Business Litigation
The Supreme Court Upholds the Parties’ Right to Contract for Arbitration
By Leslie A. Berkoff, Moritt Hock & Hamroff LLP
The Supreme Court has just issued the first of three decisions involving the Federal Arbitration Act which are set for determination this term. In Henry Schein, et al. v. Archer & White Sales, Inc., No. 17-1272 (January 8, 2019), Justice Kavanaugh, writing for a unanimous Court, addressed the question of whether, in light of the Federal Arbitration Act (“FAA”), a court may disregard a provision of an arbitration agreement delegating to the arbitrator the authority to determine whether a specific claim is arbitrable under the governing agreement if the court finds the argument in favor of arbitration to be “wholly groundless.” The Court held that the FAA does not contain a “wholly groundless” exception. Further, Justice Kavanaugh explained that “[w]hen the parties' contract delegates the arbitrability question to an arbitrator, the courts must respect the parties' decision as embodied in the contract.” The Court found the propounded exception to be inconsistent with the statutory text of the FAA and existing court precedent. It should be noted that the Court did not extend its analysis to determine whether the contract in question had in fact delegated that authority to the arbitrator. Given that there are two additional decisions pending with respect to various provisions of the FAA, lawyers practicing in this area should continue to watch for future decisions.
The Rule of Three: How to Calculate Deadlines Under the Federal Arbitration Act
By Leslie A. Berkoff, Moritt Hock & Hamroff LLP
In Stevens v. Jiffy Lube, No. 17-15965 (9th Cir. 12/27/18) (https://caselaw.findlaw.com/us-9th-circuit/1902716.html), the Ninth Circuit affirmed the District Court's denial of a petition to vacate an arbitral award finding the petition was filed late. Section 12 of the Federal Arbitration Act ("FAA") requires a petition to vacate an award be filed "within three months after the award is filed or delivered." The Court determined this time period should be calculated according to Federal Rule of Civil Procedure 6(a) and set forth three steps to follow: (1) When the period is stated in days or a longer unit of time (here, three months), exclude the day of the event that triggers the period, here, September 14, 2016; (2) Count every day, including intermediate Saturdays, Sundays, and legal holidays; and (3) Include the last day of the period, but if the last days is a Saturday, Sunday, or legal holiday, the period continues to run until the end of the next day that is not a Saturday, Sunday, or legal holiday. Careful calculation is necessary to prevent denial of petitions.