Galli v. PricewaterhouseCoopers LLP Notice/Severance Policy As Amended and…
Galli v. PricewaterhouseCoopers LLP Notice/Severance Policy As Amended and Restated Effective February 1, 2011
- Lorna Schofield
- 1:19-cv-07224
- U.S. District Court · Southern District of New York
- 2
In Galli v. PricewaterhouseCoopers LLP, Judge Schofield ordered supplemental briefing on whether a court or arbitrator should decide a fraudulent-inducement defense to arbitration.
Susan J. Galli and the defendants, who were required to provide supplemental briefing about whether a court or arbitrator should decide the fraudulent-inducement issue.
What happened
In Galli v. PricewaterhouseCoopers LLP, the defendants asked the court to require arbitration of several claims under the Employee Retirement Income Security Act, including claims about benefits, fiduciary duties, and disclosures. Susan J. Galli opposed the request and asserted that she was fraudulently induced to agree to arbitration.
The arbitration agreement says that a court, rather than the arbitrator, must decide disputes about the agreement’s formation, validity, interpretation, scope, and proper parties. The parties cited cases about whether a fraudulent-inducement challenge to a contract generally must be decided by an arbitrator, but neither side fully addressed how those cases apply to this agreement.
Judge Lorna G. Schofield ordered both sides to file letter briefs of no more than three pages by July 15, 2020, addressing that question. The order did not decide the motion to compel arbitration.
The detailed version
- Galli v. PricewaterhouseCoopers LLP Notice/Severance Policy As Amended and… · No. 1:19-cv-07224
- Lorna Schofield
- July 8, 2020
Background
The defendants moved to compel arbitration of Counts I, III, IV, and V. Those counts assert claims under the Employee Retirement Income Security Act concerning review of an ERISA claim, interference with benefits, breach of fiduciary duty, and disclosure violations. Susan J. Galli opposed the motion and asserted fraudulent inducement as a defense.
Issue Identified by the Court
The arbitration agreement provides that the arbitrator lacks authority to decide disputes about jurisdiction or arbitrability, including disputes concerning the agreement’s formation, existence, validity, interpretation, scope, and proper parties. Those questions are reserved for a court with authority to decide them.
The parties’ briefing cited decisions addressing whether a fraudulent-inducement claim or defense concerning a contract as a whole must be decided by an arbitrator, rather than a court. The court observed that neither party fully addressed how that line of cases applies when the arbitration agreement contains language reserving these questions for a court.
Order
Judge Schofield ordered the parties to submit supplemental letter briefing on that issue. Each letter brief could not exceed three pages, and the parties were required to file them by July 15, 2020. The order required additional briefing; it did not rule on the defendants’ motion to compel arbitration or decide the fraudulent-inducement defense.
Note on the Opinion Text
The opinion’s introductory recitals contain dates that appear inconsistent with the July 8, 2020 order: they refer to a December 6, 2020 motion and a January 15, 2020 opposition. This summary does not rely on those dates.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.