Park Avenue Life Insurance Company v. Allianz Life Insurance Company of N. America, No. 19-CV-1089 (JMF), 2019 WL 4688705 (S.D.N.Y. Sept. 25, 2019).
Issue Discussed: Clarification of Arbitration Awards & Filing Arbitration Materials Under Seal
Submitted by Michael Carolan
Date Promulgated: September 25, 2019
Case: Park Avenue Life Insurance Company v. Allianz Life Insurance Company of N. America, No. 19-CV-1089 (JMF), 2019 WL 4688705 (S.D.N.Y. Sept. 25, 2019).
Issue Discussed: Clarification of Arbitration Awards & Filing Arbitration Materials Under Seal
Court: U.S. District Court for the Southern District of New York
Date Decided: September 25, 2019
Issues Decided: (1) Whether a court should remand an arbitration award back to the panel for clarification due to an ambiguity; and (2) whether arbitration materials may be filed under seal.
Submitted by: Michael T. Carolan, Partner, Troutman Sanders LLP
Park Avenue Life Insurance Company (“PALIC”) reinsured certain life insurance policies issued by Allianz Life Insurance Company of North America (“Allianz”). After Allianz entered into an agreement with state regulators to pay death benefits that would be “escheated” to a government entity after a search of the “Death Master File,” a dispute arose and the parties proceeded to a confidential arbitration.
Following the arbitration panel’s issuance of an Award, the parties disagreed with how it applied to claims going forward. Allianz argued the Award obligated PALIC to reimburse both beneficiary claims and escheatment claims. PALIC argued the Award required reimbursement of only beneficiary claims. Thus, both Allianz and PALIC moved to confirm the Award, pressing for its interpretation. Allianz also proposed, in the alternative, that the court remand the Award to the arbitration panel for clarification.
Ultimately, the court found the Award ambiguous and remanded it to the arbitrators for clarification. As the court explained, “when a district court is asked to confirm an ambiguous award — for instance, one that fails to address a contingency that later arises or is susceptible to more than one interpretation — it ‘should instead remand to the arbitrators for clarification.’’ (internal quotation marks and citation omitted). Thus, while the court cautioned that “remand is only appropriate where a true ambiguity exists,” it concluded that remand was “the appropriate course of action” because after reviewing the Award as a whole and the parties’ submissions, the court could not say that the interpretation of either Allianz or PALIC was “definitively correct.”
The court further found that because the ambiguity “goes to the very heart of the dispute,” clarification was the best available remedy.
Finally, the court made clear that on remand “the arbitrators need not limit their clarification to those particular questions” and should “broadly aim” to specify the meaning or effect of the Award, so that a reviewing court will know what it is being asked to enforce.
Separately, the court also denied the parties’ request to maintain under seal virtually every document filed in connection with the confirmation petitions. As the court explained, there is “a presumption of public access’ to judicial documents filed with the court, relevant to the performance of the judicial function and useful in the judicial process. Balancing the considerations for an against access, the court found that “there is no basis to keep any of the documents at issue here under seal.” Although the parties cited the confidentiality agreement for the underlying action as a basis to seal the records, the court dismissed that as sufficient, noting that the confidentiality agreement itself provides that arbitration information may be disclosed in connection with motions to confirm. It also held, however, that even without the carveout the confidentiality agreement “would not suffice on its own” to overcome the presumption of access to judicial documents under the First Amendment.
