Employers' Innovative Network, LLC et al v. Bridgeport Benefits, Inc. et al

Filing 273

MEMORANDUM OPINION AND ORDER granting 254 JOINT MOTION by Capital Security, Ltd., Jeana Nordstrom, Universal Risk Intermediaries, Inc., Bridgeport Benefits, Inc., Voluntary Benefit Specialists, LLC, Stephen Salinas, Wayne Blasman, Casey Blasman t o Lift Stay and for Confirmation, Recognition, and Enforcement of the Bermuda Arbitration Awards. Accordingly, the Court LIFTS the stay, and REINSTATES this case to the active docket. Signed by Judge Frank W. Volk on 3/18/2024. (cc: counsel of record; any unrepresented party) (mfo)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT BECKLEY
NETWORK, LLC, et al.,
Plaintiffs,
v.

CIVIL ACTION NO. 5:18-cv-01082

BRIDGEPORT BENEFITS, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending are Defendants Capital Security, Ltd., Universal Risk Intermediaries, Inc.,

Voluntary Benefit Specialists LLC, Stephen Salinas, Wayne Blasman, and Casey Blasman (the
Joint Motion to Retain Case on Active Docket for the Purposes of
Confirming, Recognizing, and Enforcing Arbitration Awards [Doc. 253] and Joint Motion to
Confirm, Recognize, and Enforce Arbitration Awards [Doc. 254], both filed June 2, 2023.
Plaintiffs Employers Innovative Network, LLC, and Jeff Mullins responded in opposition to
Defendants

s on June 16, 2023. [Docs. 256, 257]. Defendants filed a Joint Reply on June

21, 2023. [Doc. 258]. The Bridgeport Defendants filed a separate reply [Doc. 259] on June 21,
2023, and the Nordstrom Defendants filed a separate reply [Doc. 260] on June 22, 2023. The
matters are ready for adjudication.
I.
On April 2, 2018, Plaintiffs instituted this action against Defendants in the Circuit

Court of Wyoming County. They alleged the unauthorized practice of insurance, breach of
fiduciary duty, slander, negligence, breach of contract, fraud in the inducement, fraud in the
performance, and civil conspiracy. [Doc. 1 Ex. 4]. The Nordstrom Defendants removed on June
27, 2018. [Id.].
On July 17, 2018, Plaintiffs filed a Motion for Entry of Default against the
Nordstrom Defendants. [Doc. 12]. The Clerk entered a default against the Nordstrom Defendants
on July 18, 2018. [Doc. 14]. On July 20, 2018, the Nordstrom Defendants filed a Motion to Set
Aside Default [Doc. 15], along with a proposed Motion to Dismiss and request to compel
arbitration [Doc. 16].
On February 25, 2019, the Court granted the Nordstrom Defendant
Aside Default. [Doc. 67]. That same day, the Nordstrom Defendants filed a Memorandum of Law
in support of their Motion to Dismiss and request to compel arbitration [Doc. 69]. Plaintiffs
responded on March 11, 2019 [Doc. 74]. The Nordstrom Defendants replied on March 31, 2019.
[Doc. 82].

Dismiss and referred
Agreement. [Doc. 216]. In response, the Bridgeport Defendants moved to have the entire matter
referred to arbitration on equitable estoppel grounds. [Doc. 220]. Plaintiffs replied in opposition.
[Doc. 222].
On September 16, 2019, Plaintiffs filed a Motion to Reconsider the August 2, 2019,
Order. [Doc. 227]. Plaintiffs claimed the Nordstrom Defendants waived their right to arbitration
by engaging in discovery and behaving inconsistently with their professed desire to arbitrate. [Id.].
On September 17, 2019, the Court denied the Motion to Reconsider inasmuch as Plaintiffs, without

