Bakoss v. Certain Underwriters, Lloyds of London
U.S. COURT OF APPEALS, SECOND CIRCUIT
Alternative Dispute Resolution
Circuit Judge José Cabranes
Lloyds underwriters issued a certificate of insurance providing Bakoss a benefit if he became "permanently totally disabled." The certificate provided each party the right to have Bakoss examined by a physician. In the event of disagreement those two doctors would jointly name a third physician whose decision was final and binding. The Lloyds underwriters removed Bakoss' lawsuit to federal district court, arguing that the third-physician clause was an arbitration agreement providing federal question jurisdiction as well as jurisdiction under the Federal Arbitration Act (FAA). Applying federal common lawMcDonnell Douglas Fin. Corp. v. Pa. Power & Light and AMF v. Brunswick district court held the three-physician clause an agreement to arbitrate, and that federal jurisdiction existed under the FAA. Second Circuit affirmed. Citing Miss. Band of Choctaw Indians v. Holyfieldand agreeing with the analyses of circuits that have followed federal law in defining the scope of "arbitration" under the FAASecond Circuit held that federal common law provides the definition of "arbitration" under the FAA because Congress intended national uniformity regarding the interpretation of the term "arbitration."