Discovery in international arbitrations can be controversial for a lot of reasons. The District Court for the District of South Carolina recently added another one to the list in In re Servotronics, Inc., No. 2:18-MC-00364-DCN, 2018 WL 5810109 (D.S.C. Nov. 6, 2018). The case addresses a very practical question: does 28 U.S.C. § 1782, which allows a district court to order a person who resides in the court’s district to provide testimony or documents to be used in a proceeding in a foreign tribunal, apply to a private international arbitration? According to the court, the answer is “no.”

The dispute arose from an arbitration related to a fire at a Boeing facility in Charleston, South Carolina. Boeing was testing a plane when the plane’s engine caught fire. The fire caused several million dollars of damage to the plane and the test facility. Boeing sought compensation from the engine’s manufacturer, Rolls-Royce. Rolls-Royce, in turn, demanded indemnity from Servotronics, who had manufactured a valve in the engine. Servotronics refused the demand, and Rolls-Royce initiated an arbitration in London.

During the course of the proceeding, Servotronics sought the deposition of three Boeing employees residing in Charleston. Boeing would not voluntarily produce them, so Servotronics filed an action in the US District Court in South Carolina seeking to compel discovery for use in a foreign proceeding under §1782.

In denying Servotronics’ request, the court concluded that a private arbitral body does not qualify as a foreign or international “tribunal” for purposes of §1782. As the court noted, this conclusion squares with decisions of the Second and Fifth Circuits. See Nat’l Broad. Co. v. Bear Sterns & Co., Inc., 165 F.3d 184 (2d Cir. 1998); Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999).

The Second and Fifth Circuit decisions, however, were cast into some question by SCOTUS’s subsequent interpretation of §1782 in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). Specifically, in dicta, SCOTUS said that Congress had amended §1782, expanding its application from “any judicial proceeding” to “a proceeding in a foreign or international tribunal.” Id. at 257–58. The Court noted that “Congress understood that change to ‘provide the possibility of U.S. judicial assistance in connection with administrative and quasi-judicial proceedings abroad.’” Id. (citations omitted). The Court went on to deploy a definition of “tribunal” from a law professor (Yay!) to include “ investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts.” Id. at 258 (citations omitted).

In the wake of Intel, lower courts have divided over the question of whether §1782 applies to international arbitration bodies. Compare, e.g., In re Operadora DB Mexico, S.A. de C.V., 2009 WL 2423138, at *6 (M.D. Fla. Aug. 4, 2009) (“The Intel Court was not faced with—and did not address—the question of whether a private arbitral tribunal is a foreign or international tribunal under § 1782.”) with In re Roz Trading Ltd., 469 F. Supp. 2d 1221, 1224 (N.D. Ga. 2006) (“Although the Supreme Court in Intel did not address the precise issue of whether private arbitral panels are ‘tribunals’ within the meaning of the statute, it provided sufficient guidance for this Court to determine that arbitral panels convened by the [private arbitral institution] are ‘tribunals’ within the statute’s scope.”).

Joining the negative side of the ledger, the District Court for the District of South Carolina held that the Intel decision did nothing to alter the Second and Fifth Circuit precedent, noting that

[s]tretching the language of Intel to apply to private arbitration is simply too far of a reach absent more explicit language from Congress or the Supreme Court.

Given just how important the question is, I go on record now to predict that we’re going to see more Circuits weigh in on the issue in the very near future. If I were a betting person, I’d say that SCOTUS would come down in favor of broad support for international commercial arbitration and read §1782 as applying to arbitral bodies.

Pick up any textbook or treatise on arbitration law, and you’ll find the same thing in the chapter on enforcing arbitral awards: courts cannot conduct a merits review of awards. Courts, in other words, do not second guess the conclusions of the arbitrators about law or facts.

Or at least they’re not supposed to do so.

Still, losing parties often try to convince a reviewing court that the arbitrator “exceeded her powers.”  These sorts of excess of authority arguments have become quite common.

