Recent Posts

May 12, 2009

Supreme Court Decision on FAA Appeals

The Supreme Court of the United States has held that any litigant –-whether or not a signatory of the agreement to arbitrate — who suffers denial of an application to stay the litigation pending arbitration, is entitled to an interlocutory appeal of that order. Section 16(a)(1) (A) of the Federal Arbitration Act, the Court held, clearly provides for such an interlocutory appeal, without reference to the contractual status of the appellant, so long as the District Court order did in fact deny a stay. The Court further held that such a litigant may not have an application for a stay…
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April 02, 2009

Supreme Court Limits Federal Jurisdiction Over Petitions to Compel Arbitration

The Federal Arbitration Act (“FAA”) guarantees the enforceability of private agreements to arbitrate, but guarantees a federal forum to compel arbitration only some of the time. State courts are bound to give effect to the FAA in enforcing agreements to arbitrate, and limitations on federal subject matter jurisdiction often will require that they do so. Section 4 of the FAA provides for a civil action whose sole purpose is to obtain an order to compel a recalcitrant party to arbitrate. No court action concerning the underlying dispute need be pending; the Section 4 petition is an independent proceeding. It permits…
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March 04, 2009

Third Circuit Invalidates Arbitral Class Action Waiver

Last summer I published a commentary in the Mealey’s Class Action Report entitled Unconscionable Consumer Class Action Waivers and the Federal Arbitration Act. (located on my website, www.lexmarc.us/Documents/Consumer_Class_Action_Waivers.pdf) The article reported on the trend of federal cases to find the clauses requiring all claims to be resolved in individual, non-class arbitration are unconscionable under state law, and that non-enforcement of arbitration agreements to the extent of refusing to give effect to the class action waiver does not violate the Federal Arbitration Act. That commentary was critical of a decision of the United States Court of Appeals for the Third Circuit,…
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February 03, 2009

Second Circuit Invalidates Arbitral Class Action Waiver

The U.S. Court of Appeals for the Second Circuit has held that a class action waiver in an arbitration clause that operates in practice to stifle prosecution of federal antitrust claims, violates public policy and therefore is invalid under the Federal Arbitration Act (“FAA”). In re American Express Merchants’ Litigation, 2009 U.S. Dist. LEXIS 1646 (2d Cir. Jan. 30, 2009). Whether the decision will affect the economic balance between consumer products companies and their customers is difficult to predict. Consumer services companies have sought over the last decade to limit their exposure to class-wide damages judgments by requiring claims to…
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January 30, 2009

Removal of New York Convention Case from State to Federal Court

I report today on an unusual case, involving a rarely-encountered issue. The case, decided by a U.S. District Judge in New York in the last days of 2008, is Vistra Trust Co. v. Stoffel, 2008 U.S. Dist. LEXIS 106493 (S.D.N.Y. Dec. 29, 2008). The issue: the right of a litigant to transfer a case filed in state court to a federal court (in federal practice parlance, “removal”) when the case involves an arbitration agreement or award governed by the U.N. Convention on Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). In Vistra, a family trust brought fraud claims…
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January 22, 2009

Do-Overs: A New Installment in the Law of Reconstituted Tribunals

“Do-Overs”: A New Installment in the Law of Reconstituted Arbitral Tribunals By Marc J. Goldstein Do-overs are much-discussed in the news, as the President and Chief Justice of the United States decided, in an abundance of caution, to re-enact the administering of the Constitutionally-mandated oath of office in a White House ceremony attended by roughly 500 million fewer people than witnessed the original stumbling performance at mid-day on January 20, 2009. Do-overs in arbitration are again a topic of discussion, after the recent decision of a federal district judge in New York that ordered an arbitration to start anew and…
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