Thursday, August 19, 2010

Magistrate Judge Torres Asks A Good Question.

 torresquestion                                                              

That one being, "why would someone move to enforce an arbitration agreement and then not pay the arbitrator, forcing the arbitration to shut down and causing plaintiff to seek to reopen the case in federal court"?

Let me take a stab at this: maybe because the defendant wants to impede an adjudication on the merits, and is trying to "exhaust" the limited financial resources of the plaintiff and leverage or squeeze a financially-strapped claimant -- via continuing delay, multiple filings, and useless arbitration expenses -- into walking away or accepting less than he or she might otherwise be entitled?

Oh well, that's why everyone calls me a cynic.

Here's how Judge Torres looked at it:
This matter is for some inexplicable reason back before the Court after having a bench trial under 9 U.S.C. § 4, after the Court’ Findings of Fact and Conclusions of Law were prepared, and after the Court dismissed the case in favor of contractually required arbitration. The pending motion to reopen the case [D.E. 71] was filed after the Defendant persistently refused to timely pay its share of the arbitrator’s fee, which resulted in the arbitrator dismissing the proceedings. Not surprisingly, Plaintiff quickly proceeded back to this Court to reopen the case alleging that Defendant defaulted/waived its contractual right to proceed with arbitration.

Defendant, also not surprisingly, opposes the motion arguing that it tried to cure its default on payment to the arbitrator, that Plaintiff is the one who is preventing them from curing, and that Defendant is still ready, willing and able to proceed with arbitration but likely before a different arbitrator or utilizing a different but comparable arbitration procedure.

The Court is frankly disappointed to have to deal with this case again after having dealt extensively with the parties and the issues they raised. Even though Defendant carried the day in those earlier proceedings by the skin of its teeth in convincing the Court to enforce an arbitration agreement that was encumbered with a material scrivener’s error, and an agreement that was not even found until the first day of trial scheduled under § 4 of the FAA, Defendant was so overwhelmed with excitement over its procedural victory that it forgot the most elementary and basic of tasks necessary to carry out that arbitration that it fought for – paying the arbitrator’s fee. Now the arbitrator that the parties contractually agreed upon in the employment agreement in question refuses to open the case without the Plaintiff’s consent. And the Plaintiff does not consent, most likely because he never wanted to arbitrate this case in the first place.

Faced with this record, the Court could simply scoff at the problem, deny the motion, and force the Plaintiff to try again to get the Defendant to abide by its contractual responsibilities. But the question that must first be answered is why? Why under these circumstances, when the Plaintiff claims that he has a statutory right to seek relief under the laws of the United States, would a federal court turn him aside again in favor of arbitration when the party who demanded that arbitration in the first place so cavalierly ignored Plaintiff’s right to speedy resolution of statutory claims when the Court’s eyes looked elsewhere? To ask the question is to answer it.
 Judge Torres also rightly notes:
The irony, of course, is that these supposed benefits of arbitration versus litigation are utterly lost in a case, such as this, filed in November 2008 that still has not gotten off the ground because of disputes over arbitration. We note as well that most FLSA cases filed in our Court are resolved routinely within nine months. But we digress.
 Don't digress!

That's a key insight, particularly as the Arbitration Fairness Act continues to languish in Congress while folks debate whether Nazis should build mosques on Newt Gingrich's tuches (what I affectionately call "Ground Zero").

Nice opinion all around.

11 comments:

  1. tired and hot and calling a Shumie

    ReplyDelete
  2. Mag. Torres is one of the better ones. It would be nice to see him elevated to Dsitrict Court Judge.

    ReplyDelete
  3. Problem is it never should have went to arbitration in the first place.

    ReplyDelete
  4. Visit http://www.dofollowarticles.com to post articles in the following categories: Chilton, cockatiels, wireless, napoli, panchk, chemise, exfoliation and more...

    ReplyDelete
  5. Who were the lawyers on this case?

    ReplyDelete
  6. A court doesn't have eyes.

    ReplyDelete
  7. Plaintiff's counsel - J.H. Zidell and Daniel Feld. Defendant's counsel - Herman Russomanno (presumably as local counsel) and Venable LLP as lead counsel

    ReplyDelete
  8. Venable 'forgot' not very likely.

    ReplyDelete
  9. Herman the Vermin.

    ReplyDelete
  10. Great post. I've covered some aspects you didn't cover on my blog. Check it out.

    ReplyDelete
  11. Wow, there is really much useful info here!
    nice 8 | look 6 | nice 3 this check | this link | nice 2 you may here | this link

    ReplyDelete