What’s In and What’s Out: Recent Developments In Arbitral Jurisdiction

December 7, 2016 – 1:00 pm to 2:30 pm ET

PROGRAM SUMMARY

Speakers: Tony DiLeo and Claire Popovich This webinar will provide an in-depth look at the latest developments in arbitral jurisdiction, an area that frequently undergoes change and can cause confusion about the limits of an arbitrator’s authority.

AGENDA 1:00 p.m. Welcome and Introduction of Speakers (5 minutes) 1:05 p.m. Arbitral Jurisdiction (75 minutes)

• Severability • Delegation • Objections to arbitration • Jurisdiction over interim and emergency relief • Arbitration with non-signatories

2:20 p.m. Conclusion and Questions (10 minutes) 2:30 p.m. Evaluation (5 minutes) 2:35 p.m. Adjourn

Copyright 2016 American Arbitration Association

Anthony M. DiLeo, Esq.Neutral ID : 149946

The AAA provides arbitrators to parties on cases administered by the AAA under its various Rules, which delegate authority to the AAA on various issues, including arbitrator appointment and challenges, general oversight, and billing. Arbitrations that proceed without AAA administration are not considered "AAA arbitrations," even if the parties were to select an arbitrator who is on the AAA's Roster.

Anthony M. DiLeo, Esq.Anthony M. DiLeo, APC

Current Employer-Title Anthony M. DiLeo, A Professional Corporation - President

Profession Attorney, Arbitrator, Mediator

Work History Attorney, Self-employed, 2005-present; Member/Partner/Associate, Stone Pigman Walther Wittmann, L.L.C, 1973-2005; Law Clerk, Judge John Minor Wisdom, U.S. Court of Appeals, Fifth Circuit, 1973; Law Clerk, Judge Alvin B. Rubin, U.S. District Court, Eastern District of Louisiana, 1971-72.

Experience Over 40 years' experience. Practice has included corporate, business, and partnership agreements, transactions, and litigation including tender offer, exchange offer, merger, and private placement of securities; antitrust, securities, shareholder, and tax litigation including U.S. Tax Court; banking and savings and loan restructuring for borrowers and lenders; income, estate, and gift tax planning; administrative law; and commercial litigation in all levels of state and federal courts. Appointed by federal trial judge to national steering committee for multi-district litigation proceeding involving consolidated class actions. Appointed as Hearing Officer for the Commercial Real Estate Property Tax Appeals Board of Review, City of New Orleans, 2007. Served on Louisiana Governor Jindal's Hurricane Recovery Transition Advisory Council. Member of the Board of Commissioners of the Ernest N. Morial New Orleans Exhibition Authority, a 2-million sq.ft. convention center, 2008-2009. Adjunct Professor of Law at Tulane Law School (Advanced American Arbitration Law, Spring 2009 and Spring 2010; Health Care Law Practice, 2000-2004).

Present practice is business, corporate, partnership, and shareholder planning and transactions, including contracts, employment, and healthcare; expert witness testimony in several contexts, including attorneys' fees, limited liability company agreements for members of a professional group, corporate governance, and standards for limited liability of a sole shareholder of a professional corporation; and arbitration and mediation.

Alternative Dispute Resolution Experience

Served as sole arbitrator, chair/member of arbitration panel in over 200 cases nationally with aggregate claims of over $2 billion. Arbitrated large complex cases and modest-sized cases that included business and corporate issues (stockholder rights, manufacturing and distribution rights, minority shareholder redemption, buy-out, ownership, valuation, net income distribution, capital accounts, accounting, calculation of income, audits, going business concern, asset purchase agreement, book value, stock basis, surplus, dilution, tax sharing, tax losses, reorganization, indemnification, choice of law, royalty claims, licensing, marketingagreements, partnership withdrawal, liquidation of operating partnership, partnership obligations, construction, real estate transactions); banking and finance issues (investment banking fees, warrants, convertible securities, credit);

Anthony M. DiLeo, Esq.Neutral ID : 149946

The AAA provides arbitrators to parties on cases administered by the AAA under its various Rules, which delegate authority to the AAA on various issues, including arbitrator appointment and challenges, general oversight, and billing. Arbitrations that proceed without AAA administration are not considered "AAA arbitrations," even if the parties were to select an arbitrator who is on the AAA's Roster.

employment (compensation, constructive termination, recruiting, non-competition);insurance (property, health, excess insurer, reinsurance); antitrust; fraud; defamation; intellectual property; assignment of patented and trademarked products.

Parties include life, property, service providers (management and billing companies, software licensors); manufacturers; retailers; contractors; sales and marketing companies; technology vendors; family LLCs; employers; employees; law firms; banks; federal agencies; investment banking firms; public companies; stockholders.

Arbitrator in 9-figure dispute over federal antitrust claims of price fixing, conspiracy and injunctive relief; 9-figure tax advice dispute; 9-figure dispute involving a merger, acquisition, stock purchase, tax allocation, declaratory relief, stock basis, tax losses, reorganization and indemnification; 8-figure dispute involving breach of exclusive agreement for research, license, assignment of patented and trademarked products; 8-figure dispute over alleged breach of noncompetition agreement; 8-figure physician management services dispute; 8-figure business interruption and rent dispute between hotel purchaser and seller; 8-figure dispute over royalty claims of licensing agreements; 7-figure dispute over sale of assets and claim of lack of going business concern status; 7-figure dispute between public companies over investment banking fee for financing and equity investment; 7-figure dispute over dissolution of an operating company and minority stockholder buy-out; 7-figure dispute between law firms over legal fees arising from national products liability class action and disputes of legal ethics and duties in context of multi-district litigation; 7-figure dispute involving breach by company to redeem shares and issues of warrants, dilution, convertible securities, earnings, profits, book value and surplus; 7-figure dispute over national exclusive manufacturing and distribution agreement; 7-figure dispute over logistics industrialmanufacturing supply contract; dispute involving insurer and 8-figure contract withpharmacy benefits manager; 7-figure dispute over exclusive licensing contract for internet discount coupon sales via mass marketing email; 7-figure dispute involving claim of accounting malpractice arising from failure to detect employee embezzlement; 7-figure dispute between international automobile manufacturer and logistics services supplier; 7-figure employment contract dispute between public company and CEO, noncompetition agreement, stock options and allegations of self dealing; bank dispute over Participation Agreement, Factoring Agreement and Factored Accounts; legal fee dispute arising out of federal antitrust litigation; billing and coding dispute arising out of Medicare overpayment; liquidation of LLC resulting from shareholders' dispute and assertion of breach of ethical duty.

