Tuesday, April 7, 2009

The Neverending Story

A decision today from the New York Appellate Division for the First Judicial Department in the saga of Milberg Weiss. The court concludes that claims in arbitration should be consolidated:

The Milberg law firm and some of its former partners are engaged in a dispute concerning, in part, appellants' entitlement to a share in the counsel fees awarded by a federal court in connection with certain litigation. Appellants and the firm have demanded arbitration under Milberg's partnership agreement, but the court declined appellants' petition to consolidate the proceedings. It is well settled that "there is judicial power to order consolidation of arbitration proceedings" Although arbitrations arising under separate agreements are not generally consolidated, the proceedings before us not only arise from the same partnership agreement and involve common issues of law and fact, but there is a possibility that separate arbitrations could result in inconsistent rulings. Under these circumstances, the court improvidently denied consolidation.

The fraudulent inducement claims by Kallas and Clark-Weintraub are clearly subject to arbitration under the firm's partnership agreement; but that agreement makes no mention of timeliness, nor does it expressly incorporate New York law. Questions relating to time limits are generally within the province of the arbitrators. Since they will need to resolve the fraudulent inducement claim by Guglielmo, which Milberg has conceded is arbitrable, and it cannot be said that the claims by Kallas and Clark-Weintraub are not intertwined with the other substantive questions raised by appellants, the court should have left to the arbitrators the issue of timeliness of the fraudulent inducement claims by the remaining appellants. (citations omitted)

(Mike Frisch)


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