That’s exactly the sort of argument at issue in a hot-off-the-presses Tenth Circuit case, MEMC II, LLC v. Cannon Storage Sys., Inc., No. 18-6079, 2019 WL 549633 (10th Cir. Feb. 12, 2019).

In the case, the parties entered into a standard form construction contract, containing an arbitration clause. Cannon was supposed to build a commercial storage facility for MEMC. A dispute arose because Cannon decided that it needed to make some changes to the structural plans. When MEMC discovered this, it refused to continue to pay Cannon. Cannon then initiated arbitration to recover the payments.

MEMC defended by saying that Cannon had committed a material breach. It maintained that, under applicable Texas law, Cannon’s unilateral decision to depart from the specifications constituted a per se material breach discharging it from its duty to pay under the contract. The arbitrator listened to the arguments at a three-day hearing, reviewed over 100 exhibits, and concluded that MEMC had breached by failing to pay Cannon. She also found that Cannon had breached by not getting approval for several of the changes it made, but that the cost of remediating Cannon’s breaches had not be sufficiently proven by MEMC. Accordingly, she awarded $143,608 in damages to Cannon and nothing to MEMC.

MEMC challenged the award on the basis of excess of authority. The argument was essentially that “the arbitrator was required to apply the law and by awarding damages when the law would not allow for recovery of damages, the arbitrator exceeded her authority.”

The Tenth Circuit took the opportunity to give us all an Arbitration 101 lesson. Citing another Tenth Circuit case from last year – which indicates that parties may not be learning the lesson – the Court said, “[E]rrors in either the arbitrator’s factual findings or his interpretation of the law (unless that interpretation shows a manifest disregard of controlling law) do not justify review or reversal on the merits of the controversy.” (quoting Dish Network L.L.C. v. Ray, 900 F.3d 1240, 1243 (10th Cir. 2018)).

[F]ederal courts strongly defer to an arbitrator’s decisions. Because of this, “a party seeking relief under § 10(a)(4) bears a heavy burden.” [Oxford Health Plans LLC, 569 U.S. 564, 564 (2013) (quotations omitted).] “[C]onvincing a court of an arbitrator’s error—even his grave error—is not enough” to warrant vacatur under § 10(a)(4). Id. at 572. “Because the parties ‘bargained for the arbitrator’s construction of their agreement,’ an arbitral decision ‘even arguably construing or applying the contract’ must stand, regardless of a court’s view of its (de)merits.” [citations omitted]

Liz has written before about the ways that state courts sometimes try to resist SCOTUS’s love affair with arbitration.  Resistance can come in many and varying forms, some more subtle than others.

One persistent source of confusion in arbitration law, and thus a locus for resistance, centers on delegation clauses. As a quick refresher, in the United States, courts decide questions of arbitrability (questions about the proper scope of an arbitration agreement as well as the contractual validity of an arbitration agreement) unless the parties, in clear and unmistakable language, delegate these questions to the arbitrator.  Parties may provide such a delegation, most courts agree, by including express language in the arbitration clause to this effect or by incorporating by reference a set of arbitration rules that include such a delegation.  (See, e.g., Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1074 (9th Cir. 2013) (“Virtually every circuit to have considered the issue has determined that incorporation of [institutional] arbitration rules constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrability.”  But for a different take, check out this blast from ArbitrationNation’s past.)

Like the doctrine of separability, the goal of a delegation clause is to insulate and protect the arbitral process, preventing the parties from having to waste time and money fighting in court before getting to arbitration.

In Midwest Neurosciences Associates, LLC v. Great Lakes Neurosurgical Associates, (Wis. 2018), however, the Wisconsin Supreme Court effectively created a new rule that allows a court to ignore a delegation clause.  As the dissenting Justice says, the case “creat[es] a new rule bestowing on the judiciary the power to decide arbitrability even though the parties agreed an arbitrator would resolve this issue.”   Accordingly, parties who choose arbitration in Wisconsin, may wind up stuck waging preliminary battles about arbitrability in courts, even if they include clear and unmistakable language saying that they want all of their fights resolved before an arbitrator.