Alternative Dispute Resolution Training

AAA/ICDR/Mediation.org Panel Conference, 2016; Faculty, ACI's Annual Advanced Forum on Managed Care Disputes and Litigation - Managed Care Litigation Mock Arbitration Session, Chicago, 2015; AAA, Developments in Arbitration Law: Testing the Boundaries of Court Intervention 2015; CPR, Practical Negotiation & Mediation Training (taught by Prof. Eric Green), 2015; AAA, Crossing the Line: New Developments in the Law of Arbitral Jurisdiction 2015; College of Commercial Arbitrators, Arbitration Compass Points:

Anthony M. DiLeo, Esq.Neutral ID : 149946

The AAA provides arbitrators to parties on cases administered by the AAA under its various Rules, which delegate authority to the AAA on various issues, including arbitrator appointment and challenges, general oversight, and billing. Arbitrations that proceed without AAA administration are not considered "AAA arbitrations," even if the parties were to select an arbitrator who is on the AAA's Roster.

Collaborating on New Directions, 2014; AAA ACE8 self-paced study, Principled Deliberations, Decision-Making Skills for Arbitrators, 2014; Faculty, American Health Lawyers Association and Hamline University School of Law Arbitration Training: Arbitrating a Health Law Case, 2012; Faculty, Spring Judges' Conferenceof the Louisiana Judicial College, The Bridge Between Judicial Management of Cases and the ADR World, 2012; AAA Healthcare Payor Provider Rules Training, 2011; AAA/ICDR Neutrals Conference, 2010; Faculty, AAA Dealing with Delay Tactics in Arbitration (ACE004), 2010; AAA Webinar, Electronic Discovery in Arbitration: What You Need to Know, 2010; AAA Webinar, Current Issues in Employment Arbitration: The Arbitration Fairness Act of 2009 Legislation and Recent Court Decisions, 2009; AAA/ICDR Neutrals Conference: Large Complex Construction Mediation: The Dynamics of the Negotiation Team, Electronic Discovery in Arbitration, Mediator Ethics: Objective Standards and Subjective Practices, and Arbitrator Update: Topical Issues and Case Law Arbitration, 2009; AAA Neutrals Conference, 2006, 2004; ALI-ABA, The Art and Science of Servingas a Special Master in Federal and State Courts, 2007; Faculty, AAA Chairing an Arbitration Panel: Managing Procedures, Process & Dynamics (ACE005), 2005; AAA Arbitration Awards: Safeguarding, Deciding & Writing Awards (ACE001), 2004; AAA Arbitrator Ethics and Disclosure (ACE003), 2004; Arbitrator Update 2004, 2002; Faculty, AAA Ethics and Professionalism for Advocates in ADR, 2004; Faculty, AAA Ethics in Arbitration and Negotiation, 2003; AAA Commercial Arbitrator II: Advanced Case Management Issues, 2002; American Health Lawyers Association, Advanced Mediator Training Program, 2002; Faculty,AAA, The Non-Signor Cases: A Review of Jurisprudence in Which Parties Have Been Compelled to Arbitrate Even Though Not a Party to an Arbitration Agreement, 2002; AAA Commercial Arbitrator Training, 2000.

Professional Licenses Admitted to the Bar: Louisiana, 1970; District of Columbia, 1972; U.S. District Court, Eastern District of Louisiana; U.S. Court of Appeals, Fifth Circuit; U.S. TaxCourt; U.S. Supreme Court.

Professional Associations

American Law Institute (Life Member); Louisiana State Law Institute, Alternative Dispute Resolution Committee; Louisiana Bar Association (Business, Corporate and Securities Law Section, Past Chair; Section on Health Care Law, Past Chair; Council on Administrative Law); American Bar Association (Health Law Section; Business and Transactions Healthcare, Vice Chair; Healthcare Fraud and Compliance, Past Chair); New Orleans Bar Association (Committee on Revision ofArticles of Incorporation, Past Chair, Executive Committee); International Mediation Institute (IMI) Certified Mediator.

Education Tulane University (BA-1968; JD-1970, Order of the Coif, Assistant Editor of Tulane Law Review); Harvard University (LLM-1971).

Publications and Speaking Engagements

SAMPLE PUBLICATIONS: "Drafting Noncompetition Agreements For Statutory Compliance: Exceptions that Prove the Rule," Louisiana Bar Journal, December 2011; "The Enforceability of Contractual Agreements to Arbitrate: A Survey of theLast Three Years of Jurisprudence," Louisiana Bar Journal, October/November 2008 (cited by LA Appellate Court); "Enforceability Of Arbitration Agreements Byand Against Non-Signatories," Journal of American Arbitration, June 2003;

Anthony M. DiLeo, Esq.Neutral ID : 149946

The AAA provides arbitrators to parties on cases administered by the AAA under its various Rules, which delegate authority to the AAA on various issues, including arbitrator appointment and challenges, general oversight, and billing. Arbitrations that proceed without AAA administration are not considered "AAA arbitrations," even if the parties were to select an arbitrator who is on the AAA's Roster.

"Attorney-Client Privilege, Self Evaluative Privilege and Legal Issues Related to Internal Investigations," American Academy of Healthcare Attorneys, 1996; "Ancillary Facilities for Physicians in the 1990's; Formation and Dissolution Issues," National Health Lawyers Association, Health Law CD-ROM, Clark Boardman Callaghan, 1995; "Planning For the Payment of Federal Estate Tax Afterthe Tax Reform Act of 1976," Louisiana Revised Statutes, 1978 Louisiana Code of Civil Procedure, pocket part, West Publishing Company, 1978; co-author with Judge Alvin B. Rubin, LAW CLERK HANDBOOK: A HANDBOOK FOR FEDERAL DISTRICT AND APPELLATE COURT LAW CLERKS, Federal Judicial Center, 1977. Interviewed and quoted in national publications on subjects including arbitration, physician compensation, managed care, ERISA, fraud and abuse, and employment law.

SAMPLE SPEAKING ENGAGEMENTS: New Orleans Bar Association, 2014; Arbitrating Cultural and Heritage Disputes as to the unique nature of arbitration of title, ownership, and possession of rare and highly valuable artworks, AAA Webinar, 2013;"What's Next for Healthcare Dispute Resolution," ABA Section of Dispute Resolution, 15th Annual Spring Conference, 2013; "The Bridge Between Judicial Management of Cases and the ADR World," 2012 Spring Judges' Conference of the Louisiana Judicial College; "The Arbitration Process," AmericanCollege of Legal Medicine, 2012; "Best Practices to Effectively Represent Your Client in Arbitration (and in Drafting the Arbitration Agreement)," Louisiana State Bar Association Solo and Small Firm Conference, 2012; "Judge Rubin: A Life of Ethics and Professionalism," 18th Annual Judge Alvin B. Rubin Symposium, An Annual Discussion on Aspects of Federal Law or Federal Practice, the Federal Bar Association New Orleans Chapter, 2010; "The Science and Psychology of Professional Relationships," Annual Estate Planning Conference, Loyola University College of Law, 2010; "Recent Developments in the Law of Arbitration," LSU Law School Recent Developments in Legislation and Jurisprudence program, 2008; "The Enforceability of Contractual Agreements to Arbitrate: A Survey of the Last Three Years of Jurisprudence," New Orleans Bar Association, 2008; "Effective Arbitration of Health Care Disputes," National Teleconference sponsored by the American Bar Association Health Law Section and ABA Center for Continuing Legal Education, 2008; "Arbitration Basics," Chartered Financial Analysts Society of New Orleans, 2007; "Professionalism in Tax Practice," Tulane Tax Institute, 2006; "Tax, Limited Liability, and Management Issues in New Entity Formation: Comparison of LLCs, Partnerships, and Corporations," LSU Masters of Public Health Program, 2003; "The Science and Psychology of Professionalism," Louisiana Association of Criminal Defense Lawyers, 2003; "The Basics of Compliance, Fraud and Abuse," ABA Annual Meeting, San Francisco, 2003; "Ethical Duties of Lawyers and Arbitrators During Negotiations and Alternative Dispute Resolutions," Physician and Physician Organizations Law Institute, New Orleans, 2002; "Professionalism in Litigation and Advocacy," Academy of Trial Lawyers, 2002; "Professionalism: Effective Style and Tactics in Negotiations," New Orleans Bar Association, 2001; "Doing theeHealth Deal: A Primer for Best Practices for Drafting and Negotiating," ABA Conference on eHealth Law, Chicago, 2000; "Organization, Operation, Sale or Dissolution of Ancillary Facilities," National Health Lawyers Association, Atlanta, 1996.

