A split U.S. Supreme Court ruled yesterday that the grounds for vacatur and modification of arbitration awards stated in the Federal Arbitration Act (FAA) at 9 U.S.C. sec. 9-11, are exclusive for parties seeking expedited review under the FAA.
The parties in Hall Street Associates, L.L.C. v. Mattel, Inc., proposed to arbitrate Hall Street’s claim for indemnification after Mattel’s right to terminate its lease was decided at a bench trial. The District Court approved and entered the parties' arbitration agreement as an order. The agreement required the court to vacate, modify, or correct any award if the arbitrator's conclusions of law were erroneous. In its ruling the Supreme Court noted that its holding decided “nothing about other possible avenues for judicial enforcement of awards.” It remanded the case for consideration of “independent issues.” The Court said that because the arbitration agreement was submitted to the District Court and adopted as an order, there was some question whether it should be treated as an exercise of the District Court's authority to manage its cases under Federal Rule of Civil Procedure 16.
The Oregon Supreme Court on Thursday held that a builder may be liable to a subsequent purchaser for repair costs resulting from negligent construction. The defendant in Harris v. Suniga unsuccessfully urged the court to bar damages under the 'economic loss' doctrine, which provides that a defendant is ordinarily not liable for negligently causing a stranger's purely economic loss without injuring his person or property.
Defendants argued that plaintiffs' losses amounted to nothing more than a decrease in the value of their investment, and did not constitute injury to property. The court, affirming the Court of Appeals, rejected that characterization: "plaintiffs here seek recovery for physical damage to their real property, and this court's cases generally permit a property owner to recover in negligence for damages of that kind."
See our coverage from December 2006 of the economic loss doctrine and the Court of Appeals opinion in Harris v. Suniga.
Overturning a trial court ruling, the Washington Court of Appeals, Division One, yesterday ruled that the “effective date of dissolution” of an administratively dissolved limited liability company under the Washington Limited Liability Company Act (LLCA), RCW 25.15 et seq., is three years from the date of administrative dissolution, not the date the limited liability company’s certificate of formation is canceled. The LLCA provides that the affairs of a limited liability company that is administratively dissolved are “wound up” under RCW 25.15.270 and its certificate of formation is canceled under RCW 25.15.290(4) two years after the administrative dissolution date. The LLCA, at RCW 25.15.270, sets forth several different methods of dissolution of a limited liability company. The Court’s ruling in Belltown Waterproofing, Inc., v. Clear Brook Construction meant that general contractor Clear Brook Construction Limited’s construction defect claims against subcontractor Belltown Waterproofing, LLC were barred by the statute of limitations.
The case aptly demonstrates that a general contractor’s potential risk does not end at project completion. Clear Bank is not the first and will certainly not be the last general contractor to get caught in the middle between an owner’s claim brought within, but near the end of, the applicable statute of limitations, and the applicable statute of limitations and/or statute of repose the general contractor must meet in order to timely bring its claims against its subcontractors.
In 2007 the US Supreme Court raised the standards for pleading a federal antitrust claim, holding in Bell Atlantic v. Twombly that plaintiff must plead sufficient facts to suggest an illegal agreement in restraint of trade. The Ninth Circuit last week agreed to dismiss an antitrust complaint for failing to meet that pleading standard. What's interesting about the case, Kendall v. Visa USA, Inc., is what happened in the trial court: the plaintiffs had been allowed to take depositions of defense witnesses after their complaint had been dismissed.
According to the Ninth Circuit opinion, the district court judge dismissed the initial complaint for failure to plead adequate facts, but agreed that plaintiffs could conduct discovery before filing an amended complaint. Because the amended complaint continued to be deficient, the court dismissed it without leave to amend. This case turns the usual litigation process on its head: a complaint must typically be in place before discovery can begin. If discovery after dismissal becomes the norm in antitrust cases, expect many disputes over how much discovery defendants must make available to plaintiffs.
See our earlier coverage of the Supreme Court's Twombly opinion here.
An article titled Class Certification and Interlocutory Review: Rule 23(f) in the Courts, by blog contributor Lori Irish Bauman, appears in the most recent issue of the Journal of Appellate Practice and Process. The article critiques the federal circuit courts' application of Federal Rule of Civil Procedure 23(f), which provides for appellate review of class action certification decisions. It appears in Volume 9, Issue 1 of the Journal, published last week.
The same issue of the Journal of Appellate Practice and Process includes a study of best practices in 13 state appellate courts, including the Oregon Court of Appeals.
The table of contents for the current issue appears here. Journal articles are available through Lexis and Westlaw.
The Oregon Supreme Court today significantly reduced a punitive damage award against an insurance company on a claim of bad faith failure to settle. In Goddard v. Farmers Insurance Co., a jury found that an automobile insurer had in bad faith refused to settle a wrongful death claim within policy limits, and entered an award to the insured of more than $20 million in punitive damages. That punitive damages amount was 16 times greater than plaintiff's compensatory damages.
On review the Supreme Court held that, where the defendant's wrongful act resulted in economic injury but not personal injury, the ratio of punitive damages to compensatory damages should generally not exceed four to one in order to avoid violating the Due Process Clause of the US Constitution. The court ordered a new trial limited to the amount of punitive damages, unless defendant accepts the reduced award of four times compensatory damages.