954 F. Supp. 2d 239
S.D.N.Y.2013Background
- National Union contracted with Personnel Plus to provide workers’ compensation liability insurance for Personnel Plus and its affiliate Great Dane Management Services; agreements included the Payment Agreement and an Addendum with a mandatory arbitration clause and a tripartite panel mechanism.
- Arbitration procedure required each party to appoint one arbitrator, with those two appointing a neutral third arbitrator (umpire); if the party-appointed arbitrators failed to appoint the umpire within 30 days, either party could seek court appointment.
- National Union demanded $6,643,924 from respondents on Feb 28, 2011; the dispute was not resolved, and arbitration was demanded on Sept 28, 2011.
- Parties appointed their arbitrators in Oct–Nov 2011; in Feb 2012 each side submitted candidate lists for the neutral umpire; National Union filed the petition to appoint the umpire on June 13, 2012.
- The court granted National Union’s petition (Jan 11, 2013 order) and appointed Kevin Martin as neutral umpire (Jan 25, 2013); the decision discussed agency binding, forum selection, FAA applicability, and arbitrability.
- The court held Great Dane bound as an express/implicit signatory via agency; Addendum controls forum-filing and NY court jurisdiction; FAA applies over McCarran-Ferguson; disputes pending in California fall within arbitration; final judgment to be entered and case closed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether non-signatory bound to arbitration via agency | Great Dane bound through Personnel Plus as agent | Only Personnel Plus signed agreements; Great Dane not bound | Great Dane bound by agency |
| Whether court may appoint a neutral umpire under the agreement | Arbitration clause and Addendum contemplate court appointment if needed | Potential ambiguity between NY Supreme Court and NY courts | Court may appoint under Addendum §6; no ambiguity invalidating petition |
| Whether forum-selection clause requires NY court jurisdiction | Forum clause is valid and enforceable | Clause unenforceable or misapplied | Forum-selection clause enforceable; this Court has jurisdiction |
| Whether FAA governs and whether arbitrability should be decided by arbitrators | FAA applies; arbitrability to be decided by panel | California statute and defenses affect enforceability | FAA governs; arbitrability to be decided by arbitral panel |
| Whether California suit concerns are within arbitration scope | California claims fall within arbitration as related to Payment Agreement | California action seeks non-arbitrable relief | California claims within arbitration scope; should be submitted |
Key Cases Cited
- Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 64 F.3d 773 (2d Cir. 1995) (arbitration is contractual by nature; enforce contracts to arbitrate)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (courts must respect contractual rights and expectations in arbitration)
- United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960) (arbitration as a contractual obligation subject to enforcement)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (challenge to contract validity as a whole; arbitration panel decides arbitrability)
- Phillips v. Audio Active, Ltd., 494 F.3d 378 (2d Cir. 2007) (forum-selection clause presumptively enforceable; multi-factor test)
- KPMG LLP v. Cocchi, 132 S. Ct. 23 (2011) (scope of FAA enforcement of arbitration agreements)
- Recurrent Capital Bridge Fund I, LLC v. ISR Systems & Sensors Corp., 875 F. Supp. 2d 297 (S.D.N.Y. 2012) (non-party related to contract bound by forum clause; related party effect)
- D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006) (enforceability of forum-selection clauses; consent-based jurisdiction)