Week 12 (2020)
Week of March 30 through April 3, 2020
Ashford v. PricewaterhouseCoopers LLP (Quattlebaum 4/3/2020): The Fourth Circuit held that arbitration will be required to settle Title VII claims arising from an employment agreement when there is a contractual provision therein that can be reasonably read to require arbitration. The court reversed the decision by the District Court for the District of South Carolina (Currie) to deny a motion to compel arbitration and remanded the case to the district court with instructions to dismiss the complaint and compel arbitration. Full Opinion
United States v. Fall (Quattlebaum 4/3/2020): The Fourth Circuit held that although the realities of modern technological advances require us to exercise care when they implicate privacy interests, they do not prevent us from applying well-settled principles of criminal law to those realities. The court declined to determine the outer boundaries of the private search doctrine in the context of electronic searches. The court affirmed the conviction by the District Court for the Eastern District of Virginia (Morgan). Full Opinion
United States v. McMiller (Keenan 3/30/2020): The Fourth Circuit held that a district court may consider a defendant’s future earnings potential when determining their ability to pay a special assessment; however, district courts have a duty to explain the special conditions of supervised release that they impose, and failure to do so is reversible plain error because it deprives the defendant of meaningful appellate review and effects their substantial rights. This duty cannot be satisfied or circumvented through the adoption of a standing order purporting to impose special conditions of supervised release across broad categories of cases or defendants, although there may be instances when such a special condition is so unobtrusive or self-evident that remand will be unnecessary. The decision of the District Court for the Western District of North Carolina (Conrad) was affirmed with regard to the sentence and special assessment, reversed with regard to the special conditions of release, and remanded to the district court for further explanation of the terms of release. Full Opinion
Servotronics, Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020)
- Majority Opinion: Niemeyer
- Argued: December 10, 2019
- Decided: March 30, 2020
The Fourth Circuit held that under 28 U.S.C. § 1782, which provides that a U.S. District Court may provide assistance in providing testimony for a proceeding before “a foreign or international tribunal,” that a private arbitration in the United Kingdom between two companies in the United Kingdom would qualify as such a tribunal. The court reasoned that the term tribunal should be read broadly to include private actions that are contractually mandated, that such a reading would not onerously expand the scope of the statute, and that U.S. District Courts should assist in these proceedings in compliance with Congressional intent and mandate.
Servotronics is appealing as part of an indemnification action that, under long term agreement with Rolls-Royce, is a dispute they are unable to resolve and must be decided through arbitration in Birmingham, England. Servotronics supplied a valve to Rolls-Royce for use in an engine that was installed on a Boeing 787 Dreamliner aircraft. Suring testing, a metal wafer dislodged from the valve and caused a fire, substantially damaging the aircraft. Rolls-Royce and Boeing (jointly intervening in this case and referred to simply as “Boeing”) settled Boeings claim for damages, and Rolls-Royce is seeking to indemnify Servotronics for $12.8M. Servotronics rejected the demand, alleging lack of fault and an unreasonable amount. To support its defense in the UK based arbitration, Servotronics filed an ex-parte application in the district court under § 1782 to authorize subpoenas on three current or former Boeing employees in South Carolina. The district court denied the application, reasoning that private arbitral bodies are not tribunals under § 1782.
The current version of the statute was amended in 1964 in order to expand the assistance given to foreign procedures from “any judicial proceeding pending in any foreign court in a foreign country” to “in a proceeding in a foreign or international tribunal.” This signals a Congressional intent to expand the scope of the statute to administrative and quasi-judicial proceedings abroad, which increases international cooperation and encourages the rule of law and a spirit of international comity between foreign countries and the United States. Consequently, holding that an arbitration is a private proceeding and not a tribunal since it is deriving its authority from the agreement between the parties and not the government represents too narrow an understanding, and does not bear weight under the intent of the statute. Not only is it an incorrect presumption under the statute, but it is also too narrow an understanding of arbitration in general. Both in the Unites States and in the United Kingdom the mechanics of compelling arbitration when private agreements require it are endorsed and regulated by the government and supervised by the judicial process, so contrary to Boeing’s arguments, they are a product of “government-conferred authority.” Even if the more restrictive definition of a foreign or international tribunal were applied here, under which a tribunal would only be an entity acting with the authority of the state, the UK arbitral panel resolving this dispute would still meet this definition for the reasons cited above.
There is little danger of the wild expansion of the procedural scope of § 1782(a) that Boeing describes, because contrary to their claims, the statute does not give foreign arbitrations access to our full discovery process; it does not even mention discovery. The statute simply “authorizes a U.S. district court to function in the stead of a foreign tribunal and, on behalf of that tribunal, to take statements and receive testimony and documents or other materials intended “for use” in the proceeding before the tribunal.” In reality, the district court simply functions as an extension of the foreign arbitral panel, mandated by congress, to promote international cooperation as a matter of public policy.
Accordingly, the court reversed and remanded the United States District Court for the District of South Carolina’s decision to deny the application to obtain testimony and remanded it to the District Court for further proceedings on Servotronics’ application.
Miles J. Reynolds