 2020 U.S. App. LEXIS 32558, at *2 (9th Cir. (Cal.) Oct. 15, 2020).

[262] Id. at *1.

[263] Id. at *2, n.1.

[264] Id. at *2-3.

[265] Id. at *3-4.

[266] Id. at *4.

[267] Id. at *6-7.

[268] 47 U.S.C.A. § 227 (West 2020).

[269] Mey v. DIRECTV, LLC, 971 F.3d 284, 287-88 (4th Cir. (W.Va.) 2020).

[270] Id. at 290-291.

[271] Id.

[272] Id. at 292.

[273] Id. at 293-94.

[274] Id.

[275] Id. at 294.

[276] Id. at 297-98.

[277] Id. at 299.

[278] Id. at 298-300.

[279] Revitch v. DIRECTV, LLC, 977 F.3d 713 (9th Cir. (Cal.) 2020).

[280] Id. at 721.

[281] Id. at 717.

[282] Id. at 718 (citing Lamps Plus, Inc. v. Varela, 139 S. Ct. at 1418).

[283] Id. at 720.

[284] Id.

[285] Id.

[286] Id. at 724.

[287] Id. at 724.

[288] Id. at 724.

[289] Id. at 728.

[290] Hill v. Emple. Res. Grp., LLC, 816 F. App’x 804, 805-806 (4th Cir. (W.Va.) 2020).

[291] Id. at 806.

[292] Id.

[293] Id. at 807-808.

[294] Id. at 808-809.

[295] Id.

[296] Id. at 809-810.

[297] Id. at 810-811.

[298] Bacon v. Avis Budget Grp., Inc., 959 F.3d 590, 595 (3d Cir. (N.J.) 2020).

[299] Id. at 595-596.

[300] Id. at 596.

[301] Bacon v. Avis Budget Grp., Inc., 357 F. Supp. 3d 401, 432 (D.N.J. 2018).

[302] Bacon, 959 F.3d at 599.

[303] Id. at 600-602.

[304] Id. at 600 (citing and quoting Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 983 A.2d 604, 617 (N.J. Super. Ct. App. Div. 2009) (quoting 11 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 30:25 (4th ed. 1999))).

[305] Id..

[306] Id. at 602-03.

[307] Id. at 603-04.

[308] Mason v. Midland Funding LLC, 815 F. App’x 320, 322 (11th Cir. (Ga.) 2020).

[309] Id. at 323.

[310] Id. at 323-24.

[311] Id. at 324 (quoting Utah Code § 25-5-4(2)(e)).

[312] Id. at 325.

[313] Id. at 326.

[314] Id. at 328.

[315] Id. at 329.

[316] Nicosia v. Amazon.com, Inc., 815 F. App’x 612, 614 (2d Cir. (N.Y.) 2020).

[317] Id. at 613.

[318] Id.

[319] Id. at 613-14.

[320] Id.

[321] Id.

[322] Id.

[323] Skuze v. Pfizer, Inc., 244 N.J. 30, 38 (2020).

[324] Id. at 37.

[325] Id. at 37.

[326] Id. at 42.

[327] Id. at 42-43.

[328] Id. at 44 (citing Skuse v. Pfizer, Inc., 457 N.J. Super 551, 561).

[329] Id. at 46.

[330] Id. at 48-50.

[331] Id. at 53-54.

[332] Id. at 56-61.

[333] Id. at 61.

[334] Carrick v. Turner by and through Walley, 298 So.3d 1006, 1008 (Miss. 2020).

[335] Id.

[336] Id. at 1009.

[337] Id. at 1009-10.

[338] Id.

[339] Id. at 1012.

[340] Id. at 1012-1013.

[341] Id. at 1013.

[342] Jorja Trading, Inc. v. Willis, 598 S.W.3d 1, 3-4 (Ark. 2020).

[343] Id.

[344] Id.

[345] Id.

[346] Id. at 5-6.

[347] Id. at 6.

[348] Id. at 6-7.

[349] Id. at 7.

[350] Id.

[351] Id. at 7-8.

[352] Delisle v. Speedy Cash, 818 F. App’x 608, 609 (9th Cir. (Cal.) 2020).

[353] Id. at 609.

[354] Id. (citing McGill v. Citibank, N.A., 2 Cal. 5th 945 (Cal. 2017)).

[355] See Cal. Fin. Code § 22304.5(a) (effective January 1, 2020).

[356] Delisle, 818 F. App’x at 610.

[357] Id. at 611.

[358] Roberts v. AT&T Mobility LLC, 801 F. App’x 492, 493 (9th Cir (Cal.) 2020).

[359] Id.

[360] Roberts v. AT&T Mobility LLC, 877 F.3d 833 (9th Cir. (Cal.) 2017).

[361] McGill v. Citibank, N.A., 2 Cal. 5th 945, 952 (2017).

[362] Roberts, 801 F. App’x at 494.

[363] Id. at 495 (quoting Boyd v. City & Cty. of San Francisco, 576 F.3d 938, 943 (9th Cir. (Cal.) 2009)).

