Gibbons Law Alert

Gibbons Law Alert

Tagged: Compelling Arbitration

Third Circuit: Challenges to Contract’s Validity Must Be Arbitrated, But Challenges to Contract’s Formation May Proceed in Court

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Posted in General Litigation

On March 1, 2013

In its recent decision in SBRMCOA, LLC v. Bayside Resort, Inc., the Third Circuit clarified when challenges to a contract containing an arbitration clause must be arbitrated and when they must be decided by a court. Emphasizing that the relevant distinction is between challenges to a contract’s validity, which are subject to arbitration, and challenges to a contract’s formation, which generally are not, the Court concluded that a claim that a contract was coerced must be arbitrated, but a claim that a contract was beyond a signatory’s authority or ultra vires requires judicial determination.

Third Circuit Finds Waiver of Right to Arbitrate After Ten Months of Litigation

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Posted in Appellate

On February 7, 2013

In its recent opinion in In re: Pharmacy Benefit Managers Antitrust Litigation, the Third Circuit held that a defendant waived its right to arbitration after “actively” and “aggressively” litigating an antitrust dispute for ten months, even though no discovery had taken place. Emphasizing that no one factor is determinative, the Third Circuit’s holding is somewhat of a departure from prior cases finding waiver, which “uniformly featured significant discovery activity in the District Court.”

New Amendments to New Jersey Court Rules Will Make Orders Denying Arbitration Immediately Appealable

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Posted in Appellate

On August 13, 2012

The amended Rules Governing the Courts of the State of New Jersey will take effect on September 4, 2012. Among the more important amendments are those concerning a party’s ability to appeal an arbitration order. Typically, only final orders that conclude a litigation as to all parties and all issues are immediately appealable. But, as a result of amendments made in 2010, the current version of Rule 2:2-3(a) expands the notion of a final order in the context of orders compelling arbitration, providing that “an order compelling arbitration, whether the action is dismissed or stayed, shall also be deemed a final judgment of the Court for appeal purposes.” The New Jersey Supreme Court in GMAC v. Pittella, 205 N.J. 572 (2011), expanded that Rule still further by holding that “orders compelling or denying arbitration are deemed final and appealable as of right as of the date entered.” To implement that decision, Rule 2:2-3(a) has been amended to state that “any order either compelling arbitration, whether the action is dismissed or stayed, or denying arbitration shall also be deemed a final judgment of the Court for appeal purposes.” An amendment to Rule 2:9-1(a) will permit the Trial Court to retain jurisdiction, pending appeal, over other parties and claims that remain in that court.

Third Circuit Rejects Employee’s Unconscionability Arguments in Compelling Arbitration

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Posted in Class Action Defense

On April 4, 2012

In Quilloin v. Tenet HealthSystem Phila. Inc., the Third Circuit reversed the Eastern District of Pennsylvania’s denial of a motion to compel arbitration, finding error in the district court’s conclusion that genuine disputes of material fact might render the parties’ arbitration agreement unconscionable and unenforceable under Pennsylvania law.

New Jersey Appellate Division Finds That a Demand for Arbitration or Mediation Constitutes the “First-filed” Action for Comity Purposes

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Posted in General Litigation

On March 15, 2012

In CTC Demolition Company, Inc. v. GMH AETC Management / Development, LLC, et al., the Appellate Division recently found in a to-be published opinion that a party’s demand for contractually-mandated arbitration or mediation may constitute the “first filed” action for purposes of a comity analysis. The “first filed rule” typically surfaces where parties have engaged in a “race to the courthouse,” filing similar lawsuits in different jurisdictions that they perceive to be most friendly to their cause. Based on traditional principles of comity, the rule provides that “a New Jersey court should not interfere with a similar, earlier-filed case in another jurisdiction that is capable of affording adequate relief and doing complete justice,” Sensient Colors, Inc. v. Allstate Ins. Co., but allows for certain exceptions, such as where “the presence of special equities may lead a court to disregard the traditional deference paid to the first-filed action.”

Second Circuit Holds That Concepcion Preemption Analysis Does Not Apply to Federal Statutory Claims, Rejecting Class Action Waiver in Arbitration Agreement Where Individual Plaintiffs Would Be Left Unable to Vindicate Their Rights

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Posted in Class Action Defense

On February 24, 2012

In In re: American Express Merchants’ Litigation (Feb. 1, 2012) (“AmEx III”), the Second Circuit refused to enforce American Express’s class action waiver where the “practical effect” would be to deprive plaintiffs of the ability to vindicate their federal statutory rights. By framing the issue in terms of the ability to vindicate federal statutory rights, the Second Circuit sidestepped the preemption analysis mandated by the United States Supreme Court in AT&T Mobility LLC v. Concepcion. But whether AmEx III is ultimately reversed, or deemed to carve out an exception to Concepcion where federal statutory rights are at issue, it brings into sharp focus the real question on everyone’s mind: Can companies bar class actions in both courts and arbitral forums in favor of bilateral arbitration, and if so, how?

Third Circuit Enforces Arbitration Provision in Consumer Contract Where Designated Arbitral Forum is Unavailable

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Posted in General Litigation

On January 30, 2012

In a matter of first impression, the Third Circuit in Khan v. Dell Inc. held that the Federal Arbitration Act requires the appointment of a substitute arbitral forum where the forum designated by the parties is unavailable and the designation of that particular (unavailable) forum was not integral to the arbitration provision. The case stemmed from alleged design defects in a Dell computer purchased by plaintiff Khan. Dell’s Terms and Conditions of Sale included an arbitration provision which provided that any dispute between Khan and Dell “SHALL BE RESOLVED EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION ADMINISTERED BY THE NATIONAL ARBITRATION FORUM (NAF)” and that “this provision shall be governed by the Federal Arbitration Act 9 U.S.C. sec. 1-16 (FAA).” The arbitration provision did not designate a replacement arbitrator in the event that NAF was unavailable.

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