Author: CPR Staff

Nominee Ketanji Brown Jackson’s ADR Work

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By Tamia Sutherland and Russ Bleemer

President Biden’s nominee to the U.S. Supreme Court, U.S. District of Columbia Circuit Court of Appeals Judge Ketanji Brown Jackson, is well acquainted with conflict resolution’s role in legal practice from her law firm days.

The 51-year-old was elevated just last June to the appeals court by Biden, but has been on the bench since 2013, serving as a U.S. District Court judge in Washington, D.C. She would be the first black woman Supreme Court justice if she is confirmed.

While her ADR-centric cases on the bench were few, Jackson–who clerked in 1999-2000 for Justice Stephen G. Breyer, whom she would replace, though she wasn’t at the Court for the justice’s seminal arbitration cases–has significant commercial conflict resolution work in her CV.

Most notably, while of counsel in the Washington office of Morrison & Foerster, Jackson did extensive work on the seminal case of Hall Street Associates LLC v. Mattel Inc., 552 U.S. 576 (2008) (available at http://bit.ly/38ELtSU), successfully preserving respondent Mattel’s arbitration award (pending additional court review) and standing for the proposition that the parties cannot expand the scope of review for an award because it is contrary to the Federal Arbitration Act’s mission.

Jackson’s MoFo litigation department work, on both the civil and criminal sides, was preceded by two years as an associate at one of the nation’s highest-profile commercial conflict resolution practices with mediator Kenneth Feinberg.  Jackson was an associate in Feinberg’s Washington firm, then known as the Feinberg Group, in 2002-2003, in the midst of Feinberg’s best-known case, when he served as special master of the September 11th Victim Compensation Fund of 2001. Congress established the fund to aid victims and survivors of the 9/11 attacks; the fund used mediation-style processes to reach out to potential claimants, and evaluated applications, determined appropriate compensation, and disseminated awards.

Judge Jackson described her work at the firm in her Senate Judiciary Committee Questionnaire for Judicial Nominees ahead of a hearing on her nomination last April:

While at the Feinberg Group, I assisted in the negotiated (non-litigation) resolution of mass tort claims. I attended arbitration proceedings and advised client corporations regarding trust payment structures for
resolving mass-tort liability, such as asbestos claims.

She noted later in her disclosure, “my typical clients were large corporations facing mass tort liability. I specialized in mediation and arbitration procedures and in the evaluation of trust structures for the settlement of current and potential (future) tort claims.” She noted that she did not appear in court while working at the firm.

“I recall quite well the superlative legal skills of Judge Jackson while a member of the Feinberg Group Law Firm,” notes Ken Feinberg in an email. He continues:

Ketanji was involved in a series of matters relating to ADR: asbestos mediation, Dow-Corning breast implants mediations and some work on the 9/11 Victim Compensation Fund. Quite apart from her obvious legal skills, she proved to be a creative lawyer looking for paths to resolve complex mass tort litigation outside of the conventional legal system. She quickly recognized that mediation, arbitration and negotiation were cost effective, efficient and an abbreviated way to “get to yes.”

Feinberg concludes, “It was clear to me some 20 years ago that she was destined for greatness.”

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Jackson was confirmed to the D.C. Circuit Court by the Senate 53-44 on June 14. In a statement this morning, the White House noted that the president “sought a candidate with exceptional credentials, unimpeachable character, and unwavering dedication to the rule of law,” but also noted, in anticipation of a close confirmation vote, that “Judge Jackson has been confirmed by the Senate with votes from Republicans as well as Democrats three times.”

Senate Majority Leader Chuck Schumer, D., N.Y., told reporters Friday afternoon he will seek “a prompt hearing” by the Senate Judiciary Committee, to be followed quickly by Senate confirmation to the U.S. Supreme Court seat.

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Judge Jackson further detailed her ADR work in her Senate Judiciary Committee questionnaire. She listed on her questionnaire the sole arbitration case for which she wrote an opinion, CEF Energia B.V. v. Italian Republic, No. 19-cv-3443 (KBJ) (D.D.C. Jul. 23, 2020).  In the case, Jackson granted Italy’s request to decline to confirm arbitration awards.  The two awards in favor of four energy companies against the Italian government were stayed in a Sweden court pending Italy’s challenge to the award, and the companies sought enforcement before Judge Jackson.

Jackson conducted an analysis of the power to stay proceedings in the United States while a foreign arbitral matter is continuing under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, best known as the New York Convention. 

Noting “the ongoing set-aside proceedings that are taking place in Sweden (the primary jurisdiction of the parties’ arbitrations) and the significant interests in judicial economy and international comity that weigh in favor of staying this case,” Jackson stayed the confirmation decision pending the outcome in Sweden.

She wrote that a federal district court “must recognize and enforce a foreign arbitral award ‘unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.’” 9 U.S.C. § 207. Furthermore, Jackson found that “a court ‘may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention.’”

The applicable grounds for refusal Jackson highlighted from Article V of the New York Convention, were that the agreement is not valid if (1) “award …has been set aside or suspended by a competent authority of the country in which … that award was made[,]” or (2) recognition or enforcement… would be contrary to the public policy of that country. New York Convention Art. V(1)(e), Art. V(2)(b).

But Judge Jackson’s holding to stay the confirmation was supported by her findings that the interest of the judicial economy, and the test in Europcar Italia S.P.A. v. Maiellano Tours, 156 F.3d 310 (2d Cir. 1998), which she wrote weighed in favor of staying the case. Quoting Naegele v. Albers, 355 F. Supp.2d 129, 141 (D.D.C. 2005), Jackson stated that  “[l]itigating essentially the same issues in two separate forums is not in the interest of judicial economy or in the parties’ best interests.”

In concluding her point that the interest of the judicial economy weighed in favor of staying the case, she acknowledged the length of time that had elapsed and wrote:

This Court fully understands that Petitioners have been pursuing recompense from Italy since 2015 and that the resolution in the [Sweden] Court may take one to two more years. . . . But it is not at all clear that proceeding with the instant litigation will necessarily lead to a faster resolution of the complex issues that must be determined prior to enforcing the awards. …

Judge Jackson carefully analyzed each of the six Europcar factors in deciding whether to stay an action under Article VI of the New York Convention in relation to the CEF Energia B.V. facts, concluding that the Europcar factors weighed in favor of staying the case.

She also noted that the European litigation over the awards stemmed from the controversial European Court decision in Slovak Republic v. Achmea B.V., Case C-284/16 (2018) (available at https://bit.ly/2Kf8OmM), in which the court found that “intra-[European Union] treaty arbitration provisions are invalid to the extent that they prohibit judicial review of EU law by EU courts.” Achmea concerned cases under the Energy Charter Treaty—the treaty under which the CEF Energia B.V. arbitrations were conducted.

* * *

In addition to CEF Energia, B.V. v. Italian Republic, Judge Jackson had eight other arbitration-focused cases on her docket covering a range of arbitration issues. In Metropolitan Municipality of Lima v. Rutas De Lima S.A.C. Jackson presided over an issue regarding Federal Arbitration Act Section 10, where the city of Lima, Peru, petitioned and moved for an order vacating an arbitral award that was rendered in favor of the respondent, a contractor. The matter was reassigned to Judge Florence Y. Pan before Jackson could rule on the merits.  

