Reinsurance Battle Ends in Big Quinn Emanuel Win With Impact on Arbitration World
Quinn Emanuel has won a significant dismissal in Manhattan federal court, defeating an effort to disqualify an arbitrator in a case likely to have an impact on the field at large, especially in reinsurance arbitration.
The case spanned state and federal court, two states, and multiple motions. It ultimately turned on a Hold Harmless Agreement in which the parties had undertaken to refrain from any actions against the arbitration panel. The lawsuit was remarkable for naming not just an adversary in the dispute but an arbitrator himself – our client, Jonathan Rosen – as a defendant.
The dismissal lends further support to the principle that reinsurance arbitrators’ distinguished careers and technical expertise are a benefit, not a detriment, to the arbitration world. The ruling protects parties to reinsurance arbitrations that understand the importance of having an experienced arbitrator – Rosen has presided over 380 arbitrations – and choose a party-appointed system for that reason.
The case, Truck Insurance Exchange v. Rosen et al., confirmed the longstanding contractual doctrine that sophisticated parties who form an agreement at arm’s length should be kept to their word – here in the choice of arbitration system (using party arbitrators) and later in hewing to their agreement not to sue an arbitrator.
Quinn Emanuel’s legal charge was led by Global Co-Managing Partner Michael Carlinsky, who is also Head of Complex Litigation and Co-Chair of Insurance Litigation, and partner Jianjian Ye, who specializes in complex commercial litigation.
Torrent of Litigation
The case stemmed from a dispute between the insurer and its reinsurers over payments for asbestos-related liabilities. Truck had agreements with certain reinsurers at Lloyd’s, among others, for reimbursement of payments under its policies, in this case to Kaiser Cement. The agreements stipulated arbitration to resolve conflicts between the parties.
Then the litigation came fast and furious.
Truck sought a declaratory judgment in California state court in 2024 that the reinsurers were required to pay the Kaiser billings. The reinsurers removed the action to California federal court and moved to compel arbitration, which the court granted.
Truck then filed in New York state court against Rosen himself, on the theory that he had breached his fiduciary duties to the insurer. It sought a temporary restraining order or an injunction to prevent him from having ex parte communications with the reinsurers.
Unusual Legal Strategy
It was a novel legal strategy, to say the least. Based on our research, arbitration parties overwhelmingly challenge the choice of arbitrator either in the underlying arbitration proceeding or in a lawsuit against the opposing arbitrating party.
After Truck sued in New York state court, the reinsurers who had appointed Rosen moved to intervene, and we began preparing an opposition to the TRO motion immediately, through both briefing and preparation for oral argument. But the reinsurers removed the New York state action to Manhattan federal court before any hearing.
Finally, we moved to dismiss the case, focusing on both federal law (the Federal Arbitration Act) and state contractual and fiduciary duty law, leaning into the Hold Harmless provision.
On July 17 U.S. District Judge Lewis A. Kaplan, in the Southern District of New York, granted our motion to dismiss and declined Truck’s request to remand the case back to New York state court. Judge Kaplan dismissed the case with prejudice, barring Truck from revising and refiling its suit, because it can’t plead around the Hold Harmless Agreement’s contractual bar.
Importance of Shielding Arbitrators
“The decision protects arbitrators and reinforces that U.S. courts will honor agreements between parties to insulate arbitrators from suit and other collateral attacks,” said Carlinsky, who devised the legal strategy together with Ye and a team of associates including Christine Botvinnik.
The reinsurance world is a small community, and the disputes that flare up within it are complicated and highly technical. Arbitrators assigned to these battles are specifically chosen because they are experienced practitioners themselves.
Rosen has been in the insurance industry for over 40 years, first as an attorney at various companies and then as an arbitrator. He sits on the board of ARIAS U.S., which governs reinsurance arbitration, and the Reinsurance Mediation Institute.
The associates on the QE team also included Grant Strudwick, Shen Peng, and Albert Zhu.