[364] Blair v. Rent-A-Ctr., Inc., 928 F.3d 819 (9th Cir. (Cal.) 2019).

[365] Id. at 828.

[366] Id. at 830.

[367] Roberts, 801 F. App’x at 496.

[368] Belton v. GE Capital Retail Bank, 961 F.3d 612, 617 (2d Cir. (N.Y.) 2020), cert. denied,. No. 20-481 (Mar. 8, 2021).

[369] Id. at 614.

[370] Id. at 614-16 (citing Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1624 (2018)).

[371] Belton, 961 F.3d. at 617.

[372] Id. at 615 (citing Epic Sys. Corp., 138 S. Ct. at 1626).

[373] Id. at 616.

[374] Id. at 617.

[375] Id. (citing In re Anderson, 884 F.3d 382, 392 (2d Cir. (N.Y.) 2018), cert. denied, 139 S. Ct. 144, 144 (2018)).

[376] Id. at 388-90.

[377] Belton, 961 F.3d at 615.

[378] Robertson v. Intratek Computer, Inc., 976 F.3d 575, 579-80 (5th Cir. (Tex.) 2020).

[379] Id.

[380] 41 U.S.C.A. § 4712 (West 2020).

[381] Id. at 577-78.

[382] Id. at 578-79.

[383] Id. at 579 (quoting CompuCredit v. Greenwood, 565 U.S. 95, 98 (2012) (quotation omitted)).

[384] Robertson, 976 F.3d at 580.

[385] Id. at 582.

[386] Id. at 583.

[387] Id. at 583-84.

[388] Id. at 584.

[389] Sparks v. Old Republic Home Protection Company, Inc., 267 P.3d 680, 682 (Okla. 2020).

[390] Id.

[391] Id. at 683.

[392] Id. at 684.

[393] 12 O.S. 2011 § 1855(D).

[394] Sparks, 267 P.3d at 685.

[395] 15 U.S.C.A. §§ 1011 et seq. (West 2020).

[396] Id. at 686-687.

[397] Id. at 687.

[398] Id. at 691.

[399] Burgess v. Lithia Motors, Inc., 196 Wn.2d 187, 189 (2020).

[400] Id. at 189.

[401] Id.

[402] Id. at 190.

[403] Id.

[404] Id.

[405] Id. at 191.

[406] Id. at 191-192.

[407] Id. at 191, 196.

[408] Id. at 197.

[409] Id. at 196-197.

[410] Noe v. City Nat’l Bank, No. 20-1230, 2020 U.S. App. LEXIS 31088 (4th Cir. (W.Va.) Sept 30, 2020).

[411] Id. at *3.

[412] Id. at *2-3 (citing 9 U.S.C.A. § 16(a)(1)(b) (West 2020)).

[413] Id. at *6.

[414] Id. at *7-8.

[415] Id. at *8.

[416] Hermosillo v. Davey Tree Surgery Co., 821 F. App’x 753, 754 (9th Cir. (Cal.) 2020).

[417] Id.

[418] Id. at 755 (citing 9 U.S.C.A. § 16(b) (West 2020)).

[419] Hermosillo, 821 F. App’x  at 755.

[420] Id.

[421] Id. at 755-56.

[422] Torgerson v. Lcc Intl, No. 20-3020, 2020 U.S. App. LEXIS 25155 (10th Cir. (Kan.) 2020).

[423] Id. at *3-4.

[424] Id. at *4-5.

[425] Id. at *5.

[426] Id.

[427] Id. at *6.

[428] Id. at *7 (citing Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019)).

[429] Id. at *7-8.

[430] Id. at *8.

[431] Id. at *9 (citing 9 U.S.C.A. § 16(a)(3) (West 2020)).

[432] Id. at *10.

[433] Id. at *11-12 (citing 9 U.S.C.A. § 16(a)(1)(C) (West 2020)).

[434] Id. at *13 (citing 9 U.S.C.A. § 16(a)(1)(D) (West 2020)).

[435] Id. at *15 (citing 9 U.S.C.A. § 10 (West 2020)).

[436] Jin v. Parsons Corp., 966 F.3d 821, 827 (D.C. Cir. 2020).

[437] Id. at 823-24.

[438] Id. at 827.

[439] Id.

[440] Id. at 824.

[441] Id. at 824-25.

[442] Id. at 825.

[443] INTL FCStone Fin. Inc. v. Jacobson, 950 F.3d 491 (7th Cir. (Ill.) 2020).

[444] Id. at 493.

[445] Id. at 494, 49 (citing 9 U.S.C.A. § 4 (West 2020)).

[446] Id. at 495.

[447] Id. at 499- 501.

[448] Id. at 501 (citing 28 U.S.C.A. § 1292(a)(1) and 9 U.S.C.A. § 16(b) (West 2020)).

[449] Id. at 502 (citing 9 U.S.C.A. § 16(a) (West 2020)).

[450] Hart v. Charter Communs., Inc., 814 F. App’x 211, 213 (9th Cir. (Cal.) 2020).