The other cases mostly involved confirmation proceedings.

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Here is how Judge Jackson described her work on Hall Street Associates from her Senate Judiciary questionnaire:

From 2007 to 2008, I was part of a litigation team that represented respondent Mattel in a Supreme Court case involving the section of the Federal Arbitration Act that grants expedited judicial review to confirm, vacate, or modify an arbitration award. I was responsible for reviewing the factual record related to the subject matter of the underlying arbitration, and I drafted parts of both the primary brief for respondent and two supplemental briefs on specified issues the Supreme Court ordered. I also assisted in the preparation of oral argument counsel. The Supreme Court ultimately agreed with Mattel’s argument that the Act’s grounds for vacatur and modification of arbitration awards are exclusive for parties seeking expedited review under the FAA, but remanded the case for a determination regarding whether the parties did, in fact, intend for the arbitration proceeding at issue to be governed by the FAA.

She listed the case as one the 10 most significant litigated matters she has worked on in her career on the Senate Judiciary questionnaire.

The case is often cited for limiting the ability of parties to contract for review of their arbitration awards, though it does not apply to arbitration awards written solely under state laws, where, at least theoretically, parties could contract for expanded review under some circumstances.

Hall Street Associates also left alive the judicial standard of “manifest disregard” of the law for overturning awards under FAA Section 10, which commentators have urged needs clarification.  See, e.g., Stuart M. Boyarsky, “The Uncertain Status of the Manifest Disregard Standard One Decade after Hall Street,” 123 Dick. L. Rev. 167 (2018) (available at https://bit.ly/3slmLTk), and Michael H. LeRoy, “Are Arbitrators Above the Law? The ‘Manifest Disregard of the Law’ Standard,” 52 B.C. L.Rev. 137 (2011) (available at https://bit.ly/3ImK05i).  

The 116-page Senate Judiciary Questionnaire prepared by Judge Jackson containing descriptions of her professional work and education history can be found at https://bit.ly/35vbFSJ.

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Sutherland, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern. Bleemer edits Alternatives to the High Cost of Litigation for CPR.

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‘Negotiating the Nonnegotiable’: Highlights from the March ACR-GNY Round

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By Tamia Sutherland

The Greater New York Chapter of the Association for Conflict Resolution, a nonprofit organization with nine chapters nationwide dedicated to enhancing the practice and public understanding of peaceful, effective conflict resolution, held its latest monthly roundtable breakfast on the topic of negotiating in an era of discontent.

The Feb. 3 event, co-sponsored by CUNY Dispute Resolution Center at John Jay College, was attended by more 230 guests, and marked ACR-GNY’s 246th roundtable breakfast. The monthly events started soon after the 9/11 attacks to convene and build the ADR community.

The event presented keynoter Daniel Shapiro, the founder and director of the Harvard International Negotiation Program, an associate professor in psychology at Harvard Medical School/McLean Hospital, and an affiliate faculty member at the Program on Negotiation at Harvard Law School.  He is a frequent public speaker and author of Negotiating the Nonnegotiable (Penguin 2017), which served as his presentation’s theme.

The meeting was divided into three parts: a 30-minute networking reception, the keynote presentation, and a question-and-answer session with Shapiro.

The meeting kicked of with welcoming remarks from Maria R. Volpe, Professor of Sociology, Director of the Dispute Resolution Program at John Jay College of Criminal Justice in New York, and Julie Denny, a mediator in Morristown, N.J., and a board member as well as former president of ACR-GNY.

Shapiro began by highlighting some of the polarized and emotionally charged public conflict issues in the world right now, such as challenges to democracy, race relations, the pandemic, etc., which have now “entered the home.” He outlined the purpose of his presentation, which included introducing the “lures” that he identified, which he explained exacerbate conflict and make it emotionally charged.

Shapiro illustrated his point by analogy to a boat trying to make it to a sunny island while undercurrents pull the boat toward a waterfall edge. In this analogy, the boat represents the conflict resolution process, the island represents the cooperative mindset, the undercurrents represent the five lures he has identified, and the waterfall edge represents the tribal, divisive  mindset that is insular, self-righteous, and closed.

In the broader context of ADR literature, Dr. Shapiro explained that Getting to Yes, by Roger Fisher and William Ury, illustrates the rational way for the boat to get to the island, or a process to get to the parties to embrace a cooperative mindset rather than a divisive mindset.

Furthermore, Beyond Reason, by Roger Fisher and Dr. Shapiro, addresses the emotional dimension involved in getting the boat to this hypothetical island or getting parties in a process to embrace the cooperative mindset. Shapiro said his book, Negotiating the Nonnegotiable provides language to discuss hidden emotional dynamics and provides a lens to analyze the lack of rationality in dispute resolution processes, which are the undercurrents that typically drag parties away from engaging in a cooperative mindset while resolving a dispute.

The language Shapiro used to characterize the lures/undercurrents pulling the conflict resolution process away from a cooperative mindset and toward a tribal mindset were:

  1. “Vertigo”–becoming so consumed in a conflict that one can think about nothing else but the perpetrator, the grievance, and everything they’ve done.
  2. “Taboos”–an action, thought, or feeling that is difficult to discuss because a community deems it unacceptable.
  3. “Repetition Compulsion”–repeating the same dysfunctional pattern of behavior as a result of an addicting part of our identity.
  4. “Assault on the Sacred”–responses to an attack on the most meaningful part of one’s identity.
  5. “Identity Politics”–the process of allying with a person or group to advance a point.

To illustrate the lure of taboos, Dr. Shapiro said participants at the roundtable breakfast would be placed into break-out rooms of two with a stranger. Participants were then asked to share their (1) political affiliation, (2) salary or family net worth, (3) perception of the attractiveness of the other participant, and (4) perception of the other participant’s age.

Before Shapiro finished the instructions and ultimately let participants know that the activity would not happen, at least 10 participants dropped off the zoom call. Other participants admitted to fixing their hair, considering lying, and having general feelings of nervousness for the exercise. The participants’ actions unintentionally and clearly illustrate taboos as an undercurrent that moves individuals away from a cooperative mindset. Moreover, there was no conflict here.

Following the completion of his presentation, Dan Shapiro conducted a question-and-answer session where roundtable participants discussed in-depth questions about the lures presented.

ACR posts the program videos at https://www.acrgny.org/RTB-Videos. Information on the March Roundtable Breakfast, “Ombuds Confidential,” can be found at https://www.acrgny.org/event-4705858.

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The author, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern.

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Justice Breyer’s ADR Legacy

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By Andrew Ling

U.S. Supreme Court Justice Stephen G. Breyer’s retirement announcement last month puts the focus on his replacement, but it also requires looking back at the justice’s record. Serving more than two decades on the Court, he has made important contributions to U.S. jurisprudence on arbitration, in both domestic and international contexts.

