The Second Circuit held recently that the term “customer” under FINRA Rule 12200 does not include a broker-dealer non-party to a credit default swap agreement. See Wachovia Bank v. VCG Special Opportunities Master Fund Ltd., No. 10-1648-cv (2d Cir. N.Y. Oct. 28, 2011). In the present case, Wachovia Bank, N.A. (“Wachovia Bank”) and Wachovia Capital Markets, LLC (“WCM”) (collectively “Wachovia”) sued VCG Special Opportunities Master Fund, Ltd., (“VCG”) in connection with a credit default swap (or “CDS”) transaction.Wacovia asserted that there was no arbitration agreement between VCG and Wacovia Bank. The district court the motion ruling that the FINRA Code of Arbitration Procedure for Customer Disputes (“FINRA Code”) provides for arbitration of disputes between a FINRA member and its “customer[s],” and that, as WCM was a FINRA member and negotiated part of the CDS agreement entered into by VCG and Wachovia Bank, VCG should be considered a customer of WCM within the meaning of the FINRA Code. The Second Circuit concluded that no rational fact-finder could infer that VCG was a customer of WCM. Thus, Wachovia should have been granted summary judgment. Technorati Tags: law, ADR, arbitration

As Computerworld reports, Seagate has been awarded $525 million in arbitration against competitor Western Digital. The companies are the top two hard-drive manufacturers in the market. Seagate alleged that Western Digital and a former Seagate employee misappropriated confidential information and trade secrets. Read more about the arbitration award here and here. Technorati Tags: law, ADR, arbitration

In Paper, Allied-Industrial Chem. & Energy Workers Int’l Union, Local 4-12 v. Exxon Mobil Corp., 657 F.3d 272 (5th Cir. La. 2011), plaintiff (the “Union”) filed suit to compel defendant corporation (“Exxon”) to arbitrate two labor grievances, pursuant to a provision in the collective bargaining agreement (“CBA”). The CBA defined “arbitrable grievance” as “good faith claim by one party that the other party has violated a written provision of this agreement.” The district court granted the Union’s motion for summary judgment, but only as to one of the grievances, and both sides appealed. The issue before the Court of Appeals for the Fifth Circuit is whether the Union’s grievances are arbitrable. Because the element of “good faith” was included in the arbitration clause, the court concluded that only “good faith” claims by one party that the other party had violated a written provision of the CBA were arbitrable. The Fifth Circuit held that the Union’s grievances, based upon employer’s contracting out of process work as it was expressly allowed to do under an unambiguous provision of the CBA, or based on employer’s performance of expressly authorized management function, were not asserted in “good faith” as required for it to be arbitrable. For the same reasons that section of the CBA could not serve as a basis for requiring arbitration of the post-reduction claim. Accordingly, the court reversed the district court’s grant of the Union’s motion for summary judgment with regard to the contracting-out grievance, affirmed the district court’s denial of the Union’s motion for summary judgment with regard to the post-reduction grievance, and reversed the district court’s denial of Exxon’s motion for summary judgment.

We invite you to check out Pictured It Settled, a premier App for negotiators. Created by Don R. Philbin (contributor of this blog), Pictured It Settled helps negotiators to (a) see whether and when settlement negotiations might end in a deal; (b) calculate future offers based on the prior moves of the parties; and (c) keep track of multiple negotiations in a single place. Learn more about Pictured It Settled here or visit the iTunes App Store here. “Perfect tool for busy professionals – lawyers and litigants – who need immediate, on-the-spot help in discovering what’s going on in a settlement or contract negotiation. Infinitely better than scratching your head!” John A. Chalk   Technorati Tags: law, ADR, arbitration