Anthony M. DiLeo, Esq.Neutral ID : 149946

The AAA provides arbitrators to parties on cases administered by the AAA under its various Rules, which delegate authority to the AAA on various issues, including arbitrator appointment and challenges, general oversight, and billing. Arbitrations that proceed without AAA administration are not considered "AAA arbitrations," even if the parties were to select an arbitrator who is on the AAA's Roster.

Awards and Honors Recognized by Chambers USA, America's Leading Lawyers for Business (since 2004) and by The Best Lawyers in America® (since 2005) in the area of Health Law. Named The Best Lawyers in America® 2016 New Orleans Health Care Law "Lawyer of the Year.". Martindale Hubbell AV Peer Review Rating, 30 years. Recognized by The Best Lawyers in America, beginning 1995; the first annual "CityBusiness Leadership in Law Award: New Orleans 50 Top Lawyers," 2005; New Orleans Magazine Best Lawyers, 2010. Examiner in Corporations, Securities, and Negotiable Instruments, Louisiana Supreme Court appointment (responsible for writing questions and grading State of Louisiana Bar Examination in Corporations, Securities, and Negotiable Instruments, 1982-1984).

Citizenship United States of AmericaLanguages EnglishLocale New Orleans, Louisiana, United States of America

Claire Popovich is a staff attorney with the Louisiana State Law Institute in Baton Rouge, Louisiana. She co-ordinates and provides research for committees that update and revise Louisiana law. Her areas of research include: ADR, Adult Guardianship, Child Support, Summary Judgment, Security Devices, Electronic Signatures, Trust Code, and the U.C.C. Currently, Ms. Popovich is working with the Law Institute’s ADR Committee to comprehensively revise the body of ADR law in Louisiana. Ms. Popovich graduated from the Paul M. Hebert Law Center in 2012 with a J.D./D.C.L. Prior to law school, Ms. Popovich received her Master of Arts, with Distinction, from the School of Slavonic and East European Studies, University College London, University of London in 2007. In 2005 Ms. Popovich graduated summa cum laude from the University of New Orleans’ Honors College with a Bachelor of Arts degree.

174 October / November 2008

The Enforceability of Contractual Agreements

to Arbitrate:A Survey of the Last Three Years of Jurisprudence

By Anthony M. DiLeo1

Louisiana Bar Journal Vol. 56, No. 3 175

Arbitration is a widely accepted and fre-quently adopted method of dispute reso-lution and is often included in contracts drafted by many practitioners. A large number of practitioners have participated in and sought the benefits of an arbitra-tion proceeding to resolve a dispute.2

This summary examines some of the key precedents over the past several years and is a guide to lawyers either drafting the specific language of an arbitration provi-sion or applying one once a dispute ex-ists.3 Because awards of arbitrators are confidential,4 the only reported decisions involving arbitration are those where one party challenges its obligation to arbitrate or the award of the arbitrator.

Though parties have asserted argu-ments to persuade the courts to narrow the application of the Federal Arbitration Act (FAA), those efforts have been largely un-successful. Many opinions have been ren-dered during the past three years that are precedent for state and federal courts in this state, and a number of the most promi-nent decisions are reviewed in this article. Following are the applicable statutes.

The FAA, 9 U.S.C. §2, provides:

A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or trans-

action, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, trans-action, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. (Emphasis added)

The Louisiana Binding Arbitration Law, La. R.S. 9:4201, provides:

A provision in any written contract to settle by arbitration a contro-versy thereafter arising out of the contract, or out of the refusal to per-form the whole or any part thereof, or an agreement in writing between two or more persons to submit to arbitration any controversy exist-ing between them at the time of the agreement to submit, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

The majority of decisions address some variation of the argument that a particular circumstance allows a party to avoid the applicability of these statutory provisions. Recent court opinions continue to uphold

arbitration,5 infrequently allowing the pe-titioner to avoid a contractual agreement to arbitrate or avoid the results of that ar-bitration.6

United States Supreme Court

This survey of recent arbitration juris-prudence begins with an analysis of the United States Supreme Court’s landmark decision in Buckeye Check Cashing, Inc. v. Cardegna.7 This opinion, which narrowed the grounds to challenge arbitration, has been embraced in Louisiana Binding Ar-bitration Law (LBAL) jurisprudence and has reinforced the trend toward interpret-ing the LBAL to closely follow federal court interpretations of the FAA. In Buck-eye, the court addressed whether a chal-lenge to the validity of a contract itself provided a basis for avoiding arbitration and whether such a challenge would per-mit a party to litigate the enforceability of the contract in the courts. Clarifying prior holdings, the court ruled that when ques-tions of validity are involved, unless the arbitration clause is itself directly and in-dependently challenged as unenforceable, the validity of the contract in its entirety is a matter for the arbitrator to decide.8 The court also concluded that its decision was applicable whether the challenge was brought in state or federal court, as long

1. Anthony M. DiLeo (www.TonyDiLeo.com). The research assistance of Di-ane Trace Warlick, JD, Nate Viavant (JD candidate 2009, Tulane Law School) and Annie Baldridge (JD candidate 2009, Tulane Law School) is greatly appreciated.

2. Such as informal procedure, confidentiality of the proceedings, a voice in arbitration selection, and a duty of arbitrator disclosure of any prior relationship to lawyers, parties or witnesses, and no formal rules of discovery. Parties may also decide the level of detail in the award to be issued. Rule 42 of the American Arbi-tration Association (www.adr.org). The United States Supreme Court explained the benefits of arbitration as follows:

The advantages of arbitration are many: it is usually cheaper and faster than litigation; it can have simpler procedural and evidentiary rules; it normally minimizes hostility and is less disruptive of ongoing and future business dealings among the parties; it is often more flexible in regard to scheduling of times and places of hearings and discovery devices. . . .

Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 US. 265, 280 (1995) (quoting H.R. Rep. No. 97-542, p. 13 (1982)). Thus, “by avoiding the delay and expense of litigation, [arbitration] will appeal to big business and little business alike, corpo-rate interests and individuals.” Allied-Bruce Terminix, 513 U.S. at 280 (quoting S. Rep. No. 536, 68th Cong., 1st Sess., 3 (1924)).

3. Most attorneys adopt the standard form of an arbitration provision found at the American Arbitration Association Web site (www.adr.org). See R-1 of the American Arbitration Association. However, arbitration provisions in contracts can vary due to the permitted flexibility of arbitration. For examples of drafting issues, see “Drafting Dispute Resolution Clauses: A Practical Guide” found at www.adr.org. A minority

of clauses may contain some revision to the standard clause. See also, “Drafting Arbitration Clauses: Avoiding the Seven Deadly Sins” at www.adr.org.

4. Arbitrators are bound by confidentiality, but the parties are not. Rule R-23 of the American Arbitration Association states: “The arbitrator and the American Arbitration Association shall maintain the privacy of the hearings unless the law provides to the contrary.” See ITT Educational Services, Inc. v. ARCE et al, No. 07-20438 (5 Cir. 6/27/2008), where the United States 5th Circuit Court of Ap-peals upheld as valid a contractual agreement to keep the arbitrator’s findings as confidential and upholding the district court ordering permanent injunctive relief to enforce the contractual provision of confidentiality.

5. The Louisiana Supreme Court has explained, “[a]rbitration is a substitute for litigation. The purpose of arbitration is settlement of differences in a fast, in-expensive manner before a tribunal chosen by the parties.” Nat’l Tea Co. v. R.R. Richmond, 548 So.2d 930, 933 (La. 1989); Firmin v. Garber, 353 So.2d 975, 978 (La. 1977) (arbitration is for “the speedy resolution of disputes outside the court system”). See also, e.g., Thomas v. Desire Cmty. Housing Corp., 773 So.2d 755, 759 (La. App. 4 Cir. 7/19/00) (“we also recognize that arbitration is a substitute for litigation and that its purpose is to settle disputes in a fast, inexpensive manner before a tribunal chosen by the parties”).

6. The court has described the presumption favoring arbitration as a matter of state and federal law as a “heavy” one. Aguillard v. Auction Management Corp., 908 So.2d 1, 40 (La. 2005), superceded by La. C.C.P. art. 2083, as amended by 2005 La. Acts, No. 205 § 1, effective Jan. 1, 2006, with respect to the right to interlocutory appeal.

7. 546 U.S. 440, 126 S.Ct. 1204, (2006).8. See also, Downer, infra.

176 October / November 2008

as the FAA was implicated.Prior to Buckeye, other United States

Supreme Court decisions over the past sev-eral years continued to expand the scope of arbitrable issues and restrict the ability of parties to challenge arbitration decisions in litigation. The court has, in addition to vesting authority in the arbitrator to decide the overall validity of a contract, also held other issues of contract interpretation are to be decided by the arbitrator, including whether class certification is permitted un-der an arbitration agreement,9 and whether critical issues in arbitration agreements, such as a time limit on the availability of arbitration10 or the limitation of damages under RICO,11 may render an arbitration agreement unenforceable.

The court has continued to support a broad interpretation of the FAA’s “involv-ing commerce” test, thereby applying the FAA to previously litigated disputes.12 The term “involving commerce,” according to the court, applies broadly to encompass a wide range of transactions.

Extending this reasoning further, the court recently ruled in early 2008 in Hall Street Assoc., LLC v. Mattel, Inc. that the FAA contains the exclusive statutory grounds for judicial review of an arbitra-tion award in FAA cases, thereby pre-cluding parties from supplementing by agreement the statutory grounds for mod-ification or vacatur of an award under the FAA.13 The court declined Hall’s request to review whether there had been legal er-ror by the arbitrator on the merits, which is not recognized as one of the specifi-cally enumerated grounds in the FAA.14 Still, the court, in a complex 6-3 opinion

with two dissenting opinions, noted the parties’ flexibility in arbitration:

. . . the FAA lets parties tailor some, even many, features of arbitration by contract, including the way arbitrators are chosen, what their qualifications should be, which issues are arbitrable, along with procedure and substantive law. Hall, 128 S.Ct. at 1404.

Also, earlier this year, the Supreme

Court clarified the reach of the FAA where primary jurisdiction is vested by state statute in a forum other than the federal courts. In Preston v. Ferrer,15 an attorney who claimed he was owed fees for services to a television performer ini-tiated arbitration proceedings to seek re-covery of those fees. When the performer objected to the arbitration, the California Superior Court stayed the arbitration un-less and until the Labor Commissioner determined she lacked jurisdiction to

9. Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003). 10. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002). 11. Pacificare Health Sys., Inc. v. Book, 538 U.S. 401 (2003).12. The Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (2003). In Circuit City

Stores v. Saint Clair Adams, 532 U.S. 105, 2008 WL 762537, (2001), the court noted that when it issued its decision in Allied-Bruce Terminix Companies, Inc. v. Dobson, and when it considered the significance of Congress’ use of the words “involving commerce,” “the court interpreted [Section 2 of the Federal Arbitration Act] as implementing Congress’ intent ‘to exercise [its] commerce power’ Allied-Bruce.” The Federal Arbitration Act “was enacted pursuant to Congress’ substan-tive power to regulate interstate commerce . . . and that the Act was applicable in state courts and pre-emptive of state laws hostile to arbitration. . . . Relying upon . . . the evident reach of the words ‘involving commerce,’ the court interpreted Section 2 [of the Federal Arbitration Act] as implementing Congress’ intent ‘to exercise [its] commerce power to the full’” (emphasis added).

13. Hall Street Assoc., LLC v. Mattel, Inc., 128 S.Ct. 1396, 2008 WL 762537 (2008), implicitly overruling Gateway Technologies v. MCI, 64 F.3d 993, 997 (C.A.

5th 1995). See Hall p. 1403, footnote 5, noting the split in the federal circuits. In Gateway, the U.S. 5th Circuit had upheld in 1995 the parties’ contractual agreement to expand review, beyond the FAA, into “errors of law” which allowed the district court a de novo review, a precedent now presumably overruled by Hall. One federal court has already ruled that “manifest disregard” is not a basis for vacatur. Robert Lewis Rosen Associates v. Webb, 2008 WL 2662015 (SDNY July 7, 2008).

14. Buckeye, supra at n.4. One day after Hall was decided, a Louisiana court issued its opinion in Rent-A-Center v. Barker, No. 07-1414, 2008 WL 818949, (M.D. La. 2008), citing Gateway, infra, the 5th Circuit ruling of 1995. See footnote 10 supra. In Rent-A-Center, now on appeal to the 5th Circuit, the trial court upheld a contractual provision creating a standard of review to be “the same as that ap-plied by an appellate court reviewing a decision of a trial court. . .” The forthcom-ing opinion of the 5th Circuit should demonstrate application of Hall to cases in this circuit. Contractual provisions that seek to convert arbitration functionally into a trial court with a right of appeal are now largely invalid.

