Reinsurance Update

This edition highlights a recent decision from the United States District Court for the Southern District of New York denying a motion to vacate a supplemental arbitral award of attorneys’ fees.  We also include a brief update regarding Congress’ review of the United States Supreme Court’s much-discussed opinion in Ashcroft v. Iqbal, which fundamentally changed the standards that apply to motions to dismiss cases filed in federal court. 

Southern District of New York Denies Motion to Vacate Supplemental Arbitral Award of Attorneys’ Fees
National Union Fire Ins. Co. v. Odyssey America Reinsurance Corp., No. 05 Cv. 7539, 2009 U.S. Dist. LEXIS 108318 (S.D.N.Y. Nov. 18, 2009).

The United States District Court for the Southern District of New York recently denied a motion to vacate a supplemental arbitral award of attorneys’ fees, finding that none of the statutory bases for vacatur applied and that the award was not in manifest disregard of the law.  Because the treaty contained broad language referring “all disputes or differences arising out of the interpretation of this Contract” to arbitration, and contained no provision requiring each side to pay its respective attorney’s fees, the court held that “[a] fortiori . . . the arbitrator’s award of attorneys’ fees ‘drew its essence’ from the broad language of the agreement to arbitrate.”  Thus, the court concluded that the arbitrators did not exceed their authority by awarding fees. 

Legislative Update -- Congress is Reviewing Ashcroft v. Iqbal

The U.S. Supreme Court’s May 2009 decision in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), which essentially injected a ‘plausibility’ standard into the district courts' review of the sufficiency of a complaint pursuant to a Fed. R. Civ. P. 12(b)(6) motion to dismiss, continues to impact the landscape of proper pleading in federal courts, and Congress may be next to weigh-in.  Plaintiffs’ attorneys contend that the standards first articulated in Bell Atlantic v. Twombly, 550 U.S. 544 (2007), and expanded upon in Iqbal, set too high a bar for surviving a motion to dismiss, whereas the defense bar trumpets the standards as long-awaited limitations on frivolous litigation.  Both the Senate Judiciary Committee and the House Judiciary Courts Subcommittee have recently held hearings to elicit testimony on proposed legislation which would revert the pleadings standard to its prior, pre-Twombly iteration.  That standard, first articulated in Conley v. Gibson, 355 U.S. 41 (1957), permits dismissal only if there is no conceivable set of facts on which to sustain the claim.  The House bill, H.R. 4115, entitled “Open Access to Courts Act of 2009,” incorporates specific standards drawn from Gibson and expressly precludes dismissal based on lack of plausibility.  The Senate bill, S. 1504, entitled, “Notice Pleadings Restoration Act of 2009,” simply requires that courts apply the standards set forth in Gibson without specifically delineating the applicable standards.          

If you have any questions regarding this or any other reinsurance matter, please contact:

John Jacobus, 202.429.6276 or jjacobus@steptoe.com
Jon Neumann, 602.257.5220 or jneumann@steptoe.com

For information regarding Steptoe's Government Affairs & Public Policy Group, please contact:

Scott Sinder, 202.429.6289 or ssinder@steptoe.com