[451] Id. at 213-14.

[452] Id. at 214 (quoting Jenks v. DLA Piper Rudnick Gray Cary US LLP, 243 Cal. App. 4th 1, (Cal. Ct. App. 2015) (quotations omitted)).

[453] Id.

[454] Id.

[455] Id.

[456] VIP, Inc. v. KYB Corp., 951 F.3d 377 (6th Cir. (Mich.) 2020).

[457] Id. at 383.

[458] Id. at 381.

[459] Id. at 382-383.

[460] Id.

[461] Id. at 383.

[462] Id.

[463] Id. at 384.

[464] Landry v. Transworld Systems Inc., 485 Mass. 334, 335 (2020).

[465] Id. at 336.

[466] Id.

[467] Id. at 339.

[468] Id. at 344.

[469] Id.

[470] Burgess v. Johnson, No. 19-5098, 2020 U.S. App. LEXIS 34930 (10th Cir. (Okla.) 2020).

[471] Id. at *4.

[472] Id. at *2.

[473] Id. at *6 (citing Casillas v. Cano, 79 S.W.3d 587, 589 (Tex. App. 2002)).

[474] Id. at *8.

[475] Id. at *10.

[476] GGNSC Administrative Services LLC v. Schrader, 484 Mass. 181, 182 (Mass. 2020).

[477] Id. at 183-184.

[478] Id. at 184.

[479] Id. at 192.

[480] Id.

[481] 9 U.S.C.A. § 1 (West 2020).

[482] Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113 (2001).

[483] Grice v. United States Dist. Court, 974 F.3d 950, 954 (9th (Cal.) 2020).

[484] Id. (citing 9 U.S.C.A §1 (West 2020)).

[485] Grice, 974 F.3d at 954.

[486] Id. at 954-55 (citing In re Van Dusen, 654 F.3d 838, 840-41 (9th Cir. (Ariz.) 2011)).

[487] Id.at 955 (citing In re Swift, 830 F.3d 913, 917 (9th Cir. (Ariz.) 2016)).

[488] Id. at 957.

[489] Id. at 958-59.

[490] Rittmann v. Amazon.com, Inc., 971 F.3d 904, 907 (9th Cir. (Wash.) 2020).

[491] Id. at 908.

[492] Id. at 908-909.

[493] Id. at 909.

[494] Id. at 910-911.

[495] Id. at 914-915.

[496] Id. at 924-925.

[497] Id. at 920.

[498] Id. at 920-921.

[499] Wallace v. Grubhub Holdings, Inc., 970 F.3d 798 (7th Cir. (Ill.) 2020).

[500] 9 U.S.C.A § 1 (West 2020).

[501] Id. at 800 (quoting Bacashihua v. U.S. Postal Serv., 859 F.2d 402, 405 (6th Cir. (Mich.) 1988) (emphasis added)).

[502] Id. at 802.

[503] Id. at 803.

[504] Waithaka v. Amazon.com, Inc., 966 F.3d 10 (1st Cir. (Mass.) 2020).

[505] Id. at 15-16.

[506] Id. at 14-15.

[507] Id. at 15.

[508] Waithaka v. Amazon.com, Inc., 404 F. Supp. 3d 335, 339 (D. Mass. 2019).

[509] Waithaka, 966 F.3d at 18.

[510] Id. at 18-26.

[511] 45 U.S.C.A § 51 (West 2020).

[512] Waithaka, 966 F.3d at 26 (citing Circuit City v. Adams, 532 U.S. 105, 118 (2001).

[513] Id. at 26-35.

[514] Id. at 35.

[515] Eastus v. ISS Facility Servs., 960 F.3d 207, 208 (5th Cir. (Tex.) 2020).

[516] Id.

[517] Id.

[518] Id. at 209-10 (quoting Circuit City, 532 U.S. at 119).

[519] Id. at 211.

[520] Id. at 212.

[521] Darrington v. Milton Hershey Sch., 958 F.3d 188 (3d Cir (Pa.) 2020).

[522] Id. at 190-91.

[523] Id. at 191.

[524] Id. at 192 (citations omitted).

[525] Id.

[526] Id.

[527] Id. at 193-94.

[528] Id. at 194 (quoting Wright v. Universal Mar. Serv. Corp., 525 U.S. 70, 79-80 (1998).

[529] Id. at 196.

[530] Cordoba v. DIRECTV, LLC, 801 F. App’x 723, 724 (11th Cir. (Ga.) 2020).

[531] Id. at 724-725.

[532] Id. at 725.

[533] Id.

[534] Id. at 725-726.

[535] Id. at 726.

[536] Id.

[537] Solo v. United Parcel Serv. Co., 947 F.3d 968, 974 (6th Cir. (Mich.) 2020).

[538] Id. at 971.

[539] Id.

[540] Id.

[541] Id.

[542] Id. at 974.

[543] Id. at 972 (citing Hergenreder v. Bickford Senior Living Grp., LLC, 656 F.4d 411, 415-16 (6th Cir. (Mich.) 2011) (citation omitted)).

