Peter Lubin and Patrick Austermuehle have this article, published in Mondaq, discussing the Seventh Circuit’s recent decision in CCC Intelligent Solutions Inc. v. Tractable Inc., in which the court refused to permit a company known as Tractable to invoke the arbitration provision contained in a software license agreement between Tractable’s employee using a fictitious name and a competitor. The employee turned over to Tractable the licensed software, which Tractable allegedly proceeded to disassemble and appropriate in violation of the software agreement. The victimized competitor brought suit, and Tractable moved to compel arbitration based upon the terms of the license agreement between its employee and the competitor.

The Seventh Circuit rejected the attempt to arbitrate, holding that Tractable could not step into the shoes of its employee. For the court, the actions of the employee using a fictitious name was a game stopper, as there was no way that the competitor would “know that Tractable would claim to be its trading partner.” As the court noted, “some legal disputes are simple. This is one…Tractable is not a party to this contract, so it cannot demand arbitration.”

Prestonwood Tradition, LP v. Jennings is a fascinating 7-6 decision recently issued by an en banc panel of a Texas appellate court. Robert Fountain of Carrington Coleman summarizes the competing majority and dissenting opinions in this article available at JD Supra.

The issue before the court is one that often is litigated: when parties disagree as to whether a contract requires a particular dispute to be arbitrated, who decides? Is it up to the court to decide, or is the question one for the arbitrator? With respect to contracts that incorporate the commercial rules of the American Arbitration Association, the generally prevailing view is that the arbitrator should decide. This is because AAA rules provide that “an arbitrator is empowered to determine his “the 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, without any need to refer such matters first to a court.”

The Prestonwood Tradition case, however, offered an interesting twist. When presented with the dispute, the AAA made an administrative decision not to proceed with the arbitration, determining that, in the absence of agreement by the parties to proceed with arbitration, a court should decide the arbitrability question. Nonetheless, the majority decision held that, based on the parties’ contract, arbitrability must be decided by the arbitrator and “[w]hen the parties agree to have the arbitrator decide arbitrability, as they did in this case, then the AAA lacks discretion to require something different.”

Thus, there is a standoff. While the court by virtue of its 7-6 decision decreed that a AAA arbitrator should proceed to determine arbitrability, the AAA–an independent administrative agency that was not a party to the litigation–determined that it was not going to administer the arbitration until a court ruled that it was arbitrable.

So, what happens next?

The court cannot order the AAA to administer the arbitration. As a non-party to the litigation, the AAA is not subject to the jurisdiction of the court. Certainly, the AAA voluntarily may alter its non-administration position based upon the court’s decision. If not, the parties to the dispute have a judicial decree with no ability to implement it.

In this article available on Lexology, Christina LaBruno of Gibbons discusses the Third Circuit’s decision in In re Rotavirus Vaccines Antitrust Litigation, holding that medical practices’ antitrust claims against a pharmaceutical company were subject to arbitration by virtue of an agreement signed by its purchasing agents. The Third Circuit rejected the lower court’s view that the medical practices could not be required to arbitrate since they were unaware that the agreement between the purchasing agents and the pharma company provided for arbitration. The takeaway for Attorney LaBruno is that “firms should make it a point to know the terms of their agents’ contracts with third parties because they may unknowingly be bound by them.”

William Russell of Reed Smith has authored this article, available at Lexology, discussing the Ninth Circuit’s recent decision in Jones Day v. Orrick, Herrington & Sutcliffe, LLP. The panel reversed a lower court determination which had interpreted a venue statute restrictively to limit a court’s ability to compel witness attendance pursuant to an arbitrator’s subpoena. As summarized by Mr. Russell:

“In 2021, the Northern District of California attempted to pinion the wings of arbitral subpoenas by declaring that they were only enforceable in the district in which the arbitration was seated. The Ninth Circuit reversed and allowed arbitral subpoenas to fly again across the full expanse of the federal general venue statute.”

Much of the case law surrounding arbitration involves the appropriate allocation of responsibilities between courts and arbitrators. This recent JD Supra article by James Newland and Owen Wolfe at Seyfarth Shaw addresses the role played by the courts in entertaining a party’s request for an attachment in aid of an international arbitration. The opinion in Iraq Telecom Limited v. IBL Bank S.A.L.–the subject of the article–is available here.

The Southeast Texas Record has this discussion of an interesting decision by the Texas Court of Appeals in Lupe Holdings LP v. Sanchez. The lower court had denied a motion to compel arbitration, finding that the claimant initiated the proceeding after the expiration of a statute of limitations ostensibly incorporated into the parties’ agreement. With a detailed analysis of applicable law and the contract provision, the appellate court concluded that the timeliness argument was not sufficiently clear that the court should deprive the claimant of presenting the issue to the arbitrator. Accordingly, the court reversed the lower court’s decision.

“It might come as no surprise that many settlors and advisors seek to include [an arbitration] clause in their trusts…. Despite [the] potential benefits, the question remains whether such a clause can be enforced against a beneficiary or a trustee, when such beneficiary or trustee wants to proceed in court.” So begins this JD Supra article by Michael Barker, Hunter Glenn, Jodie Herrmann Lawson and Stephen Murphy of McGuire Woods, discussing the Virginia Supreme Court’s recent decision in Boyle v. Anderson, in which the court, interpreting the Federal Arbitration Act and its Virginia statutory counterpart, held that insofar as a trust is not a contract, the settlor of the trust cannot require that trustees and beneficiaries submit disputes to arbitration and the inclusion of an arbitration provision.

Robert Fountain of Carrington Coleman has this interesting article, available at JD Supra, discussing the Texas appellate opinion in Bluestone Resources, Inc. v. First National Capital, LLC.

As the article notes, the decision raises interesting issues about whether and when a court may impose statutory interest on an award when the arbitrators fail to provide for interest.

Attorney Robert Herskovits has authored this interesting article, available at JD Supra, discussing the intervention of the Alabama Securities Commission (“ASC”) in a Florida action brought by a registered financial advisor to confirm an arbitration award that expunged certain customer complaints from his record. According to the article, the ASC has stated its intention to vacate the award on grounds that the arbitrator acted with corruption, fraud, partiality, refused to hear evidence and exceeded his powers.

The article suggests that the ASC’s concerns go beyond the specific case and encompass a wholesale attack on the expungement process.

Franklin McRoberts authored this article, available at JD Supra, discussing in a business divorce context an unsuccessful attempt by one of the owners to bring nonparties into a contractually compelled arbitration. As the article explains, the New York court in Fritch v. Bron held that, insofar as the company held itself out as operating under a corporate structure, the plaintiff shareholder could not argue that there were “silent partners” who should be subject to arbitration under the corporate documents.