The Dallas Court of Appeals has held that a trial court properly rejected a party’s motion to seal an arbitration award as part of an enforcement petition despite the existence of a confidentiality agreement between the parties. In McAfee v. Weiss, 05-09-01102-CV (Tex. App. – Dallas, March 16, 2011), Kevin M. Weiss filed a petition to confirm an arbitration award against McAfee in state court. Weiss, a former president at McAfee, Inc. was terminated in 2006. As a result of termination of Weiss’ employment, Weiss and McAfee engaged in an arbitration proceeding. McAfee and Weiss agreed to enter into a protective order which allowed parties to mark exhibits and testimony for the arbitration as “Confidential” or “Attorneys’ Eyes Only.” Additionally, counsel for Weiss assured a number of witnesses that their testimony would remain confidential. The arbitrator ultimately ruled in Weiss’ favor and issued an award that was supported by numerous citations to witness testimony and documentary exhibits. In June 2009, Weiss filed a petition to confirm the award and attached a copy of the arbitral award to his petition. McAfee filed a motion to seal both the petition and the award and requested a temporary sealing order. The trial court issued a temporary order, and a full hearing was held on August 24, 2009. After the hearing, the judge issued a memorandum order which stated McAfee failed to meet its burden under Texas Rules of Civil Procedure 76a. The temporary sealing order remained in effect, however, until McAfee and Weiss agreed to certain redactions in the award. Next, Weiss “filed a proposed redacted arbitration award” after the parties failed to agree on necessary redactions. After another hearing, a final order denying McAfee’s motion for a sealing order, vacating the temporary sealing order and confirming the arbitration award was issued. Finally, the trial court ordered that the redacted version of the award as submitted by Weiss be substituted into the court record. After determining that the Dallas Court of Appeals had jurisdiction to hear the appeal, the court considered whether the trial court abused its discretion when it denied McAfee’s motion to seal the petition and award. McAfee argued the trial court erred because arbitration awards are not “court records” within the definition of Texas Rules of Civil Procedure 76a. The court concluded that McAfee failed to preserve the issue on appeal on procedural grounds, but also rejected it on the merits. Looking at the plain language of the rule, the court concluded that an arbitration award submitted by a party in connection with a matter before the court is clearly a court record within the meaning of Rule 76a. Additionally, McAfee’s argument that the confidentially agreement between the parties and enforced by the arbitrator exempted the award from the definition was not persuasive because the facts did not fit one of the specific exceptions defined by the rule. Next, the Dallas Court held McAfee failed to meet the requirements to overcome the presumption that court records should be open to the public: We have found no cases recognizing a party’s general interest in a confidentiality agreement – even an agreement reinforced by an arbitrator’s rules and orders – as a specific, serious, and substantial interest within the meaning of 76a(1). The relevant case law indicates that the interest relied on must be more specific than that. Because an arbitration award submitted by a party in connection with a matter before the court is a court record within the meaning of Rule 76a and McAfee failed to offer evidence of a specific, serious and substantial interest which required sealing the award, the Dallas Court of Appeals affirmed the trial court. Technorati Tags: ADR, law, arbitration

The Beaumont Court of Appeals has held in a memorandum opinion that Section 9 of the Federal Arbitration Act (“FAA”) established a mandatory one year statute of limitations for the enforcement of arbitral awards. In Arthur v. FIA Card Services, N.A., No. 09-09-00520-CV, (Tex. App. – Beaumont, March 10, 2011), Sally LaRue Arthur (“LaRue”) appealed a judgment which confirmed a National Arbitration Forum (“NAF”) award because she was served with a motion to confirm the award outside of the FAA’s one year statute of limitations. On April 27, 2007, an arbitration award was issued by the NAF in favor of MBNA America Bank. On December 5, 2007, FIA Card Services (“FIA”), formerly known as MBNA America Bank, filed an action to confirm the arbitration award in a state court. LaRue was ultimately served more than one year after the award was issued, however. LaRue filed an answer and moved to vacate the arbitral award asserting that under Texas law, “a timely filed suit does not interrupt the running of limitations unless a plaintiff exercises due diligence in the issuance and service of citation.” The trial court issued a judgment confirming the arbitration award on August 17, 2009. LaRue appealed. First, the Beaumont Court of Appeals noted that a split exists among federal courts as to whether FAA Section 9 acts as a statute of limitations. In Bernstein Seawell & Kove v. Bosarge, 813 F.2d 726 (5th Cir. 1987), the Fifth Circuit “recognized the one year provision is mandatory,” stating, “[w]ithout discussion” that “’[t]he complaint to enforce the arbitration award was filed within one year as required by 9 U.S.C. § 9.’” Relying on this and other precedents, the Beaumont Court of Appeals concluded “the one year limitation period set forth in section 9 is mandatory, not permissive.” The Court of Appeals then stated Texas courts look to federal law for substantive matters but state law to resolve procedural questions when applying the FAA. According to the court, Texas law regarding tolling of the statute of limitations is procedural in nature and has been applied when analyzing the application of a federal statute of limitations in state court. The Beaumont court next addressed the matter of “whether a plaintiff used due diligence in serving a defendant,” further noting that “[g]enerally, a plaintiff’s due diligence in effecting service is a question of fact.” According to the court, because LaRue pled a statute of limitations defense and established that she was served after the one year limitations period passed, “the burden shifted to FIA to explain the delay in service of process,” and FIA’s response raised an issue of fact. Although the Court of Appeals recognized that proceedings to confirm arbitration awards under Section 9 are typically summary proceedings, when disputed issues of material fact arise in a matter for which the legislature has prescribed summary disposition, the trial court still has a duty to hear evidence when necessary to resolve disputed fact issues. The Beaumont Court of Appeals held the one year statute of limitations set forth in section 9 of the FAA was mandatory and material issues of fact existed regarding whether FIA used due diligence in serving LaRue. The court reversed and remanded the case for an evidentiary hearing prior to confirmation of the arbitral award. Technorati Tags: ADR, law, arbitration

