After nearly 2-1/2 years of litigation, a U.S. contractor sued over the deaths of four security guards in Iraq has still not addressed the merits of the landmark case –- and now may have avoided ever doing so in a public proceeding.
A mob in Fallujah shot and dismembered the guards working for Blackwater USA in March 2004, hanging two of the bodies from a bridge. The guards' families allege the company sent them into hostile territory without the proper equipment and the wrongful-death case could shed light on the private military industry which has profited so handsomely from the “War on Terror.”
Blackwater, whose legal team includes Kenneth Starr, has bogged the case down in procedural maneuvers (see ). As the plaintiffs noted in a recent court brief, those tactics
have resulted [in] the filing of two state court actions, multiple attempts at removal [to federal court], a federal court action, and two arbitration proceedings, all of which have proceeded without the Defendant having filed a single Answer or responsive pleading to any Complaint filed against them.
After an appeals court ruled against Blackwater in a jurisdictional dispute, a state court judge in North Carolina lifted a stay on discovery in November. But Blackwater quickly petitioned a federal judge to compel arbitration.
Arbitration proceedings are conducted behind closed doors and the guards' employment contract provided for “arbitration of any dispute regarding interpretation or enforcement of any of the parties' rights or obligations under this Agreement.”
The families contend the arbitration clause is not enforceable because Blackwater fraudulently induced the guards to sign the contract. But Senior U.S. District Judge James C. Fox granted the petition in an April 20 order.
The fraud claim is “no bar to arbitration proceedings,” he reasoned, since the complaint “does not allege fraudulent inducement of the arbitration clause itself.”
With a preliminary hearing before a three-member arbitration panel set for May 25, the plaintiffs have appealed the order to the 4th Circuit. One of the panel members, former FBI and CIA director William Webster, has personal and business ties to several Blackwater lawyers including Starr.
Blackwater is also seeking to arbitrate a $10 million counterclaim against the lawyer who filed the original complaint as administrator of the guards' estates. Richard Nordan, it alleges, breached the guards' employment agreement by failing to honor the arbitration clause.
The counterclaim is questionable, to say the least, since Nordan was not a party to the contract and his lawyers filed a declaratory relief action May 4 in state court. In yet another maneuver, Blackwater has petitioned to remove that case to federal court.
Going after Nordan in an arbitration proceeding, bypassing the courts, "greatly offends me," the state court judge told Blackwater's lawyers at a hearing in Raleigh, N.C., last week. "There are some fundamental due-process rights, including right to trial by jury ... They may not exist necessarily in other courts, but they exist in this court."
By Matthew Heller
5/23/07