2

good cause, failed to seasonably raise the waiver argument. [Doc. 228]. Plaintiffs then withdrew
On October
18, 2019, the Court referred the entirety of the dispute to the Bermuda arbitral forum and stayed
the case pending arbitration. [Doc. 231].
On January 20, 2022, Bermudian Arbitrator Delroy Duncan entered his decision in
favor of the Defendants. [Doc. 254 Ex. 3]. Although the arbitral decision was entitled
Award

ruling on the issue of attorney fees and costs. [Id.]. On January 22,

2022, Plaintiffs were served the Final Award. [Doc. 244 at 1 n.2].
Thereafter, Plaintiffs discovered an undisclosed lawsuit in which arbitration
counsel for the Nordstrom Defendants, Keith Robinson and Sam Stevens, were simultaneously
pursuing an $18,000,000 claim against

Bermuda law firm

. [Doc. 248 at 1]. Plaintiffs also discovered that Katie Tornari, Vice-Chair of the
Chartered Institute of Arbitrators, Bermuda Branch
Duncan --

-

-- the entity which appointed Mr.

the Robinson/Stevens lawsuit. [Id. at 2]. When

requested, Mr. Duncan allegedly failed to provide information regarding the Robinson/Stevens
lawsuit and the resulting potential conflict of interest. [Doc. 257 at 16]. Plaintiffs then filed a
Notice of Arbitrator Challenge with Mr. Duncan pursuant to the governing procedural rules.1
[Doc. 248 at 2; Id. Ex. 2]. On April 19, 2022, Mr. Duncan rejected the challenge, and refused to
withdraw from the proceedings. [Id. Ex. 4].

1

Client Service Agreement, the United Nations Commission on
Arbitration Rules
arbitration proceedings herein. [Doc. 68 Ex. 3 at 6 ¶ 13]. Article 13(4) of the UNCITRAL
Arbitration Rules provides, [] . . . the challenged arbitrator does not withdraw, the party making
the challenge . . . [may,] within 30 days from the date of the notice of challenge, . . . seek a decision
Id.
3

On May 4, 2022, Plaintiffs appealed
257 at 6]. On September 21, 2022, the CIA-BB denied
Mr. Duncan

to the CIA-BB. [Doc.
. [Doc. 250].2 It concluded

[un]likely to give rise to justifiable doubts as to

counsel would act
inappropriately. [Id. at 4].
On April 21, 2022, Plaintiffs filed a Motion to Set Aside Final Arbitration Award
[Docs. 243, 244]. On January 17, 2023, the Court denied
Arbitration Award, finding (1) no final arbitration award had been entered inasmuch as the
Arbitrator had not yet resolved the issue of attorney fees and costs, and (2)

appeal to the

CIA-BB was yet pending. [Doc. 249]. On May 19, 2023, Defendants advised that the Arbitrator
entered his decision awarding Defendants $978,657.47 in attorney fees and costs (hereinafter, the
, $250,354.00 of which was designated Share of [A]
[Doc. 251].
On May 23, 2023, the case closed effective June 5, 2023, unless the parties earlier
showed cause in opposition. [Doc. 252]. On June 2, 2023, Defendants jointly moved to reinstate
the case to confirm, recognize, and enforce the Final and Costs Awards
. [Docs. 253, 254].

2

The CIA-BB adjudicated the appeal via a September 21, 2022, letter sent by electronicmail. The adjudication was not filed herein until January 18, 2023. [Doc. 250].
4

II.
A.

The Stay
This action arises under the United Nations Convention on the Recognition and

Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517
. The New York Convention
the recognition and enforcement of commercial arbitration agreements in international
Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974). The United States
acceded to the New York Convention on September 30, 1970, see 21 U.S.T. 2517, and Congress
that same year enacted the implementing statute, namely, Chapter Two of the Federal Arbitration
Act ( FAA ). 9 U.S.C. §§ 201 08.
Inasmuch as

CIA-BB has been fully adjudicated, the

Arbitrator has rendered a decision on the award of attorney fees and costs, and a final arbitral
award has been entered,

joint motions to reinstate this case to the active docket and

confirm the Final Arbitration Award are ripe for adjudication. See 9 U.S.C. § 207
years after an arbitral award falling under the [New York] Convention is made, any party to the
arbitration may apply to any court having jurisdiction under this chapter for an order confirming
the awa
Accordingly, the Court LIFTS the stay, and REINSTATES this case to the active
docket.
B.

