Meredith-Anne Berger and Anne Dana of Seyfarth Shaw have authored this article, available through JD Supra, discussing the recent decision by the U.S. District Court for the District of New Jersey in New Jersey Civil Justice Institute v. Grewal, in which the court held that New Jersey’s ban on enforcement of mandatory pre-dispute arbitration provisions for all claims of employment discrimination, retaliation, and harassment is pre-empted by the Federal Arbitration Act.

The Illinois Appellate Court’s recent decision in Zuniga v. Major League Baseball is the subject of this JD Supra article by Patrick Hammon of McManis Faulker. As noted by Mr. Hammon, “the appellate court focused on the consideration that made this case different from many other unconscionability cases—specifically, the fact that Ms. Zuniga did not purchase, but instead was gifted, the ticket at issue.” As he predicts, “[w]hile the case will have no binding impact on any cases brought by sports fans against teams located outside of Illinois, it is likely that clubs located across the country (and across all major sports) will take notice of what some might call the Zuniga loophole—where a potential plaintiff was not the purchaser, but instead merely a recipient, of the ticket at issue.”

In American Family Life Assurance Company v. Baker, a Second Circuit panel affirmed the Southern District’s decision to compel arbitration of ERISA claims, when the employer was forced to unravel conflicting contract provisions that on their face served to collectively preclude the employees from asserting their claims altogether. One contractual provision purported to mandate arbitration of “any dispute,” while another provision “limit[ed] the scope of any arbitration to claims for breach of contract, fraud, or willfully tortious conduct.” Arguing that the two provisions, read together, precluded them from “vindicat[ing] their statutory rights in any forum,” the employees argued that the arbitration provisions should be voided, thereby enabling them to pursue their ERISA claims in court.

The employer responded by representing to the court that it would waive the second arbitration provision, thereby enabling the employees to arbitrate their ERISA claims. Based upon this waiver, the lower court held–and the Second Circuit affirmed–that the dispute was arbitrable. The Second Circuit alternatively noted that, even had the company not waived the second arbitration provision, it was severable.

Chael Clark of Carlton Fields has authored this article, available in JD Supra, discussing the Southern District’s decision in Copragri S.A. v. Agribusiness United DMCC. As the article explains, [t]he court held that because Copragri was not a party to the bill of lading and therefore did not consent to arbitration in New York, the arbitration panel acted outside its scope and authority when issuing its award.” Moreover, “the arbitration panel’s failure to analyze or even address Copragri’s various objections … constituted a manifest disregard for the law, further justifying vacatur.”

Those interested in additional insight into the court’s decision, especially as it relates to the ongoing vitality of the manifest disregard decision, should take a look at Dave Reif’s article discussing Copragi.

Contract drafters who treat choice of law provisions as insignificant should think twice, at least if there is a desire to ensure disputes will be arbitrated. In Frederick v. Law Office of Fox Kohler & Associates PLLC LLC , the Third Circuit, called to assess whether the lower court had incorrectly interpreted an arbitration provision under New Jersey rather than Delaware law, concluded that the court indeed erred and that the law of the two states did substantively differ regarding the enforceability of the arbitration provision. In the particular matter, however, the lower court’s error was deemed harmless, as the Third Circuit concluded that the dispute was arbitrable even under the more restrictive New Jersey statutory language.

As described in this article in Scottish Legal News, the United Kingdom has set aside a £1 million budget to incentivize mediation, by providing 2000 couples on a first come, first served basis with tax-free vouchers, with the hope of relieving burdens on the courts. Interesting idea, that if utilized in appropriate circumstances, could pay for itself many times over.

David Zaslowsky and Grant Hanessian of Baker McKenzie have this article in Lexology, discussing the Southern District’s decision in Accent Delight Int’l Ltd. v. Sotheby’s, precluding litigating parties from obtaining in discovery documents utilized in a related private mediation.