[544] Id. at 973.

[545] Id. at 974 (citing Watch v. Sentinel Sys., 176 F.3d 369, 372 (6th Cir. (Tenn.) 1999)).

[546] Solo, 947 F.3d at 974.

[547] Id. at 975 (quoting Hurley v. Deutsche Bank Tr. Co. Ams., 610 F.3d 334, 338 (6th Cir. (Mich.) 2010) (citation omitted)).

[548] Solo, 947 F.3d at 975.

[549] Id. at 976-77.

[550] Id. at 977.

[551] Kramer v. Enter. Holdings, No. 19-16354, 2020 U.S. App. LEXIS 35671(9th Cir. (Cal.) 2020).

[552] Id. at *2.

[553] McGill v. Citibank, N.A., 2 Cal. 5th 945 (Cal. 2017).

[554] Kramer, 2020 U.S. App. LEXIS 35671 at *2 (citing Blair v. Rent-A-Center, Inc., 928 F.3d 819, 827-31 (9th Cir. (Cal.) 2019)).

[555] Id. at *3.

[556] Id.

[557] Shivkov v. Artex Risk Sols., Inc., 974 F.3d 1051, 1056 (9th Cir. (Ariz.) 2020).

[558] Id. at 1057.

[559] Id. at 1057.

[560] Id. at 1060.

[561] Id. at 1060-63.

[562] Id. at 1060 (quoting Litton Financial Printing Division v. NLRB, 501 U.S. 190, 204 (1991)).

[563] Id.

[564] Id. at 1061.

[565] Id. at 1062.

[566] See, e.g., Biller, 961 F.3d at 513; Breda v. Cellco P’ship, 934 F.3d 1, 7 (1st Cir. (Mass.) 2019); Huffman v. Hilltop Cos., LLC, 747 F.3d 391, 395-96 (6th Cir. (Ohio) 2014); Wolff v. Westwood Mgmt., LLC, 558 F.3d 517, 520-21, 385 U.S. App. D.C. 1 (D.C. Cir. 2009); Koch v. Compucredit Corp., 543 F.3d 460, 465-66 (8th Cir. (Ark.) 2008); CPR (USA) Inc. v. Spray, 187 F.3d 245, 254-56 (2d Cir. (N.Y.) 1999), abrogated on other grounds as explained in Accenture LLP v. Spreng, 647 F.3d 72, 76 (2d Cir. (N.Y.) 2011).

[567] Shivkov, 974 F.3d at 1061.

[568] Id. at 1065-66.

[569] Id. at 1068-69.

[570] Id. at 1069.

[571] Stover v. Experian Holdings, Inc., 978 F.3d 1082 (9th Cir. (Cal.) 2020).

[572] Id. at 1084.

[573] Id.

[574] Id. at 1085.

[575] 15 U.S.C.A. § 1681 et seq. (West 2020).

[576] Stover, 978 F.3d at 1084.

[577] Id. at 1085.

[578] Id.

[579] Id.

[580] Id.

[581] Id. at 1088.

[582] Id.

[583] Id. at 1087.

[584] Id. (citing Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 969 (9th Cir. (Cal.) 2018)).

[585] Id. at 1088.

[586] Id.

[587] B&S MS Holdings, LLC v. Landrum, 302 So.3d 605, 607-608 (Miss. 2020).

[588] Id. at 608.

[589] Id. at 609.

[590] Id.

[591] Id. at 611.

[592] Laver v. Credit Suisse Sec. (USA), LLC, 976 F.3d 841, 848-49 (9th Cir. (Cal.) 2020).

[593] Id. at 843.

[594] Id.

[595] Id. at 844.

[596] Id.

[597] Id. at 848-49.

[598] Id.

[599] Id. at 847.

[600] Id.

[601] Id. at 846.

[602] Id. at 848.

[603] Id. at 848-49.

[604] Id. at 849 (citing Cohen v. USB Fn. Servs., Inc., 799 F.3d 174, 174 (2d Cir. (N.Y.) 2015)).

[605] Brickstructures, Inc. v. Coaster Dynamix, Inc., 952 F.3d 887 (7th Cir. (Ill.) 2020).

[606] Id. at 889.

[607] Id.

[608] Id. at 890.

[609] Id. at 892.

[610] Id. at 893.

[611] Davis v. White, 795 F. App’x 764, 766-67 (11th Cir. (Ala.) Jan. 7, 2020).

[612] Id. at 767.

[613] 42 U.S.C.A. 1983 (West 2020).

[614] Davis, 795 F. App’x 765-66.

[615] Id. at 766.

[616] Id.

[617] Id.

[618] Id. at 767.

[619] Id.

[620] Id.

[621] Johnson v. Keybank Natl Assn (In re Checking Account Overdraft Litig.), 754 F.3d 1290, 1294 (11th Cir. (Fla.) 2014) (quotation marks omitted).

[622] Davis, 755 F. App’x at 768.

[623] Id. at 768-69.

[624] Id. at 769.

[625] Id. at 770-71.

[626] Id. at 771.