Enforcement of Final Arbitration Award
Section 203 of the FAA provides district courts with original jurisdiction over

5

[New York]

9 U.S.C. § 203. The New York Convention

than the State
awards not considered as domestic awards in the State where their recognition and enforcement
21 U.S.T. at 2519, art. I(1); see also 9 U.S.C. § 202 (

any parties, unless both
[neither] property located abroad, [nor] envisages performance or enforcement abroad, [n]or has
). An arbitral award is

in

the location of the

of the U.S. L.

. & Inv.-State Arb. §§ 1.1(dd), (oo), cmt. dd (Am. L. Inst. 2023).
The parties agreed arbitration would occur in Bermuda. Additionally, they agreed

to proceed with a single arbitrator appointed by the Appointment Committee of the CIA-BB. They
additionally concurred that the Bermuda International Conciliation and Arbitration Act 1993 and
the UNCITRAL Arbitration Rules presently in force would govern the proceedings. [Doc. 68 Ex.
3 at 6 ¶ 13]. Defendants now seek enforcement of the arbitral award in this District following the
Bermuda proceedings. The instant action is thus covered under the New York Convention and
Chapter 2 of the FAA.
Under the New York Convention, the process of reducing a foreign arbitral award
to a

21 U.S.T. at 2517 20, arts. III, IV,
enforcement

6

reduction of a foreign arbitral award to a judgment. Restatement (Third) of the U.S. L.
Com. & Inv.-State Arb. §§ 1.1(nn), (m), cmt. m (Am. L. Inst 2023). Chapter 2 of the FAA
implements this scheme through Section 207,

ithin three years after an arbitral

award falling under the Convention is made, any party to the arbitration may apply to any court
having jurisdiction under this chapter for an order confirming the award as against any other party
to th

.
Federal courts generally divide arbitration actions subject to the New York

Convention

-

considering an action or motion to refer the partie

when a district court is
;

-

after an arbitration award has been made and the court is
considering whether to recognize and enforce [that]

Aggarao v. MOL Ship Mgmt. Co.,

Ltd., 675 F.3d 355, 372 (4th Cir. 2012) (internal quotation marks omitted) (quoting Lindo v. NCL
(Bahamas), Ltd., 652 F.2d 1257, 1277 80 (11th Cir. 2011)); see also 9 U.S.C. § 206 (actions
compelling arbitration); 9 U.S.C. § 207 (actions to confirm an arbitration award). Based upon the
foregoing discussion, this matter has progressed to the award-enforcement stage.
As noted, the New York Convention contemplates an arbitral award may be entered
in one country but confirmed in another. 21 U.S.T. at 2517, 2520, arts. I, V. Courts refer to these
countries, respectively, as having primary and secondary jurisdiction. See, e.g., Compania de
Inversiones Mercantiles S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V., 58 F.4th 429, 445
(10th Cir. 2022); Esso Expl. & Prod. Nigeria Ltd. v. Nigerian Nat l Petroleum Corp., 40 F.4th 56,
62 (2d Cir. 2022); Thai-Lao Lignite (Thailand) Co. v. Gov t of Lao People s Dem. Rep., 864 F.3d
172, 176 (2d Cir. 2017); TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 935 (D.C. Cir.

7

2007); Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d
274, 287 (5th Cir. 2004).
The New York Convention contemplates that a country with primary jurisdiction
will be free to set aside or modify an award in accordance with its domestic arbitral law and its
full

Yusuf Ahmed Alghanim & Sons v. Toys
, 126 F.3d 15, 23 (2d Cir. 1997) (citing 21 U.S.T. at 2520, art. V(1)(e) (the award may

which, that award was

). Bermuda is the primary jurisdiction inasmuch as the parties agreed

to arbitrate there. [See Doc. 68 Ex. 3 at 6 ¶ 13].
All other signatory states have

and may refuse to enforce

the award only on the grounds explicitly set forth in Article V of the New York Convention. CBF
Indústria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58, 71 (2d Cir. 2017) (citing Yusuf Ahmed
Alghanim & Sons

when an

action for enforcement is brought in a foreign state, the state may refuse to enforce the award only
see also 21
U.S.T. at 2520,

Recognition and enforcement of an arbitral award may also be

refused if the competent authority in the country where recognition and enforcement is sought
finds that . . . the recognition or enforcement of the award would be contrary to the public policy
of that country. ; 9
grounds for refusal or deferral of recognition or enforcement of the award specified in the [New
York] Convention. .

