Practice and Procedure – Arbitration

Published in Law 360 (July 30, 2018)

Who may determine whether “class arbitration” has been authorized by the parties to an arbitration agreement — a court, an arbitrator, either? Considering the nature of “class arbitration,” is this a special case of the arbitrability delegation issue, or is this issue sui generis? And what does exploring the issue reveal about the larger question of whether “class arbitration” is an oxymoron?

Continue Reading Who May Determine Whether Class Arbitration Is Authorized?

When an agreement to arbitrate contains a clear and unmistakable “delegation” provision, gateway questions of arbitrability are for the arbitrator to decide. See, e.g., Kubala v. Supreme Prod. Servs., 830 F.3d 199, 201-02 (5th Cir. 2016), citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 942 (1995); Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (2010). But a determination of the delegation issue is not always obvious, and it is sometimes presented to an arbitrator, rather than to a court, in the first instance. In that case, a party challenging arbitrability may feel some trepidation about submitting its challenge to the very arbitrator who could ultimately be deciding the merits of the case. And another, possibly surprising, concern should be the risk that making such a challenge too vigorously in the arbitration proceeding will foreclose a fulsome judicial review of the arbitrator’s ruling on the scope of his or her own authority.

Continue Reading The Potential Pitfalls of Contesting Arbitrability in the Arbitration

Published in Law360 (June 22, 2018)

“Gateway” arbitration issues, including the validity, enforceability, and scope of an arbitration agreement, are presumptively to be decided by a court, rather than by an arbitrator. However, such gateway issues may be “delegated” to an arbitrator, e.g., AT&T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 106 S.Ct. 1415 (1986), if the pertinent arbitration agreement clearly and unmistakably manifests the parties’ intention to do so, First Options of Chicago v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920 (1985); Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S.Ct. 588 (2002); Greentree Financial Corp. v. Bazzle, 539 U.S. 444, 123 S.Ct. 2402 (2003). But what if the arbitration agreement is in doubt — could such a purported delegation be enforced if one of the concerned parties did not execute the arbitration agreement in question? Spoiler alert: arguably not.

Continue Reading Can Arbitrability Questions Concerning a Non-Signatory to the Arbitration Agreement Be “Delegated” to an Arbitrator?

Published in Law 360 (May 22, 2018)

The cost of arbitration, including attorneys’ fees, can be substantial, commensurate with the matters in dispute. Your desire to settle a dispute that is going to arbitration is often as or more substantial. But sometimes your adversary is not willing to settle at your very rational number. What next — increase your settlement offer or reduce your demand? How about using the anticipated arbitration costs to your advantage? Consider incentivizing your adversary with a “sealed settlement offer,” which could eventually make a settlement offeree pay a heavy price in such costs for miscalculation or intransigence.

Continue Reading Arbitration Jiu Jitsu: Increasing the Pressure to Settle With a “Sealed Settlement Offer”

As discussed in an earlier post, obtaining discovery from a non-party to an arbitration often is easier said than done. Depending on the law of the place of arbitration, arbitrators may not be able to compel document production or testimony from a non-party before a hearing on the merits. This can impair a claimant’s ability to prove its claims considerably, or in some cases altogether inhibit a potential claimant from learning the facts necessary to identify the correct respondent(s) or to articulate a competent claim. Moreover, while Fed. R. Civ. P. 27 permits pre-action discovery to “perpetuate testimony regarding [a] matter that may be cognizable,” many federal courts have interpreted the phrase “perpetuate testimony” to mean that Rule 27 may only be used to “preserve testimony which could otherwise be lost,” rather than as a “substitute for discovery.” Ash v. Cort, 512 F.2d 909, 912 (3d Cir. 1975); accord Bryant v. Am. Fedn. of Musicians of the United States, 666 Fed. Appx. 14, 16 (2d Cir. 2016); In re Allegretti, 229 F.R.D. 93, 96 (S.D.N.Y. 2005) (“[Rule 27] is not a method of discovery to determine whether a cause of action exists; and, if so, against whom the action should be instituted.”)).

Continue Reading Pre-Arbitration Discovery: Turn to State Law Where the Federal Rules are Inadequate

Arbitration is a creature of contract. So is the law concerning contracts with an arbitration clause the same as the law concerning any other contract? Almost. One must always bear in mind the “separability” or “independence” of the arbitration agreement — the autonomy principle.

Continue Reading Arbitrability Basics: An Illustration of the “Autonomy” Principle

Arbitration is often promoted as faster, cheaper, more predictable, and more controllable than litigation. But to many, arbitration’s promise comes up short on delivery. Why? A prime reason is that many parties do not make use of their ability to shape a proceeding that fulfills those promises, and end up with an arbitration that is more time consuming, more expensive, and less predictable than it could have been.

Continue Reading Dissecting Common Basic Arbitration Clauses — You Can Build a Better One

Published in Law 360 (February 15, 2018)

In a series of articles over the past several months, we asked whether “class arbitration” — meaning the utilization of the Fed.R.Civ.P. 23 class action protocol in an arbitration proceeding — is ultimately viable in U.S. jurisprudence. We suggested that it arguably is not, considering the fundamental nature of arbitration. And we noted that the U.S. Supreme Court had not addressed core issues that will ultimately determine the viability of a class arbitration award, nor had the various Courts of Appeal grappled with those issues. But the courts in the Second Circuit have begun to do so.

Continue Reading Is “Class Arbitration” an Oxymoron — Another Shoe Drops in the Second Circuit

Litigators in the U.S. often take for granted the ease with which they can obtain discovery from non-parties in our federal and state courts. One might assume that the “presumption in favor of arbitrability” embodied in the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (“FAA”), would have been implemented with, among other things, a statutory grant of subpoena power to arbitrators that is virtually coextensive with that of a federal district court.  No so, however.  And depending on the place of arbitration, a party’s ability to compel document production from a non-party, much less to depose that witness, prior to a hearing, may be very limited indeed.  Problems and issues abound.

Continue Reading Document Discovery From Non-Parties in Commercial Arbitration: Availability and Practical Considerations