Breyer officially retired on Jan. 27, just ahead of the Court’s winter recess.  It returns this week, with an opinion expected soon on the one arbitration case argued so far this year, Badgerow v. Walters, No. 20-1143 (see Russ Bleemer, “Supreme Court Hears Badgerow, and Leans to Allowing Federal Courts to Broadly Decide on Arbitration Awards and Challenges,” CPR Speaks (Nov. 2)), and four more arbitration arguments slated for next month.  See Russ Bleemer, “The Supreme Court’s Six‐Pack Is Set to Refine Arbitration Practice,” 40 Alternatives 17 (February 2022) (available on open access at https://bit.ly/3GDEJEK).

In 1995, in his second year on the bench, Breyer drafted two frequently cited Federal Arbitration Act opinions. In the first, Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265 (1995) (available at https://bit.ly/3uUcJu5), Breyer wrote that the FAA applies to all transactions involving interstate commerce, even if the parties did not contemplate an interstate commerce connection.

The holding endorsed a broad FAA reading—specifically on 9 U. S. C. § 2,  which “makes enforceable a written arbitration provision in “a contract evidencing a transaction involving commerce.”

In First Options of Chicago Inc. v. Kaplan, 514 U.S. 938 (1995) (available at http://bit.ly/2WEXGnF), Breyer set up the general principle that courts, not arbitrators, should decide whether a dispute is subject to arbitration, phrased as the “question of arbitrability.”

To submit questions of arbitrability to arbitration, there must be clear and unmistakable evidence indicating such intent from the parties. As Columbia Law Prof. George Bermann commented, First Options recognizes “the fundamental importance of consent to arbitrate,” and guarantees parties’ rights to an independent judicial determination. See George A. Bermann, “After First Options: Delegation Run Amok,” American Review of International Arbitration (Sep. 2021) (available at https://bit.ly/3oV54bb).

By contrast, when an issue does not raise a question of arbitrability, it should be presumptively decided by an arbitrator. In Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (available at https://bit.ly/2yiejeh), Justice Breyer wrote that a FINRA time-limit rule for submission to arbitration is a procedural issue that an arbitral tribunal should decide. This approach achieves a balance between respecting arbitrators’ authority and parties’ consent to arbitrate.

Justice Breyer is recognized as an international arbitration authority. As he argued in his 2015 book, “The Court and The World: American Law and the New Global Realities” (Penguin Random House), the Court must look at foreign and international laws in today’s increasingly interdependent world.

Breyer put his philosophy to use in the investment treaty case of BG Group PLC v. Argentina, 572 U.S. 25 (2014) (available at https://bit.ly/3LIfLb8). The matter dealt with an enforcement action of a foreign investment arbitral award. Breyer, writing for the 6-2 Court, held that a treaty precondition to arbitration is a procedural issue that usually leaves the arbitral tribunal to decide, and the court should defer to the tribunal’s decision on that matter.

But the view was expansive. Breyer cited multiple international authorities and wrote that a bilateral investment treaty should not be treated differently from a contract.

Washington, D.C.-based Paul Hastings partner Igor Timofeyev praised the opinion for bringing predictability to the enforcement of investment arbitral awards in the U.S. See Caroline Simson, “Justice Breyer Set Many Standards for Arbitration Community,” Law 360 (Jan. 27) (available at https://bit.ly/3oSQoJO).

Justice Breyer’s arbitration opinions also reflect his often-noted pragmatic streak. He drafted majority opinions on class arbitration, such as Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003) (available at https://bit.ly/33putSQ) (designating that the decision on the contract in the case about the applicability of class arbitration was for the arbitrators, not the court), and Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) (available at https://bit.ly/3696Cb2) (finding that “Like silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to ‘sacrifice[ ] the principal advantage of arbitration,’” and reaffirming that “courts may not infer consent to participate in class arbitration absent an affirmative ‘contractual basis for concluding that the party agreed to do so.’”)

But Justice Breyer also sometimes found himself in the minority. In the seminal consumer arbitration case, AT&T Mobility LLC v. Concepcion, 563 U.S. 133 (2011) (available at https://bit.ly/3LEpkHV), the Court ruled that the Federal Arbitration Act preempted California arbitration law, which barred class arbitration. While Breyer drafted a dissenting opinion in the case, he upheld and applied Concepcion in his majority decision in DIRECTV Inc. v. Imburgia, 577 U.S. 47 (2015) (available at https://bit.ly/3gS8DKQ). He wrote,

No one denies that lower courts must follow this Court’s holding in Concepcion. The fact that Concepcion was a closely divided case, resulting in a decision from which four Justices dissented, has no bearing on that undisputed obligation. Lower court judges are certainly free to note their disagreement with a decision of this Court. But the “Supremacy Clause forbids state courts to dissociate themselves from federal law because of disagreement with its content or a refusal to recognize the superior authority of its source.” . . . The Federal Arbitration Act is a law of the United States, and Concepcion is an authoritative interpretation of that Act. Consequently, the judges of every State must follow it.

For Justice Breyer, “it’s the court’s job to help make government work for real people,” according to a former law clerk. See Richard Wolf, “After 20 Years, Breyer Is High Court’s Raging Pragmatist,” USA Today (Aug. 7, 2014) (available at https://bit.ly/3GTfu1m).

In Breyer’s view, by following judicial precedents, the Court contributes to social stability and allows people to plan their lives. He said, “The law might not be perfect but if you’re changing it all the time people won’t know what to do, and the more you change it the more people will ask to have it changed, and the more the court hears that, the more they’ll change it.” Andrew Chung, “U.S. Justice Breyer Touts Compromise, Democracy, Adherence to Precedent,” Reuters (May 28, 2021) (available at https://reut.rs/3Ju4Wr4).

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The author, a third-year law student at the University of Texas School of Law, in Austin, Texas, is a CPR 2022 Spring Intern.

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Practice and Power: Highlights from NYLS’s ADR and Diversity Symposium

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By Tamia Sutherland

New York Law School’s Alternative Dispute Resolution Skills Program annual ADR and Diversity Symposium featured a former New York governor and a lineup of prominent practitioners and legal organization officials.

The Jan. 27 event presented keynoter David A. Patterson, the 55th governor of New York who served from 2008-2010. It also featured speakers and an expert roundtable panel that discussed diversity in ADR, their experiences, and the legal profession more broadly.

Following welcoming remarks, Patterson’s keynote speech highlighted the need for discussions like the symposium, sharing personal stories about his first mediation job in the early 1970s and working for the NAACP in the early 1980s. He explained that he transferred the skills he learned in ADR to his position as governor. And the skills were instrumental when working with the New York Senate Majority Leader and Assembly Speaker in efforts to balance the state budget.

Next, Deborah Enix-Ross, the American Bar Association’s president-elect and senior adviser in international dispute resolution at New York-based Debevoise & Plimpton, provided ABA history. She shared that in 1912, the ABA rescinded the membership of William H. Lewis, the first black Assistant U.S. Attorney, and restricted membership to white lawyers only.  ABA membership, she explained, was restricted until a resolution passed in 1946 that stated that membership is not dependent on race, creed, or color.  

Enix-Ross also provided information on the ABA’s 2018 resolution that urged domestic and international dispute resolution providers to expand their rosters with minorities, women, people with disabilities, and people of diverse sexual orientation/gender identities. She encouraged the selection of diverse neutrals.

