Reinsurance Focus

In this class action brought by current and former female employees of Sterling Jewelers, Inc. (“Sterling”), Sterling moved to vacate the arbitrator’s decision that class arbitration is not prohibited by the arbitration agreement or, in the alternative, to stay the arbitration proceedings. The federal district court stated, and Sterling conceded, that the arbitrator’s decision could be overturned only if the decision exceeded the arbitrator’s powers in violation of the Federal Arbitration Act or if the decision was made in manifest disregard of the law. In denying the motion to vacate, the court first ruled that the arbitrator had the power to decide such an issue, pointing to the broadness of the arbitration clause and citing the court’s prior decision determining that the arbitrator should resolve the question of whether class arbitration should proceed. The court held that the arbitrator did not act in manifest disregard of law based upon the Second Circuit’s holding in Stolt-Nielsen SA v. Animalfeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2008), which is currently pending for decision before the Supreme Court after argument last December. Lastly, the court refused to grant a stay of arbitration pending the Supreme Court’s decision in Stolt-Nielsen, finding that Sterling did not identify any substantial harm that would justify a delay and noting the uncertainty surrounding when Stolt-Neilsen will be decided and whether the decision will dispose of the issues raised in this case. Jock v. Sterling Jewelers, Inc., Case No. 08-2875 (USDC S.D.N.Y. Dec. 28, 2009).

This post written by Dan Crisp.