Welcome to Disputing‘s 2009 Year-End Highlights. During this year, the U.S. Supreme Court decided several cases related to arbitration: On March 9, the Court decided Vaden v. Discover Bank. The issues were (1) whether a district court, if asked to compel arbitration, should “look through” the petition and grant the relief if the court would have federal-question jurisdiction of the controversy and (2) whether a district court should exercise jurisdiction over the petition when the petitioner’s complaint rests on state law but an actual or potential counterclaim rests on federal law. (post available here) On April 1, the Court decided 14 Penn Plaza v. Pyett. The issue resolved by the Court was whether a provision in a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate claims arising under the Age Discrimination in Employment Act is enforceable. (posts available here and here) On May 4, the Court decided Arthur Andersen LLP v. Carlisle. The issues decided were (1) whether appellate courts have jurisdiction under Section 16(a) of the FAA to review denials of stays of litigation requested by nonparties to the arbitration agreement and (2) whether Section 3 of the FAA can ever mandate a stay of litigation by nonparties to the arbitration agreement. (post available here) On June 15, the Court granted certiorari to Stolt-Nielsen S.A., et al. v. AnimalFeeds International Corp., to decide whether the FAA permits class arbitration when the arbitration agreement is silent. The case will be heard by the Court on December 9, 2009. (post available here and Professor Alan S. Rau comments here). [update: transcript of the Dec. 9 argument is here] The Court also vacated and remanded the Sixth Circuit decision in Kimberlin v. Renasant Bank for further consideration in light of Arthur Andersen LLP v Carlisle. (post available here) On October 5, the Court denied certiorari to three “manifest disregard of the law” cases: The Coffee Beanery, Ltd. v. WW, LLC, 300 Fed. Appx. 415 (6th Cir. 2008); Grain v. Trinity Health, 551 F.3d 374 (6th Cir. 2008); and Comedy Club, Inc. v. Improv West Associates, 553 F.3d 1277 (9th Cir. 2008). (order list 558 U.S. is here) [update:] Finally, in December, the Court decided Union Pacific v. Brotherhood of Locomotive Engineers, 558 U.S. ___(Dec. 8, 2009). The issue before the Court was whether a pre-arbitration conference was a jurisdictional requirement under the Railway Labor Act. (post available here) Technorati Tags: arbitration, ADR, law, U.S. Supreme Court

Disputing is pleased to introduce its Year-End Highlights series. During this month, we will discuss 2009 developments in case law and legislation regarding arbitration and mediation. Stay tuned! Karl Bayer, Holly Hayes, and Victoria VanBuren

In The Householder Group v. Caughran, No. 09-40111 (5th. Cir. Nov. 11, 2009), the court summarizes the facts as follows: [A] panel of arbitrators with the National Association of Securities Dealers, Inc. (“NASD”) awarded Householder Group $39,500 in compensatory damages for breach of a promissory note, $50,000 in compensatory damages for breach of a Branch Office Agreement, and $70,000 in attorneys fees. Thereafter, Householder Group filed a motion in the district court to confirm the award, and Caughran filed a motion for vacatur. On September 17, 2008, the district court granted Householder Group’s motion, denied Caughran’s motion, and confirmed the arbitration award. Subsequently, Caughran filed this pro se appeal contending that the district court erred by denying his motion to vacate and by confirming the award. The Fifth Circuit noted that judicial review of arbitral awards is “exceedingly deferential, and vacatur is available only for the limited reasons outlined in Section 10(a) of the FAA.” The court also said that it has no authority to review the merits of the award. Since Caughran did not allege the FAA grounds, the court construed his claims under Sections 10(a)(2) and (3). First, Caughran argues that he did not receive a fair hearing because the panel did not allow him to introduce certain evidence. But the Fifth Circuit agreed with the reasoning of the district court: The arbitrator is not bound to hear all of the evidence tendered by the parties; however, he must give each of the parties to the dispute an adequate opportunity to present its evidence and argument. An evidentiary error must be one that is not simply an error of law, but which so affects the rights of a party that it may be said that he was deprived of a fair hearing. The court then addressed Caughran’s second argument that the panel was biased. Specifically, Caughran claims that: (1) the panel refused to force Householder Group to comply with the panel’s discovery orders; (2) the panel’s rulings were one-sided and against Caughran; (3) the panel wanted him to lose despite overwhelming evidence favoring Caughran; and (4) the panel awarded $50,000 for the breach of the Branch Office Agreement in order to punish Caughran for filing forty motions for evidence. The Fifth Circuit stated that “evident partiality based on actual bias is an onerous burden” because the party must show that “the alleged arbitrator partiality was direct, definite, and capable of demonstration.” The court concluded that Caughran failed to meet his burden because he did not produce specific facts to support these allegations. Lastly, the Fifth Circuit discussed Caughran’s claim that his Seventh Amendment rights had been violated. The court stated that “[I]f claims are properly before an arbitral forum pursuant to an arbitration agreement, then the Seventh Amendment right to a jury trial vanishes.” Accordingly, the Fifth Circuit affirmed the lower court’s decision to confirm the arbitral award. Technorati Tags: arbitration, ADR, law, Fifth Circuit

In re Golden Peanut Co., (Texas 2009) (No. 09-0122) deals with family members who brought a wrongful death action against Grant Drennan’s employer, Golden Peanut Company, LLC. (“Golden Peanut”). Golden Peanut did not subscribe to worker’s compensation insurance, but provided an Employee Injury Benefit Plan which called for binding arbitration of employment-related claims. Golden Peanut filed a motion to compel arbitration. The trial court denied the motion and Golden Peanut appealed. The Texas Supreme Court, citing In re Labatt Food Service, L.P., __S.W.3d __ (Tex. 2009), held that wrongful death beneficiaries nonsignatories to an arbitration agreement must be compelled to arbitrate when the decedent’s claims would had been arbitrated. Technorati Tags: arbitration, ADR, law, Texas Supreme Court