Then, Thomas Maroney, the ADR Committee Chair of the Defense Research Institute, a 52-year-old Chicago-based membership organization of defense attorneys and in-house counsel, discussed insurance industry diversity initiatives. One of DRI’s main goals, he said, is to gather ADR diversity data and put it in a central database. More specifically, he said the data will show national data averages for appointments of underrepresented neutrals, which will help insurance companies assess and identify which law firms are increasing the frequency of appointments of underrepresented neutrals.

An expert roundtable panel, followed, moderated by Rekha Rangachari, the Executive Director of the New York Arbitration Center, a nonprofit that promotes New York’s role in international arbitration, and Jeffrey T. Zaino, Vice President of the Labor, Employment and Elections Division of the American Arbitration Association in New York. The panelists included:

After the panelists introduced themselves and the organizations they represent, the moderators began with a question inquiring about what is not working in the profession and whether continued discussions about diversity issues make a significant difference. Panelist Duggal explained that in ADR, the central tension lies with the fact that a major tenant of the processes is self-selection. Panelist Gupta flipped the question, and talked about how the profession has succeeded and is working to introduce younger neutrals to the field.

Moderators then asked should diversity discussions move past gender and race. The panelists explained that the conversation has to move beyond gender and race, especially when examining diversity from a global lens.

Panelist Duggal stated that power structures globally are generally held by Caucasians. The concept of global white supremacy was raised. The moderators countered with a question, inquiring whether white male arbitrators are being excluded from diversity initiatives.

In response, a panelist stated that the answer is yes, assuming the hypothetical white male is straight, healthy, and able-bodied. Moreover, the panelist acknowledged feelings of exclusion and suggested therapy and vocalization to reveal the triggers that may be coming from a hostile place internally.

The last question to the panelists was how far one could actually push ADR users—that is, in-house counsel–to select diverse neutrals. The themes from the answers suggest using education, awareness, networking, and bringing the problem and solution to light.

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The author, a second-year law student at the Howard University School of Law in Washington, D.C., is a CPR 2022 Spring Intern.

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Senate Sends Bill Restricting Arbitration for Workplace Sexual Assault Victims for Biden’s Signature

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By Tamia Sutherland & Russ Bleemer

The U.S. Senate passed H.R. 4445, Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, this morning on a voice vote.

The bill had bipartisan support in both legislative chambers and quickly cleared the 60-vote procedural step to advance in the Senate. The House had passed the bill on Monday by a vote of 335-97.

President Biden has signaled he will sign the bill, which will take effect immediately. The Office of Management and Budget expressed the administration’s support in a Statement of Administration Policy letter, published Feb. 1, noting, “This bipartisan, bicameral legislation empowers survivors of sexual assault and sexual harassment by giving them a choice to go to court instead of being forced into arbitration.”

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act invalidates pre-dispute arbitration agreements and waivers of joint proceedings for individuals alleging conduct constituting a sexual harassment dispute or sexual assault. It effectively overrides employment contracts that require arbitration and allows all cases which include sexual assault or harassment claims to be resolved in court, despite the signed agreement containing an arbitration clause.

The language targets predispute arbitration agreements and predispute joint-action waivers, but not ad hoc or post-dispute processes. In fact, the law apparently allows employees an option to stay in existing arbitration agreements, noting at the outset that an arbitration clause will not be valid “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct. . . .” The law focuses on the filing of cases; a determination of the arbitrability of matters is sent by the law to courts, not arbitrators. . . .”

In introducing the bill this morning, Senate Majority Leader Charles Schumer, D., N.Y., noted the bipartisan agreement on the bill, and emphasized that it will apply retroactively.  The law states that it “shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.” Said Schumer, “That’s an important point that hasn’t gotten enough attention.”

The text of the bill is available here.

Arbitration clauses in employment contracts have been characterized by legislators as “forced” and were discussed in depth at the Nov. 16 House Judiciary hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows.” A blog post about the Nov. 16 hearing can be accessed here, and the hearing can be viewed in its entirety at https://bit.ly/3wTDLkf.

Some legislators and attorneys were worried that the proposed reforms could unwittingly fail in practice. There is concern because litigation can be more expensive; the bill does not prevent companies from forcing people to sign nondisclosure agreements that also could hide sexual misconduct allegations, and plaintiffs’ attorneys could be incentivized to include sexual harassment allegations in cases that have nothing to do with sexual harassment to evade arbitration.

“Unfortunately, some of the language in the statute is potentially ambiguous,” says Christopher C. Murray, a shareholder in the Indianapolis office of Ogletree, Deakins, Nash, Smoak & Stewart, and co-chair of the firm’s Arbitration and Alternative Dispute Resolution Practice Group. He explains:

Specifically, the statute bars enforcement of certain arbitration agreements with respect to “cases” relating to sexual harassment and sexual assault disputes.  The statute probably should state it bars enforcement of agreements with respect to ‘claims’ relating to sexual harassment and sexual assault disputes. Some plaintiffs’ counsel may try to make hay out of this ambiguous use of ‘cases’ and seek to expand the scope of the statute to bar the arbitration of other types of claims that happen to be in the same case. I expect that effort by plaintiffs’ counsel will ultimately be unsuccessful under cases like CompuCredit Corp. v. Greenwood, but the ambiguity may still result in some extra litigation in the short term. . There’s no indication the new law is intended to change the “Congressional command” analysis for claims under other federal statutes that have nothing to do with a sexual harassment or sexual assault dispute.

In CompuCredit Corp. v. Greenwood, 565 U.S. 95 (2012), the Supreme Court held that because the Credit Repair Organizations Act is silent on whether claims can be arbitrated, the Federal Arbitration Act required the plaintiff’s arbitration agreement to be enforced according to its terms. Moreover, the case stands for the proposition that an arbitration agreement should be enforced if the claims at issue are federal statutory claims, unless the mandate of the Federal Arbitration Act, 9 U.S.C. § 1, et seq., has been overridden by a contrary Congressional command. Parties likely will dispute whether the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which specifically amends the FAA, changes that analysis in any way for claims under federal statutes that do not relate to sexual harassment or assault.

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The Senate also was concerned about the misuse of sexual assault and harassment claims to piggyback arbitrable claims into court, and this morning addressed the issue. 

Sen. Joni Ernst, R., Iowa, emphasized that the act should not be used for other workplace disputes. “Those claims are meaningfully different,” she said, emphasizing that if an employment agreement has a predispute arbitration provision and a sexual assault or harassment claim is brought with another claim, and the assault or harassment claim is later dismissed, “the court should remand the other claim back to the arbitration” system.

Ernst told the Senate that the presence of sexual assault or harassment claims “should not effectively destroy arbitration in employment litigation.”

Ernst pledged to work with Schumer and other senators, she said, “if there are indications that there is gaming of the system” by claimants or lawyers.

Sponsor Kirsten Gillibrand, D., N.Y., expressed appreciation for work on the bill by Ernst and Sen. Lindsey Graham, R., S.C., and agreed with Ernst’s cautions. “I do not believe that survivors of sexual assault and harassment will use the claims” to avoid arbitration, she said, adding, “If those claims on assault or harassment are dismissed, [victim claimants] will go back to arbitration.”

