Reinsurance Focus

This post summarizes the salient issues and key points of recent decisions on arbitration awards:

• In the latest development in Swiss Re v. Lincoln National, the Northern District of Indiana confirmed the entry of an uncontested arbitration award. Swiss Reinsurance Co. v. Lincoln Nat’l Reinsurance Co. (Barbados) Ltd., Case No. 09-cv-36 (N.D. Ind. Dec. 14, 2009).
• In ConocoPhillips v. United Steel Workers, the Eastern District of Pennsylvania analyzed a labor arbitration award. The court determined that the arbitrator was not authorized to make a particular progressive discipline structure of his own creation part of the Collective Bargaining Agreement. The court confirmed the award, but modified the arbitrator’s opinion to make clear that the five-step progressive discipline structure described would only be illustrative rather than required by or part of the CBA. ConocoPhillips v. United Steel Workers Local 10-234, Case No. 09-3842 (E.D. Pa. Jan. 19, 2010).
• Following an adverse arbitration award, plaintiff Jerry Broaddus moved the Middle District of Tennessee to vacate the award. Mr. Broaddus contended the award was in manifest disregard of the law because the arbitrator incorrectly defined an “adverse employment action” as a materially adverse change in the terms of conditions of employment in contravention of controlling case law. The court found that even if the arbitrator failed to correctly view the “adverse employment action,” the error was harmless. The award was confirmed. Broaddus v. Rivergate Acquisitions, Inc., Case No. 08-0805 (M.D. Tenn. Jan. 14, 2010).
• In Kirby Morgan Dive Sys. V. Hydrospace Ltd., the Central District of California entered an order confirming an arbitration award in favor of Kirby Morgan Dive Systems. The court found that (1) it had subject matter jurisdiction over the petition; (2) personal jurisdiction over the defendant; (3) Kirby Morgan was permitted to proceed on a default basis; (4) and Kirby Morgan was not required to obtain a prior order compelling arbitration. Kirby Morgan Dive Sys. v. Hydrospace Ltd., Case No. 09-4934 (C.D. Cal. Jan. 13, 2010).
• A Texas Court of Appeals conditionally granted Chevron USA’s motion for a writ of mandamus against the trial court judge compelling him to enter an order confirming three arbitration awards. Chevron additionally filed a notice of appeal from an order which, it argues, denies its motion to confirm the arbitration awards. The Court of Appeals dismissed the notice of appeal after determining that it lacked jurisdiction to hear the interlocutory appeal. In re: Chevron U.S.A., Inc., Case No. 08-00082 (Tex. Ct. App. Jan. 27, 2010).
• Rhode Island Hospital moved to vacate an arbitration award in favor of Defendant United Nurses and Allied Professionals Local 5098. The Court held that the award was founded on a “plausible interpretation” of the collective bargaining agreement, and thus the court “must uphold it.” Rhode Island Hospital v. United Nurses and Allied Professionals, Local 5098, Case No. 09-226 (D. R.I. Jan. 22, 2010).
• In Thomas Kinkade Co. v. Lighthouse Galleries, LLC, the Eastern District of Michigan vacated an arbitration award in favor of Lighthouse Galleries. The court, while noting the limited nature of judicial review of arbitration awards, found that the award violated the parties’ contract and disregarded undisputed evidence. Thus, the court ruled that intervention was appropriate and vacated the award. Thomas Kinkade Co. v. Lighthouse Galleries, LLC, Case No. 09-10757 (E.D. Mich. Jan. 27, 2010).
• In a dispute related to construction work on the US Navy’s SPAWAR facility, the US District Court sitting in South Carolina denied plaintiff Coastal Roofing Company’s motion to vacate the arbitration award entered against it. The court found that even though the arbitrator failed to include a written explanation for his decision, the award should be confirmed. United States of America for the Use and Benefit of Coastal Roofing Co., Inc. v. P. Browne & Assoc., Inc., Case No: 07-3008 (D. S.C. Jan. 22, 2010).
• Petitioners Thomas E. Collins, Jr. and Heather Collins moved to confirm an arbitration award issued by FINRA against Lawrence Joseph Ferrari, who had not filed a response or appearance in the action. The court found that petitioners carried their light burden of persuasion, and the award was confirmed. Collins v. Ferrari, Case No. 08-1274 (N.D. N.Y. Feb. 9, 2010).
• In Schwartz v. Merrill Lynch, the Southern District of New York found that petitioner Robert Schwartz offered no legitimate grounds to support his motion to vacate the arbitration award entered in favor of Merrill Lynch. The court found specious Schwartz’s arguments that the arbitrator was biased and failed to consider relevant evidence. Schwartz v. Merrill Lynch & Co., Inc., Case No. 09-900 (S.D. N.Y. Feb. 8, 2010).

This post written by John Black.