The case involved a potential conflict between two contracts.  The first was an Operating Agreement, which contained an arbitration clause and a choice to arbitrate pursuant to the JAMS Arbitration Rules (which include a delegation provision).  The Operating Agreement substantively contained a set of non-compete obligations preventing certain behavior by the defendants.  The second, and subsequent, contract was a Redemption Agreement, which did not contain any reference to arbitration, included a merger clause, and was intended to at least partially supersede the earlier agreement.  Specifically, the Redemption Agreement was supposed to release the defendants from their obligations under the Operating Agreement.

The defendants started acting in contravention to their non-compete obligations. The plaintiffs objected, saying that they had never actually agreed to the Redemption Agreement. Instead, they believed it to be a mere proposal that they had ultimately rejected.

The Wisconsin Supreme Court concluded that the questions of whether the Redemption Agreement was valid and, if so, whether it changed the forum for dispute resolution were for the court rather than the arbitrator.  In reaching this conclusion, the majority effectively ignored the delegation clause, relegating it to an aside in a footnote.

Lest you think that I’m being too harsh in saying that the decision evidences resistance to arbitration, I’ll just quote Justice Rebecca Bradely’s dissent in closing:

While the foundation of the majority’s preference for court resolution of arbitrability disputes is unclear, its disdain for arbitration as a method of dispute resolution is transparent . . . The majority misunderstands that the choice of method for dispute resolution belongs to the parties, not the court.

 

 

When Liz first told me that she was going to be our state’s new Solicitor General, I was overwhelmed, feeling a great wave of pure, abject panic.

Don’t get me wrong, Liz is going to be an outstanding Solicitor General, and Minnesota couldn’t be luckier to have her. In fact, I think hiring her for the gig is one of the smartest things Minnesota has done in years. Yay Minnesota.

But come on Liz, what about me? I was terrified, you see, about what would happen to ArbitrationNation. I’ve been an avid reader of the blog for many years, and it’s been a tremendous resource for me, as I’m sure it has been for all of you.

Then she suggested that I take over the primary responsibility for maintaining it. Turns out that I didn’t really know what panic was.

The truth is that I am honored to step in, roll up my sleeves, and do my best to continue Liz’s amazing work. But it is a daunting enterprise. Liz’s expertise, humor, and intellect have built this blog from nothing into one of the most respected and valuable resources on the law and practice of arbitration out there. I will miss Liz’s regular contributions and insights. But rest assured, I’ll bug her plenty to help me out. And I hope that you all will help me out as well. As you did with Liz, please send me your questions, comments, insights, cases, studies, and ideas for posts.

I’ll not bore you with a bunch of details about me, though please feel free to check out my bio. But as Liz said, I’m definitely a fellow arbitration nerd. I teach and write about arbitration, I serve as a mediator and arbitrator for commercial disputes (I’m happy to talk about serving in that role if you find yourself in need of a neutral), and I represent clients in arbitration-related matters as Of Counsel for Greene Espel, P.L.L.P. (I’m also happy to talk about helping as counsel or co-counsel on arbitration-related issues).

Most importantly, I love this stuff and I am looking forward to engaging with you.

As many of you know from LinkedIn or Twitter, I have accepted an exciting new position. I will be Minnesota’s Solicitor General starting next week.  Because I want to give my full attention to serving this great state, I need to step back from ArbitrationNation.

Thankfully, however, I have a wonderful replacement lined up.  My friend and fellow arbitration geek, Prof. Henry Allen Blair, has agreed to serve as the primary blogger here. I trust you will welcome him and keep him informed, just as you did with me, sending new cases, new studies, as-yet-unpublished data, and ideas for interesting posts.  He will bring different expertise (and different cultural references) to his posts, and I can’t wait to read them.

