A U.S. District Court for the Southern District of New York recently enjoined Advanced Micro Devices (AMD), from proceeding with litigation in California against National Union Fire Insurance Company (NUFIC), related to a dispute over premiums under workers compensation insurance policies. The New York court further required the parties to proceed in arbitration in New York, even though the relevant arbitration agreements were contained within side agreements (the “indemnity and payment agreements”), and not in the relevant insurance policies.
In opposing NUFIC’s request to require AMD to proceed with arbitration, AMD argued that the indemnity and payment agreements unenforceable because they were unauthenticated side agreements that had not been filed with California’s insurance regulators. The court rejected AMD’s argument that the indemnity agreements were not authentic. The court also found that the dispute over the legitimacy of the indemnity and payment agreements would be addressed in arbitration, rather than by the courts. The court further determined that since one iteration of the applicable arbitration clauses broadly applied to “disputes arising out of or relating to the Agreements,” the arbitration could include the premium dispute at issue here.
Finally, the court considered whether it should defer to the first-filed lawsuit in California (it was filed three days before the New York action to enforce arbitration). The court determined that even though the California action was first in time, the dispute at hand was clearly subject to arbitration, and the New York court was “uncertain” that the California court had the “power” to compel the arbitration. Therefore, the court ruled that the arbitration should proceed in New York, and further ruled that a preliminary injunction enjoining the California proceedings was warranted. National Union Fire Insurance Co. v. Advanced Micro Devices, Inc., Case No. 1:16-cv-05699 (USDC S.D.N.Y. Aug. 4, 2016).