The Beaumont Court of Appeals has held in a memorandum opinion that Section 9 of the Federal Arbitration Act (“FAA”) established a mandatory one year statute of limitations for the enforcement of arbitral awards. In Arthur v. FIA Card Services, N.A., No. 09-09-00520-CV, (Tex. App. – Beaumont, March 10, 2011), Sally LaRue Arthur (“LaRue”) appealed a judgment which confirmed a National Arbitration Forum (“NAF”) award because she was served with a motion to confirm the award outside of the FAA’s one year statute of limitations. On April 27, 2007, an arbitration award was issued by the NAF in favor of MBNA America Bank. On December 5, 2007, FIA Card Services (“FIA”), formerly known as MBNA America Bank, filed an action to confirm the arbitration award in a state court. LaRue was ultimately served more than one year after the award was issued, however. LaRue filed an answer and moved to vacate the arbitral award asserting that under Texas law, “a timely filed suit does not interrupt the running of limitations unless a plaintiff exercises due diligence in the issuance and service of citation.” The trial court issued a judgment confirming the arbitration award on August 17, 2009. LaRue appealed. First, the Beaumont Court of Appeals noted that a split exists among federal courts as to whether FAA Section 9 acts as a statute of limitations. In Bernstein Seawell & Kove v. Bosarge, 813 F.2d 726 (5th Cir. 1987), the Fifth Circuit “recognized the one year provision is mandatory,” stating, “[w]ithout discussion” that “’[t]he complaint to enforce the arbitration award was filed within one year as required by 9 U.S.C. § 9.’” Relying on this and other precedents, the Beaumont Court of Appeals concluded “the one year limitation period set forth in section 9 is mandatory, not permissive.” The Court of Appeals then stated Texas courts look to federal law for substantive matters but state law to resolve procedural questions when applying the FAA. According to the court, Texas law regarding tolling of the statute of limitations is procedural in nature and has been applied when analyzing the application of a federal statute of limitations in state court. The Beaumont court next addressed the matter of “whether a plaintiff used due diligence in serving a defendant,” further noting that “[g]enerally, a plaintiff’s due diligence in effecting service is a question of fact.” According to the court, because LaRue pled a statute of limitations defense and established that she was served after the one year limitations period passed, “the burden shifted to FIA to explain the delay in service of process,” and FIA’s response raised an issue of fact. Although the Court of Appeals recognized that proceedings to confirm arbitration awards under Section 9 are typically summary proceedings, when disputed issues of material fact arise in a matter for which the legislature has prescribed summary disposition, the trial court still has a duty to hear evidence when necessary to resolve disputed fact issues. The Beaumont Court of Appeals held the one year statute of limitations set forth in section 9 of the FAA was mandatory and material issues of fact existed regarding whether FIA used due diligence in serving LaRue. The court reversed and remanded the case for an evidentiary hearing prior to confirmation of the arbitral award. Technorati Tags: ADR, law, arbitration
Continue reading...Dr. Michael A. Helfand, Associate Professor of Law and Associate Director, Glazer Institute for Jewish Studies at the Pepperdine University School of Law, recently authored an interesting article entitled “Religious Arbitration and the New Multiculturalism: Negotiating Conflicting Legal Orders,” 86 N.Y.U. L. Review, __ (2011), Forthcoming. In his article, Professor Helfand discusses religious arbitration agreements and awards and offers policy recommendations for courts faced with enforcing them. Here is the abstract: This Article considers a trend towards what I have termed the “new multiculturalism,” where conflicts between law and religion are less about recognition and symbolism and more about conflicting legal orders. Nothing typifies this trend more than the increased visibility of religious arbitration, whereby religious groups use current arbitration doctrine to have their disputes adjudicated not in U.S. courts and under U.S. law, but before religious courts and under religious law. This dynamic has pushed the following question to the forefront of the multicultural agenda: under what circumstances should U.S. courts enforce arbitration awards issued by religious courts in accordance with religious law. Indeed, with growing skepticism regarding the oppressive potential of religious majorities, critics have questioned whether religious arbitration has any place in a regime dedicated to individual liberties. By contrast, this Article contends that current arbitration doctrine can meet the challenges of the new multiculturalism. To do so, this Article makes two concrete policy recommendations: (1) courts should redefine the scope of enforceability of religious arbitration awards by limiting the application of the public policy exception to vacate religious arbitration awards and (2) courts should expand the application of unconscionability to void religious arbitration agreements. The article may be downloaded here (without charge) from Social Science Research Network. What are your thoughts? Technorati Tags: ADR, law, arbitration
