Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

The issue before the Fourth Circuit concerned commercial arbitration of insurance disputes in foreign tribunals. Appellant-Cross-Appellee ESAB Group, Inc. contended that South Carolina law "reverse preempts" federal law (namely, a treaty and its implementing legislation) pursuant to the McCarran-Ferguson Act. ESAB Group faced numerous products liability suits arising from alleged personal injuries caused by exposure to welding consumables manufactured by ESAB Group or its predecessors. These suits presently were proceeding in numerous state and federal courts in the United States. ESAB Group requested that its insurers defend and indemnify it in these suits. Several, including Zurich Insurance, PLC (ZIP), refused coverage. As a result, ESAB Group brought suit against its insurers in South Carolina state court. The district court then found that ZIP had the requisite minimum contacts with the forum to permit the exercise of personal jurisdiction and that the exercise of jurisdiction over ZIP was otherwise reasonable. Because it had referred to arbitration all claims providing a basis for subject-matter jurisdiction, the district court declined to exercise supplemental jurisdiction over the remaining claims. ESAB Group timely appealed the district court's exercise of subject-matter jurisdiction. ZIP filed a cross-appeal, challenging the district court’s exercise of personal jurisdiction and its authority to remand the nonarbitrable claims to state court. Upon review, the Fourth Circuit affirmed as to the district court’s exercise of subject-matter jurisdiction, and found no error in the district court's order compelling arbitration. Likewise, the Court rejected ZIP's arguments that the district court erred in exercising personal jurisdiction over it and in remanding nonarbitrable claims to state court. View "ESAB Group, Incorporated v. Zurich Insurance PLC" on Justia Law

Plaintiffs-Appellees Wheeling Hospital and Belmont Hospital along with other medical providers, filed this putative class action in West Virginia state court against the Ohio Valley Health Services and Education Corporation, Ohio Valley Medical Center and East Ohio Regional Hospital, (collectively, the "OV Health System Parties"), and Appellant The Health Plan of the Upper Ohio Valley, Inc. The plaintiffs sued in order to collect amounts allegedly owed to them by employee benefit plans established by the OV Health System Parties, for which The Health Plan acted as administrator. After pretrial activity, The Health Plan moved to dismiss the claims brought against it by the hospital plaintiffs pursuant to an arbitration agreement between the parties. The district court denied this motion, holding that The Health Plan had defaulted on its right to arbitrate. The Health Plan appealed. Upon review, the Fourth Circuit concluded that the district court erred in its determination that The Health Plan defaulted on its right to arbitrate. The Court therefore reversed the district court’s denial of The Health Plan’s motion to dismiss. View "Wheeling Hospital, Inc. v. Health Plan of the Upper Ohio Valley, Inc. " on Justia Law

Plaintiff-Appellant Waterford Investment Services, Inc. appealed the district court’s ruling that it must arbitrate certain claims that a group of investors brought before the Financial Industry Regulatory Authority (FINRA). The investors alleged in their FINRA claims that they received bad advice from their financial advisor, George Gilbert. The investors named Gilbert, his current investment firm, Waterford, and his prior firm, Community Bankers Securities, LLC (CBS), among others as parties to the arbitration. In response, Waterford filed this suit asking a federal district court to enjoin the arbitration proceedings and enter a declaratory judgment that Waterford need not arbitrate the claims. The district court, adopting the recommendations of a magistrate judge, concluded that because Gilbert was an "associated person" of Waterford during the events in question, Waterford must arbitrate the investors' claims. Upon review of the matter, the Fourth Circuit affirmed, finding that Gilbert was inextricably an "associated person" with Waterford, and that the district court did not abuse its discretion in adopting the magistrate judge's opinion. View "Waterford Investment Services v. Bosco" on Justia Law

Former Shareholders of Tarcon filed petitions in the Tax Court contesting the Commissioner's notices of transferee liability. The Tax Court ruled in favor of the Former Shareholders, applying Commissioner v. Stern, holding that the Commissioner could only collect from the Former Shareholders if, under North Carolina law, a Tarcon creditor could recover payments of Tarcon's debts from the Former Shareholders. The court concluded that the Tax Court properly identified and applied the controlling legal framework as set forth in Stern and it did not commit clear error in its factual findings. Accordingly, the court affirmed the judgment in favor of the Former Shareholders. View "Starnes v. Commissioner, IRS; Stroupe v. Commissioner, IRS; Naples v. Commissioner, IRS; Morelli, Sr. v. Commissioner, IRS" on Justia Law

Appellant, a former shareholder in Wachovia, sought to recover personally for the decline in value of his shares of Wachovia stock during the recent financial crisis. The district court dismissed the suit, concluding that appellant's complaint stated a claim derivative of injury to the corporation and that he was therefore barred from bringing a direct or individual cause of action against defendants. The court held that because appellant's varied attempts to recast his derivative claim as individual were unavailing, the judgment of the district court was affirmed. View "Rivers, Jr. v. Wachovia Corp., et al." on Justia Law

The under seal appellant ("Company 1"), a foreign company, appealed the district court's denial of its motion to quash the government's grand-jury subpoenas served on the under seal intervenor ("Company 2") where the subpoenas sought documents that Company 1 delivered to Company 2 in response to discovery requests that arose during the course of civil litigation between the two companies in district court. The court affirmed the denial of Company 1's motion to quash the government's subpoenas and held that the district court did not abuse its discretion in determining that the subpoenas passed muster under Rule 17 of the Federal Rules of Criminal Procedure and Company 1 provided no basis for the court to craft a new procedural rule in support of its position. The court also held that there were no clearly erroneous rulings by the district court in resolving the factual issue regarding the nature of Company 2's interaction with the government and Company 1 failed to show that the issue merited any further investigation or an evidentiary hearing. The court rejected Company 1's remaining arguments and affirmed the district court's denial of Company 1's motion to quash.

Plaintiffs, a West Virginia coal sales company, sued Mountain State Carbon, LLC ("Mountain State")and its member companies, on of which was Severstal Wheeling, Inc. ("Severstal Wheeling") in federal district court alleging that Mountain State wrongfully refused to accept coal deliveries in breach of a coal supply agreement with plaintiffs. At issue was whether the district court erred by determining that Severstal Wheeling's principal place of business was in Wheeling, West Virginia for diversity jurisdiction purposes under Hertz Corp. v Friend. The court held that the district court erred by determining that Severstal Wheeling's principal place of business was in Wheeling, West Virginia where the touchstone for determining a corporation's principal place of business for diversity purposes was "the place where the corporation's high level officers direct, control, and coordinate the corporation's activities." Therefore, Dearborn, Michigan was Severstal Wheeling's principal place of business where seven of its eight officers, including its chief executive officer, chief operating officer, and chief financial officer, set corporate policies and oversaw significant corporate decisions out of Dearborn, Michigan.