“But,” continued Gillibrand, “it is important that all claims related to assault or harassment are dealt with at the same time” to avoid sending victims to multiple forums. “If victims and attorneys break those rules, they can be sanctioned in court,” she said.

Ahead of the voice vote, Lindsey Graham said, “It does not hurt business to make sure that people harassed in the workplace [get justice]. It helps business.  . . . Arbitration has its place in business.  . . . [But] you’re not going to sign away your life.”

He concluded, “This is not bad for business. This is good for America.”

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The passing of the Ending Forced Arbitration Act marks a significant national reform in the fight against sexual misconduct in the workplace that emerged from the bravery of the #MeToo movement.  It also may be a harbinger of more to come in terms of arbitration restrictions. The White House statement supporting the legislation, which now goes to the president’s desk to be signed into law, ended by noting,

The Administration also looks forward to working with the Congress on broader legislation that addresses these issues as well as other forced arbitration matters, including arbitration of claims regarding discrimination on the basis of race, wage theft, and unfair labor practices.

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Sutherland, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern.  Bleemer edits Alternatives to the High Cost of Litigation for CPR.

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Highlights from the CPR Houston Regional Meeting & Networking Event

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By Tamia Sutherland

The CPR Energy, Oil, and Gas Committee held its Fifth Annual Houston Regional Meeting and Networking Event on January 19. The meeting, attended by more than 75 participants, was divided into two parts: a panel discussion and networking roundtable where attendees were placed in breakout rooms with the panelists and rotated every 10 minutes.

BakerHostetler was a co-sponsor of the meeting, which was moderated by Sashe Dimitroff, the national practice leader of BakerHostetler’s International Commercial Arbitration team. The panelists discussed the most important factors they look for and their frame of mind while selecting outside counsel when a problem arises and included:

  • Victoria Lazar, the Executive Vice President, Chief Legal Officer, and Secretary in Houston at TechnipFMC, a global company providing technology for energy operations (see Marc Curriden, “TechnipFMC’s Victoria Lazar Solves Billion-Dollar Problems,” Texas Lawbook (Dec. 21, 2021) (available here).
  • Bryan Elwood, the chief legal officer at Houston’s Tricon Energy, which provides support for commodities market participants including risk management, finance, and more.
  • Josh Dazey, the general counsel of Arlington, Texas-based U.S. Energy Development Corp., a private oil and gas producer, and
  • Alberto Ravell, senior legal counsel at ConocoPhillips Co., a Houston-based oil and gas producer.

Brief introductions were made by CPR’s Vice President of Global Development, Mia Levi, and President and CEO Allen Waxman. Moderator Dimitroff then began with a question about the panelists’ biggest internal clients from the in-house counsel viewpoint. Panelist Josh Dazey explained that his internal clients are the entire executive management team, including the chief executive officer, chief financial officer, vice presidents of securities, operations, and business development. Panelist Alberto Ravell added that he also has to address international and domestic business units and other colleagues in his legal department.

Dimitroff then asked what type of research the panelists do before hiring outside counsel. Panelist Bryan Elwood explained that he generally has a list of counsel. But he highly recommended that firms have a good network of lawyers who can make referrals. Furthermore, Elwood said he explores information on the Internet, such as Legal 500 and other similar sources. Once his research is complete, he said he goes through interview, shortlist, and decision processes.

An audience member asked how solo practitioners can get in front of the panelists and in-house counsel. Panelist Victoria Lazar explained that the best way is to cultivate relationships for references, and publish thought-provoking, industry-specific articles that will catch people’s attention.

Moreover, Lazar stated that she is willing to follow lawyers if they leave larger firms and branch out independently. Panelist Bryan Elwood added that in his experience, sometimes larger firms will bring on a solo practitioner to help in a case, which is a great starting point to build relationships with in-house attorneys.

The last question posed asked the panelists to provide examples of a good first meeting with a lawyer/firm. The panelists suggested being prepared, understanding the business risk, and chemistry as essential factors. Moderator Dimitroff summed up the answers by stating that the most important thing clients care about is commercial solutions.

* * *

For more information about CPR’s Energy, Oil and Gas Dispute Resolution Services, please visit the CPR website.

* * *

The author, a second-year law student at the Howard University School of Law in Washington, D.C., is a CPR 2022 Spring Intern.

[END]

Highlights from the House Judiciary Hearings Targeting Arbitration’s Role in Prosecuting Sexual Harassment

/ CPR Staff / 1 Comment

By Tamia Sutherland

The House Committee on the Judiciary held a Nov. 16 hearing on arbitration’s effects on victims of sexual violence and harassment. Chairman Jerrold Nadler,  D., N.Y., presided over the hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows.”

A second hearing followed the next day, marking up a bill introduced to restrict the use of arbitration in sexual harassment employment cases, and sending it to the full House, where it awaits action.

In his opening statement at the first hearing, Nadler said that “arbitration was originally developed as an alternative to the court system, for parties of relatively equal bargaining power to enter into voluntarily.”

But, he continued, “forced arbitration” clauses, seen in “take it or leave it contracts,” have grown in popularity between large corporations and individuals. Nadler asserted that forced arbitration is most problematic in the workplace. He provided data projecting that by 2024, 80% of private-sector employees will be required to sign an arbitration clause when accepting employment. Moreover, he stated that employers prevailed over employees in 98.1% of arbitrations.

Notwithstanding the statistical information, Nadler explained that the purpose of the hearing was to examine the “true human toll of forced arbitration, [based on] stories that cannot be distilled down to a number or a statistic.” He set out the theme of the hearing by declaring arbitration a system that is “fundamentally unjust,” but noting that the decisions in the matters involving the witnesses would not be reversed. He added that the witnesses’ appearances were to provide a voice for other victims of sexual harassment.

Ranking minority committee member Jim Jordan, R., Ohio, also provided an opening statement in which he explained that the committee must ensure that “pathways that Americans have to resolve their disputes function properly and are fair to everyone.” He added, “Arbitration should be as fair as court.”

He noted the declining number of civil cases that concluded in a trial. Jordan said that if the arbitration system is not being used properly, there is an obligation to fix it to benefit the parties to the dispute.

Many of the witnesses who provided hearing testimony are survivors of sexual harassment and/or sexual assault who reported that they were forced into arbitration agreements based on their employment. Chairman Nadler explained that the witnesses faced off in arbitration with their employers, who had the opportunity to select “the judge and the jury, truncate the discovery process, choose the law applied, and prevent all appeals.” The individuals who provided testimony, Nadler reported, were only allowed to do so because a congressional subpoena has compelled their testimony. Here is the witness list:

  • Eliza Dushku, actor/producer and philanthropist;
  • Tatiana Spottiswoode, first-year Columbia University Law School student and former business analytics associate at Afiniti Ltd., a Hamilton, Bermuda-based software developer;
  • Anna St. John, president and general counsel at Washington, D.C., public interest law firm Hamilton Lincoln Law Institute;
  • Andowah A. Newton, vice president for legal affairs and head of litigation for LVMH Moët Hennessy Louis Vuitton Inc.;
  • Sarah Parshall Perry, Legal Fellow, Edwin Meese III Center for Legal and Judicial Studies at the Heritage Foundation, a Washington, D.C. membership think tank focusing on conservative issues;
  • Lora Henry, a sales associate for Wacom Mitsibushi in Canton, Ohio, and
  • Myriam Gilles, the Paul R. Verkuil Chair in Public Law at the Yeshiva University’s Benjamin N. Cardozo School of Law in New York.

