Continental Casualty Company et al v. Staffing Concepts, Inc. et al

Filing 323

ORDER overruling 319 --objections; adopting 316 --REPORT AND RECOMMENDATION; granting 276 --motion to vacate arbitration award as to the issue of arbitrability--the motion is otherwise denied; denying without prejudice 264 --petition to confirm the arbitration award; denying without prejudice 267 --motion for summary judgment; denying without prejudice 307 --petition to confirm; denying without prejudice 309 --motion to vacate; directing the magistrate judge to conduct a status conference. Signed by Judge Steven D. Merryday on 3/5/2012. (BK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
CONTINENTAL CASUALTY
COMPANY, et al.,
Plaintiffs/Counter-defendants,
v.

CASE NO.: 8:09-cv-2036-T-23AEP

STAFFING CONCEPTS, INC., et al.,
Defendants/Counter-claimants.
/

ORDER
Four insurers sue ten insureds for deductibles. Simultaneously, the insurers’
claim administrator, CNA ClaimPlus, Inc. (ClaimPlus), seeking claim handling fees,
demanded and won arbitration with one of the insureds, Staffing Concepts
International, Inc. (Staffing Concepts). Staffing Concepts moves (Doc. 276) to vacate
the arbitration award, which ClaimPlus petitions (Doc. 264) to confirm. Also based
on the arbitration award, ClaimPlus moves (Doc. 267) for summary judgment.
Magistrate Judge Porcelli received both motions and the petition for a report a
recommendation.
Staffing Concepts seeks to vacate the arbitration award because one of the
arbitrators displayed partiality, because the arbitrators committed legal error when
allocating the burden of proof and when fashioning a remedy, because the arbitrators

refused to consider enough evidence, and because the arbitrators erred in finding
arbitrability an arbitrable question.
Judge Porcelli’s report (Doc. 316) first concludes that no direct evidence of the
challenged arbitrator’s partiality exists and that, in any event, because the three
arbitrator panel reached a unanimous decision, evidence of one arbitrator’s partiality
would likely fail to invalidate the panel’s award. Observing both that the arbitration
clause allows the arbitrators to “abstain from strict rules of law” and that arbitration
in general involves the parties’ renunciation of appeal or judicial review of an
arbitrator’s erroneous conclusion of law, the report arrives at the eminently correct
conclusion that Staffing Concepts’s complaints about bearing the burden of proof and
about suffering an adverse declaratory judgment are baseless. The report concludes
also that, when Staffing Concepts proposed to enter evidence from thousands of
claims to show that ClaimPlus mishandled them, the panel reasonably limited
Staffing Concepts to entering evidence from the few claims that allegedly suffered the
most ‘egregious’ mishandling; the panel merely barred cumulative and unnecessary
evidence.
Although none of the panel’s decisions during the arbitration proper warrant
vacating the arbitration award, Staffing Concepts argues that a question exists as to
whether Staffing Concepts and ClaimPlus agreed to arbitrate in the first place.
Staffing Concepts signed the supposedly operative claims servicing agreements with
ClaimPlus’s predecessor; that predecessor, according to Staffing Concepts, assigned
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the claims servicing agreements to ClaimPlus without informing Staffing Concepts.
ClaimPlus never signed the claims servicing agreements, which, in addition, prohibit
assignment without both parties’ consent.
Concurring with Staffing Concepts that a court rather than an arbitration panel
must decide the propriety of the assignment, the report quotes Judge Richard
Arnold’s opinion in I.S. Joseph Company, Inc. v. Michigan Sugar Company, 803 F.2d 396
(8th Cir. 1986):
Absent some indication in the original agreement that the parties at the
time provided for assignment of their interests under the agreement or
otherwise intended to bind themselves to entities not then in existence,
the validity of [an] assignment . . . is [an issue] which is reserved for the
court under the [Federal Arbitration] Act.

803 F.2d at 400. Accordingly, the report recommends partially granting the motion
to vacate, denying without prejudice the other motion and the petition, scheduling a
status conference, and proceeding with a judicial determination of arbitrability.
The objections (Doc. 319) that ClaimPlus submits suffer obvious infirmities.
Of particular note, ClaimPlus never addresses Judge Arnold’s opinion in I.S. Joseph,
arguably the most pertinent and compelling authority in the report’s analysis.
Because Staffing Concepts casts colorable doubt on the supposed assignment and on
the supposed agreement to arbitrate, the several factual disputes that ClaimPlus raises
remain dormant pending a judicial assessment of arbitrability.*

The Eleventh Circuit recently confirms in Solymar Investments, Ltd. v. Banco Santander S.A., --- F.3d ---, 2012 WL 612302, *4-*6 (11th Cir. Feb. 28, 2012), that a court determines the existence of an agreement to
arbitrate.
*

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ClaimPlus’s objections (Doc. 319) are OVERRULED. The report and
recommendation (Doc. 316), thorough and impressive, is ADOPTED in full.
Staffing Concepts’s motion (Doc. 276) to vacate the arbitration award is GRANTED
as to the issue of arbitrability and is otherwise DENIED. ClaimPlus’s petition
(Doc. 264) to confirm the arbitration award and motion (Doc. 267) for summary
judgment are DENIED WITHOUT PREJUDICE. Premature because of the
dispute over arbitrability, ClaimPlus’s petition (Doc. 307) to confirm and Staffing
Concepts’s motion (Doc. 309) to vacate an arbitration award of attorney fees are
DENIED WITHOUT PREJUDICE as well. In accord with his recommendation,
the magistrate judge is directed to conduct a status conference.
ORDERED in Tampa, Florida, on March 5, 2012.

Steven D. Merryday 

STEVEN D. MERRYDAY
UNITED STATES DISTRICT JUDGE

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