Dr. Michael A. Helfand, Associate Professor of Law and Associate Director, Glazer Institute for Jewish Studies at the Pepperdine University School of Law, recently authored an interesting article entitled “Religious Arbitration and the New Multiculturalism: Negotiating Conflicting Legal Orders,” 86 N.Y.U. L. Review, __ (2011), Forthcoming. In his article, Professor Helfand discusses religious arbitration agreements and awards and offers policy recommendations for courts faced with enforcing them. Here is the abstract: This Article considers a trend towards what I have termed the “new multiculturalism,” where conflicts between law and religion are less about recognition and symbolism and more about conflicting legal orders. Nothing typifies this trend more than the increased visibility of religious arbitration, whereby religious groups use current arbitration doctrine to have their disputes adjudicated not in U.S. courts and under U.S. law, but before religious courts and under religious law. This dynamic has pushed the following question to the forefront of the multicultural agenda: under what circumstances should U.S. courts enforce arbitration awards issued by religious courts in accordance with religious law. Indeed, with growing skepticism regarding the oppressive potential of religious majorities, critics have questioned whether religious arbitration has any place in a regime dedicated to individual liberties. By contrast, this Article contends that current arbitration doctrine can meet the challenges of the new multiculturalism. To do so, this Article makes two concrete policy recommendations: (1) courts should redefine the scope of enforceability of religious arbitration awards by limiting the application of the public policy exception to vacate religious arbitration awards and (2) courts should expand the application of unconscionability to void religious arbitration agreements. The article may be downloaded here (without charge) from Social Science Research Network. What are your thoughts? Technorati Tags: ADR, law, arbitration

The Supreme Court of Texas has denied a party’s petition for a writ of mandamus after the Houston [1st] Court of Appeals held U.S. courts lacked authority to appoint an arbitration panel. In In re Aramco Services Co., No. 01-09-00624-CV, (Tex. App. – Houston [1st], March 19, 2010), DynCorp International, LLC and Aramco entered into a contract for a computer system which was to be manufactured in the U.S. and installed at Aramco’s offices in Saudi Arabia. The contract contained a Saudi “Choice of Law” provision and an arbitration clause which required an arbitrator to be “a Saudi national or a Moslem foreigner.” DynCorp filed suit in Houston seeking payment of certain monies pursuant to the contract. Aramco filed a motion to compel arbitration, which the trial court granted. DynCorp then filed a motion to compel arbitration before JAMS or the American Arbitration Association. Over Aramco’s objections, the trial court granted DynCorp’s motion in part and appointed a three party arbitration panel which consisted of two non-Muslims. Aramco sought a writ of mandamus from an appeals court. The Houston Court of Appeals held that the trial court lacked authority to appoint an arbitral panel to decide the parties’ dispute. The Houston Court conditionally granted Aramco’s writ of mandamus and directed the trial court to vacate its previous orders. DynCorp then filed a petition for a writ of mandamus with the Supreme Court of Texas. On February 25th, the Supreme Court denied DynCorp’s petition in In re DynCorp International, LLC, No. 10-0798. You can read Disputing‘s previous post about the case here. We would love to hear your thoughts. Technorati Tags: arbitration, ADR, law, Texas Supreme Court