In a one-paragraph opinion, the U.S. Court of Appeals for the Fifth Circuit held that arbitration cannot be used to circumvent procedural requirements of the Texas Structured Settlement Protection Act (“SSPA”) and affirmed the District Court’s refusal to confirm an arbitration award. In Symetra Life Ins. Co. v. Rapid Settlements Ltd., No. 08-20248, Symetra National Life Insurance Company, (“Symetra”) payor of structured settlement payments, sued Rapid Settlements, Ltd., (“Rapid”) a “factoring company.” Symetra sought to enjoin Rapid from continuing its practice of using arbitration to circumvent SSPA requirements. This dispute deals with the secondary market in structured settlement rights. Settling defendants purchase annuities from Symetra to fund structured settlements to pay tort claimants. The beneficiaries (Symetra annuitants) then contract with Rapid to exchange their rights to the future periodic payments in exchange for a discounted lump sum paid in the present. Symetra annuitants’ agreements with Rapid contain an arbitration clause whereby the parties agree to arbitrate any disputes arising under the contract. Symetra challenged Rapid’s practice of executing a contract of sale with the annuitant, then alleging that the annuitant had breached a provision of that agreement, and thereafter invoking the arbitration clause to submit the matter to arbitration. At these “arbitration” proceedings, the annuitant usually appeared by phone without a lawyer. As a result, Rapid would obtain an arbitration award in its favor and seek its confirmation without notice to Symetra. The award would require the annuitant to transfer some of the future income-stream to Rapid, without complying with the SSPA. The United States District Court for the Southern District of Texas denied Rapid’s motion to confirm the arbitration award. According to the District Court, the transfers violated the SSPA because they failed to comply with the Act’s requirement that a state court approve the transfer based on specific findings that the transfer is in annuitant’s “best interest.” The court further stated that “[o]btaining state-court confirmation of an arbitration award that effects a transfer of future-payment rights does not equate to obtaining state-court approval of the proposed transfers under the state structured settlement protection acts.” See Symetra Life Ins. Co. v. Rapid Settlements, Ltd., 599 F.Supp.2d 809 (S.D. Tex. 2008). Rapid appealed. Rapid had argued that the Federal Arbitration Act preempts state structured settlement protections acts to the extent that they conflict with the arbitration right set out in the arbitration agreement. But neither the trial court nor the Fifth Circuit were persuaded by Rapid’s argument. The Fifth Circuit adopted Symetra’s position and stated that: And on matters of insurance regulation, the congressional message of the Federal Arbitration Act comes with the congressional message of the McCarran-Ferguson Act. On that score, no fewer than forty-six states have seen fit to enact statutes exercising that power, to which Congress has consented, to guard recipients of structured settlements against abusive transfers. We are loathe to read the Federal Arbitration Act to provide an end run around this dually secured line of protection. The Fifth Circuit referred to the reasons stated by the District Court to affirm the judgment and concluded that “[a]rbitral powers do not extend beyond the substantive capacity of the party agreeing to arbitration, and neither Prima Paint nor any other Supreme Court case teaches the contrary.” Technorati Tags: arbitration, ADR, law, Fifth Circuit
Continue reading...As a future computer scientist, it is hard not to write about the most recent issue of Landslide, published by the ABA Section of Intellectual Property Law. The magazine contains an excellent article by Mark V. B. Partridge and Scott T. Lonardo. The authors discuss ICANN‘s recent developments in the Internet domain name system: Domain Name Tasting. In order to decrease the practice of domain name tasting, ICANN has adopted a new policy to limit refunds during the add grace period. WHOIS Protocol. ICANN is following up on breach notices for registrars to cure data inaccuracy. New gTLDs. About 5,000 new addresses will be available as early as 2009. Follow this link to view the article (log in required): ICANN Can or Can It?, Landslide, May/June 2009. Technorati Tags: law, domain names, ICANN, gTLD, Whois, Domain Name Tasting
Continue reading...[update: H.B. 2139 passed the House and Senate (with amendments); the amended version was under consideration by the conference committee when the session ended. See here. ] Today, two bills related to ADR were passed by the 81st Texas Legislature: H.B. 1083. The bill, authored by Rep. Gary Elkins, states that “Except as provided by agreement of the parties, a court may not order mediation in an action that is subject to the Federal Arbitration Act (9 U.S.C. Sections 1-16).” The bill’s history is here. H.B. 2139. Authored by Rep. McClendon, the bill establishes a victim-offender pretrial mediation program for first-time offenders. The bill’s history is here. Technorati Tags: arbitration, ADR, law, mediation
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.