Eliza Dushku began the witness testimony, noting that she has worked in the entertainment industry on high-profile films and television for nearly 30 years.  She also identifies as a victim and survivor of sexual harassment in the workplace—she was fired and says she was silenced when she attempted to speak out.

She told the story of being aggressively pursued by CBS to co-lead in a 2017 show, “Bull,” in which she said her character was written with her in mind, and which required a six-year commitment to playing a strong, confident lawyer. But within the first week of her new job, she reported that she became the brunt of crude sexualized, lewd verbal assaults and suffered near-constant sexual harassment from her co-star, Michael Weatherly, who also was the show’s co-producer.

Dushku says she wasn’t physically harmed, but the effects of verbal abuse have been long lasting. Examples of some of the comments endured included being called “legs” and being told she would be taken to a “rape van” where  “long phallic things” would be used, or she would be “take[n] over his knee and spank[ed] like a little girl.” Additionally, she reported Weatherly told her that his sperm were “powerful swimmers,” and he shouted out loud on set that he and his buddy wanted to have a “threesome” with her.

The comments were not scripted lines. They were made in front of the cast and crew members, and sometimes while the cameras were still rolling. She stated that her co-star’s comments emboldened other male crew members.  One said to her, “I’m with Bull, I want to have a threesome with you, too, Eliza,” between scenes.

Dushku reported that she was horrified and became physically nauseous but, she said, her drive to succeed was strong, and she loved the role, so she tried to maintain her professionalism. And as a result, she said, she received positive reviews from the showrunner and other CBS employees and officials.

After speaking with her manager about the work conditions, Dushku said that she asked her co-star to be her ally and “tone down some of the sexualized comments.” His response was that “no one is more respectful of women than me.”

But then he texted the head of CBS Studios that Dushku was “humor deficit,” who she reported replied that Dushku made the show better. Nevertheless, Dushku was fired the next day and told she was only in three more episodes despite the six-year deal.

Despite her longevity in the entertainment industry, Dushku said she never understood the mandatory arbitration clauses in her contracts. In this case, the harassment of Dushku was caught on camera, in tapes CBS provided in a poorly constructed attempt to defend itself. Still, Dushku told the House Judiciary Committee that no one will see the tapes due to her signing a binding arbitration clause.

Dushku concluded her testimony by asserting that there will never be real justice for her and for countless other victims of sexual harassment who unknowingly signed binding arbitration clauses.

* * *

Tatiana Spottiswoode explained that she first met Zia Chishti, the founder of Invisalign and CEO of Afiniti, when she was around 12-13 years old, as a business associate and friend of her father’s. When Spottiswoode was a college senior in 2014, Chishti, then 43, deceived Spottiswoode by insisting that she attend a ski trip to meet a nephew that she later discovered didn’t exist. Spottiswoode believes the trip was an attempt to groom her and introduce her to “an extravagant lifestyle.”

When Chishti explained that he had feelings for her, she rejected him but agreed to date him nine months later. After 10 weeks of dating, Spottiswoode ended the relationship. ‘

Months later, Spottiswoode was offered a job with an annual $60,000 salary, and she was assured Chishti did not expect a sexual relationship. In April 2016, Spottiswoode signed an employment contract that included an arbitration agreement. And over the next 18 months, Spottiswoode was pressured for sex and punished or humiliated when she did not comply.  Chishti, she said, also retaliated by ignoring her for months after her rejection.

Chishti fixated on another young female employee on a Dubai business trip, according to Spottiswoode. After the employee was violated by Chishti after a night of drinking, the other young employee was flown home and paid a secret settlement, according to Spottiswoode’s testimony. Afiniti did not take any steps to prevent other women from this behavior, she reported, noting that in all interactions with Chishti she made clear that she did not want to have a sexual relationship with Chishti. In a January 2017 email, Spottiswoode wrote to Chisti: “three times you have behaved inappropriately and with my explicit non-consent.”

Chishti only became more hostile. He called Spottiswoode petulant and told her to fix her behavior in writing. After expressing concern to Chishti, Spottiswoode received pornographic emails describing Chishti’s rape fantasies. On a business trip to Brazil, where Spottiswoode had business accounts, Chishti forced sex with her, and beat her. Spottiswoode’s was covered with scratches, cuts, and contusions;  gruesome images, including choke marks, were submitted in the hearing (and are available at the committee hearing link below).

According to Spottiswoode’s testimony, Chishti then initiated arbitration against Spottiswoode. He filed suit against her father, who had quit his employment with the company when she returned from Brazil the day before her deposition was scheduled.

In May 2019, an arbitrator ruled that Spottiswoode was sexually harassed. Chishti’s Big Law representation, she told the House Judiciary Committee hearing, have tried to get Spottiswoode to vacate the arbitration award by offering her money and to drop the suit against her father, and pay him $1 million. Spottiswoode’s father’s arbitration was continuing as of the House Judiciary Committee hearing, she said. Spottiswoode  she said she is terrified about the ramifications of her testimony because forced arbitration gave Chishti the power for continuing a “campaign of retaliation.”

Zia Christie Chishti stepped down from his role as Afiniti CEO three days after the hearing, but denied all of the allegations. Rimal Farrukh, “She Wanted to Accuse a Celebrated Techie of Sexual Assault But Couldn’t. Until Now.” Vice.com (Nov. 29, 2021) (available at https://bit.ly/3sBblvu).

* * *

Committee witness Anna St. John of the Hamilton Lincoln Law Institute argued that removing arbitration is not in the best interests of those subjected to sexual harassment and assault. St. John explained that studies show that arbitration provides a faster and less expensive way to resolve claims against employers and to obtain greater relief because (1) arbitration is more flexible, (2) involves less burdensome discovery and traditional rules, and (3) organizations support arbitration proceedings to increase accessibility and fairness for individual claimants, and which can lower the costs of claims.

St. John argued that secondary benefits include corporations having more funds for employee benefits or lowering costs to consumers. Furthermore, St. John stated that the U.S. Supreme Court and Congress have expressly recognized the benefits of arbitration.

St. John said that she believes that taking away arbitration for victims is a “top-down, heavy-handed approach that denies them the advantages of arbitration as a means of adjudicating their claims.” Moreover, she believes that overburdened courts are slow-moving, which in turn benefits attorneys, not victims. And class actions do not benefit sexual assault victims because their experiences are often individualized, according to St. John.