By a 2-1 decision, Florida’s Fourth District Court of Appeal has reversed a lower court’s order compelling arbitration of claims brought by investors against investment company-related defendants. In Fallang Family Limited Partnership v. Privcap Companies, LLC, the parties’ agreement, materially similar to countless others, provided as follows:

12.10 Arbitration. In the event of any dispute under this agreement the parties agree to submit to binding arbitration in the state of Florida with a panel of one arbitrator. The arbitrator shall be chosen by the AAA and the AAA rules and procedure shall apply, and the arbitration will be governed by the law of the state of Florida.

In furtherance of this language, the lower court, considering the investment companies’ motion to compel arbitration of sixteen claims between parties to the agreement, granted the motion as to fourteen of the claims, holding that, at least superficially, they were arbitrable because “they are eitherwholly related to the Operating Agreement or tangentially related to the Operating Agreement through the Servicing Agreement between [FFLP] and Privcap Funding.” The court held that the arbitrator was authorized to make more specific determinations of arbitrability based on facts to be presented by the parties.

Thus, the lower court appeared to be following United States Supreme Court guidance, most recently expressed in Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524 (2019), when it held that under the Federal Arbitration Act “parties may delegate threshold arbitrability questions to the arbitrator, so long as the parties’ agreement does so by ‘clear and unmistakable’ evidence,” and that “[w]e must interpret the Act as written, and the Act in turn requires that we interpret the contract as written. When the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract.”

On appeal, however, the Fourth District concluded otherwise, holding that the lower court decision ignored “’gatekeeper’” provisions embodied in Florida statutory law, requiring the court to decide “what controversies are subject to an arbitration agreement,” unless the parties “by contract” have “shift[ed] that authority to the arbitrator.”

Seizing on language from Henry Schein and other U.S. Supreme Court precedent, the court held that “the contract language shifting the authority to decide what controversies are arbitrable from the court to the arbitrator must provide ‘clear and unmistakable evidence’ of that intent, and ambiguity as to ‘who decides’ reverses the usual presumption from the arbitrator to the court.”

For the majority of the appellate panel, the parties’ arbitration provision calling for the applicability of the AAA rules–no different than that contained in countless commercial contracts–was insufficient to constitute the requisite evidence of the parties’ intent that the arbitrator determine arbitrability. Even though AAA commercial rule specifically addresses jurisdiction, providing that “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim,” the appellate panel held this was not enough. According to the court, the contract’s “general reference to ‘AAA rules’ did not ‘clearly and unmistakably’ supplant the trial court’s authority to decide what is arbitrable,” and that “the general reference to the ‘AAA rules’ in this case left ambiguity as to whether the arbitrator has authority to decide arbitrability to the exclusion of the trial court.”

Takeaways, at least for Florida practitioners: (a) wait to see if the Florida Supreme Court accepts or rejects the holding of this divided appellate panel, (b) revisit the contractual invocation of arbitration that has guided contracting lawyers for decades to more specifically reference the applicable AAA rules, (c) be content to have a court determine the scope of arbitrability, at the risk of layering disputes with additional litigation costs.

Jennifer Smith Thomas of Rumberger Kirk has this article, available in JD Supra, discussing the Florida Court of Appeal decision in City of Miami v. Ortiz, which she describes as “a rare finding against arbitrability where an arbitration clause was present in a contract,” and urging “contractors, vendors, and consumer service providers who seek to enforce arbitration to examine the terms of their arbitration provisions.”

International arbitration practitioners who have been monitoring the split among the United States federal circuits as to the applicability of 28 U.S.C. § 1782 to permit discovery may be interested to know that the Supreme Court, having granted certiorari in a Seventh Circuit case, will decide the issue. As summarized in this National Law Review article authored by Shin Hahn and Neil Popovic of Sheppard Mullin, “[t]he Supreme Court’s decision should resolve the current circuit split on the question of whether Section 1782 can be used for private international arbitration, which has been an ongoing topic of interest among international arbitration practitioners and scholars.” The Court’s decision either “will open up U.S.-style discovery, which has typically been perceived to be expansive and broader than what is permitted in international arbitration, to litigants in private foreign arbitration proceedings,” or will foreclose litigants from “tak[ing] advantage of Section 1782 to assist them with gathering evidence and testimony from parties and witnesses located in the U.S.”