U.S Supreme Court 2018-2019 Arbitration Cases Review. Mediation and Conflict Management Master Class Art, Craft, Science

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U.S Supreme Court 2018-2019 Arbitration Cases Review

Melanie A. Conroy of the Pierce Atwood LLP firm prepared the following excellent summary of the key arbitration related decisions rendered by the U.S. Supreme Court. Hope you find it informative and useful.

The 2018-2019 term of the U.S. Supreme Court opened with a newly configured court in which Justice Kavanaugh joined as an Associate Justice following the retirement of Justice Kennedy. Since October of last year, the Court has heard 69 argued appeals, several of which arose from class action litigation. Over the past nine months, the Court has addressed issues relating to class action practice concerning arbitration provisions, federal removal statutes, consumer antitrust law, FDA preemption, and the equitable tolling of interlocutory appeals. Although presented with class action questions related to cy pres awards, data privacy litigation standing, issue class certification, securities laws, and TCPA claims, the Court declined to resolve these issues. Reflective of the Court’s decisions this term at large, rulings were unanimous or sharply divided along ideological lines, with the Court declining to hear a number of controversies. The below summary provides an overview of class action decisions by the Court this term, including recent remands and certiorari decisions.

Opinions from the 2018 October Term

• Lamps Plus v. Varela, No. 17-988: In a 5-4 opinion authored by Chief Justice Roberts, the Court reversed and remanded a decision from the Ninth Circuit and held that under the Federal Arbitration Act, an ambiguous agreement cannot provide the necessary consent for class-wide arbitration. The decision limits the availability of class-wide arbitration to contracts where it is expressly and unambiguously authorized.
• Home Depot U.S.A. Inc. v. Jackson, No. 17-1471: In a 5-4 opinion authored by Justice Thomas, the Court affirmed the Fourth Circuit’s holding limiting the removal of class action claims from state to federal court on the basis that neither the general removal provision of 28 U.S.C. §1441(a), nor the removal provision in the Class Action Fairness Act of 2005, permit a third-party counterclaim defendant to remove a class action claim.
• Apple Inc. v. Pepper, No. 17-204: In a 5-4 opinion authored by Justice Kavanaugh, the Court affirmed the ruling of the Ninth Circuit and held that consumers who purchased apps for their iPhones through Apple’s App Store were direct purchasers from Apple under Illinois Brick Co. v. Illinois and may sue Apple in an antitrust consumer class action for allegedly monopolizing the retail market for the sale of iPhone apps.
• Merck Sharp & Dohme Corp. v. Albrecht, No. 17-290: In a 9-0 opinion authored by Justice Breyer, the Court vacated and remanded a Third Circuit decision and held that judges, not juries, should decide whether Food and Drug Administration actions pre-empt state court failure-to-warn class action suits on the basis of “clear evidence” the FDA would not have approved a change to a drug’s label.
• Nutraceutical Corp. v. Lambert, No. 17-1094: In a 9-0 opinion authored by Justice Sotomayor, the Court reversed and remanded a decision from the Ninth Circuit and held that Rule of Civil Procedure 23(f), providing a 14-day deadline to seek permission for the interlocutory appeal of an order granting or denying class certification, is not subject to equitable tolling.
• Frank v. Gaos, No. 17-961: In a per curiam opinion, the Court vacated and remanded the Ninth Circuit’s decision upholding a $8.5 million settlement where all net proceeds were to be distributed in a cy pres award with no direct relief to class members. The Court remanded to the courts below to address the plaintiff’s standing in light of Spokeo, Inc. v. Robins.
• PDR Network, LLC v. Carlton & Harris Chiropractic Inc., No. 17-1705: In a 9-0 opinion authored by Justice Breyer, the Court vacated and remanded the Fourth Circuit’s decision concerning whether the Hobbs Act required the district court to accept the Federal Communication Commission’s legal interpretation of “unsolicited advisement” under the Telephone Consumer Protection Act. The Court remanded to the court below to address whether the FCC’s interpretation was a legislative or interpretive rule and whether petitioners had a prior, adequate opportunity to seek review.

Certiorari Decisions from the 2018 October Term

• Behr Dayton Thermal Products, LLC v. Martin, No. 18-472: the Court declined to hear an appeal from the Sixth Circuit concerning whether plaintiffs may obtain issue class certification under Federal Rule of Civil Procedure 23(c)(4) without demonstrating that common issues predominate over individual issues for the entire action under Rule 23(b)(3).
• Hagan v. Khoja, No. 18-1010: the Court declined to hear an appeal from the Ninth Circuit concerning a corporate issuer’s duty to update its disclosures under Securities and Exchange Commission Rule 10b-5(b).
• Retirement Plans Committee of IBM v. Jander, No. 18-1165: the Court agreed to hear an appeal from the Second Circuit concerning whether the “more harm than good” pleading standard can be satisfied in ERISA class actions by generalized allegations that the harm of an inevitable disclosure of alleged fraud generally increases over time.
• Intel Corp. Investment Policy Committee v. Sulyma, No. 18-1116: the Court agreed to hear an appeal from the Ninth Circuit concerning whether the three-year limitations period in Section 413(2) of ERISA bars a class action suit when all relevant information was disclosed to the plaintiff by the defendants more than three years before the filing of the complaint and the plaintiff either did not read or did not recall the information.
• Rotkiske v. Klemm, No. 18-328: the Court agreed to hear an appeal from the Third Circuit concerning whether the “discovery rule” applies to toll the one-year statute of limitations under the Fair Debt Collection Practices Act.
• Emulex Corp. v. Varjabedian, No. 18-459: the Court in a per curiam decision dismissed the writ of certiorari as improvidently granted in this appeal from a Ninth Circuit decision concerning whether Section 14(e) of the Securities Exchange Act of 1934 supports an inferred private right of action.

