Section 1782(a) permits a person to seek a court order for the production of documents for use “in a proceeding in a foreign or international tribunal. …” To obtain discovery under the statute, the petitioner must meet three requirements: (1) the person from whom discovery is sought must reside or be found in the district where the application was made; (2) the discovery must be for use in a foreign proceeding before a foreign or international tribunal; and (3) the applicant must be either a foreign tribunal or an interested person.
Here, the court relied on precedent in the Second Circuit holding that when Congress enacted section 1782, “it intended to cover governmental or intergovernmental arbitral tribunals and conventional courts and other state-sponsored adjudicatory bodies,” but did not intend to cover “arbitral bodies established by private parties.” Based on this precedent, the court found that the China International Economic and Trade Arbitration Commission (CIETAC) did not qualify as a foreign tribunal under section 1782(a). While the court acknowledged that CIETAC was originally established in 1954 by the Chinese government, the court explained that: (1) CIETAC’s jurisdiction is derived exclusively from the private agreement of the parties to arbitration proceedings; (2) the parties, not the state, are permitted to choose their own arbitrator; (3) the arbitrator’s decision is final and binding upon both parties; and (4) CIETAC itself emphasizes it is “independent of the administrative organs of the Chinese government, and free from any administrative interference in handling cases.” The court also noted that permitting parties to seek discovery through American courts under section 1782(a) would undermine significant advantages of arbitration, specifically, its efficiency and cost-effectiveness, and thereby conflict with the strong federal policy favoring arbitration. The court therefore held that CIETAC is not a “foreign or international tribunal” within the meaning of section 1782(a).
In re Application of Hanwei Guo, No. 1:18-mc-00561-JMF (S.D.N.Y. Feb. 25, 2019).
The Ninth Circuit affirmed the denial of a petition to vacate an arbitration award because the petition was filed one day late. The court determined that whether a petition to vacate is filed within the applicable three-month deadline under the FAA is based upon the method of calculating provided by Federal Rule of Civil Procedure 6(a). That Rule provides a three-step process: (1) exclude the day the arbitrator delivered the final award (in this case, September 14, 2016); (2) calculate three months from the following day (in this case September 15); and (3) include the last day of the period, unless it is on the weekend or a legal holiday, in which case the period concludes at the end of the next weekday that is not a legal holiday. Here, the court focused on Step 2. The court stated that each month began on the 15th day of the month and ended on the 14th day of the following month, just as “the month beginning January 1 concludes on January 31, not February 1.” Because the plaintiffs filed their petition for vacatur on December 15, when the last day for filing within the available three-month window under the FAA was December 14, the Ninth Circuit found that the petition was properly denied as untimely. The Ninth Circuit also addressed the standard for whether a post-judgment motion tolls the time to file an appeal pursuant to Federal Rule of Appellate Procedure 4(a)(4). Stevens v. Jiffy Lube International, Inc., No. 17-15965 (9th Cir. Dec. 27, 2018).
This post written by Benjamin E. Stearns.
Sears Roebuck and Co. (Sears) entered a 40-year lease with Century III Mall, PA., LLC (“Century III Mall”), whereby Sears agreed to maintain an anchor store at the Century III Mall. In the event that Sears elected to discontinue operations, the lease provided Century III Mall with an option to acquire the Sears “Building and Improvements,” the valuation to be determined by a formula specified in the lease. The lease also contained an arbitration clause prohibiting the arbitrators from, among other things, changing any terms set forth in the lease. Sears later terminated the lease and Century III Mall exercised its right to acquire the Building and Improvements. Unable to agree on a valuation, Sears commenced arbitration and an arbitration panel awarded Sears nearly $4 million.
Century III Mall filed a petition in a federal district court in Pennsylvania seeking to vacate the award, claiming the panel exceeded its authority by “rewriting” the terms of lease and, in turn, inflating the property value. The district court disagreed and dismissed the action, as well as confirmed the award. The Third Circuit affirmed, noting, as an initial matter, that the district court had subject matter jurisdiction under 9 U.S.C. §§ 9 and 10 and 28 U.S.C. § 1332, and that appellate jurisdiction was proper under 9 U.S.C. § 16(a) and 28 U.S.C. § 1291. Substantively, the Third Circuit agreed with the district court that the panel reasonably interpreted the lease and rationally applied its terms. Thus, citing the “highly deferential standard of review” applicable to arbitration decisions, the Court declined to disturb the district court’s decision not to vacate the award.
Century III Mall, PA., LLC v. Sears Roebuck & Co., Nos. 17-2284 and 17-2759 (3d Cir. Dec. 20, 2018).
This post written by Alex Silverman.
A dispute regarding attorney Steven Johnson’s right to fees from William Drake, an individual who hired Johnson to pursue a product liability claim, was made considerably more complicated by conflicting forum provisions in a contract with the attorney and the settlement agreement in the MDL that eventually resolved Drake’s product liability claim.
Drake received a hip implant that was later recalled. Drake hired Mr. Johnson to represent him in his claim against the manufacturer of the implant, signing a contract providing that fee disputes would be arbitrated in Texas. Drake later terminated Johnson and hired a new lawyer, who filed lawsuit against the manufacturer, which became part of an MDL. Drake’s claims were then settled by the manufacturer, and the settlement agreement specified the use of a special master to settle disputes regarding attorneys’ fees.
Johnson commenced an arbitration proceeding against Drake in Texas regarding his fees, and Drake initiated arbitration proceedings against Johnson before the special master regarding the same issues. The special master dismissed Drake’s arbitration proceeding because it was already pending in a different arbitral forum. The Texas arbitrator then issued an award in Johnson’s favor. Drake moved, in the Ohio federal district court handling the MDL, to enforce the terms of the settlement agreement and vacate the Texas arbitration award. The court granted to motion to enforce the settlement but did not decide whether to vacate the apparently conflicting Texas arbitration award, and Johnson appealed this decision to the Sixth Circuit.
The Sixth Circuit started and ended its consideration of the matter with the question of jurisdiction, which Johnson argued existed because (1) the district court’s decision was a final decision appealable under 28 U.S.C. § 1291, and (2) it was appealable under section 16 of the Federal Arbitration Act. The court disagreed. First, the court found that the motion to vacate the Texas arbitration award was one of the main issues before the court, and the district court’s failure to rule on that motion meant that there was no final resolution of the litigation on the merits. Second, the court found that section 16 of the FAA did not apply because the district court did not address the Texas arbitration award, rejecting an argument that it was implicitly vacated by the ruling enforcing the settlement. Lacking jurisdiction, the Sixth Circuit remanded the case to the district court with instructions that it consider whether the Texas arbitration award should be confirmed or vacated.