[627] Jeoung Lee v. Evergreen Hospital Medical Center, 195 Wash.2d 699, 699 (2020).

[628] Id. at 704.

[629] Id. at 708.

[630] Innovative Images, LLC v. Summerville, 848 S.E.2d 75, 77 (Ga. 2020).

[631] Id.

[632] Id.

[633] Id. at 81.

[634] Id.

[635] Id. at 84.

[636] Goff v. Nationwide Mut. Ins., 825 F. App’x 298, 300 (6th Cir. (Ohio) 2020).

[637] Id. at 301.

[638] Id. at 303.

[639] Id. at 305 (quoting Sikes v. Ganley Pontiac Honda, Inc., No. 82889, 2004 WL 67224, at *2 (Ohio Ct. App. Jan. 15, 2004)).

[640] Id. at 306.

[641] Wash. Nat’l Ins. Co. v. OBEX Grp. LLC, 958 F.3d 126, 128-29 (2d Cir. (N.Y.) 2020).

[642] Id. at 129.

[643] Id.

[644] Id.

[645] Id. at 131.

[646] Id.

[647] Id. at 131.

[648] Id. at 132.

[649] Id.

[650] Id. at 134.

[651] Id. at 134-35.

[652] Id. at 136.

[653] Id. at 139.

[654] American Intl. Specialty Lines Ins. Co. v. Allied Capital Corp., 35 N.Y.3d 64, 67 (2020).

[655] Id.

[656] Id.

[657] Id. at 68.

[658] Id.

[659] Id. at 68-69.

[660] Id. at 69.

[661] Id.

[662] Id.

[663] Id. at 69-70.

[664] Id. at 70.

[665] Id.

[666] Id. at 71.

[667] Id.

[668] Id. at 73.

[669] Id. at 74.

[670] Id.

[671] Transcon. Gas Pipe Line Co LLC v. Permanent Easement for 2.59 Acres, No. 19-2738 & 19-3412, 2020 U.S. App. LEXIS 33924, at *2 (3d Cir. (Pa.) Oct. 28, 2020).

[672] Id. at *3.

[673] Id. at *5-6.

[674] Id. at *15.

[675] 9 U.S.C.A. § 12 (West 2020).

[676] Id. at *15-16 (quoting Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 569 (2013)).

[677] Id. at *15, n.13.

[678] Badgerow v. Walters, 975 F.3d 469 (5th Cir. (La.) 2020).

[679] Id. at 472.

[680] Vaden v. Discover Bank, 556 U.S. 49 (2009).

[681] Badgerow, 975 F.3d at 473 (citing Quezada v. Bechtel OG & C Constr. Servs., Inc., 946 F.3d 837, 843 (5th Cir. (La.) 2020).

[682] Vaden, 556 U.S. at 66.

[683] Badgerow, 975 F.3d at 474-475.

[684] Id. at 475.

[685] Teamsters Local 177 v. UPS, 966 F.3d 245, 248 (3d Cir. (N.J.) 2020).

[686] Id.; Teamsters Local Union No. 177 v. United Parcel Servs., 409 F. Supp. 3d 285 (D.N.J. 2019) (citing Derwin v. Gen. Dynamics Corp., 719 F.2d 484, 492-93 (1st Cir. (Mass.) 1983) and Zeiler v. Deitsch, 500 F.3d 157 (2d Cir. (N.Y.) 2007)).

[687] Teamsters Local 177, 966 F.3d at 248 (citing Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir. (N.Y.) 1984)).

[688] Id. at 257.

[689] Id. at 251.

[690] EB Safe, LLC v. Hurley, No. 19-38592020, 2020 U.S. App. LEXIS 33066, at *2 (2d Cir. (N.Y.) Oct. 20, 2020).

[691] Id. at *2-3.

[692] Id. at *3.

[693] Id. at *4.

[694] Id. at *5 (quoting T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339 (2d Cir. (N.Y.) 2010).

[695] Id. at *7.

[696] Id. at *8 (citing Odeon Capital Grp. LLC v. Ackerman, 864 F.3d 191, 196 (2d Cir. (N.Y.) 2017)).

[697] Id. at *8 (citing Karppinen v. Karl Kiefer Mach. Co., 187 F.2d 32, 34 (2d Cir. (N.Y.) 1951)).

[698] Id. at *9.

[699] Salinas v. McDavid Houston-Niss, L.L.C., No. 20-20003, 2020 U.S. App. LEXIS 32842 (5th Cir. (Tex.) Oct. 13, 2020).

[700] Id. at *3.

[701] Id. at *5-6.

[702] See Tex. Civ. Prac. & Rem. Code Ann. § 38.001.

[703] Kohn Law Grp., Inc. v. Jacobs, 825 F. App’x 465, 466 (9th Cir. (Cal.) 2020).

[704] Id.

[705] Id.

[706] Floridians for Solar Choice, Inc. v. Paparella, 802 F. App’x 519 (11th Cir. (Fla.) 2020).

[707] Id. at 521.

[708] Id. at 522-23.

