Reinsurance & Arbitration Focus

The Second Circuit recently affirmed the confirmation of an arbitrator’s decision dismissing claims on statute of limitations grounds against a claim that the arbitrator had no authority to consider such a defense and affirmed an order by the district court enjoining the plaintiff from attempting to once again refile his state court complaint regarding the dispute.

In accordance with prior decisions, Matthew Swain’s claims against Hermès of Paris Inc. were referred to arbitration. The arbitrator then granted Hermès’ motion to dismiss on the ground that Swain’s claims were time-barred. Swain responded by asking the district court to vacate the arbitrator’s dismissal on the ground that the arbitrator lacked the authority to consider Hermès’ statute of limitations defense. The district court declined to do that and instead (1) confirmed the arbitrator’s award and (2) enjoined Swain from attempting to once again refile a state court complaint asserting his claims despite the court’s prior rulings regarding arbitration.

The Second Circuit affirmed. The Second Circuit noted that, when arbitration is proper, there is a presumption that procedural questions related to the substantive issues to be arbitrated are for the arbitrator to decide. Although the parties can rebut that presumption by adopting “express language” to the contrary, the parties had done no such thing in this case. To the contrary, the arbitration agreement allowed the arbitrator to consider “claims and defenses otherwise available in court,” which included Hermès’ statute of limitations defense. Swain’s argument to the contrary that the parties had listed “disputes covered” by the arbitration agreement and that that list did not include timeliness issues was not persuasive. The list of “disputes covered” identified substantive issues for the arbitrator. The fact that it did not include any procedural issues or defenses did not overcome the presumption that such issues were for the arbitrator.

The Second Circuit also held that the district court did not abuse its discretion when it enjoined Swain from attempting to once again refile his state court complaint. The Second Circuit agreed with the district court that Swain had a “history of vexatious and duplicative lawsuits against Hermès,” including filing two motions to reinstate his state court complaint despite decisions from multiple courts, including the Second Circuit and district court, that his claims were subject to arbitration and that “Swain lacked an objective good faith expectation of prevailing in the instant dispute” and that his actions had “undoubtedly caused needless expense to Hermès and imposed an unnecessary burden on federal and state courts through his repeated filings.”

Hermès of Paris, Inc. v. Swain, No. 20-3451 (2d Cir. Nov. 8, 2021).