PacificCare Health Systems, Inc. v. Book

Case Updates

NCLC’s amicus brief in PacificCare Health Systems, Inc.,et al. v. Book, et al. (No. 02-215) seeks to strengthen the enforceability of arbitration agreements — including their limits on punitive damages — by challenging an Eleventh Circuit decision that arbitration agreements that preclude punitive damages awards can be avoided simply by filing a RICO claim. The many businesses that routinely employ arbitration to resolve their disputes have a strong interest in ensuring that they remain free to structure future arbitration agreements according to their wishes and the wishes of their contracting parties. The appellate court’s decision, NCLC maintains, will weaken many existing arbitration agreements and limit the ability of businesses to freely negotiate further arbitration settlements. In asking the U.S. Supreme Court to reverse the Court of Appeals, NCLC’s brief notes that the Eleventh Circuit’s decision imposes a categorical rule that contracting parties who agree to submit their disputes to an arbitrator cannot also agree to forgo treble damages under RICO. Unless it is reversed, NCLC argues, the ruling will mean that parties that have already entered into arbitration agreements that waive punitive damages will be able to bypass arbitration altogether if they can frame a dispute as a RICO claim or damages. By giving an unjustified preference to RICO’s trebledamages provision, NCLC adds, the decision will — if upheld — encourage frivolous claims under RICO, or will simply discourage the formation of agreements to arbitrate.