Manhattan Cryobank Inc. v. Hensley

Background

Megan Hensley and her partner purchased sperm from Manhattan Cryobank, Inc. The purchase agreement required arbitration of claims or disputes relating to the agreement. Manhattan Cryobank shipped the sperm to a clinic in St. Louis, where Hensley was inseminated.

S.J.E. was born with alpha thalassemia, a rare blood disorder. Before the insemination, Manhattan Cryobank had represented that it had conducted extensive genetic screening and that the donor did not carry the thalassemia trait. Hensley therefore chose not to be tested for the trait. Both Hensley and the donor were carriers.

Hensley began arbitration in 2016 and later submitted a claim as S.J.E.’s representative. In August 2018, the arbitrator awarded Hensley $88,700 on her negligence and malpractice claims. The arbitrator rejected S.J.E.’s negligence and malpractice claims as barred by Missouri law. Manhattan Cryobank then petitioned the court to confirm the arbitration award. Hensley opposed confirmation of the part concerning S.J.E.

Legal standard

Under Section 9 of the Federal Arbitration Act, a court generally must confirm an arbitration award unless it is vacated, modified, or corrected under the Act. Review is very limited, and a party seeking vacatur—the setting aside of an award—bears a heavy burden. Section 10 permits vacatur in specified circumstances, including when arbitrators exceed their powers.

The Federal Arbitration Act generally requires written arbitration agreements to be enforced, while preserving generally applicable contract defenses such as fraud, duress, or unconscionability. State law may be displaced when it conflicts with federal law or obstructs the Federal Arbitration Act’s purposes.

New York Civil Practice Law and Rules Section 1209

New York Civil Practice Law and Rules Section 1209 provides that a dispute involving a minor cannot be submitted to arbitration without a court order obtained by the minor’s representative. The parties agreed that the required procedure was not followed. They also agreed that, unless Section 1209 was displaced by the Federal Arbitration Act, the arbitrator exceeded his authority by deciding S.J.E.’s claims.

Manhattan Cryobank argued that Section 1209 improperly obstructed the federal policy favoring enforcement of arbitration agreements. Hensley argued that the statute was a generally applicable protection for minors and people who lack legal capacity to contract, not a rule hostile to arbitration.

The court held that Section 1209 was not displaced by the Federal Arbitration Act. The court reasoned that the statute concerns the legal capacity of the contracting party—whether the party is a minor or legally incompetent—rather than a feature unique to arbitration. The statute therefore did not improperly target arbitration or alter arbitration’s essential characteristics. Instead, requiring a court order before arbitration protected minors and helped ensure that an arbitration agreement would be enforceable.

Disposition

Because the Section 1209 requirements were not satisfied, the court denied Manhattan Cryobank’s motion to confirm the portion of the award concerning S.J.E. and vacated that portion, identified as section (b). Hensley had not challenged the rest of the award, so the court otherwise granted the motion to confirm it.

In the conclusion, Judge Paul G. Gardephe stated that the motion to confirm the arbitration award was granted in part and denied in part. The Clerk was directed to terminate the motion and close the case.