Reinsurance Focus

The Second and Eighth Circuit Courts of Appeal have both issued recent opinions regarding res judicata issues in the context of arbitrations. In Lobaito v. Chase Bank, No. 12-3492 (2d Cir. July 16, 2013), the Court affirmed a district court’s dismissal under Rule 12(b)(6) of a complaint alleging the same claims as had been arbitrated to conclusion in a FINRA arbitration, in favor of the defendant bank, and against a pro se former employee of the bank. The Court held that the district court properly found res judicata applied to the claims – which were identical to the claims in the FINRA arbitration and between the same parties – and, even if res judicata did not apply, construing the pro se plaintiff’s claim as a motion to vacate the FINRA award, the Court found the plaintiff’s motion to vacate was untimely and futile anyway.

The Eight Circuit Court of Appeals reviewed a district court’s grant of summary judgment in favor of an employer in a dispute with an employee, who was represented by his Union. Previous litigation between the parties as to the arbitrability of the employment dispute resulted in a district court decision in favor of the Union, which referred the parties to arbitration. However, before the arbitration commenced, the employer filed a new declaratory judgment action, arguing that the dispute was not arbitrable under the contract alleged by the Union in its arbitration claim, and sought an order precluding arbitration of the issue. The Court granted the employer’s motion for summary judgment on its declaratory claim, finding the dispute as framed outside the purview of the contract alleged. However, the Eight Circuit Court reversed, finding that the district court failed to properly apply res judicata to the employer’s claim, because it could have been raised in the prior proceeding, which was decided in favor of the Union. Carlisle Power Transmission Products, Inc. v. U.S. Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Int’l Union, Local No. 662, No. 12-2986 (8th Cir. Aug. 5, 2013).

This post written by John Pitblado.

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