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Louisiana Health Service Indemnity Co. v. Gambro A B

July 8, 2011


The opinion of the court was delivered by: Judge Tucker L. Melan§on

Magistrate Judge C. Michael Hill


Before the Court is plaintiffs, Louisiana Health Service Indemnity Company, d/b/a BlueCross BlueShield of Louisiana, HMO of Louisiana, Inc.'s ("BCBSLA") Motion To Vacate Final Partial Class Determination Award Under 9 U.S.C. §§ 10(a)(3) & (a)(4) [Rec. Doc. 60], and defendant, DVA Renal Healthcare, Inc. f/k/a Gambro Healthcare Inc.'s ("Gambro"), Opposition thereto [Rec. Doc. 68]*fn1 . For the following reasons, BCBSLA's motion will denied.

I. Background

BCBSLA filed this action on August 8, 2005 to recover damages for overpayments it allegedly made to Gambro as a result of Gambro's "unlawful conduct." R. 1; ¶3 a-h. On November 29, 2005, Gambro filed a motion to stay this litigation and compel BCBSLA to arbitrate its claims under the contract between Gambro and BCBSLA ("BCBSLA/Gambro Arbitration Agreement"). R. 21. On March 15, 2006, the Court granted Gambro's motion to compel arbitration and administratively terminated this action subject to allowing any party to initiate a motion to reopen the proceedings within thirty (30) days of the arbitrator's decision if deemed necessary. R. 34. BCBSLA filed its class arbitration demand with the American Arbitration Association ("AAA") on October 26, 2006. R. 35, Exh. F. On October 5, 2007, the three member arbitration panel ("the Panel") issued a Clause Construction Award pursuant to Rule 3 of the AAA's Supplementary Rules for Class Arbitrations,*fn2 finding that, although the agreement was silent as to class arbitration, BCBSLA and Gambro had impliedly agreed to class arbitration. R. 35, Exh. K.

On May 9, 2008, BCBSLA moved the Panel to certify the class in arbitration. R. 35-5, Exh. Q, 06/07/10 Letter. In its Motion for Class Certification, BCBSLA alleged that it represented a class composed of approximately 225 class members, each with different arbitration agreements. R. 61, Class Determination Award; R. 61, Exh. 2; R. 68-1, Exh. E, 9/25/09 Class Certification Hrg, 1681:12-14; 1685:2-15, 22-24; 1716:8-25; Exhs. F, G; Exh. I, 08/18/10 Letter referencing Order No. 12. Of the approximately 225 arbitration agreements, three (3) contracts included express waivers of class proceedings and the others were silent as to class arbitration. Id.; R. 35-5, Exh. Q, 06/07/10 Letter.

On April 30, 2010, Gambro filed a Motion to Reconsider the Panel's Clause Construction Award based on the Supreme Court's decision in Stolt-Neilsen S.A. v. Animal Feeds International Corp., 130 S.Ct. 1758 (2010). R. 35-4, Exh. L. The Panel issued its denial of Gambro's Motion to Reconsider on June 7, 2010. See, Exh. I, 08/18/10 Letter referencing Order No. 12. During a telephone conference with the Panel held on July 30, 2010, "both parties asked the [Panel] to proceed to a decision with respect to class certification rather than await a decision by the [District] Court on a possible appeal [of the Clause Construction Award] by Gambro." Id. Thereafter, on September 2, 2010, Gambro filed a motion in this Court to vacate the Panel's October 5, 2007 Clause Construction Award permitting class arbitration. R. 36. The Court denied the motion on December 21, 2010. R. 52.

On February 9, 2011, the Panel denied BCBSLA's Motion for Class Certification in a Partial Final Class Determination Award ("Class Determination Award"). R. 61, Exh. 4. On May 10, 2011, BCBSLA filed the motion before the Court to vacate the Panel's Class Determination Award. R. 60.

II. Standard Of Review

The Federal Arbitration Act ("FAA") provides the means for enforcing arbitral awards, via a judicial decree confirming, vacating, modifying or correcting an award. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008). "Judicial review of an arbitration award is 'exceedingly deferential.' Kergosien v. Ocean Energy, Inc., 390 F.3d 346, 352 (5th Cir.2004). Vacatur is available 'only on very narrow grounds,' Brabham v. A.G. Edwards & Sons Inc., 376 F.3d 377, 380 (5th Cir.2004), and federal courts must defer to the arbitrator's decision when possible. Antwine v. Prudential Bache Sec., Inc., 899 F.2d 410, 413 (5th Cir.1990).An award must be upheld as long as 'it is rationally inferable from the letter or purpose of the underlying agreement.' Nauru Phosphate Royalties, Inc. v. Drago Daic Interests, Inc., 138 F.3d 160, 164-65 (5th Cir.1998)(internal quotation marks omitted). Even 'the failure of an arbitrator to correctly apply the law is not a basis for setting aside an arbitrator's award.' Kergosien, 390 F.3d at 356. 'It is only when the arbitrator strays from interpretation and application of the agreement and effectively dispenses his own brand of industrial justice that his decision may be unenforceable.' Major League Baseball Players Assoc. v. Garvey, 532 U.S. 504, 509 (2001)(quoting Steelworkers v. Enter. Wheel & Car Corp., 363 U.S. 593, 597 (1960) (internal quotation marks omitted)). The party moving to vacate an arbitration award has the burden of proof. The court must resolve any doubts or uncertainties in favor of upholding the award. Brabham v. A.G. Edwards & Sons Inc., 376 F.3d 377, 385, n.9 (5th Cir.2004) (citing Action Indus., Inc. v. U.S. Fid. & Guar. Co., 358 F.3d 337, 343 (5th Cir.2004)). "[R]review under [9 U.S.C.] § 10 focuses on misconduct rather than mistake." AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1752 ( 2011).

III. Analysis

BCBSLA moves the Court to vacate the Panel's denial of its Partial Class Determination Award under the FAA, 9 U.S.C. §§ 10(a)(3) and (a)(4). In Hall Street Associates v. Mattel, Inc., 552 U.S. 576 (2008), the Supreme Court held that the statutory grounds contained in the FAA, sections 10 and 11, are the exclusive means by which an arbitral award may be vacated. Hall Street at 584. Pursuant to Section 10(a) of the FAA, there are only four grounds for which a court can vacate an arbitration award:

(1) [W]here the award was procured by corruption, fraud, or undue means;

(2) [W]here there was evident partiality or corruption in the ...

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