Bakoss v. Certain Underwriters at Lloyds of London Issuing Certificate No. 0510135
2013 U.S. App. LEXIS 1527
2d Cir.2013Background
- Bakoss sued Lloyds in state court; Lloyds removed to the Eastern District of New York under the FAA and New York Convention.
- The Certificate of Insurance provided a potential benefit for Permanent Total Disability and allowed third-physician dispute resolution that was dispositive on Total Disability.
- The district court held the third-physician clause constitutes an arbitration agreement and that federal question jurisdiction under the FAA applied.
- Judge Irizarry relied on McDonnell Douglas Fin. Corp. and AMF to characterize the third-physician provision as arbitration.
- The court applied federal common law to define arbitration and denied subject-matter-jurisdiction challenges; it granted summary judgment for Lloyds.
- The court also upheld summary judgment on Bakoss’s claim regarding timely notice of a potential disability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who defines ‘arbitration’ under the FAA? | Bakoss argued New York law should define arbitration. | Lloyds argued federal common law governs the term. | Federal common law governs arbitration. |
| Does the FAA/Convention provide federal jurisdiction over this dispute? | Bakoss contested jurisdiction under the FAA and NY Convention. | Lloyds asserted removal and federal jurisdiction. | District Court had subject-matter jurisdiction under the FAA/Convention. |
| Is the third-physician clause an arbitration clause under the FAA? | Bakoss argued the clause is not an arbitration provision. | Lloyds contends the clause submits the dispute to a third doctor for binding resolution. | Third-physician clause constitutes arbitration under the FAA. |
| Was summary judgment proper on timely notice of disability? | Bakoss argued issues of notice bar summary judgment. | Lloyds supported summary judgment on notice grounds. | Summary judgment affirmed on timely notice issue. |
Key Cases Cited
- Evanston Ins. Co. v. Cogswell Properties, LLC, 683 F.3d 684 (6th Cir. 2012) (uniformity favored federal definition of arbitration)
- Salt Lake Tribune Pub’l Co. v. Mgmt. Planning, Inc., 390 F.3d 684 (10th Cir. 2004) (federal law preferred to define arbitration under FAA)
- Fit Tech, Inc. v. Bally Total Fitness Holding Corp., 374 F.3d 1 (1st Cir. 2004) (federal definition of arbitration governs FAA scope)
- Wasyl, Inc. v. First Boston Corp., 813 F.2d 1579 (9th Cir. 1987) (state-law approach questioned; uniformity concern cited)
- Portland Gen. Elec. Co. v. U.S. Bank Trust Nat’l Ass’n, 218 F.3d 1085 (9th Cir. 2000) (concern about patchwork result if state law governs arbitration)
- Hartford Lloyd’s Ins. Co. v. Teachworth, 898 F.2d 1058 (5th Cir. 1990) (state-law approach criticized for FAA interpretation)
- McDonnell Douglas Fin. Corp. v. Pa. Power & Light Co., 858 F.2d 825 (2d Cir. 1988) (arbitration includes third-party decision-maker when parties submit disputes)
- AMF Inc. v. Brunswick Corp., 621 F. Supp. 456 (E.D.N.Y. 1985) (arbitration includes submission to a third party for binding decision)