[709] Id. at 523.

[710] Id. at 524-525.

[711] Id. at 525-526.

[712] Id. at 526.

[713] Auto Equity Loans of Delaware, LLC v. Baird, 232 A.3d 1293 (Del. 2020).

[714] Id.

[715] Id.

[716] Id. at n.27 (quoting SPX Corp. v. Garda USA, Inc., 94 A.3d 745, 750 (Del. 2014) (internal quotation omitted)).

[717] Id.

[718] Id.

[719] Cinatl v. Prososki, 307 Neb. 477, 480 (2020).

[720] Id. at 483.

[721] Id. at 483.

[722] Id. at 483.

[723] Id. at 484.

[724] Id. at 484.

[725] Id. at 488-490 (citing Neb. Rev. Stat. § 25-2613 (2020)).

[726] Cinatl, 307 Neb. at 491.

[727] Id. at 492.

[728] Gherardi v. Citigroup Global Mkts., Inc., 975 F.3d 1232 (11th Cir. (Fla.) 2020).

[729] Id. at 1234.

[730] 9 U.S.C.A. § 10(a)(4) (West 2020).

[731] Gherardi, 975 F.3d at 1237 (quoting Bamberger Rosenheim, Ltd. v. OA Dev., Inc., 862 F.3d 1284, 1286 (11th Cir. (Ga.) 2017).

[732] Id. at 1238 (quoting Wiregrass Metal Trades Council AFL-CIO v. Shaw Envtl. & Infrastructure, Inc., 837 F.3d 1083, 1087 (11th Cir. (Ala.) 2016).

[733] Id. at 1239.

[734] Id. at 1244.

[735] Diverse Enters., Co., L.L.C. v. Beyond Int’l, Inc., No. 19-51121, 2020 U.S. App. LEXIS 29650 (5th Cir. (Tex.) Sept. 17, 2020).

[736] 9 U.S.C.A. § 11(a) (West 2020).

[737] Diverse Enters, 2020 U.S. App. LEXIS 29650 at *3.

[738] Id. at *4-5.

[739] Id. at *6-7.

[740] Id. at *7.

[741] Bay Shore Power Co. v. Oxbow Energy Sols., LLC, 969 F.3d 660, 661 (6th Cir. (Ohio) 2020).

[742] Id. at 662.

[743] Id. at 662-63.

[744] Id. at 663.

[745] Id. at 664.

[746] Id. at 667.

[747] Id.

[748] Star Dev. Grp., LLC v. Darwin Nat’l Assur. Co., 813 F. App’x 76, 78 (4th Cir. (Md.) 2020).

[749] Id. at 79-80.

[750] Id. at 80.

[751] Id. at 81-82.

[752] Id. at 83.

[753] Id. at 87.

[754] Id. at 83-87.

[755] Mid Atl. Capital Corp. v. Bien, 956 F.3d 1182, 1186 (10th Cir. (Colo.) 2020) (quoting 9 U.S.C.A. § 11(a) (West 2020)).

[756] Id. at 1191-1196.

[757] Id. at 1205-06.

[758] Id. at 1207.

[759] Id. at 1211-1212.

[760] Id.

[761] Interactive Brokers LLC v. Saroop, 969 F.3d 438, 440 (4th Cir. (Va.) 2020).

[762] Id. at 440-41.

[763] Id. at 440.

[764] Id.

[765] Id.

[766] Id. at 441-42.

[767] Id. at 442.

[768] Id.

[769] Id. (quoting Jones v. Dancel, 792 F.3d 395, 402 (4th Cir. (Md.) 2015)).

[770] Id. 443-44.

[771] Id. at 444.

[772] Id. at 445.

[773] Id.

[774] Id. at 449.

[775] Blondeau v. Baltierra, No. 20282, 2020 Conn. LEXIS 203 (Sept. 24, 2020).

[776] Id. at *2.

[777] Id.

[778] Id. at *1.

[779] Id. at *10-11.

[780] Id. (contrasting General Statutes § 522-418 (governing vacatur of arbitration awards) with General Statutes § 52-263 (providing the statutory right to appeal in civil actions)).

[781] Id. at *31.

[782] Id. at *10-11.

[783] Id. at *11, 16 (emphasis in original).

[784] Id. at *18.

[785] Tex.s Brine Co., L.L.C. v. Am. Arbitration Ass’n, Inc., 955 F.3d 482, 490 (5th Cir. (La.) 2020).

[786] Id. at 484-85.

[787] Id. at 490 (citing Gibbons v. Bristol Myers Squibb Co., 919 F.3d 699 (2d Cir. (N.Y.) 2019); Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. (Pa.) 2018)).

[788] Id. at 485-86.

[789] Id. at 487.

[790] Id. at 487-90.

[791] Id. at 489.

[792] Id.

[793] Id.

[794] Id.

[795] Id.

[796] Gulf LNG Energy, LLC v. Eni USA Gas Marketing LLC, No. 22, 2020, 2020 Del. LEXIS 380, at *1-2 (Nov. 17, 2020).

