APPEAL
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MAINE [Hon. D. Brock Hornby, U.S. District Judge]
Melissa A. Murphy-Petros, with whom Christopher P. Flanagan
and Wilson Elser Moskowitz Edelman & Dicker LLP were on
brief, for appellants.
David
W. Bertoni, with whom Michael E. Carey and Brann &
Isaacson were on brief, for appellee.
Before
Torruella, Thompson, and Barron, Circuit Judges.
TORRUELLA, Circuit Judge.
Defendants-Appellants
Applied Risk Services, Inc. ("ARS"), Applied
Underwriters, Inc. ("AU"), and Applied Underwriters
Captive Risk Assurance Co., Inc. ("AUCRA")
(collectively, "Applied"), challenge the district
court's order denying their motion to vacate an
arbitrator's decision. Because the arbitrator did not
manifestly disregard the law and did not exceed his powers,
we affirm.
I.
Background
Plaintiff-Appellee,
Mountain Valley Property, Inc. ("MVP"), purchased
from AU a comprehensive insurance package known as
SolutionOne® (the "Program") that integrated
multiple lines of insurance, including workers'
compensation insurance and employment practices liability
insurance, while also offering certain payroll and tax
services and profit sharing.
As part
of the Program, on December 23, 2010, MVP entered into a
three-year Reinsurance Participation Agreement
("RPA") with AUCRA. The RPA contained a mandatory
arbitration clause, as well as a Nebraska choice-of-law
clause.
On
April 17, 2015, MVP filed a complaint in Franklin County
Maine Superior Court, asserting breach of contract and
various tort claims against Applied and seeking, inter
alia, a return of the amount it was improperly charged
from AU. In the complaint, MVP alleged that the Program,
though marketed as a cost- saving insurance alternative, was
overpriced, with Applied imposing on MVP unlawful fees both
in premiums and in amounts claimed to be due under the RPA.
MVP also stated that AU, the entity from which it purchased
the Program, was not even authorized to transact insurance in
Maine. Applied removed the case to the U.S. District Court
for the District of Maine based on diversity jurisdiction and
filed a counterclaim, requesting that MVP pay $13, 556 in
outstanding premiums. In addition, Applied argued that claims
by and against AUCRA, alone, had to be arbitrated in
accordance with the RPA between MVP and AUCRA. MVP contended
that the RPA's arbitration clause was unenforceable.
On
February 25, 2016, over MVP's objection, the district
court referred the claims against AUCRA to arbitration, for a
determination of their arbitrability.
On
April 12, 2016, the arbitrator decided that the case was not
arbitrable and had to be adjudicated in court. The
arbitrator, in a decision captioned "Final Award of
Arbitrator, " stated that whether this case should be
arbitrated turned on the applicability of the
McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015,
[1] and
not on the intent of the contracting parties. If the
McCarran-Ferguson Act applies, the arbitrator reasoned, then
the Nebraska Uniform Arbitration Act, Neb. Rev. Stat.
§§ 25-2601 to 2622 (the "NUAA"),
[2]
reverse-preempts the Federal Arbitration Act, 9 U.S.C.
§§ 1-16 (the "FAA"). The arbitrator
observed that the NUAA bans arbitration of insurance-related
cases such as this one, regardless of the parties' intent
to arbitrate. Thus, the arbitrator continued, if the NUAA
reverse-preempts the FAA, then the present case would not be
arbitrable.
To
determine the applicability of the McCarran-Ferguson Act, the
arbitrator relied on American Bankers Insurance Co.
of Florida v. Inman, which stated:
Under the McCarran-Ferguson Act, a state law reverse preempts
federal law only if: (1) the federal statute does not
specifically relate to the business of insurance; (2) the
state law was enacted for the purpose of regulating the
business of insurance; and (3) the federal ...