* * *

Other testimony included the Heritage Foundation’s Sarah Parshall Perry, who testified strongly in support of arbitration as support for helping congested court dockets.  She said that “the basic premise of all limiting legislation that arbitration is somehow unfair to or bad for employees and consumers is false. The evidence shows precisely the opposite.” She concluded noting that the elimination of the use of arbitration ultimately could hurt victims of sexual harassment and violence.

During the questioning that followed testimony, Perry repeatedly said that more scrutiny should be made of confidentiality provisions and nondisclosure agreements, the use of which she said could be “a particularly pernicious setup” when teamed with an arbitration agreement. But she warned later during questioning that reforms on confidentiality and NDAs can’t become “a piecemeal slice-and-dice of the [Federal Arbitration Act].”

Prof. Myriam Gilles discussed H.R. 4445, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” which was introduced and debated the day after the hearing. The bill would bar predispute arbitration agreements or predispute joint-action waiver in sexual assault or harassment disputes. Gilles focused on the secrecy aspect of arbitration in her support of the bill. But during questioning late in the hearing, Gilles made clear that the target is arbitration and court-waiver provisions as a condition of employment, noting, “Post-dispute arbitration is fine.”

* * *

The House Judiciary Committee marked up the bill the next day, Nov. 17. The bill prohibits the validity or enforcement of any pre-dispute arbitration agreement or a pre-dispute joint-action waiver with respect to a case “which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.” 

The terms “sexual assault dispute, “sexual harassment dispute,” “sexual assault dispute,” “pre-dispute arbitration agreement” and “pre-dispute joint-action waiver” are defined in detail in the bill. The proposed legislation, however, says nothing about NDAs, but it excepts application to collective bargaining agreements, which often depend on arbitration.

The bill was reported out to the full House at the markup hearing, 27–14, with four Republicans joining the majority Democrats in passing the proposal.

* * *

The Nov. 16 House Judiciary hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows,” can be viewed in its entirety at https://bit.ly/3wTDLkf. The link includes the biographies, written testimony, and evidence submissions of each of the hearing witnesses. The Nov. 17 House Judiciary markup, with role-call votes on the bill and proposed amendments, as well as more supporting submissions, is available at https://bit.ly/3FFNw9p.

* * *

The author, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern.

[END]

US Supreme Court to Review Whether Private Attorney General Action Can Be Waived by an Arbitration Agreement

/ CPR Staff / 1 Comment

By Mark Kantor

Continuing its focus on arbitration, the U.S. Supreme Court yesterday granted certiorari in Viking River Cruises v. Moriana, No. 20-1573, where the question presented is whether the Federal Arbitration Act requires enforcement of an arbitration agreement that waives a signatory’s ability to bring a labor law claim on behalf of California labor law agencies in court pursuant to California’s Private Attorneys General Act (PAGA).

The official issue presented:

Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under the California Private Attorneys General Act.

PAGA enables an individual employee to seek a court judgment for breach of California labor laws as a “private attorney general” on behalf of the state of California. 

An employee bringing a PAGA action does so as the “proxy” or “agent” of California’s labor law enforcement agencies, who are the real parties in interest.  A successful employee-plaintiff may obtain civil penalties under PAGA for violations committed against similarly placed employees, Cal. Lab. Code § 2699(g)(1), just as the state could if it brought the enforcement action directly.   Civil penalties recovered in a PAGA representative action must be allocated 75% to the state enforcement agency and 25% to the aggrieved employee. Cal. Lab. Code § 2699(i).

California state courts, and federal courts applying the California law, have held that a PAGA representative claim in court cannot be overcome by an arbitration agreement.  Employers consider that jurisprudence to be contrary to U.S. Supreme Court precedent.

The Supreme Court will now take up that issue for review.

The Court’s docket page for Viking River Cruises with filings is linked above. The Scotusblog page containing the lower court opinion and amicus briefs can be found here.

* * *

It has been a busy week for arbitration at the Supreme Court, and with recent moves, the Court has provided itself a full arbitration docket, with six separate cases pending in five matters, only one of which has been argued, as the others await argument dates.

Last Friday, the Court accepted two cases and consolidated them into one argument, date to be announced, on a long-running issue about the reach of a federal law that provides discovery in foreign matters. Details on the Dec. 10 cert grant on the consolidated cases, which will determine whether the law applies to discovery in international arbitration matters, can be found at John Pinney, “International Arbitration Is Back at the Supreme Court with Today’s Cert Grant on Two Section 1782 Cases,” CPR Speaks (Dec. 10) (available here).

The Court on Friday also accepted a case on  Federal Arbitration Act Sec. 1 that will examine the extent of the exception from the FAA involving workers in interstate commerce. For details on that new case, as well as a roundup of the six arbitration cases now at the U.S. Supreme Court, see Russ Bleemer, “Court Adds a Third Arbitration Case in Friday’s Cert Granted Order List,” CPR Speaks (Dec. 10) (available here).

* * *

Mark Kantor is a member of CPR-DR’s Panel of Distinguished Neutrals.  Until he retired from Milbank, Tweed, Hadley & McCloy, he was a partner in the firm’s Corporate and Project Finance Groups.  He currently serves as an arbitrator and mediator.  He teaches as an Adjunct Professor at the Georgetown University Law Center (Recipient, Fahy Award for Outstanding Adjunct Professor).  He also is Editor-in-Chief of the online journal Transnational Dispute Management.  He is a frequent contributor to CPR Speaks, and this post originally was circulated to a private list serv and adapted with the author’s permission.

[END]

Court Adds a Third Arbitration Case in Friday’s Cert Granted Order List

/ CPR Staff / 1 Comment

By Russ Bleemer

In addition to the two cert grants this afternoon on the international arbitration discovery issue in 28 U.S.C. § 1782, the U.S. Supreme Court accepted a third arbitration case for oral arguments.

Southwest Airlines Co. v. Saxon, No. 21-309, presents a Federal Arbitration Act Sec. 1 question:

“Whether workers who load or unload goods from vehicles that travel in interstate commerce, but do not physically transport such goods themselves, are interstate ‘transportation workers’ exempt from the Federal Arbitration Act.”

FAA Sec. 1 defines the statute’s application to maritime transactions and commerce. The section ends noting that “nothing [in the statute] shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

The Court has interpreted the law to mean that the exception from FAA application is only for transportation workers “engaged in” interstate commerce. Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (available at https://bit.ly/2HhwYLu).

The original plaintiff in the case, now the respondent, is a “Ramp Agent Supervisor for Southwest who occasionally loads and unloads passenger baggage from airplanes,” according to Southwest’s cert petition, which is available at the docket link above. The original plaintiff works at Chicago’s Midway Airport.

The Seventh U.S. Circuit Court of Appeals in the case (available at https://bit.ly/3rRA8Ln) held that the plaintiff was a transportation worker, and therefore exempt from the FAA.  

Noting a circuit split, Southwest appealed, and this afternoon, the nation’s top Court agreed to decide whether the local worker was FAA-exempt, which is likely to include an examination of the plaintiff’s work in relation to interstate commerce.

The case has not yet been scheduled; schedules for winter and spring 2022 argument dates in the current 2021-2022 term have yet to be released, and the case could be added before the Court’s year ends in June.