8

The Court here exercises secondary jurisdiction with respect to the Bermudian
arbitral award. Confirmation may thus only be denied if one of the seven grounds for Article V
refusal applies. The seven grounds are:
[1.] The parties to the agreement . . . were, under the law applicable to them, under
some incapacity, or the said agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon, under the law of the
country where the award was made; or
[2.] The party against whom the award is invoked was not given proper notice of
the appointment of the arbitrator or of the arbitration proceedings or was otherwise
unable to present his case; or
[3.] The award deals with a difference not contemplated by or not falling within the
terms of the submission to arbitration, or it contains decisions on matters beyond
the scope of the submission to arbitration, provided that, if the decisions on matters
submitted to arbitration can be separated from those not so submitted, that part of
the award which contains decisions on matters submitted to arbitration may be
recognized and enforced; or
[4.] The composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or, failing such agreement, was not
in accordance with the law of the country where the arbitration took place; or
[5.] The award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law of
which, that award was made[; or]
...
[6.] The subject matter of the difference is not capable of settlement by arbitration
under the law of that country; or
[7.] The recognition or enforcement of the award would be contrary to the public
policy of that country.
21 U.S.T. at 2520, art. V; see Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 638 (1985); AgAO Techsnabexport v. Globe Nuclear Servs. & Supply GNSS, Ltd., 404 F.
App x 793, 797 (4th Cir. 2010).
Plaintiffs rely solely upon ground seven, contending the Court should not recognize

9

and enforce the Final Arbitration Award
conflict of interest violates public policy.3 [Doc. 257 at 8 15].
It bears noting at the outset how narrow the public-policy exception is. Multiple
forum state

TermoRio, 487 F.3d at 938 (internal

quotation marks omitted). The United States Court of Appeals for the Fifth Circuit approvingly
The general pro-enforcement bias informing the convention
. . . points to a narrow reading of the public policy defense.

Karaha Bodas, 364 F.3d at 306 (5th

Cir. 2004) (quoting Parsons & Whittemore Overseas Co., Inc. v. Societe Generale de L Industrie
du Papier, 508 F.2d 969, 974, 976 (2d Cir. 1974)); see also id. ( Erroneous legal reasoning or
misapplication of law is generally not a violation of public policy within the meaning of the New
York Convention. . Defendants nevertheless assert Plaintiffs waived any challenge to disclosure
or partiality by the arbitrator in failing to appeal the CIA-

decision to the Bermuda Supreme

Court. [Doc. 260 at 4 5].
The Bermuda International Conciliation and Arbitration Act 1993

Act

adopts as law the
. The 1993 Act restates Bermuda s position on the recognition and enforcement of foreign
3

To the extent Plaintiffs seek vacatur of the Final Arbitration Award, see [Doc. 257 at 11,
15], a party seeking to avoid enforcement of a foreign arbitration award subject to the New York
Convention is limited to the seven defenses outlined in Article V. See 21 U.S.T. at 2520, art. V
( [r]ecognition and enforcement of the award may be refused, at the request of the party against
whom it is invoked, only if the party furnishes to the competent authority where the recognition
The New
York Convention regulates only two types of proceedings: (1) for an order confirming an
arbitration award (9 U.S.C. § 207), and (2) for an order compelling arbitration pursuant to an
arbitration agreement (9 U.S.C. § 206). It contains no provision concerning vacatur actions.
Accordingly, there is nothing within the applicable statutory framework that would permit the
Court to vacate the Final Arbitration Award.
10

arbitral awards under the New York Convention. See 1993 Act §
the UNCITRAL Model Law on International Commercial Arbitration adopted by the United
Nations Commission on International Trade Law on 21 June 1985

