Confirmation / Vacation of Arbitration Awards

LMRA ARBITRATION AWARD UPHELD BY THE THIRD CIRCUIT

August 5, 2015 by Carlton Fields

The Third Circuit affirmed an arbitration award under the Labor Management Relations Act (“LMRA”) as the decision reached by the arbitrator comported with the collective bargaining agreement (“CBA”) between the parties. Washington Hospital (“WH”) employed Deborah Holden, an LPN, before terminating her employment pursuant to the CBA’s absenteeism policy. Holden’s union filed a grievance protesting Holden’s discharge. An arbitrator decided that the termination was improper and reinstated Holden, because WH failed to follow contractually agreed upon discipline procedures. The arbitrator made this decision despite noting that Holden’s ten absences in a 12-month time period would be sufficient grounds on which to terminate an employee. WH sought to vacate the award, but the district court upheld the award.

On appeal, WH argued that the court abused its discretion by denying WH’s request for discovery based on remarks by Holden that put her honesty at issue. However, the court found that Holden’s testimony was not fraudulent, and further, that Holden’s testimony was “immaterial” to the arbitration decision. Instead, the court upheld the district court’s decision because WH did not follow the CBA’s procedures, specifically—WH failed to give two warning notices before terminating Holden. Washington Hosp. v. SEIU Health Care Inc. Penn., Case No. 14-3951 (3d Cir. June 12, 2015).

This post written by Matthew Burrows, a law clerk at Carlton Fields in Washington, DC.

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PROCEDURAL ODDITIES RESULT FROM SIMULTANEOUSLY SEEKING VACATUR OF AN ARBITRATION AWARD AND RELIEF ON THE MERITS OF THE DISPUTE

July 16, 2015 by Carlton Fields

The Second Circuit reversed the district court’s dismissal of a claim for vacatur without prejudice, which had been based on the panel’s finding that it lacked personal jurisdiction. The Second Circuit examined the merits of the vacatur claim and ruled that it should have been dismissed with prejudice. Based on that determination, the Second Circuit then affirmed the district court’s dismissal without prejudice of the second claim filed in the district court for relief on the merits of the dispute (a claim for breach of contract). The Second Circuit explained that dismissal of this claim without prejudice was appropriate due to the preclusive effect of the ruling in arbitration that personal jurisdiction was lacking. The court noted: “Although it may seem odd to deny the award preclusive effect over one claim and to grant it preclusive effect over another in the same suit, that is the logical result anytime a suit includes both a claim to vacate an award and other claims that might be precluded by a final award.” Global Gold Mining, LLC v. Ayvazian, Case No. 13-4759-cv (2d Cir. Apr. 27, 2015).

This post written by Michael Wolgin.

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FIFTH CIRCUIT WEIGHS IN ON ARBITRABILITY OF ISSUES THAT COULD HAVE BEEN DECIDED BY THE COURT

July 2, 2015 by Carlton Fields

In the recent unpublished opinion, the United States Court of Appeals for the Fifth Circuit confirmed that if an issue is voluntarily submitted to an arbitrator, then the arbitrator can decide the issue, even if it is one that should have been left to the court. After the arbitrator found for the defendant, Heritage Actions, on the basis that there was no meetings of the minds and therefore the contract was unenforceable and should be rescinded, the plaintiffs, OMG, L.P. and Greg Martin, attempted to have the award vacated in federal district court. The district court agreed with OMG and vacated the award on the basis that “a court was the proper decision-maker as to the contract formation issues in this case, not the arbitrator.” The Fifth Circuit reversed, pointing out that if the parties agree, they may arbitrate issues that are not part of the arbitration agreement. While OMG argued that the issue of the contract’s validity had not been submitted to the arbitrator either by the arbitration contract or by agreement, the Fifth Circuit found that both parties actively put forth arguments during the arbitration on whether there had been a meeting of the minds and whether the contracts should be rescinded. At no time during the arbitration did OMG argue that the arbitrator did not have the authority to decide this issue. The remedy OMG should have sought, said the Fifth Circuit, was to have “refused to arbitrate, leaving a court to decide whether the arbitrator could decide the contract formation issue,” i.e., whether there was a meeting of the minds. The district court’s judgment was reversed and the case remanded with instructions to confirm the arbitration award. OMG, L.P. v. Heritage Actions, Inc., No. 14-10403 (5th Cir. May 8, 2015).

This post written by Barry Weissman.

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CHINESE ARBITRATION AWARD AFFIRMED IN MINERAL COMPANY DISPUTE

June 24, 2015 by Carlton Fields

The court ruled that ACC Resources is bound by an arbitral award issued by the China International Economic & Trade Arbitration Commission (“CIETAC”). The award required the mineral company to pay its supplier, Calbex Mineral Limited the unpaid balance for minerals supplied. ACC argued that the award was made without its knowledge and without offering the company the opportunity to defend itself. ACC also argued that the arbitration award was void because the CIETAC subcommission that initially rendered the award in favor of Calbex had broken away from CIETAC.

The district court held that ACC failed to meet the standards of the New York Convention—which governs the enforceability of international arbitration—by not providing sufficient proof to show that they had not been given notice of the proceedings. Further, the court noted that ACC failed to offer evidence that it knew about the subcommission’s split from CIETAC during the relevant time. ACC also disputed the panel’s failure to forward evidence received in the course of its investigation, but the district court held that ACC did not show prejudice from this violation. Because ACC had not been prejudiced, the arbitral award must stand. Calbex Mineral Ltd. v. ACC Resources Co., L.P., No. 13-276 (USDC W.D. Pa. Mar. 13, 2015).

This post written by Whitney Fore, a law clerk at Carlton Fields in Washington, DC.

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COURT REMANDS ARBITRATION AWARD FOR FURTHER CLARIFICATION WHERE RATIONALE WAS NOT GIVEN

June 23, 2015 by Carlton Fields

In a case involving a dispute over steel production to replace a portion of the Whitestone Bridge spanning New York City’s East River, a federal district court remanded an arbitration award back to the arbitrator. Under the parties’ arbitration agreement, the arbitrator was to issue a reasoned award. However, the arbitrator’s award was a two-page award with the “arbitrator merely list[ing] various categories of monetary damages without explanation as to how he calculated those figures or determined liability.” Under the Southern District of New York standard, a reasoned award is one where the arbitrator presents “something short of findings of fact and conclusions of law but more than a simple result. Where the award offered no more than the damages, the court found that this low standard was not met.

The court chose not to vacate the award, however. Noting that some courts have completely vacated the award where arbiters have ignored the arbitration agreement and exceeded their powers, the court found that the doctrine of functus officio (once the award is made, the duty is done) was inapplicable. Because the arbitrator never completed his duty, the court found that remand to do so was proper. Tully Const. Co. v. Canam Steel Corp., No. 1:13-cv-03037-PGG (USDC S.D.N.Y. Mar. 2, 2015).

This post written by Zach Ludens.

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