Karo v. NAU Country Ins. Co.
297 Neb. 798
| Neb. | 2017Background
- Farmers Matt and Michael Karo held federally reinsured crop insurance policies serviced by NAU Country Insurance and submitted "prevented planting" claims for 2012; NAU denied coverage.
- The parties’ policies required binding arbitration; an arbitrator denied the Karos’ claims and issued an award on January 21, 2014.
- The Karos filed a state-court "Petition for Judicial Review" under 9 U.S.C. § 10 on May 15, 2014 (outside the FAA’s 3-month notice window in § 12); NAU moved to dismiss but the district court denied that motion, and later vacated the arbitration award on summary judgment.
- NAU appealed to the Nebraska Supreme Court, which considered whether the district court had jurisdiction to vacate the arbitration award given the Karos’ untimely service of notice under the FAA.
- The Nebraska Supreme Court concluded the FAA governs these disputes, that the FAA’s notice requirements are jurisdictional, and that the Karos’ failure to serve notice within 3 months deprived the district court of authority to vacate the award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA governs arbitration review | Karos: federal reinsured policies implicate federal law but did not contest FAA | NAU: FAA governs because policies involve interstate commerce | Held: FAA governs arbitration disputes under these policies |
| Whether §12’s 3‑month notice requirement is jurisdictional | Karos: treated requirement as procedural; did not raise jurisdictional bar | NAU: untimely service deprives court of power to review; raised on appeal | Held: §12’s notice/time requirement is jurisdictional and not waivable |
| Effect of failing to serve notice within 3 months | Karos: filed state complaint outside 3 months and pursued vacatur on merits | NAU: argued dismissal for lack of jurisdiction | Held: failure to comply deprived district court of authority; vacatur was void |
| Whether court may reach merits (manifest disregard/exceeding powers) | Karos: arbitrator exceeded powers; award should be vacated under §10(a)(4) | NAU: challenged vacatur and procedural posture | Held: Court did not reach merits because jurisdictional defect required vacatur of district court judgment |
Key Cases Cited
- Piccolo v. Dain, Kalman & Quail, Inc., 641 F.2d 598 (8th Cir.) (untimely §12 notice deprives district court of power to review arbitration award)
- Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (FAA provides limited, expedited judicial review of arbitration awards)
- Bowles v. Russell, 551 U.S. 205 (2007) (statutory time limits for taking appeals are jurisdictional)
- John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008) (statutory filing deadlines are nonjurisdictional unless Congress clearly states otherwise)
- Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145 (2013) (clear-statement rule for labeling statutory time limits as jurisdictional)
- Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010) (jurisdictional statutes speak to a court’s adjudicatory authority)
- Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (2000) (related FAA provisions should be read together to effect arbitration policy)
- Vaden v. Discover Bank, 556 U.S. 49 (2009) (FAA generates substantive federal law but does not itself confer federal jurisdiction)