Accepting that I would no longer be the sole and primary individual associated with this blog was a much bigger psychological hurdle than I anticipated.  In 2011, when I started blogging, I was just hoping for the best, with no idea whether anyone would be interested in posts about arbitration law.  Now, ArbitrationNation reaches an average of 8,000 readers each month, including journalists, judges, arbitrators, and many inside counsel.  I am thrilled to have helped create this community.  I am also thrilled to leave it in excellent hands.

Thank you all.  Thank you for supporting this blog, for engaging with me on tough issues,  for asking me to contribute to articles or to speak at conferences, and for being friends.

First, SCOTUSblog referenced “arbitration nation” last fall, which was flattering.  Then last week the Ninth Circuit declared: “we have become an arbitration nation.”   That was basically the title of my first post on this blog seven years ago!  (“We are becoming an arbitration nation.”) I am going to turn up the  Janet Jackson  (“Rhythm Nation”) and feel smugly validated while I draft the rest of this post.  Because there is more to talk about than just the catchy phrase spreading far and wide.  Three federal circuits have vacated arbitration awards this month, giving new hope to parties who are trying to vacate awards and offering cautionary tales to arbitrators.

Aspic Eng’g & Constr. Co. v. ECC Centcom Constructors2019 WL 333339 (9th Cir. Jan. 28, 2019), dealt with a subcontractor constructing army facilities in Afghanistan.  The subcontractor claimed it was owed significant funds after the project was terminated for convenience by the U.S. government.  It proceeded to arbitration against the prime contractor, and an arbitrator awarded the subcontractor just over $1,000,000.  The prime contractor petitioned to vacate the award.

Both the district court and Ninth Circuit found that the award should be vacated.  The appellate court found the arbitrator exceeded his power within the meaning of Section 10 (a)(4) by issuing a “completely irrational” award.  And what made it completely irrational in the court’s view?  It was the fact that the arbitrator explicitly refused to enforce material provisions of the parties’ subcontract because the Arbitrator concluded  “it was not reasonable to expect that Afghanistan subcontractors would be able to conform to the strict and detailed requirements of general contractors on U.S. Federal projects.”    The court found that the resulting award directly conflicted with the parties’ subcontract.  “By concluding that [subcontractor] need not comply with the FAR requirements, the Arbitrator exceeded his authority and failed to draw the essence of the Award from the Subcontracts…Such an award is ‘irrational.'”

In the opinion’s conclusion, the court reminds us that it is more than just a rubber stamp for arbitral awards:

We have become an arbitration nation.  An increasing number of private disputes are resolved not by courts, but by arbitrators.  Although courts play a limited role in reviewing arbitral awards, our duty remains an important one.  When an arbitrator disergards the plain text of a contract without legal justification simply to reach a result that he believes is just, we must intervene.

The Ninth Circuit was not the only federal circuit court of appeals to vacate an arbitration award this month.  The Fifth Circuit vacated an award in Southwest Airlines Co. v. Local 555, Transport Workers Union of America, 2019 WL 139247 (5th Cir. Jan. 9, 2019) for a similar reason.  The court found “the arbitrator ignored the unambiguous terms of the CBA.”  In particular, the arbitrator treated the final execution date of the Collective Bargaining Agreement (CBA) as the effective date, even though the record established the parties had ratified it weeks earlier. The court found the arbitrator’s analysis “was not an arguable construction of the CBA and instead amounted to the arbitrator’s own brand of industrial justice.”  Indeed, it introduced the case by saying “this case is an example of when an arbitrator goes too far.”  (The allowable bases for vacatur in this case were governed by the Railway Labor Act, and are similar to those in the FAA.)

The third case comes from the Federal Circuit, in Koester v. U.S. Park Police, 2019 WL 81105 (Fed. Cir. Jan. 3, 2019).   In that labor case, an arbitrator had upheld the park police’s decision to remove an officer from service.  But the court found the arbitrator abused his discretion by refusing to consider evidence, then vacated the award and remanded back to the arbitrator.  (Vacatur in Koester is not governed by the narrow standards of the Federal Arbitration Act, but instead by by the less deferential standards in a federal statute specific to labor relations with government employees.)