15. Preston v. Ferrer, 128 S.Ct. 978, 169 L. Ed. 2d. 917, 76 USLW 3437 (2008).

Louisiana Bar Journal Vol. 56, No. 3 177

hear the matter. The California Court of Appeal16 agreed, stating that the Califor-nia Talent Agencies Act (TAA) vested the Labor Commissioner with exclusive original jurisdiction over the dispute, and that Buckeye did not apply because it did not involve an administrative agency with exclusive jurisdiction over a disputed is-sue. The Supreme Court disagreed and concluded that the FAA pre-empted the TAA. Deciding this novel issue, the court explained that when the parties to a con-tract agree to arbitrate all issues arising under the contract under the FAA, the FAA supersedes state law lodging prima-ry jurisdiction in another forum, whether judicial or administrative. The Supreme Court held that Buckeye was largely de-terminative, because removing adminis-trative proceedings from the ambit of the FAA would undercut the strong national preference for the “streamlined proceed-ings” and “expeditious result”17 accorded the parties by the FAA.

The conclusion of these decisions ap-plying the FAA is that the evolution of federal arbitration jurisprudence contin-ues to reaffirm its breadth and durability when challenged.

5th Circuit and Federal Trial Courts

The 5th Circuit Court of Appeals ad-opted the U.S. Supreme Court mandate that the presumption to arbitrate governs all cases in which the availability of ar-

bitration is at issue. In Downer v. Sie-gel,18 a group of shareholders filed suit against their broker on grounds of fraud in the inducement, asserting a challenge to the contract as a whole. The case was removed to federal court and stayed pend-ing arbitration over the objections of the plaintiffs on grounds the arbitration agree-ment did not apply to actions based on fraud. The broker initiated arbitration pro-ceedings, successfully seeking a declara-tory judgment that he was not liable to his clients. On a motion for confirmation of the award, the district court vacated the award holding the arbitration provision was not applicable to private investments between broker and clients.

Reversing the trial court on appeal, the 5th Circuit held:

A presumption of arbitrability exists which requires the court to decide in favor of arbitration when “the scope of an arbitration clause is fairly de-batable or reasonably in doubt,” Mar-Len of La., Inc. v. Parsons-Gilbane, 773 F.2d 633, 635 (5 Cir.1985).

Quoting its opinion in Mar-Len, the court held:

The weight of this presumption is heavy: arbitration should not be denied “unless it can be said with positive assurance that an arbitra-tion clause is not susceptible of an interpretation that could cover the

dispute at issue.” Id. at 636.

The court noted that the arbitration clause in question was worded very broadly and the scope of its application was not expressly limited.19 Whether there were valid arguments that could put the private transaction outside cover-age of the arbitration clause was not the question. Any and all ambiguities must be interpreted to support arbitration. In a separate case, addressing the validity of an arbitration clause under the LBAL, the United States 5th Circuit Court of Ap-peals has also ruled that consent for bind-ing arbitration can be indicated in writing, orally, or by action or inaction, as speci-fied in the agreed-upon terms of a valid contract,20 and that employees may be bound by an arbitration agreement, even if they refuse to sign it.21 22

Other decisions of the 5th Circuit re-lating to the FAA and arbitration statutes of other states reinforce the court’s broad support of arbitration.23 On the procedural front, the court held that the administra-tive closure of a case by the district court pending arbitration was not a final judg-ment recognized under the FAA and, therefore, was not reviewable at the ap-pellate level.24 The court recognized the binding nature of arbitration clauses upon third-party beneficiaries under the FAA, finding that where an arbitration agree-ment is signed “with, or on behalf” of a patient with dementia, the clear intent of the authorized parties was to bind the

16. Ferrer v. Preston, 145 Cal.App.4th 440, 51 Cal.Rptr.3d 628, (2006), review denied (Feb. 14, 2007).

17. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 633, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

18. Downer v. Siegel, 489 F.3d 623 (5 Cir. 2007). The arbitration clause was not itself separately and independently challenged as invalid.

19. The arbitration provision stated: “All controversies which may arise be-tween the client . . . [and RPR,] its officers, directors, agents, representatives or employees, present or former, concerning any account maintained by the client [with RPR] . . . shall be determined by arbitration . . . .”

20. Marino v. Dillard’s, Inc., 413 F.3d 530 (5 Cir. 2005). See also Armstrong v. Associates Intern. Holdings Corp., in which the 5th Circuit ruled that, under Texas law, an arbitration clause may be added to an at-will employment agreement at the employer’s sole discretion, so long as the employee has 30 days’ notice of the change and thereafter continues employment. 242 Fed. Appx. 955 (5 Cir. 2007).

21. Omni Hotel Mgmt. Corp. v. Bayer, 235 Fed. Appx. 208 (5 Cir. 2007) (up-holding a decision by the United States District Court for the Eastern District of Louisiana which found that employees of a nationwide hotel management corpora-tion were bound by a mandatory arbitration agreement which predicated continued employment on agreement to arbitrate as long as they continued working, even if they failed to sign the agreement or refused to sign it); see also Lester v. Advanced Envtl. Recycling Techs., Inc., 248 Fed. Appx. 492, 2007 U.S. App. LEXIS 15972

at * 4-5 (5 Cir. 2007) (unpublished), in which the court held that, under the FAA, the validity of a binding arbitration agreement cannot be challenged on the basis of duress where an employer threatens to refuse the payment of an employee’s medi-cal bills as long as the employer has the legal right to do so.

22. Efforts have been made to statutorily overrule the application of arbitration agreements to employer-employee agreements and certain consumer disputes. See, S. 2554 and H.R.5129, Title IV C §243 captioned “Unenforceability of Arbitration Clauses in Employment Contracts” (2008). Other recent bills introduced are H.R. 3010, S. 1782, H.R. 6126, H.R. 5312, S. 2838 as to automobiles, consumers, and nursing homes, among other things.

23. A federal appeals court has ruled recently in a case of first impression that an agreement to mediate disputes is not enforceable under the Federal Arbitration Act. The U.S. Court of Appeals for the 11th Circuit reasoned in Advanced Bodycare Solutions, LLC v. Thione International, Inc. (No. 07-12309) and decided April 21, 2008, that the FAA does not apply because mediation does not result in an enforce-able award. The ruling preserves the distinction between consensual processes, like mediation, and adjudicatory processes, like arbitration, for purposes of the FAA.

24. The district court in this case closed the case administratively prior to issu-ing a stay by noting that motions, discovery and additional pleadings would only be accepted after the arbitrator’s decision was reached. The 5th Circuit found nothing in the district court’s decision to indicate an intent to dismiss the case. South La. Cement, Inc. v. Van Aalst Bulk Handling, B.V., 383 F.3d 297 (5 Cir. 2004).