* * *

Southwest Airlines Co. v. Saxon, and the two new international arbitration cases on 28 U.S.C. § 1782, ZF Automotive US Inc. v. Luxshare Ltd., No. 21-401, and AlixPartners LLP v. The Fund for Protection of Investor Rights in Foreign States, No. 21-518, contribute to an already busy 2021-2022 Supreme Court arbitration docket.

The Court had scheduled an arbitration case to be argued the first week of the term, but it dismissed the matter shortly before the arguments at the parties’ request after an award was issues and the case concluded.  For details, see Bryanna Rainwater, “Case Dismissed: Supreme Court Lightens Its Arbitration Load as Servotronics Is Removed from 2021-22 Docket,” CPR Speaks (Sept. 8) (available here).

But two more arbitration cases quickly followed last month. The Court heard Nov. 2 arguments in Badgerow v. Walters, No. 20-1143, an employment discrimination case that dives into the jurisdiction of federal courts under Federal Arbitration Act sections on enforcing and overturning arbitration awards.  See Russ Bleemer, “Supreme Court Hears Badgerow, and Leans to Allowing Federal Courts to Broadly Decide on Arbitration Awards and Challenges,” CPR Speaks (Nov 2) (available here).

And on Nov. 15, the Court accepted an employment arbitration case, Morgan v. Sundance Inc., No. 21-328, on the extent to which a federal court may defer to an arbitration agreement. The case will return to the scope of a decade-old case,  AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), which permits mandatory arbitration backed with class waivers in consumer contracts. For details, see Mark Kantor, “U.S. Supreme Court Adds an Arbitration Issue: Is Proof of Prejudice Needed to Defeat a Motion to Compel?” CPR Speaks (Nov. 15) (available here).

Like today’s three-case addition to the Court docket, Morgan awaits an argument date.

* * *

The author edits Alternatives to the High Cost of Litigation for CPR.

[END]

International Arbitration Is Back at the Supreme Court with Today’s Cert Grant on Two Section 1782 Cases

/ CPR Staff / 2 Comments

By John Pinney

The U.S. Supreme Court this afternoon granted certiorari on two Section 1782 cases, ZF Automotive US Inc. v. Luxshare Ltd., No. 21-401, and AlixPartners LLP v. The Fund for Protection of Investor Rights in Foreign States, No. 21-518.

By accepting these cases, the nation’s top Court has again agreed to decide whether 28 U.S.C. § 1782 can be invoked by parties in international arbitrations to obtain U.S.-style discovery to obtain evidence for use in such proceedings.

It is the second time this year that the Court has taken on the issue. Today’s cert grants follow the voluntary dismissal in September just six days before the scheduled argument for Servotronics, Inc. v. Rolls-Royce, PLC, No. 20-794, a case that the court had agreed to hear on the same issue last March.  For details on the dismissal, see Bryanna Rainwater, “Case Dismissed: Supreme Court Lightens Its Arbitration Load as Servotronics Is Removed from 2021-22 Docket,” CPR Speaks (Sept. 8) (available here).

As it had done in Servotronics, the International Institute for Conflict Prevention and Resolution, which publishes CPR Speaks, filed an amicus brief in support of the AlixPartners certiorari petition. [Editor’s note: John Pinney, author of this CPR Speaks blog post, also is counsel of record on both amicus briefs on CPR’s behalf. See the credit line for links below.]

In its order granting cert on the two cases, the Court formally granted CPR’s leave to file an amicus brief in AlixPartners. The Court consolidated the two cases and allotted an hour for an oral argument. The order is available here.  The case has not yet been scheduled; schedules for winter and spring 2022 argument dates in the current 2021-2022 term have yet to be released, and the case could be added before the Court’s year ends in June.

The specific issue before the Supreme Court is whether the critical phrase in § 1782, “foreign or international tribunal,” includes international arbitral tribunals. As readers who have been following the cases addressing § 1782 over the past two years know—see links to key CPR Speaks blog posts below–there is a circuit split regarding the applicability of § 1782 for private international arbitrations. The Second, Fifth and Seventh U.S. Circuit Courts of Appeals have held that an international arbitral tribunal is not a “tribunal” within the meaning of the statute, while the Fourth and Sixth Circuits have decided it is.

There was widespread disappointment in the international arbitration community when Servotronics was officially dismissed in late September after a party requested the dismissal shortly after an award was issued in the underlying London arbitration that mooted the § 1782 case before the Supreme Court.

The ZF Automotive case is virtually identical to Servotronics in that it involves a private international arbitration. It is noteworthy, however, that the ZF Automotive petition was brought before judgment out of the Sixth Circuit, one the two circuit courts allowing § 1782 discovery for a private international arbitral tribunal.

On the other hand, AlixPartners presents a significantly different issue than the Servotronics matter.

AlixPartners arises not from a private international arbitration but instead from an investment case brought under the Russian-Lithuanian bilateral investment treaty. The respondent Fund now before the Supreme Court is a Russian entity pursuing claims before an ad hoc UNCITRAL-rules arbitral tribunal against Lithuania for investors’ financial losses resulting from the insolvency of the Lithuanian bank.

The Fund brought its § 1782 request for discovery in New York against AlixPartners, a financial consulting firm that had advised the Lithuanian government regarding the bank’s insolvency. The case comes to the Supreme Court after the Second Circuit, applying criteria established in a recent case that denied discovery for a case before a private international arbitration tribunal–see In re Hanwei Guo for an Order to take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. 1782, 965 F.3d 96 (2d Cir. 2020), as amended (July 9, 2020) (available at https://bit.ly/3IxxzUK)–allowed discovery for the investment case because of the degree of governmental involvement due to the investment treaty. 

For more on ZF Automotive, see Bryanna Rainwater, “The Law on Evidence for Foreign Arbitrations Returns to the Supreme Court,” CPR Speaks (Oct. 22, 202) (available here). For a CPR YouTube discussion of the cases and two other pending U.S. Supreme Court arbitration matters, see “The Latest #SCOTUS #Arbitration: Process ‘Preference’; Int’l #Discovery; Federal Courts’ Arb #Jurisdiction,” CPR Speaks (Nov. 23) (available here).

By taking both ZF Automotive and AlixPartners, the Supreme Court will now decide the scope of § 1782 for both private international and investment arbitrations.

* * *

John Pinney is counsel to Graydon Head & Ritchey in Cincinnati. On CPR’s behalf, he acted as counsel of record in an amicus brief urging the U.S. Supreme Court to accept the AlixPartners case, but not taking a position on behalf of either party. Details on the brief can be found on CPR Speaks here. His AlixPartners brief on CPR’s behalf can be found at on the Supreme Court docket page linked at the top or directly at https://bit.ly/3pzZpHj. Earlier this year, he filed a similar friend-of-the-Court brief asking the Supreme Court to accept the Servotronics case, which was accepted and later dismissed ahead of a scheduled argument. Details on the dismissal can be found in the CPR Speaks Sept. 8 posting cited above, and here. He discusses the Servotronics brief in a CPR YouTube analysis here. His Servotronics brief on CPR’s behalf can be found on the Supreme Court docket page linked at the top of this post or directly at https://bit.ly/3Ez58U4.

[END]