The First Circuit, citing numerous instances in which the arbitral panel’s decisions may have been erroneous and at least one that left the Court ‘perplexed’, nonetheless reversed the district court’s vacatur and remanded for entry of an order confirming the award. Raymond James Financial Services, Inc. v. Robert Michael Fenyk, No. 14-1252, (1st Cir. March 11, 2015). While the First Circuit may not have ‘squarely’ disavowed the doctrine of manifest disregard, if the doctrine isn’t applicable when the arbitrators ignored Florida’s one-year statute of limitations, has it been practically disavowed? [Read more…]

In a non-precedential opinion, the Third Circuit recently found that the Federal Arbitration Act preempts a Pennsylvania statute that precludes parties who are not registered to do business in Pennsylvania from maintaining any action in any court of the Commonwealth. Generational Equity, LLC v. Schomaker et al, 2015, No. 14-1291 (3d Cir. Feb.23, 2015).

Generational Equity sought to confirm an arbitration award in U.S.D.C. for the Western District of Pennsylvania. The FAA provides that the parties may specify a court in which an arbitration award may be confirmed. Here, the parties agreed that the arbitration would be administered pursuant to the Commercial Arbitration Rules of the AAA; Rule 48(c) provides that “[p]arties to an arbitration…shall be deemed to have consented that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof.”. [Read more…]

The Second Circuit, in a Summary Order, reversed a decision of a district court in Connecticut which found an arbitral panel’s award in manifest disregard of a Connecticut statute. Sotheby’s Int’l Realty, Inc. v. Relocation Group. LLC, 2015 WL 64265 (2nd. Cir. Jan. 6, 2015). Applying the great deference given to arbitral awards, the Court stated, “[a] motion to vacate filed in federal court is not an occasion for a de novo review of an arbitral award.” The district court appeared to have done just that, engaging in an extensive analysis of the Connecticut statute, including reference to numerous unpublished opinions, which the Second Circuit found “problematic”. [Read more…]

Despite several creative arguments and “artful Monday-morning quarterbacking”, Goldman Sachs can not compel the National Credit Union Administrative Board (“NCUA”) to arbitrate a dispute over a failed credit union’s purchase of residential mortgage backed securities (“RMBS”).

In National Credit Union Administration Board v. Goldman Sachs & Co., No. 14-312-cv (2nd Cir. Dec. 23, 2014), NCUA sued Goldman in September 2013 alleging violations of federal and state securities laws in the offering and sale of the RMBS. NCUA is a federal agency which regulates federal credit unions and has the power to place a financially precarious credit union under conservatorship or liquidation. As liquidating agent, NCUA has the right to bring suit on behalf of the credit union. In 2010, NCUA placed Southwest Corporate Federal Credit Union (“Southwest”) into conservatorship and then involuntary liquidation after Southwest suffered substantial losses as a result of purchasing triple A-rated RMBS from Goldman which were later downgraded to below investment grade. [Read more…]

After litigating for nine months, including engaging in active discovery, the plaintiff  sought an “eleventh-hour stay” in favor of litigation. Not condoning “the use of an arbitration clause as a parachute when judicial winds blow unfavorably”, the First Circuit found the plaintiff waived its right to arbitrate.

In Joca-Roca Real Estate, LLC v. Brennan, No. 14-1353 (1st Cir. Dec. 1, 2014), the plaintiff alleged claims for fraud and breach of contract arising from an asset purchase agreement. While the agreement contained a broad arbitration clause, the plaintiff made no effort to pursue arbitration, instead filing claims in federal court. For eight months, the parties engaged in extensive discovery including sixteen depositions, interrogatories, and the exchange of thousands of pages of documents, as well as several telephone conferences to resolve discovery disputes and scheduling conflicts. On December 6, 2013, with trial scheduled for February 3, 2014, and without explanation, plaintiff moved to stay the proceedings pending arbitration; defendant objected. [Read more…]