Savers Property and Casualty Insurance Co. v. National Union Fire Insurance Co.

National Union Fire Insurance Company (National Union) (defendant) had a reinsurance contract with Savers Property and Casual Insurance Company and affiliated companies (collectively, Meadowbrook) (plaintiffs). The contract contained an arbitration clause that provided that disputes would be decided by a panel of three arbitrators. Meadowbrook initiated arbitration after a dispute arose over National Union’s billing practices. Meadowbrook and National Union designated their respective arbitrators, and the two party-designated arbitrators selected a third neutral arbitrator, called an umpire. The panel issued pre-hearing scheduling orders directing that ex parte communications with panel members had to stop once the parties’ initial briefs had been filed. After the hearing was held, the panel granted an interim award in favor of National Union, finding that Meadowbrook was liable, but the panel did not issue a final award on the amount of damages. The parties were directed to submit additional documentation so that the panel could calculate the final damages owed to National Union. Immediately after the interim award, National Union had ex parte communications with its chosen arbitrator. Meadowbrook submitted papers to the panel regarding damages, but the panel determined that Meadowbrook’s submission was insufficient and instructed Meadowbrook to resubmit proper documentation or else the panel would award all of the damages that National Union claimed. Meadowbrook filed suit in state court, seeking vacatur of the interim award on the grounds that National Union’s ex parte communications were improper, that the panel had exceeded its authority under the arbitration clause, and that National Union’s arbitrator was evidently partial. At the same time, Meadowbrook motioned the panel to reconsider its interim award to National Union and stay the arbitration. The panel denied those motions. Meadowbrook then motioned the state court to stay the arbitration before a final award was issued. The case was removed to federal district court. The district court determined that it could review the arbitration because Meadowbrook was essentially making a breach-of-contract claim. The court granted Meadowbrook’s motion and enjoined the panel from issuing any further orders without the court’s approval. National Union appealed.