[797] Id. at *2-3.

[798] Id. at *3.

[799] Id.

[800] Id. at *4.

[801] Id. at *5.

[802] Id. at *5-7.

[803] Id. at *8.

[804] Id. at *9 (quoting the Chancery Court opinion in Gulf LNG Energy, LLC v. Eni USA Marketing LLC, No. 2018-0700-AGB, 2019 WL 428633, at *10 (Del. Ch. Feb. 1, 2019)).

[805] Id. at *11.

[806] Id. at *10.

[807] Id. at *12.

[808] Id. at *12.

[809] Accent Delight Int’l Ltd. v. Sotheby’s, No. 18-CV-9011 (JMF), 2020 U.S. Dist. LEXIS 230272, *3 (S.D.N.Y. Dec. 8, 2020).

[810] Id.

[811] Id. at *4.

[812] Id.

[813] Id. at *5.

[814] Id.

[815] Id. at *5-6.

[816] Id. at *6-7 (quoting In re Teligent, 640 F.3d 53 (2d Cir. (N.Y.) 2011)).

[817] Id. at *7.

[818] Id.

[819] Id.

[820] Compare Rocky Aspen Mgmt. 204 v. Hanford Holdings, 394 F. Supp. 3d 461, 463-65 (S.D.N.Y. 2019) (no), with Dandong v. Pinnacle Performance Ltd., 10 Civ. 8086 (LBS), 2012 U.S. Dist. LEXIS 145454, at *4 (S.D.N.Y. Oct. 9, 2012) (yes).

[821] Accent Delight, 2020 U.S. Dist. LEXIS 230272, at *11 (citing In re Tremont Sec. Law, State Law & Ins. Litig., 699 F. App’x 8, 15 (2d Cir. (N.Y.) 2017)).

[822] Id. (internal quotation marks omitted).

[823] Id. at *13.

[824] Id.

[825] See id. at *16 (citing Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 977 (6th Cir. (Ohio) 2003); Spruce Env’t Techs., Inc. v. Festa Radon Techs., Co., 370 F. Supp. 3d 275, 278-79 (D. Mass. 2019); ACQIS, LLC v. EMC Corp., Civil Action No. 14-cv-135602017, U.S. Dist. LEXIS 100856, at *2 (D. Mass. June 29, 2017); Folb v. Motion Picture Indus. Pension & Health Plans, 16 F. Supp. 2d 1164, 1181 (C.D. Cal. 1998), aff’d 216 F.3d 1082 (9th Cir. (Cal.) 2000); Sheldone v. Pa. Tpk. Comm’n, 104 F. Supp. 2d 511, 513 (W.D. Pa. 2000); In re RDM Sports Grp., Inc., 277 B.R. 415, 430 (Bankr. N.D. Ga. 2002)).

[826] See id. at *15 (citing United States ex rel. Strauser v. Stephen L. Lafrance Holdings, Inc., No. 18-CV-673-GKF-FHM, 2019 U.S. Dist. LEXIS 197688, at *2 (N.D. Okla. Nov. 14, 2019); Ford Motor Co. v. Edgewood Props., Inc., 257 F.R.D. 418, 423 (D. N.J. 2009); Lesal Interiors, Inc. v. Resol. Tr. Corp., 153 F.R.D. 552, 562 (D. N.J. 1994)).

[827] Id. at *16-17.

[828] Id. at *17 (emphasis added).

[829] 28 U.S.C.A § 1782(a) (West 2020).

[830] Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 214 (4th Cir. (S.C.) 2020) (Servotronics I).

[831] Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (7th Cir. (Ill.) 2020) (Servotronics II).

[832] Id. at 691.

[833] Servotronics I, 954 F.3d at 214.

[834] Servotronics II, 975 F.3d at 691.

[835] Id.

[836] 28 U.S.C.A. § 1782(a) (West 2020).

[837] Servotronics II, 975 F.3d at 692.

[838]  See In re Guo, 965 F.3d 96 (2d Cir. (N.Y.) 2020); Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 191 (2d Cir. (N.Y.) 1999); Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880, 883 (5th Cir. (Tex.) 1999).

[839] Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) (“Intel”).

[840] See Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710, 714 (6th Cir. (Tenn.) 2019).

[841] Servotronics I, 954 F.3d at 211-212.

[842] Id. at 214.

[843] Id. at 214-215.

[844] Id. at 216 (quoting Intel, 542 U.S. at 263).

[845] 975 F.3d at 693-694.

[846] 975 F.3d at 695.

[847] Id.

[848] Id. at 696.

[849] Hanwei Guo v. Deutsche Bank Sec., 965 F.3d 96 (2d Cir. (N.Y.) 2020).

[850] Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 191 (2d Cir. (N.Y.) 1999).

[851] In re Hanwei Guo, 18-MC-561 (JMF), 2019 U.S. Dist. LEXIS 29572, at *2-3 (quoting NBC, 165 F.3d at 190).

[852] Hanwei Guo, 965 F.3d at 105.

