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Symposium on Arbitration of International Energy Disputes Insurance Business Exception Does Not Apply to Employment Disputes Arbitrator Applied Wrong Definition of "Conviction" - Case Remanded Court Defines NASD Code Claim Viability Arbitrator Violates "Fundamental Fairness" Duty Symposium on Arbitration of International Energy Disputes This symposium will be held in Houston, Texas on January 21 and 22, 1998. The Program Chair is John P. Bowman, Partner, Fulbright & Jaworski LLP. For information, email Jbowman@fulbright.com Insurance Business Exception Does Not Apply to Employment Disputes In re The Prudential Ins. Co. of Am. Sales Practice Litigation (3rd Cir 01/07/98) Plaintiffs alleged their employer Prudential retaliated against them after the plaintiffs refused to participate in insurance sales fraud. Prudential moved to compel arbitration; the NASD Code governed the agreement. The District Court agreed with the plaintiffs' argument that the dispute fell within the "insurance business" exception in the NASD Code sec. 1, under which "disputes involving the insurance business" are not subject to arbitration. The Circuit Court, relying on the presumption of arbitrability and finding the code section abiguous, reversed. The dissent argued that the court had rewritten the contract. Arbitrator Applied Wrong Definition of "Conviction" - Case Remanded Alvey, Inc. v. Teamsters Local Union No. 688 (8th Cir 12/29/97) Alvey found cocaine in an employees belongings on company premises, and terminated the employee after his arrest. The employee was later convicted and received a suspended sentence and probation. The arbitrator found no just cause for the termination and awarded reinstatement and back pay. The Circuit Court, however, found the arbitrator's award did not draw its essence from the collective bargaining agreement. The arbitrator determined that the employee's receiving a suspended sentence precluded the employer from discharging the employee because of his conviction (which constituted grounds for discharge under the CBA). The court found the arbitrator had misinterpreted the term "conviction" and remanded the case for the arbitrator to determine whether the conviction constituted just cause for termination. Court Defines NASD Code Claim Viability Kidder, Peabody & Co. v. Brandt (11th Cir 12/22/97) Securities brokers moved for injunction to prevent investors from arbitrating claims on the grounds the claims were filed beyond the 6 year window provided in the NASD code. The Circuit Court vacated the District Court's decision finding the claims ineligible for arbitration and held that, under sec. 15 of the code, the six year period begins upon the "last occurrence or event necessary to make the claim viable. A claim is viable when all the elements of that claim can be established such that it could withstand a motion to dismiss under FRCP 12(b)(6)." Arbitrator Violates "Fundamental Fairness" Duty Home Indem. Co. v. Affiliated Food Distributors, Inc. (S.D. N.Y. 12/12/97) Home obtained an interim arbitral award requiring Affiliated to post a letter of credit, establish an escrow account, or furnish a letter of guaranty on the disputed amount; the arbitrator conditioned Affiliated's discovery on performance of that award. The court ruled that the arbitration panel exceeded its authority by depriving Affiliated of fundamental fairness. "The Panel refused even a threshold review of the underlying dispute or its merits in relation to either party's cause." Full text on our web page: http://www.willamette.edu/dis-res/ Recent Developments
in Dispute Resolution |