In the Midwest, however, arbitration awards fared just fine under the FAA. In fact, the Eighth Circuit un-vacated an award in Great American Ins. Co. v. Russell, 2019 WL 387032 (8th Cir. Jan. 31, 2019).   That case involved a farmer’s claim that his crop insurer wrongfully denied his claim for damage to his corn crop.  A panel of three arbitrators awarded the farmer $1,433,008.  The insurer moved to vacate the award under the Federal Arbitration Act, claiming the arbitrators violated applicable federal regulations that require the arbitrators to make factual findings, including the basis for any award and breakdown any award by claim.  The insurer argued that because the panel did not break the award down by county or otherwise explain the damage calculation, the award must be vacated.  The district court agreed and vacated the award, but the Eighth Circuit reversed, finding “nothing in the regulations required the panel to segregate this claim into multiple separate claims.”

The Supreme Court issued another arbitration decision today in New Prime v. Oliveira.  And like last week’s decision in Henry Schein, it was unanimous (but Kavanaugh did not participate).  Today’s New Prime decision has two key holdings:  First, it is for courts, and not arbitrators (regardless of any delegation clause) to determine whether the Federal Arbitration Act applies.  Second, the Federal Arbitration Act does not apply to interstate transportation workers.  Those are pretty technical and dry, at least on the surface.

The Oliveira case did not start out as a dry arbitration case.  It started out as a class action by drivers for an interstate trucking company, all of whom were classified as independent contractors by the company, and all of whom alleged wage violations.  In response, the company moved to compel arbitration.

But the drivers had a great case for not arbitrating: the Federal Arbitration Act itself.   Section 1 carves out “contracts of employment of . . . workers engaged in foreign or interstate commerce.”  The drivers argued that they were workers engaged in foreign or interstate commerce.  The company’s rebuttal was two-fold: 1) the arbitrator should decide that issue, based on the parties’ delegation clause, and 2) the carve-out only applies to employees, not independent contractors.  Those arguments lost; Mr. Oliveira won at both the district court and in the First Circuit.

Writing for the unanimous court, Justice Gorsuch agreed with the lower courts.

With respect to the “who decides” question, the Court emphasized that Section 1 “warns” that nothing in the Act shall apply to those interstate workers.  So, the enforcement of Sections 2, and the authority to stay a case and compel arbitration in Sections 3-4, simply don’t apply.  The Court emphasizes the “statute’s sequencing” in its analysis — basically commenting that you don’t get to take advantage of step four of the FAA until you have passed step one.  So, you can throw your delegation clause out the window when the question is whether the FAA applies at all.

With respect to the substantive question, the Court concluded that Section 1’s exemption is not only for those who meet the current definition of “employee,” but it also encompasses independent contractors.  Why?  Because… dictionaries.  In determining the plain meaning of the text of Section 1 when it was adopted, the Court reviewed a lot of old dictionaries and legal authorities and concluded “the evidence before us remains that, as dominantly understood in 1925, a contract of employment did not necessarily imply the existence of an employer-employee or master-servant relationship.”   Therefore, the federal court lacked authority to order arbitration.

This decision raises many questions for me.  For example:

  • Did SCOTUS grant cert in these two easy cases (Henry Schein and New Prime) just to have some unanimous opinions?  Oliveira had already won at the district court and appellate court, so it’s not like SCOTUS needed to jump to his rescue.  (I expect Lamps Plus not to be unanimous…)
  • Why does it follow logically that if the FAA does not apply, then there is no authority to order arbitration?  The parties still have a contract that calls for arbitration, that the drivers are breaching by pursuing their case in court, and there can be remedies for breaching that contract…
  • Why would this exception be limited to interstate transportation workers?  If the text of the exception includes “workers engaged in foreign or interstate commerce,” that could blow a huge hole in SCOTUS’s arbitration jurisprudence.  With the case law on federal preemption in mind, pretty much every worker is engaged in interstate commerce…  And Justice Ginsburg’s dissent in Epic Systems suggested that the legislative intent was to exclude all workers from the FAA.  If so, this case turns into a backdoor Arbitration Fairness Act.
  • Why can’t these opinions be more engaging?  I swear that Justice Gorsuch was purposely trying to put us to sleep with this one.

