Case of the Day: De Beers Centenary AG v. Hasson

The Case of the Day, De Beers Centenary AG v. Hasson (S.D. Fla. 2010), is a bizzare nuisance suit that the court properly dismissed and, maybe, a reminder of why it is a good thing that we leave a role for the courts in deciding threshold questions of arbitrability. 

Hasson had been convicted of wire fraud, conspiracy to commit crimes against the United States, conspiracy to commit money laundering, and conspiracy to obstruct justice. He was serving a long sentence in prison. Here is the scoop on Hasson, from his unsuccessful criminal appeal:

Between 1981 and 1998, Hasson owned and operated an upscale jewelry and gift store in North Palm Beach, Florida. His store catered to the Palm Beach area’s wealthy and famous residents and visitors. His customers frequently spent thousands or hundreds of thousands of dollars on fine gems and jewelry. Not all of his customers, however, got what they bargained for. Hasson sold several customers gems, jewelry, and decorative pieces that failed to match the descriptions he gave. Hasson frequently supported his representations with false appraisals prepared by himself or by a co-conspirator falsely represented to have been independent. Hasson also misrepresented his own credentials to give weight to those appraisals and sometimes provided forged appraisals purporting to have been prepared by third parties.

In 2009, Hasson sent a letter to Leonard Osberg of Loxahatchee, Florida, asking him to accept appointment as arbitrator in the case of Hasson v. De Beers Family of Company [sic] and Board of Directors. Osberg accepted the appointment by letter. Hasson then sent both letters to De Beers (the De Beers company that filed the motion to vacate was a Swiss firm), whose lawyer sent Osberg a letter explaining that De Beers had not agreed to arbitrate any dispute with Hasson. Hasson responded that it was true that De Beers had never signed an agreement to arbitrate, but that De Beers’s failure to “contest or reject” his demand for arbitration operated as an acceptance of its terms. Osberg told De Beers that he would proceed to arbitrate the claim and directed De Beers to make various filings. If it did not do so, Osberg warned, its failure would be treated as a “general acquiescence and acceptance” of his appointment as arbitrator. When De Beers refused to participate in the farce, Osberg entered an award in favor of Hassan. The opinion doesn’t say so, but it seems reasonable to infer that Osberg was in cahoots with Hasson.

De Beers moved to vacate the award. The court, obviously correctly, held that there had been no meeting of the minds and no arbitration agreement, and that the arbitrator exceeded his authority, which under § 10 of the FAA is grounds for vacatur.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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