178 October / November 2008

patient.25 The court also noted applicabil-ity of arbitration to many disputes where a party did not, in fact, sign the arbitration agreement, but sought or derived benefits or obligations under a contract that con-tained one, though in Palmer Ventures, the court found the facts did not support such a holding in that case.26

The 5th Circuit supported the presump-tion in favor of arbitration where a party concurrently signed two agreements, one of which contained an arbitration agree-ment and one of which did not.27 Relying upon general principles of contract law, the court recognized that separate agree-ments executed contemporaneously by the same parties, for the same purposes, as part of the same transaction, must be con-strued together to enforce arbitration. The 5th Circuit also addressed the assertion of arbitrator bias as a ground for denying enforcement of an arbitration award. The court rejected the “mere appearance of bias” standard for nondisclosure and re-quired a concrete, rather than a specula-tive, impression of bias to vacate an ar-bitration award.28 The court explained in another case that partiality does not exist simply because an arbitrator worked in the same industry as one of the parties to the arbitration agreement. Some explana-tion of the grounds of decision within the arbitration award is required for a district court to even review a question of the va-

lidity of arbitration agreement. The court stated that where the parties had agreed the filing of arbitral findings or other ex-planation for an award would not be re-quired, remand to the arbitrator for clarifi-cation was not appropriate.29

Federal courts within the 5th Circuit have played a prominent role in the ex-pansion of arbitration under both the FAA and LBAL. Recognizing the important distinction between binding and non-binding arbitration agreements, the fed-

eral district court in Tassin deferred to the Louisiana Legislature’s amendment of the LBAL.30 The court held that amend-ing the name of the statute to insert the word “binding” into the title of the Loui-siana arbitration statute demonstrated the Legislature’s clear intent to limit applica-bility of the statute only to those agree-ments expressly requiring the arbitration to be binding. In Timber Source, L.L.C. v. Cahaba Valley Timber Co., the arbitra-tion agreement in question required both parties to “accept the non-binding arbitra-tion” or the case would be referred to the district court. Based upon the statutory change to the title of the act, the court de-nied a motion to compel, explaining that Louisiana does not recognize nonbinding arbitration.31 Another trial court has held that an arbitration award is res judicata.32

Louisiana Supreme Court

Louisiana law closely follows federal law in all pertinent respects with regard to the validity and enforceability of arbi-tration agreements, and therefore federal and state court opinions are, for the most part, consistent.33

In a prominent arbitration decision, Aguillard v. Auction Mgmt. Corp.,34 the Louisiana Supreme Court resolved a split in Louisiana appellate circuits by adopt-ing the presumption favoring arbitration

25. JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596 (5 Cir. 2007).26. In Palmer Ventures, LLC v. Deutsche Bank AG, No. 06-30584, 2007 WL

4105219 (5 Cir. Nov. 19, 2007), the court held that to compel arbitration a non-signatory must show reliance on an arbitration agreement and must demonstrate that claims against the signatory and non-signatory are intertwined. In that case, the court denied the argument of Deutsche Bank that it could demand arbitration where its indirect subsidiary, Deutsche Bank Securities, Inc., had an agreement with the plaintiff, Palmer Ventures, and that agreement contained an arbitration provision. Because the defendant, Deutsche Bank, did not demonstrate “substantially inter-dependent and concerted misconduct by both the non-signatory and one or more of the signatories to the contract,” arbitration was denied. See also A. DiLeo, “The Enforceability of Arbitration Agreements By and Against Non-Signatories: A Re-view of the Jurisprudence,” Journal of American Arbitration, May 2003.

27. Safer v. Nelson Fin. Group, Inc., 422 F.3d 289 (5 Cir. 2005). The party signed a new account information form, containing an arbitration clause, and an advisory agreement, not containing an arbitration clause. The ruling explained that the two documents together represented the full effect of the parties’ relationship.

28. Positive Software Solutions, Inc. v. New Century Mortgage Corp., 476 F.3d 278 (5 Cir. 2007), stated that there must be a “concrete, not speculative, im-pression of bias. . . .” The relationship which the arbitrator failed to disclose was that he acted as co-counsel in unrelated litigation with the attorney representing New Century and he failed to disclose the relationship despite numerous opportu-nities. In contrast, however, the American Arbitration Association’s instructions to arbitrators require very broad disclosure of all past or present relationships. Rule R-16(a) of the American Arbitration Association states:

Any person appointed or to be appointed as an arbitrator shall disclose to the AAA any circumstance likely to give rise to justifiable doubt as to the arbitrator’s impartiality or independence, including any bias or any financial or personal interest in the result of the arbitration or any past or present relationship with the parties or their representatives. Such obliga-tion shall remain in effect throughout the arbitration.

29. Am. Laser Vision, P.A. v. Laser Vision Inst., L.L.C., 487 F.3d 255 (5 Cir. 2007) (per curiam).

30. Tassin v. Ryan’s Steakhouse, 509 F. Supp. 2d 585 (M.D. La. 2007). “The review of awards is ‘exceedingly deferential.’ A reviewing court must . . . resolve all doubts in favor of arbitration.” Id. at 588.

31. Timber Source, L.L.C. v. Cahaba Valley Timber Co., 2007 WL 2332318 (E.D. La., Aug. 13, 2007). If both parties do not accept the non-binding arbitra-tion, the matter will then be referred to a Louisiana court as applicable.

32. Theriault v. FIA, 2008 WL 2787465 (E.D. La. July 17, 2008).33. Congress has declared, and the U.S. Supreme Court has affirmed, that

the Federal Arbitration Act, 9 U.S.C. §1, et. seq., has pre-empted conflicting state law. The U.S. Supreme Court set out more than 30 years ago in Southland Corp. v. Keating, 465 U.S. 1, 10 (1984): “national policy ‘appli[es] in state as well as federal courts’ and foreclose[s] state legislative attempts to undercut the enforce-ability of arbitration agreements.”

34. Aguillard v. Auction Mgmt. Corp., 908 So.2d 1 (La. 2005). The court resolved a split in the circuits and upheld the more “liberal” interpretation of the 2nd and 4th Circuits toward enforcing arbitration, as opposed to the “conserva-tive” policy of the 1st and 3rd Circuits.

Louisiana Bar Journal Vol. 56, No. 3 179

agreements even in standard form con-tracts. The court reaffirmed that Louisiana courts are statutorily limited to determin-ing whether a valid agreement to arbitrate was made and whether a party has failed to comply with that agreement. Under the LBAL, all other matters, including waiver, must be submitted to the arbitrator. Where a party applies for a stay of litigation, demonstrates that a written arbitration agreement exists and that the issue is re-ferable to arbitration under the agreement, the stay of litigation pending arbitration must be granted.35 The court concluded: “We . . . adopt the United States Supreme Court’s interpretation of the federal arbi-tration law.” 908 So.2d at 22.

The Louisiana Supreme Court also has examined the issue of appealability of arbitration rulings. Consistent with 5th Circuit and United States Supreme Court holdings, the Louisiana Supreme Court ruled that a judgment compelling arbi-tration is an interlocutory decision and, therefore, not immediately appealable.36

Louisiana Appellate Courts

More recent Louisiana appellate court decisions have begun to apply these land-mark decisions from higher courts in decisions that are relevant to Louisiana practitioners, though the full impact of these recent significant decisions is yet to be seen. Since the Louisiana Supreme Court confirmed Louisiana law in favor of a presumption of arbitration in Aguil-lard in 2005, Louisiana appellate courts have applied these principles in a wide variety of cases.