I am sure there will be good articles discussing these questions and more in the upcoming days.  Send them my way if you are so inclined!

I called it.  SCOTUS issued its unanimous opinion today in Henry Schein v. Archer & White, vacating and remanding the Fifth Circuit decision and making clear that there is no “wholly groundless” exception to the Federal Arbitration Act’s enforcement of delegation clauses.

As you may recall, a circuit split had developed over the “wholly groundless” exception.  Some circuits, including the Fifth, concluded that even when parties have delegated questions of arbitrability (questions like: is the arbitration agreement valid? and does it cover the current dispute?) to an arbitrator, courts have the right to do an initial smell test.  If the court finds the defendant’s argument for arbitrability is “wholly groundless” (and stinks), then it can refuse to send it to arbitrator.  Other circuits, however, found room for no such exception in SCOTUS’s decisions.

After quickly shooting down the four primary arguments proffered in favor of the exception, the Court concluded:

In sum, we reject the “wholly groundless” exception. The exception is inconsistent with the statutory text and with our precedent. It confuses the question of who decides arbitrability with the separate question of who prevails on arbitrability. When the parties’ contract delegates the arbitrability question to an arbitrator, the courts must respect the parties’ decision as embodied in the contract.

Given that this outcome was expected, is there anything interesting about this decision?   On first glance, there is at least one thing.  The Court’s emphasis in this decision is on the parties’ agreement: it reasons that “a court may not decide an arbitrability question that the parties have delegated to an arbitrator.”  That could be read as a signal that the Court also favors arbitrators determining the availability of class arbitration, in the circuit split on whether a delegation clause authorizes an arbitrator to decide that issue.

However, SCOTUS inserted a final paragraph that leaves it some wiggle room on that question.  It notes that “We express no view about whether the contract at issue in this case in fact delegated the arbitrability question to an arbitrator. The Court of Appeals did not decide that issue.”  In other words, if the Court is going to keep the decision regarding class arbitrability in courts, it will likely be because it finds that an incorporation of arbitral rules is not sufficient to “clearly and unmistakably” delegate arbitrability to an arbitrator.

 

Courtesy of the Ninth Circuit, we kick off 2019 with some fundamentals.  The Federal Arbitration Act gives parties three months to petition to vacate an arbitration award.  We know that “Three is the Magic Number,” but how exactly is a disappointed party supposed to calculate the three months?

Section 12 of the FAA requires that a petition to vacate be served upon the adverse party “within three months after the award is filed or delivered.”  In Stevens v. Jiffy Lube Int’l, 2018 WL 6802644 (9th Cir. Dec. 27, 2018), the Ninth Circuit concluded that the three months should be calculated according to Federal Rule of Civil Procedure 6(a).  That requires three steps.  First, exclude the day the award was delivered.  Second, calculate three months like this: “The first month began September 15 and concluded October 14; the second month began October 15 and concluded November 14; and the third month began November 15 and concluded December 14.”  In other words, it does not matter whether it is a 28-day month or a 31-day month.  It matters what day of the month the award was delivered.  For the third and final step, if the end of that three month period is a weekend or holiday, the period gets extended to the next business day.

In Stevens, the party seeking vacatur made the mistake of believing that “three months from September 15, 2016, was December 15, 2016.”  But, the court used multiple examples to point out why that is illogical.  And therefore, it concluded the petition to vacate was filed one day late and was properly rejected as untimely.

Ouch.

