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Fitzpatrick, Cella, Harper & Scinto to Join Venable - Global Banking And Finance Review (press release)

Google International ADR News - Wed, 2018-08-22 01:06

Global Banking And Finance Review (press release)

Fitzpatrick, Cella, Harper & Scinto to Join Venable
Global Banking And Finance Review (press release)
... litigation, appeals, post-grant patent challenges (e.g., IPRs), alternative dispute resolution, licensing, opinions, corporate transactions and due diligence. Fitzpatrick represents an international client base from Fortune 500 companies to start ...

Supreme Court Grants Cert Addressing Delegation of Arbitrability

Business Conflict Blog - Thu, 2018-07-05 13:46

Upon reconvening in October 2018, the Supreme Court will take up  an interesting question involving the familiar rules of First Options v. Kaplan:  Who is to decide whether a claim is subject to arbitration — a court or the arbitrator?  The peculiar facts giving rise to that concern in Archer and White Sales Inc. v. Henry Schein Inc. broaden, rather than limit, the case’s interest.

Archer, a distributor and seller of dental equipment, brought a suit against Schein, a manufacturer, alleging violations of the Sherman Antitrust Act through a pattern of conduct including price-fixing and anti-competitive agreements that were continuing.  The suit sought both money damages and an injunction prohibiting the continuing conduct.

Schein moved to compel arbitration pursuant to an arbitration agreement that required the application of AAA Rules and that carved out of its scope “actions seeking injunctive relief.”  The Magistrate Judge granted the defendants’ motion to compel arbitration on the grounds that (a) the choice of AAA Rules evince an intention to delegate arbitrability to the arbitrator, and that (b) the arbitration agreement can be reasonably construed as contemplating the inclusion of this dispute.

(AAA Rule 7(a) provides that an “arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”)

The district court vacated the Magistrate Judge’s order and held that the dispute was not arbitrable  pursuant to the arbitration agreement, because it expressly carved out any claim for the injunctive relief sought by the plaintiff in the action.

Upon appeal to the Fifth Circuit, the parties agreed to the existence of an arbitration agreement, but not to whether its scope included the filed action.  Following its precedent in Douglas v. Regions Bank, the court entered into a two-step analysis, asking first whether the parties “clearly and unmistakably” intended to delegate the question of arbitrability to an arbitrator, and second whether there is a plausible argument for the claim’s being arbitrable.  This is so because, according to the Douglas analysis, if the argument of arbitrability is “wholly groundless,” it made no sense to send to an arbitrator a dispute as to which there are no grounds whatsoever for arbitration.

As to the first step — whether the parties unmistakably agreed to delegate arbitrability — the court skirted the question of whether AAA Rule 7(a) delegated the question of arbitrability to claims that are subject to the carve-out in the arbitration agreement.  Instead, it held that the second Douglas step was dispositive irrespective of the resolution of that first inquiry.  That second-step analysis was straightforward, according to the Fifth Circuit.  The arbitration agreement “expressly excludes certain types of disputes,” and among them are claims for injunctive relief.  Here we have a dispute where the claimant seeks injunctive relief.  Any conclusion  that the claim is subject to arbitration is therefore “wholly groundless,” and the court could see “no plausible argument that the arbitration clause applies” to it.  The district court therefore properly determined that the action was not subject to arbitration, and its order denying defendants’ motion to compel was affirmed.  “The mere fact that the arbitration clause allows [plaintiff] to avoid arbitration by adding a claim for injunctive relief does not change the clause’s plain meaning.”

[Note to Self:  Revise slide 19 of the “Drafting Arbitration Clauses” Power Point!]

So we have several interesting questions.  Does a clause carving out “actions seeking injunctive relief” carve out that portion of an action that seeks an injunction, but preserve that portion that seeks monetary damages?  Is the idea of booting “wholly groundless” claims of arbitrability properly applicable only to claims having nothing whatsoever to do with the contract at issue (say, a claim for an unrelated, non-contractual injury)? In determining the “wholly groundless” nature of the assertion of arbitrability, is the court improperly construing the arbitration agreement, in derogation of the parties’ determination that the arbitrator should do so pursuant to AAA Rule 7(a)?  Is there an at-least-colorable construction of the carve-out language that would hold that the parties may come to court to seek injunctive relief, but must arbitrate claims for money damages?

At least we will have no doubt about “who decides” these questions — the Supreme Court will.

Music for Mediators

The Mediation Times - Sun, 2013-05-26 16:07
For years I have talked about the similarity of mediation with both photography and music, particularly jazz. I have been clearing out my inbox and came across an hilarious email trail between some of the UK’s top mediators. The topic – songs for mediators, parties and mediation! I thought I would share … Thank to [...]
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