International Arbitration

For those of you who might represent and work with international parties and may have a need to address international arbitration issues, there is an excellent overview of international arbitration that was prepared by HFW, an international law firm. The 66 page report is available at http://www.hfw.com/downloads/HFW-IA-Passport-2019.pdf. If you have any problems accessing a copy, let me know and I can send you a copy.

International Mediation

UN Adopts Convention on the Recognition of Mediated Settlement Agreements

The United Nations General Assembly adopted the United Nations Convention on International Settlement Agreements Resulting from Mediation. Called the Singapore Mediation Convention and somewhat similar to the New York Convention for the Enforcement of Foreign Arbitral Awards, jurisdictions can begin to become signatory “States” beginning in August, 2019. To date, the United States, China, Singapore, India and South Korea are a few of the 46 signatory “States” that are in the process of obtaining official approval to adopt and follow the new Mediation Convention.

Under the Convention, written settlement agreements reached by international parties in mediations may be submitted to signatory States for recognition and enforcement in the State. To be enforceable, settlement agreements must be 1) written, 2) resolve a commercial dispute, 3) that is international between parties of signatory States and 4) negotiated through mediation. A commercial dispute is considered “international” if “[a]t least two parties to the settlement agreement have their places of business in different states” or if “[t]he State in which the parties to the settlement agreement have their places of business is different from the “state in which a substantial part of the obligations under the settlement agreement is performed;” or the “state in which the subject matter of the settlement agreement is most closely connected.”

To establish that a settlement agreement was negotiated through mediation, a Party can show the following:

• The mediator’s signature on the settlement agreement.
• A document signed by the mediator confirming the mediation was carried out.
• A confirmation by the institute administering the mediation.
• Any other evidence that is acceptable to the competent authority.

A signatory State may refuse to enforce the mediated settlement agreement if it finds:

• Incapacity of a party to the settlement agreement.
• The settlement agreement is incapable of being performed under applicable law
• The settlement agreement is not final or binding according to its own terms.
• The settlement agreement has been subsequently modified.
• The obligations in the settlement agreement have been performed.
• The obligations in the settlement agreement are not clear or comprehensible.
• Granting relief would be contrary to the terms of the settlement agreement.
• There was a “serious breach” by the mediator of mediation standards.
• There was a failure by the mediator to disclose facts and circumstances creating justifiable doubts as to the mediator’s impartiality or independence.
• The relief is contrary to the public policy of the signing state in which enforcement is sought.
• The subject matter of the dispute is not capable of settlement by mediation under the law of the signatory state.

A signatory State may also if it finds any of the following:

• 1. Incapacity of a party to the settlement;
  2. The settlement agreement is null and void, inoperative or incapable of being performed under the applicable law;
  3. The settlement agreement
     o Is not binding, or is not final, according to its terms;
     o Has been subsequently modified;
     o The obligations in the settlement agreement have been performed or
     o Are not clear or comprehensible; or
     o Granting relief would be contrary to the terms of the settlement agreement
  4. There was a serious breach by the mediator of mediator standards; or
  5. There was a failure by the mediator to disclose to the parties’ circumstances that raise justifiable doubts as to the mediator’s impartiality or independence.

The Singapore Convention excludes settlements that are/were:

• concluded in the course of a court proceeding or approved by a court;
• enforceable as a judgment in the country of that court; and
• recorded and/or are enforceable as an arbitral award.

These circumstances are excepted because there are other generally accepted international conventions such as the Hague Convention and the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards.

Once sufficient signatory states sign on to the Convention, advocates and mediators involved in the mediation of commercial disputes between international parties will need to take specific steps to ensure that their settlement agreements can be enforced in the jurisdictions of the applicable signatory state. Some initial recommendations to consider include:

• Inclusion of recitals confirming the mediation of the commercial dispute and recognition that any resulting written settlement agreement may be submitted for enforcement under the Singapore Convention;
• Recitals confirming the satisfaction of the Convention requirements for enforceability;
• Mediators must make full and adequate disclosures of potential conflicts and assurances of impartiality and independence;
• Settlement agreements should be signed by the parties and mediator;
• Settlement agreements should be contemporaneously translated into the official language of the signatory state in which the agreement may be submitted for enforcement;
• The practice of including in settlement agreements a provision agreeing that the settlement agreement is to be treated as a stipulated arbitration award or enforceable court judgment should not be done as that will trigger an exclusion under the terms of the Singapore Convention.