As we close out 2018, it is a good time to reflect on the year in arbitration law.  Overall, I would characterize the year as another in which everyone was mildly obsessed with class actions, the U.S. Supreme Court again showed its willingness to enforce arbitration agreements of all kinds, and lower courts and groups of citizens attempted to resist the high court’s blind faith in arbitration with some success.  Here are my thoughts on the biggest stories of the year:

  • Decision With Biggest Impact: SCOTUS’s ruling in Epic Systems Groups of employees argued that the National Labor Relations Act gave them the right to join class actions and no arbitration agreement could overcome that statutory right.  But the Court emphatically rejected that argument, holding that employees are bound to the agreements they sign and nothing in the NLRA contradicts that result.  The outcome of this case was not unexpected, but the fallout was dramatic.  Many class actions dried up almost immediately, while others took a few months.  Yet other employees decided to give mass individual arbitration a go, filing hundreds of arbitration demands against the same employer simultaneously.
  • Circuit Split Most Likely To Go To SCOTUS: The split over who — judges or arbitrators — should decide whether the parties’ arbitration agreement allows class arbitration.   Seven federal circuits have looked at this issue.  Four have concluded that the issue of class arbitration is a big enough deal that it is presumptively for courts to decide, even when the parties have incorporated arbitration rules that authorize an arbitrator to decide jurisdictional questions.  Three circuits disagree.  Given the Supreme Court’s attraction to everything class arbitration, this seems likely to pique the Justices’ interest.  (Indeed, a cert petition has been filed in the 11th Circuit case, which is on the minority side of this circuit split, and the Justices have asked the winning party to respond.)
  • Best Evidence That Arbitration Law Is Still In Its Infancy: The conflicting cases over whether Uber’s arbitration agreement is enforceable.  Nothing says “This is a developing area of law” like having the First Circuit refuse to enforce the same arbitration agreement that the Second Circuit had just agreed to enforce.  Even better — the difference turned on the color of the hyperlink.  [Runner up in this category are the conflicting cases over whether the arbitration agreements printed on the outside of roofing shingle packages are enforceable.]
  • Most Successful Political Attack on Arbitration: The #MeToo movement successfully brought public attention to  concerns that having arbitration agreements in employment contracts may exacerbate a discriminatory workplace.  As a result, legislation declaring arbitration agreements invalid in cases of sexual assault or harassment was introduced at the federal level and many states.  To date, I am aware of it passing in only New York and Washington.  But, those state statutes are likely preempted by the Federal Arbitration Act.  More effective may be the public pronouncements by many major corporations that they will not enforce arbitration agreements in cases of sexual assault or harassment.
  • New Face of the Resistance: Kentucky.  First place had to go to Kentucky, after this decision, in which it just ignored the fact that the U.S. Supreme Court had schooled it on arbitration law last year.  But there are many runners-up in this category, frequently consisting of courts who are using the flexibility inherent in state contract law to find ways around arbitration.  For example, the courts who have recently decided that if the parties either did not choose an entity to administer the arbitration, or chose one that is no longer available, that voids the entire arbitration agreement. (See postscript on this entry.)  Or the courts who found that, despite the federal presumption in favor of arbitrability, the parties’ disagreement was outside the scope of their arbitration agreement.
  • Most Outrageous Motion To Compel: There are moments you just want to say “What were you thinking??” to counsel for the defense.  This year, this case stood out to me for outrageous conduct, as the plaintiffs did not originally have an arbitration agreement but apparently were duped into signing one a year into the class action litigation.  But, this case was a close second (where the defense argued that blind plaintiffs should be bound by the arbitration agreement, despite no evidence they were made aware of its existence).

Turning our sights forward, what can we expect in 2019?  Well, SCOTUS owes us three arbitration decisions (Henry Schein, Lamps Plus, and New Prime).  None of those are likely to have broad impact on arbitration law, as they each deal with fairly narrow issues.  So, big stories will likely come from elsewhere.  Maybe the new Democratic majority in the House will have more interest (and success) in passing federal arbitration legislation?   Maybe mass individual arbitration filings will change the cost-benefit-analysis of class action waivers for corporations?  I look forward to watching it unfold with all of you!  Happy New Year.