Louisiana appellate courts have general-ly found that the terms and remedies intend-ed by the parties will be upheld.37 Consis-tent with that, the termination of a contract under a valid cancellation provision also cancels any obligation to arbitrate disputes arising from the contract, as differentiated from a case where the validity of a contract is challenged, which is a question for the ar-bitrator.38 Post-Aguillard, arbitration clauses will not usually be found to be adhesion-ary39 or unenforceable,40 though consumers

have prevailed in some cases. Similarly, the Louisiana 1st Circuit, though applying the standards for unconscionability in ac-cordance with the Aguillard ruling, held an arbitration clause requiring proceedings to be paid for by a client and limiting the cli-ent’s remedy to arbitration, while simulta-neously allowing the opposing party a full range of remedies, is unconscionable.41 In some cases, the court asked whether it was clear from their written agreement that the parties intended to arbitrate and declined to hold that arbitration applied to the dispute.42 In contrast, the scope of enforcement of ar-bitration provisions is broad, encompassing even non-signing third-parties43 in many in-stances and incorporating many devices of contract law.44 Even a subcontractor not a party to the arbitration agreement is entitled to arbitration once the general contractor in-vokes its right to arbitrate under the general contract.45 Moreover, arbitration decisions will ordinarily be upheld as written, despite assertions of “manifest disregard.”46

The court in JK Developments, LLC v. Amtek of Louisiana, Inc.47 described the

35. Int’l River Ctr. v. Johns-Manville Sales Corp., 861 So.2d 139 (La. 2006) (Dec. 3, 2003). Louisiana appellate court decisions have ruled, often over dissent, that where a party is in default by refusing to perform under a written arbitration agreement, as long as the making of the agreement or the failure to comply is not at issue, La. R.S. 9:4203 provides that a court may order arbitration and issues of waiver are for the arbitrator. Arkel Constructors, Inc. v. Duplantier & Meric, Architects, L.L.C., et al., 965 So.2d 455 (La. App. 1 Cir. 2007), 2007 La. App. Lexis 1459 (7/25/07).

36. St. Bernard Funeral Home, Inc. v. The Doody Group, Inc., 822 So.2d 599, 2002 La. LEXIS 2346 (La. 8/5/02) (Decision without published opinion).

37. See, e.g., Ellis Constr., Inc. v. Vieux Carre Resort Props., L.L.C., 934 So.2d 206 (La. App. 4 Cir. 2006) (holding that remedies will be limited to those intended by parties). See footnotes 2 and 3, supra, regarding flexibility of draft-ing of arbitration provisions.

38. Johnson v. Blue Haven Pools, 928 So.2d 594 (La. App. 1 Cir. 2006).39. See, e.g., Hoffman, Siegel, Seydel, Bienvenu & Centola, A.P.L.C. v. Lee,

936 So.2d 853 (La. App. 4 Cir. 2006) (ruling that an arbitration agreement was not adhesionary where it was not in a typeface significantly smaller than other provi-sions, where the party bringing suit was not in an inferior bargaining position, and where the party seeking to overturn the arbitration decision could have selected an-other service provider. However, an arbitration agreement between a consumer and a large telecommunication provider was found to be adhesionary and unenforceable where the arbitration clause was in exceedingly small print and not set off from prior or subsequent paragraphs contained in a page of at least 3,960 words. But see Sutton Steel & Supply Co. v. BellSouth Mobility, Inc., 971 So.2d 1257, 2007-146 (La. App. 3 Cir. 12/12/07), where the court found that considerations of mutuality and prominence in determining whether arbitration clause is unenforceably adhe-sionary under Louisiana law did not violate the Federal Arbitration Act.

40. See, e.g., CACV of Co., L.L.C. v. Coston, No. 2006 CA 1460, 2007 WL 2713391 (La. App. 1 Cir. 9/19/07) (not designated for publication) (holding that, where failure to respond to notices and requests regarding arbitration results in an arbitral award, a trial court lacks discretion to deny the award on grounds of vaca-tur); NCO Portfolio Mgmt., Inc. v. Gougisha, No. 07-CA-604, 2007 WL 4553933 (La. App. 5 Cir. 12/27/07) (an arbitration award cannot be challenged for lack of agreement to arbitrate after an applicable statutory time limit for vacatur has passed), rev’d en banc on other grounds, 2008 La. App. LEXIS 646 (La. App. 5 Cir. 4/29/08), writ filed May 29, 2008, 2008-C-1146 (en banc court held 6-2 that

evidence was insufficient to prove credit card customer consented to arbitration); Dictoguard, Inc. v. Lopeo, 948 So.2d 305 (La. App. 5 Cir. 2006) (holding that a district court exceeds its authority when it awards damages against a party not ordered to pay damages by an arbitrator).

41. Lafleur v. Law Offices of Anthony Buzbee, P.C., 960 So.2d 105, No. 2006 CA 0466, 2007 WL 858859 (La. App. 1 Cir. 2007).

42. Town of Homer, Inc. v. Gen. Design, Inc., 960 So.2d 310 (La. App. 2 Cir. 5/30/07), where the court held that an earlier contract containing an arbitration agreement did not apply to later work without a contract; and Quebedeaux v. Sun-shine Homes, Inc., 941 So.2d 162 (La. App. 3 Cir. 2006), finding that a purchase agreement lacking a binding arbitration clause and payment in consideration rep-resented final agreement between the parties and that the binding arbitration clause in a subsequently signed document was not enforceable, even if delivery of mobile home would have been withheld but for signature of subsequent document. In con-trast, the court upheld arbitration claims under the New Home Warranty Act. Robert Angel Builder v. Gilbert, 42,340 (La. 2 Cir. 8/15/07), 962 So.2d 1162. However, compare Easterling v. Royal, 963 So.2d 399, at 403 (La. 3 Cir. 2007), where the court declined to order arbitration due to confusion as to the arbitration agreement.

43. See DiLeo, supra, footnote 26.44. See, e.g., Gunderson v. F.A. Richard & Assocs., Inc., 937 So.2d 916 (La. App. 3

Cir. 2006) (holding that a non-signatory to an agreement containing an arbitration provi-sion may be bound by that provision under agency or contract law); LaCour’s Drapery Co., Inc. v. Brunt Constr., Inc., 939 So.2d 424 (La. App. 1 Cir. 2006) (ruling that an arbitration award against a surety not party to the arbitration remains enforceable).

45. Touro Infirmary v. Sizler Architects, 947 So.2d 740 (La. App. 4 Cir. 11/21/06).46. Wittich v. Wittich, 948 So.2d 195 (La. App. 5 Cir. 2006) (finding that mani-

fest disregard is not a valid basis for challenging an arbitration award). Recently, a Georgia court held that it was not manifest disregard where an arbitrator misinter-preted the correct law and the court upheld the arbitration award. Savannah Dodge, Inc. v. Bynes, No. A08A0359, 2008 WL 1822370 (Ga. Ct. App. April 24, 2008).

