Snooze You Lose? Not Necessarily.

In Colon v. R.K. Grace & Company, the First Circuit addressed whether the failure to take an interlocutory appeal of a denial of arbitration decision results in the waiver of the argument. The Court determined that denials of arbitration are immediately appealable under the Federal Arbitration Act. But, nothing in the statute requires an immediate appeal. The Court noted that three circuits (Second, Fifth and Eighth) "have held that the failure to promptly appeal a denial of arbitration may be estoppel foreclose the demanding party’s right to arbitration." The analysis in these circuits depends upon a showing of prejudice. Although the First Circuit did not follow the approach adopted by these circuits, it said it was "sympathetic to the approach" and "it is wise for us to make this clear by dictum to as to give warning to the bar." This is a definitive warning that, given the right set of facts, the Court just may tap the doctrine of estoppel in a future case. Counsel beware, don’t wait to appeal a denial of arbitration. The opinion is also significant because the Court goes out of its way to state that its role is not to cobble together a coherent brief. This is "living proof" that a poorly drafted brief will get you nowhere. Colon v. R.K. Grace & Company, No. 03-1206 (1st Cir. Dec. 22, 2003).

Arbitration Subject To Condition Precedent.

"[W]hether a party to an arbitration agreement that is subject to conditions precedent can, without satisfying those conditions, compel arbitration under the Federal Arbitration Act," is the subject of HIM Portland, LLC v. DeVito Builders. The First Circuit concluded that because the parties intentionally conditioned arbitration on either party’s request for mediation, one party’s failure to request mediation precluded it from compelling arbitration under the FAA. Litigants should be aware of any conditions precedent to arbitration and make sure they satisfy them. HIM Portland, LLC v. DeVito Builders, Inc., No. 02-1955 (1st Cir. Jan. 17, 2003).

According To Judge DiClerico: Casey (and Stenberg) Doesn’t Strike Out

Judge DiClerico’s December 29, 2003 opinion in Planned Parenthood of Northern New England v. Heed has received national attention. The opinion concludes that New Hampshire’s Parental Notification Prior to Abortion Act is unconstitutional for various reasons (lacks required exception to notification requirement to protect minor's health; exception regarding prevention of death to minor too narrow). The opinion also discusses the appropriate standard for evaluating a facial challenge to the validity of a state law regulating abortion. Although the First Circuit has not decided the issue, Judge DiClerico applied the "undue burden" standard of Planned Parenthood of Southeastern Pa. v. Casey, 505 U.S. 833 (1992) and Stenberg v. Carhart, 530 U.S. 914 (2000). This is in accord with the Seventh, Third, Tenth and Ninth Circuits. The Fourth and Fifth Circuits have applied the Salerno standard, "no set of circumstances exists under which [an act] would be valid," United States v. Salerno, 481 U.S. 739 (1987), in assessing the constitutionality of abortion laws. Planned Parenthood of Northern New England v. Heed, Civ. No. 03-491-JD (Dec. 29, 2003).

Lost Cause? Properly Pleading Loss Causation Under "Fraud On The Market" Theory.

In a brief, the District Court, Southern District of New York, concluded that a recent Second Circuit opinion requires that a plaintiff allege something more than mere artificial inflation to successfully plead a "fraud on the market" theory based on loss causation. In other words, a plaintiff must allege artificial inflation of a security and "something that explains the plaintiff’s loss" such as a misstatement or omission. As the opinion notes, the Courts of Appeal are deeply divided on this issue. The Eighth and Ninth circuits hold that allegations of artificial inflation in and of themselves are sufficient. The Third and Eleventh circuits (and now, apparently, the Second) hold otherwise. In re: Initial Public Offering Securities Litigation, No. 21 MC 92(SAS) (S.D.N.Y. Dec. 31, 2003).

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