United States District Court, D. Hawaii
THE QUEEN'S MEDICAL CENTER, A Hawaii Non-Profit Corporation, et al., Petitioner,
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, a Connecticut corporation, Respondent.
ORDER (1) GRANTING PETITION TO COMPEL ARBITRATION
UNDER THE FEDERAL ARBITRATION ACT, ECF NO. 1; AND (2)
GRANTING MOTION TO STRIKE JURY DEMAND, ECF NO. 48
Michael Seabright Chief United States District Judge
February 10, 2017, Petitioner The Queen's Medical Center
(“Queens”) and its insurance carrier, Travelers
Casualty and Surety Company of America
(“Travelers”), entered into a hand-written
one-page agreement to arbitrate an insurance coverage dispute
before a panel of three arbitrators. Travelers has refused to
move forward with the arbitration, claiming that the
arbitrator selected by Queens has a disqualifying conflict.
Now before the court is Queens' Petition to Compel
Arbitration Under the Federal Arbitration Act
(“Petition to Compel”), ECF No. 1, and
Queen's Motion to Strike Jury Demand, ECF No. 48. For the
reasons discussed below, the court GRANTS the Petition to
Compel and the Motion to Strike Jury Demand.
history of the litigation underlying this coverage dispute is
long and complex. Because the parties are aware of this
history, as well as the coverage dispute, the court sets
forth only those facts necessary to provide general
background and context to this Order.
early 2012, Pacific Radiation Oncology, LLC, along with
physicians affiliated with Pacific Radiation Oncology
(collectively, “PRO”) brought the underlying suit
against Queens in state court (later removed to federal
court) making various claims relating to Queens'
radiation oncology department. See Civ. No. 12-00064
LEK-KSC, ECF No. 1. In 2014, Queens filed a counterclaim
against PRO. Id., ECF No. 175. Travelers defended
Queens under a reservation of rights. Pl.'s Ex. B, ECF
February 7, 2017, Magistrate Judge Kevin S.C. Chang directed
Travelers to send a representative with full settlement
authority to a February 10, 2017 settlement conference. Civ.
No. 12-00064, ECF No. 878. Travelers complied, and sent John
Godbout, Travelers' Managing Director and Counsel.
Godbout Decl. ¶ 5, ECF No. 21-1.
February 10, 2017, Queens and Travelers agreed on a process
to handle their coverage dispute. Travelers agreed to
contribute $1, 000, 000 as a portion of the overall
settlement package between Queens and PRO, and Queens
reserved “its right to pursue its claims as a
policyholder against Travelers.” Pl.'s Ex. A, ECF
No. 1-3. In order to resolve that coverage dispute, Queens
and Travelers agreed to “(1) discuss/mediate the
disputed issues regarding Queens' rights under the policy
for 45 days and, if no agreement can be reached, (2)
arbitrate their disputes in Hawaii on an expedited basis
before a panel of three arbitrators with a decision deadline
of May 31, 2017.” Id.
mediation failed, the parties agreed each would select one
arbitrator, and those two arbitrators would then select the
third. Queens selected Alan Van Etten and Travelers selected
Michael Tanoue. After Van Etten provided his required
disclosures, Travelers objected on three grounds: 1) in the
underlying litigation, Van Etten acted as counsel for PRO in
obtaining insurance coverage in connection with Queen's
counterclaim against PRO; 2) Van Etten previously represented
clients adverse to Travelers in coverage matters; and 3) Van
Etten has used Queens' health services. See ECF
Nos. 1-11; 16-1; 21-3. As a result, the arbitration has
stalled - Queens has named Van Etten to serve as an
arbitrator, but Travelers refuses to proceed with Van Etten.
filed its Petition to Compel Arbitration on July 25, 2017.
ECF No. 1. Travelers filed an Opposition to the Motion to
Compel on September 11, 2017, ECF No. 21, and Queens filed
its Reply on October 10, 2017, ECF No. 31.After further
settlement discussions failed, a hearing was held on April 9,
STANDARD OF REVIEW
limited exceptions, the Federal Arbitration Act (FAA) governs
the enforceability of arbitration agreements in contracts
involving interstate commerce.” Kramer v. Toyota
Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013). The
Act's interstate commerce language is read broadly, to
extend to the full reach of Congress' power under the
Commerce Clause. Allied-Bruce Terminix Companies, Inc. v.
Dobson, 513 U.S. 265, 273-77 (1995). Thus, if the
interstate commerce requirement is met, the FAA applies to
the arbitration agreement. Belnap v. Iasis
Healthcare, 844 F.3d 1272, 1279 (10th Cir. 2017).
arbitration agreements under the FAA “shall be valid,
irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2; see also Kramer,
705 F.3d at 1126 (“With limited exceptions, the [FAA]
governs the enforceability of arbitration agreements in
contracts involving interstate commerce.”). When an
agreement falls within the FAA, a “strong default
presumption is that the FAA, not state law, supplies the
rules for arbitration.” Sovak v. Chugai Pharm.
Co., 280 F.3d 1266, 1269 (9th Cir. 2002), opinion
amended on other grounds, 289 F.3d 615 (9th Cir. 2002)
(citing Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d
1205, 1213 (9th Cir. 1998)) (other citation omitted).
“To overcome that presumption, parties to an
arbitration agreement must evidence a ‘clear
intent' to incorporate state law rules for
arbitration.” Fid. Fed. Bank, FSB v. Durga Ma
Corp., 386 F.3d 1306, 1311 (9th Cir. 2004); Johnson
v. Gruma Corp., 614 F.3d 1062, 1066 (9th Cir. 2010).
the FAA, “any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration, whether
the problem at hand is the construction of the contract
language itself or an allegation of waiver, delay, or a like
defense to arbitrability.” Moses ...