47. In a decision consistent with Hall, the court in JK Developments, LLC v. Amtek of Louisiana, Inc., 2008 WL 793600 (La. App. 1 Cir.), No. 2007, CA 1825, 2007-1825 (La. App. 1 Cir. 3/26/08), confirmed the “extraordinarily narrow” ju-dicial review of arbitration awards and noted that there may be a more liberal review standard in the “fifth, fourth, and third circuits in Louisiana,” but declined to follow that jurisprudence.

180 October / November 2008

presumption of arbitration by the courts as requiring a strict adherence to the ex-clusive and limited authority for judicial modifications of arbitration awards. Fi-nally, addressing the relationship between the filing of a motion to confirm an arbi-tration award under federal and state law, a Louisiana appellate court agreed that whenever federal arbitration law governs a dispute, confirmation of an award by a state court is also governed by federal law.48 In Vishal, the court concluded that questions of contract validity are for the arbitrator, unless the challenge is specifi-cally to the arbitration provision itself.49 And, in Capital One Bank v. White, the Louisiana 1st Circuit confirmed a credit

card arbitration award.50

In contrast, the Louisiana 3rd Circuit held in Wright v. 3P Delivery, LLC51 that the Louisiana Arbitration Law does not apply to “contracts of employment of la-bor.”52 Expressly recognizing that an im-mediate appeal from a motion denying a request for arbitration is prohibited, the Louisiana 1st Circuit in Arkel Construc-tors, Inc. v. Duplantier & Meric, Archi-tects, LLC,53 found that the court could convert an appeal into an application for supervisory writs. In the same opinion, the court deferred the question of waiver of an arbitration provision as a question for the arbitrator, not the court. In another exception to non-appealability, the court in Limousine Livery v. Airport Limousine Service, LLC54 allowed the appeal from a request for injunctive relief to proceed de-spite the existence of an arbitration clause in the contract at issue. The court recog-nized that the FAA is silent on this issue and that both federal and state courts are split on whether injunctive relief is avail-able when the parties have entered into an enforceable arbitration agreement. After review of the current state of the law, the court decided that, whether or not injunc-tive relief was authorized, the case before it did not establish the requisite irreparable harm for granting injunctive relief, leav-ing the question open. Then, in Simpson v. Pep Boys,55 the court found a waiver of arbitration occurred. Still, exceptions to mandatory arbitration are uncommon and

the full impact of the recent U.S. Supreme Court decisions is yet to be fully seen.

Conclusion

The decision to incorporate an arbitra-tion provision in an agreement must be weighed as to the perceived benefits to a particular client knowing that an agree-ment to arbitrate will, in all but the most exceptional cases,56 be upheld. Practitio-ners should be aware of and clearly un-derstand the substantive and procedural rules regarding the assertion and defense of claims in arbitration, as federal and state cases confirm that courts will con-tinue to enforce arbitration provisions and awards of arbitrators.57

After graduating from Tulane Law School in 1970 and Harvard Law School, LLM, in 1971, Anthony M. DiLeo clerked for Judge Alvin Rubin and then Judge John Minor Wisdom. He has served as arbitrator of more than $1 billion in claims in 10 states and is an active practitioner, lecturer and au-thor. He is an adjunct professor at Tulane Law School and is a member of the American Law Institute. www.TonyDiLeo.com. (Ste. 2750, 650 Poydras St., New Orleans, LA 70130)

48. Chase Bank USA, N.A., v. Roach, 978 So.2d 1103, No. 07-1172, 2008 WL 585095 (La. App. 3 Cir. March 5, 2008). The lower court had denied confirmation of the award in Chase’s favor because Louisiana law requires confirmation mo-tions to be filed in the parish where the award was made and Chase filed in the par-ish of Roach’s residence. Under federal arbitration law, confirmation can be made in the county where the award was made, the county where the debtor resides or signed the contract, or where designated in the agreement. Federal debt collection law also provides that confirmation must be filed where the debtor resides or where the contract was signed.

49. Vishal Hospitality, LLC v. Choice Hotels, 04-0568 (La. App. 1 Cir. 2006), 939 So.2d 414.

50. No. 2007 CW 2174, 2008 WL 23322 (June 2008).51. Wright v. 3P Delivery, LLC, 970 So.2d 1171, 2007-683 (La. App. 3 Cir.

10/31/07), relying on Wright v. Round the Corner Restaurants of Louisiana Inc., 252 So.2d 341, 344 (La. App. 4 Cir. 1971) and cases cited therein. Writ denied by Wright v. 3P Delivery, LLC, 976 So.2d 718, 2007-2311 (La. 2/1/08) (Feb. 1, 2008) (NO. 2007-C-2311). However, compare Omni Hotel, infra. If such an employment agree-ment affected or involved interstate commerce, it would presumably be governed by the FAA, not by a more limited state statute. See, Circuit City, supra.

52. Louisiana arbitration law does not apply to “contracts for arbitration which are controlled by valid legislation of the United States.” La. R.S. 9:4216.

53. Arkel Constructors, Inc. v. Duplantier & Meric, Architects, LLC, 965

So.2d 455, 2006-1950 (La. App. 1 Cir. 7/25/07).54. Limousine Livery v. Airport Limousine Service, LLC, 980 So.2d 780 (La.

App. 4 Cir. 3/12/08).55. 847 So.2d 617, 623-24 (La. App. 4 Cir. 4/9/03). Similarly, the court held

a waiver occurred when a party refused to pay the arbitration fee, causing a year-long delay. Miller v. Conagra, Inc., 07-0747 (La. App. 3 Cir. 12/5/07), 977 So.2d 915 (La. App. 2007), writ granted, 08-0021 (La. 3/7/08), 977 So.2d 915.

56. Key Click Outsourcing, Inc. v. Ochsner Health Plan, Inc., 946 So.2d 174 (La. App. 5 Cir. 2006) (ruling that an arbitrator’s decision was void where the arbitrator committed an error of law and refused to enforce a valid agreement be-tween the parties). Also, Cf. Wittich, supra, that was decided six weeks after Key Click, also by the La. App. 5 Cir., holding that manifest disregard is not a basis for challenging an arbitration award. In Key Click, the contract stated: “the arbitrator shall have no authority to make material errors of law. . . [nor] to make any award which could not have been made by a court of law.” However, see Hall v. Mattel, supra, decided after Key Click. In Hall, the court dealt with a contractual provi-sion similar to that in Key Click. In Hall, the contract provided review “where the arbitrator’s conclusions of law are erroneous.” 128 S.Ct. 1400-1401. The court rejected Hall’s request for “general review for an arbitrator’s legal errors.” 128 S.Ct. at 1404.

57. A national weekly list of recently decided cases of interest and importance is available via free subscription at www.adrforum.com/adrupdate.

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