Id. § 23

he Model Law

has the force of law in Bermuda. . The 1993 Act appends the Model Law in Schedule 2.
Article 12(2) of the Model Law provides as follows respecting the challenge to an
arbitrator:
An arbitrator may be challenged only if circumstances exist that give rise to
justifiable doubts as to his impartiality or independence, or if he does not possess
qualifications agreed to by the parties. A party may challenge an arbitrator
appointed by him, or in whose appointment he has participated, only for reasons of
which he becomes aware after the appointment has been made.
Model Law art. 12(2). Plaintiffs appear to have been aware of, and complied with, this provision.
They appear to have then proceeded in accordance with Article 13(2) of the Model Law which
governed their type of challenge:
Failing such agreement, a party intends to challenge an arbitrator shall, within
fifteen days after becoming aware of the constitution of the arbitral tribunal or after
becoming aware of any circumstance referred to in article 12(2), send a written
statement of the reasons for the challenge to the arbitral tribunal. Unless the
challenged arbitrator withdraws from his office or the other party agrees to the
challenge, the arbitral tribunal shall decide on the challenge.
Id. 13(2) (emphasis added).

point, however, Plaintiffs inexplicably appear -- perhaps for strategic or other insufficient
reasons -- to have defaulted on
the CIA-

seeking review of

decision:

(3) If a challenge under . . . the procedure of paragraph (2) . . . is not successful, the
challenging party may request, within thirty days after having received notice of
the decision rejecting the challenge, the court or other authority specified in article
6 to decide on the challenge, which decision shall be subject to no appeal . . . .

11

Id. 13(3) (emphasis added).4 And that deviation -- under no less authority than Article 4 of the
Model Law -- is fatal:
A party who knows that any provision of this Law from which the parties may
derogate . . . has not been complied with and yet proceeds with the arbitration
without stating his objection to such non-compliance without undue delay or, if a
time-limit is provided therefor, within such period of time, shall be deemed to have
waived his right to object.
Model Law art. 4 (emphasis added); Jay E. Grenig, International Commercial Arbitration § 9:14

(citing ICDR Arbitration Rules art. 25; ICC Rules of Arbitration art. 33;
UNCITRAL Arbitration Rules art. 30; Model Law art. 4). Moreover, on June 8, 2022, the CIABB notified the parties of their right to appeal its ultimate decision on

challenge to Mr.

Duncan by applying to the Bermuda Supreme Court. [Doc. 260 at 5]. They neglected to act within
the prescribed 30-day period.
It is thus now difficult for Plaintiffs to plausibly assert a public-policy challenge
when they thought so little of the matter that they defaulted on raising it with the ultimate
Bermudian adjudicator. Frankly, the choice smacks of gamesmanship, namely, veering off from
Bermuda midstream -- and the impending finality of the Bermuda

-- after

having lost the challenge at the two earlier levels of review. Irrespective of any such motivation,
however,

unquestionably forecloses their public policy defense.
If not foreclosed, Plaintiffs have conclusively failed to offer proof of -- much less

prejudice resulting from --

4

. Frankly, the putative conflict of

Section 25(a)(1) of the 1993 Act

or the purposes of Article[]. .
. 13(3) . . . of the Model Law, the [Bermuda] Supreme Court and there is no right of appeal from
a decision of that court
Id.
12

interest cuts in multiple directions under the circumstances. The Arbitrator could have been
motivated by (1) a desire to simply bring justice, (2) an animus toward the two lawyers allegedly
adverse to him in pending litigation, or (3) a desire to curry the favor of those same two lawyers.
Given how narrowly the exception is construed, these alternatives -- whether in whole, part, or
mixed -- do not a public-policy challenge make.
III.
Based upon the foregoing, the Court GRANTS Defendants Joint Motion to
Confirm, Recognize, and Enforce Arbitration Awards [Doc. 254].
The Clerk is DIRECTED to send a copy of this written opinion and order to
counsel of record and to any unrepresented party.
ENTER:

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March 18, 2024