Reinsurance Focus

On February 18, 2010, we reported on Jock v. Sterling Jewelers, Inc., in which the U.S. District Court for the Southern District of New York refused to vacate an arbitration decision that permitted class arbitration under an agreement that did not address whether that procedure was permitted. Sterling subsequently appealed the order to the Second Circuit Court of Appeals, where it is currently pending. Thereafter, Sterling moved the Southern District of New York for an “indicative ruling” as to whether the court would reconsider its order based on the U.S. Supreme Court’s recent Stolt-Nielsen decision, which held that class arbitration is not permitted when the relevant arbitration clause is “silent” on class arbitration. The Southern District of New York concluded that, in light of Stolt-Nielsen, the court would now vacate the arbitration decision. The court explained that the determinative factor was the underlying arbitration agreement’s silence on whether class arbitration was permitted. The court was not persuaded by the plaintiffs’ attempts to distinguish this case from Stolt-Nielsen, including plaintiffs’ contention that the context of the agreement and sophistication of the parties in this case varied from the underlying agreement and parties in Stolt-Nielsen. Without an express or implied agreement for class arbitration, class arbitration would not be allowed. Jock v. Sterling Jewelers, Inc., No. 08- 2875 (USDC S.D.N.Y. July 27, 2010).

This post written by Michael Wolgin.