Continue reading...The Supreme Court of Texas has denied a party’s petition for a writ of mandamus after the Houston [1st] Court of Appeals held U.S. courts lacked authority to appoint an arbitration panel. In In re Aramco Services Co., No. 01-09-00624-CV, (Tex. App. – Houston [1st], March 19, 2010), DynCorp International, LLC and Aramco entered into a contract for a computer system which was to be manufactured in the U.S. and installed at Aramco’s offices in Saudi Arabia. The contract contained a Saudi “Choice of Law” provision and an arbitration clause which required an arbitrator to be “a Saudi national or a Moslem foreigner.” DynCorp filed suit in Houston seeking payment of certain monies pursuant to the contract. Aramco filed a motion to compel arbitration, which the trial court granted. DynCorp then filed a motion to compel arbitration before JAMS or the American Arbitration Association. Over Aramco’s objections, the trial court granted DynCorp’s motion in part and appointed a three party arbitration panel which consisted of two non-Muslims. Aramco sought a writ of mandamus from an appeals court. The Houston Court of Appeals held that the trial court lacked authority to appoint an arbitral panel to decide the parties’ dispute. The Houston Court conditionally granted Aramco’s writ of mandamus and directed the trial court to vacate its previous orders. DynCorp then filed a petition for a writ of mandamus with the Supreme Court of Texas. On February 25th, the Supreme Court denied DynCorp’s petition in In re DynCorp International, LLC, No. 10-0798. You can read Disputing‘s previous post about the case here. We would love to hear your thoughts. Technorati Tags: arbitration, ADR, law, Texas Supreme Court
Continue reading...The Northern District of Texas has held the mandatory arbitration mechanism of the Railway Labor Act (RLA) preempted a grievance which required interpretation of a collective bargaining agreement (CBA), but did not preclude claims which were independent of the CBA. In CareFlite v. AFL-CIO, No. 4:07-CV-334-Y, (N.D. Tex., February 11, 2011), CareFlite, a medical transportation company, sought summary judgment on two counts of the Office and Professional Employees International Union, AFL-CIO (“the Union”) and Craig Hilton’s Amended Counterclaim. The dispute arose out of CareFlite’s discharge of Hilton, a pilot represented by the Union. In 2006, Hilton was discharged by CareFlite and filed a grievance with the Union. Although Hilton was reinstated, he was again discharged in 2007 for failing to complete a required training certification within one year as required by a CBA between CareFlite and the Union. Hilton then filed another grievance with the Union. Previously, the United States Court of Appeals for the Fifth Circuit held that the grievance concerning Hilton’s discharge was not subject to the RLA’s mandatory arbitration mechanism because the CBA explicitly excluded the claim. More information on the history of the case is available here. Because Count I was previously resolved by the Fifth Circuit, the Northern District of Texas only addressed Counts II and III of Hilton and the Union’s Amended Counterclaim. In the relevant portion of Count II, the Union alleged “that CareFlite breached the CBA when it discharged Hilton.” According to the court, the question of Hilton’s discharge was, preempted by the RLA because it grows out of an interpretation of the CBA and centers over the meaning of the CBA. Indeed, without the CBA, Count II would not exist. Nevertheless, Hilton and the Union argue that the Court should hear the merits of Count II because, in light of the Fifth Circuit’s determination that the ATPC-related discharge question is nonarbitrable, Hilton will have a right without a remedy if the Court now determines that Count II is preempted. This argument is unavailing, however, given that the language in the CBA excluding ATPC-related discharges from arbitration is the product of negotiations in which Hilton and the Union were involved. As the Fifth Circuit noted, “unions and employees can contract to exempt certain claims from arbitration through their bargained-for CBAs.” CareFlite, 612 F.3d at 322 (citations omitted). Thus, to the extent that Hilton lacks a remedy, it is partially of his own making–or at the very least, his union’s making. Next, the court addressed Count III which alleged, that CareFlite’s “treatment of Hilton since his reinstatement, including, but not limited to, CareFlite’s refusal to provide Hilton with additional time to obtain an ATPC Certification and CareFlite’s discharge of Hilton, constitute illegal discrimination and retaliation under [45 U.S.C.A. § 152, Third and Fourth (West 2010), of] the RLA.” According to the court, “[t]he assertion of any right that is not created by a CBA is . . . not subject to binding arbitration under the statute.” CareFlite, 612 F.3d at 320-21. That is, claims that are independent of the CBA are not “minor disputes,” and the RLA’s mandatory arbitration mechanism does not preclude or preempt their being brought in federal court. See id. The allegation in Count III was, independent of the CBA and, thus, is not precluded by the RLA’s mandatory arbitration mechanism. The CBA is not the “only source” of Hilton’s right “not to be discharged wrongfully” in this case. Hawaiian Airlines, 512 U.S. at 258. Rather, Count III arises out of Section 2, Third and Fourth, of the RLA, which “protects the rights of employees to engage in organized union activities without interference from their employer.” Silva, 2008 WL 4552779, at *6 (citing Trans World Airlines, Inc. v. Indep. Fed’n of Flight Attendants, 489 U.S. 426, 440 (1989); Johnson v. Express One Int’l, 944 F.2d 247, 252 (5th Cir. 1991)). Finally, the Northern District refused to grant CareFlite’s Motion for Summary Judgment on Count III. According to the court, CareFlite offered little analysis on its claim and the court was “not prepared to say that there are no genuinely disputed material facts with regard to Count III.” The Northern District of Texas held the mandatory arbitration mechanism of the RLA preempted Count II, but did not preclude Count III of Hilton and the Union’s Amended Counterclaim. The court granted CareFlite’s Motion for Summary Judgment as to Count II and denied it as to Count III. Technorati Tags: ADR, law, arbitration
Continue reading...Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.
Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.