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The efforts of big business to push disputes into binding
arbitration took a surprising turn recently when the Ninth Circuit Court of
Appeals recently ruled that the federal courts do not have the power under
the Federal Arbitration Act to reduce or annul an arbitration panel's award
because the court feels that the award was too high. In the insurance bad
faith case of Lagstein v. Certain Underwriters at Lloyd's of London
, Case No. 07-16094 (9th Cir., June 10, 2010), an
arbitration panel awarded roughly $2 million in compensatory damages and $4
million in punitive damages to Dr. Lagstein for the wrongful denials of his
disability insurance claims. The Ninth Circuit ruled that a District Court
judge did not have the power to vacate the arbitration award.
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