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SUPREME COURT DOCKET REPORT

Mayer Brown's Supreme Court and Appellate Practice Group distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community. We also email the Docket Report to our subscribed members and if you don't already subscribe to the Docket Report and would like to, please click here.

October Term 2010 - February 22, 2011

February 22, 2011

Today the Supreme Court granted certiorari in two cases of interest to the business community:


The Federal Arbitration Act—Waiver

Today, the Supreme Court granted certiorari in Stok & Associates, P.A. v. Citibank, N.A., No. 10-514, to decide whether, under the Federal Arbitration Act, a party opposing arbitration must demonstrate that it was prejudiced by the other party’s conduct in order to show that that party had waived its right to compel arbitration.

This case is of great interest to any business that makes use of arbitration agreements, because parties who resist arbitration often contend that a business has waived the right to compel arbitration through preliminary litigation conduct. Courts are often reluctant to find waiver given the Supreme Court’s prior recognition that, “as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983) (emphasis added). The Court’s decision in this case may provide guidance over the types of circumstances that result in waiver, including whether the party asserting waiver must show prejudice, and if so, whether prejudice may be shown when the party seeking arbitration has engaged in certain litigation steps.

In Stok & Associates, the petitioner—a law firm—had sued a bank in Florida state court. The bank filed an answer, after which the law firm served the bank with an offer of judgment and discovery requests and also filed a reply to the bank’s answer and a notice of readiness for trial. Thereafter—less than a month after filing its answer—the bank sent petitioner a letter electing arbitration. The bank filed a petition to compel arbitration in state court, but withdrew that petition and filed a new petition in federal court. The district court denied the bank’s petition to compel arbitration, holding that the bank had participated in the state court action in a manner that prejudiced petitioner, and that the bank had therefore forfeited the right to compel arbitration.

The Eleventh Circuit reversed in a short, unpublished opinion. Assuming without deciding that the bank had acted inconsistently with the right to compel arbitration, the Eleventh Circuit held that petitioner had not been prejudiced. The Eleventh Circuit observed that the delay in seeking arbitration was less than one month and that petitioner had not identified any quantifiable “litigation-specific” expenses it had incurred as a result of the delay.
Absent extensions, amicus briefs in support of the petitioner will be due on April 15, 2011, and amicus briefs in support of the respondent will be due on May 16, 2011. If you have any questions about the case, please contact Evan Tager (+1 202 263 3240) or Archis Parasharami (+1 202 263 3328) in our Washington, DC office.


Outer Continental Shelf Lands Act—Scope of Worker Compensation Coverage

The Outer Continental Shelf Lands Act (“OCSLA”) extends worker compensation benefits for “disability or death . . . resulting from any injury occurring as the result of operations conducted on the outer Continental Shelf.” 43 U.S.C. § 1333(b). This morning, the Supreme Court granted certiorari in Pacific Operations Offshore, LLP v. Valladolid, No. 10-507, to resolve disagreement among the lower courts as to the scope of that provision.

The Fifth Circuit has held that OCSLA imposes a “situs-of-injury” requirement, so that compensation under the statute is available only for injuries occurring over the outer continental shelf. Mills v. Director, Office of Workers’ Compensation Programs, 877 F.2d 356 (5th Cir. 1989) (en banc). The Third Circuit has held that OCSLA imposes a “but for” test, so that compensation is available if the injury occurred “as the result of” operations on the outer continental shelf. Curtis v. Schlumberger Offshore Service, Inc., 849 F.2d 805, 809–11 (3d Cir. 1988. Disagreeing with both the Fifth Circuit’s situs-of-injury test and the Third Circuit’s but-for test, the Ninth Circuit last year held that compensation is available under OCSLA so long as “the claimant [can] establish a substantial nexus between the injury and extractive operations on the shelf.” Valladolid v. Pacific Operations Offshore, LLP, 604 F.3d 1126, 1139 (9th Cir. 2010).

The Supreme Court’s resolution of this conflict is likely to have significant consequences for the offshore drilling industry and other industries involved in the extraction of natural resources from the outer continental shelf. If the Court allows plaintiffs to bring claims under the OCSLA even for injuries occurring outside the geographic boundaries of the outer continental shelf, companies could be subject to significantly expanded liability.
The defendant in the case now before the Court, Pacific Operations Offshore, LLP, operates two offshore oil drilling platforms located over the outer continental shelf more than three miles off the coast of California. Although the decedent, Juan Valladolid, spent the great majority of his working time aboard one of the drilling platforms, he was injured at Pacific Operations’s onshore oil-processing facility, when he was crushed by a forklift. His widow filed claims for benefits under the California workers’ compensation scheme, the Longshore and Harbor Workers’ Compensation Act, and the OCSLA. Her federal claims were referred to an administrative law judge, who rejected the OCSLA claim on the grounds that Valladolid’s injury had occurred outside the geographic situs of the outer continental shelf. On appeal, the Ninth Circuit announced its “substantial nexus” test and remanded for further factual findings.

Absent extensions, amicus briefs in support of the petitioner will be due on April 15, 2011, and amicus briefs in support of the respondent will be due on May 16, 2011. Any questions about this case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington, DC office.


Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).

Feel free to forward this message to anyone who you believe might be interested in the Docket Report.

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Mayer Brown's Supreme Court & Appellate practice distributes a Docket Report whenever the Supreme Court grants certiorari in a case of interest to the business community and distributes a Docket Report-Decision Alert whenever the Court decides such a case. We hope you find the Docket Reports and Decision Alerts useful, and welcome feedback on them (which should be addressed to Andrew Tauber, their general editor, at atauber@mayerbrown.com or +1 202 263 3324).

Mayer Brown Supreme Court Docket Reports provide information and comments on legal issues and developments of interest to our clients and friends. They are not a comprehensive treatment of the subject matter covered and are not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed. 



 
 
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