[853] Intel, 542 U.S. at 258 (emphasis added) (quoting Hans Smit, International Litigation Under the United States Code, 65 Colum. L. Rev. 1015, 1026 n.71 (1965)).

[854] Hanwei Guo, 965 F.3d at 104 (citing In re Application, 939 F.3d at 725 n.9 (“determining only that ‘the Supreme Court’s approving quotation of the Smit article . . . provides no affirmative support’ for a reading of the statute that excludes private arbitration”)).

[855] Id. at 105.

[856] Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710 (6th Cir. (Tenn.) 2019).

[857] 28 U.S.C.A. § 1782(a) (West 2020).

[858] In re Application, 939 F.3d at 713-14.

[859] Id. at 714.

[860] Id. at 719.

[861] Id. at 714.

[862] Id. at 720.

[863] Id. at 722.

[864] Id. at 723.

[865] Id.

[866] Id. at 723 (citing Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004)).

[867] Id. at 724.

[868] Id.

[869] Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880, 883 (5th Cir. (Tex.) 1999).

[870] National Broadcasting Co., Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184 (2d Cir. (N.Y.) 1999).

[871] In re Application, 939 F.3d at 732.

[872] Vantage Deepwater Co. v. Petrobras Am., Inc., 966 F.3d 361, 365-66 (5th Cir. (Tex.) 2020).

[873] Id. at 366.

[874] Id. at 367.

[875] Id.

[876] Id.

[877] Id. at 368.

[878] T.I.A.S. No. 90-1027, reprinted following Pub. L. 101-369, 104 Stat. 448 (1990).

[879] Vantage Deepwater Co., 966 F.3d at 368.

[880] Id. at 369.

[881] Id. at 369-70.

[882] Id. at 371.

[883] Id. at 372.

[884] Id. at 373.

[885] Id.

[886] Id. at 374-75.

[887] Id. at 375.

[888] EGI-VSR, LLC v. Coderch, 963 F.3d 1112, 1115 (11th Cir. (Fla.) 2020).

[889] Id.

[890] Inter-American Convention on Letters Rogatory (“Convention on Letters Rogatory”), Jan. 30, 1975, O.A.S.T.S. No. 43, 1438 U.N.T.S. 288.

[891] EGI-VSR, LLC, 963 F.3d at 1118.

[892] Id. at 1119-1120.

[893] Id. at 1123.

[894] Id. at 1124.

[895] Process & Indus. Devs. v. Fed. Republic of Nig., 962 F.3d 576, 579-580 (D.C. Cir. 2020).

[896] Id.

[897] 28 U.S.C.A. § 1604 (West 2020).

[898] Process & Indus. Devs. v. Fed. Republic of Nig., No. 18-594, 2018 U.S. Dist. LEXIS 226627, at *3 (D.D.C. Oct. 1, 2018).

[899] Process & Indus. Devs., 962 F.3d at 582-584.

[900] Id. at 585.

[901] Id. at 586.

[902] Id.

[903] Earth Sci. Tech, Inc. v. Impact UA, Inc., 809 F. App’x 600, 603 (11th Cir. (Fla.) 2020).

[904] 9 U.S.C.A. § 10(a)(4) (West 2020).

[905] 9 U.S.C.A. §§ 301-307 (West 2020), incorporating § 202 by reference.

[906] 9 U.S.C.A. § 207 (West 2020).

[907] Earth Sci. Tech, 809 F. App’x at 605.

[908] Id. at 606.

[909] Id. at 609.

[910] OJSC Ukrnafta v. Carpatsky Petro. Corp., No. 19-20011, 2020 U.S. App. LEXIS 14264 (5th Cir. (Tex.) 2020), vacating on rehearing OJSC Ukrnafta v. Carpatsky Petro. Corp., 955 F.3d 465 (5th Cir. (Tex.) 2020).

[911] Id.at *4.

[912] Id.

[913] Id. at *5.

[914] Id. at *6.

[915] Id. at *7.

[916] Id. at *9 (citing Certain Underwriters at Lloyd’s v. Warrantech Corp., 461 F.3d 568, 575-76 (5th Cir. (Tex.) 2006).

[917] Id. (citing Acosta v. Master Maint. & Constr., Inc., 452 F.3d 373, 377 (5th Cir. 2006)).

[918] Id. at *11 (citing the New York Convention at Art. V(1)(e); Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 287-88 (5th Cir. (Tex.) 2004)).

[919] Id. at *11-12.

[920] Id. at *14-15.

[921] Id. at *22-23.

[922] Id. at *22-24.

[923] Id. at *24-25.

[924] Id. at *26-27 (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)).

[925] Id.

[926] Soaring Wind Energy, L.L.C. v. Catic USA Inc., 946 F.3d 742, 747 (5th Cir. (Tex.) 2020).

[927] Id. at 748.

[928] Id.

[929] Id.

[930] Id. at 749.

[931] Id.

[932] Id. at 750-51.

[933] Id. at 752-53.

[934] Id. at 753.

[935] Id.

[936] Id. at 755.

[937] Id. at 758.

[938] Id.

[939] Id.

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