Confirmation / Vacation of Arbitration Awards

ARBITRATION ROUND-UP

October 5, 2011 by Carlton Fields

Manifest Disregard:

Protherapy Associates, LLC v. AFS of Bastian, Inc., Case No. 6:10cv00017 (USDC W.D. Va. July 27, 2011) (granting motion to confirm award; denying motion to modify award; no manifest disregard of law; arbitration decision that found joint and several liability did not conflict with related judicial opinion that elected not to pierce corporate veil);

International Brotherhood of Teamsters Local Union 177 v. United Parcel Service, Inc., Case No. 2:11cv00180 (USDC D.N.J. Aug. 11, 2011) (denying motion to vacate award; arbitrator relied on evidence and did not exceed powers; no “manifest disregard” of underlying collective bargaining agreement where arbitrator’s interpretation was not “totally unsupported” by general contract principles);

Johnson v. Wells Fargo Home Mortgage, Inc., Case No. 3:05cv00321 (USDC D. Nev. Aug. 17, 2011) (granting in part motion to vacate award on remand from Ninth Circuit; damages award under the Fair Credit Reporting Act was “manifest disregard” to the extent it conflicted with court’s prior holding that certain foreclosure fees were paid for a business purpose and not a consumer purpose);

Priority One Services, Inc. v. W&T Travel Services, LLC, Case No. 1:10cv01873 (USDC D.D.C. Aug. 23, 2011) (granting in part motion to vacate award; panel’s award of prejudgment interest was an “evident material miscalculation” requiring modification; court need not resolve whether “manifest disregard” is valid basis for vacatur because no showing panel otherwise acted improperly in applying state law and calculating damages);

Amaprop Ltd. v. Indiabulls Financial Services Ltd., Case No. 1:11cv02001 (USDC S.D.N.Y. Sept. 9, 2011) (granting petition to confirm arbitration award; no “manifest disregard” where arbitrator’s analysis justified award and party failed to oppose petition);

Sussex v. Turnberry/MGM Grand Towers, LLC, Case No. 2:08cv00773 (USDC D. Nev. Sept. 15, 2011) (denying motion to vacate award and motion for reconsideration; no “manifest disregard” for arbitrator’s determination that plaintiffs could not proceed as a class; reconsideration denied where new case law did not change the law);

Jurisdiction:

Powerweb Energy, Inc. v. GE Lighting Systems, Inc., Case No. 2:10cv02652 (USDC E.D. Pa. Sept. 2, 2011) (granting motion for remand to state court of petition to vacate award; jurisdiction cannot be based on federal issues absent from complaint that would arise only upon vacatur of award or based on counts of counterclaim);

Northland Truss System, Inc. v. Henning Construction Co., Case No. 4:11cv00216 (USDC S.D. Iowa Sept. 7, 2011) (dismissing petition to vacate arbitrator’s order joining seller of construction materials to arbitration between barn owner and builder; no jurisdiction where allegation of manifest disregard of federal law was “patently meritless”; noting that Eight Circuit has not determined whether claim for manifest disregard of federal law confers jurisdiction; plaintiff failed to state claim because FAA does not authorize vacatur of arbitration orders).

Procedure:

Pearl Seas Cruises, LLC v. Irving Shipbuilding, Inc., Case No. 3:11cv00201 (USDC D. Conn. Aug. 9, 2011) (granting motion to dismiss petition to vacate interim award; prior to final award, party’s claim of undue delay was for panel, not for court);

Atlantic City Electric Co. v. Estate of Jerry Riccardo, Case No. 2:09cv03573 (USDC E.D. Pa. Aug. 11, 2011) (granting summary judgment in action to set aside award due to misrepresentations related to health of accident victim; fraud claims were time-barred; under Pennsylvania law, “regardless of whether the arbitration at issue is a statutory or common law arbitration, the thirty (30) day time limit within which to challenge the award applies”);

International Brotherhood of Teamsters, Local No. 264 & 375 v. Nason’s Delivery, Inc., Case No. 1:11cv00186 (USDC W.D.N.Y. Aug. 31, 2011) (denying unions’ motion for preliminary injunction and temporary restraining order to enforce relief awarded in arbitration against employer liquidating its assets; unions failed to show irreparable harm of employer’s liquidation and likelihood of success of petition to confirm award under N.Y. General Associations Law).

Evident Partiality:

Plastic Recovery Technologies, Co. v. Samson, Case No. 1:11cv02643 (USDC N.D. Ill. July 28, 2011) (denying motion to vacate award; no evident partiality despite arbitrator’s knowledge of party’s refusal to pay fees).

FINRA:

McCafferty v. A.G. Edwards & Sons, Inc., Case No. 2:11cv00517 (USDC D.N.J. Aug. 11, 2011) (granting motion to dismiss and cross-motion to confirm award; alleged violation of N.J. whistleblower statute was not a “statutory employment discrimination claim” under FINRA; arbitration panel did not lack jurisdiction or exceed powers by including a “non-public” arbitrator on the panel).

Due Process:

First American Title Insurance Co. v. Ordin, Case No. B226671 (Cal. Ct. App. Sept. 14, 2011) (affirming confirmation of awards; plaintiff failed to show it was “substantially prejudiced” by arbitrator’s alleged refusal to hear relevant evidence and to permit supplemental briefing).

This post written by Michael Wolgin.

ORDER VACATING CONFIRMATION OF ARBITRATION AWARD FOR LACK OF JURISDICTION AFFIRMED WHERE DEFENDANT DID NOT APPEAR IN CASE

September 20, 2011 by Carlton Fields

On December 15, 2010, we reported on Aurum Asset Managers, LLC v. Banco de Estado do Rio Grande do Sul, in which a court vacated its prior confirmation of an arbitration award in favor of Aurum upon independently finding that subject matter jurisdiction was lacking over the case. The appellate court has now affirmed that decision, rejecting the argument that the award could be overturned only if it constituted a “clear usurpation of power.” The court explained that the “clear usurpation” legal standard applies only when jurisdiction has been litigated “such that re-litigation of the issue is barred by principles of res judicata.” Here, the defendant had elected to ignore the judicial proceedings. The lower court did not err by conducting its own jurisdictional analysis, finding that jurisdiction did not exist, and vacating the arbitration award. Aurum Asset Managers, LLC v. Bradesco Companhia de Seguros, No. 10-4281 (3d Cir. Aug. 15, 2011).

This post written by Michael Wolgin.

TWO LONDON ARBITRATION AWARDS ENFORCED

September 7, 2011 by Carlton Fields

Constellation Energy recently filed a petition in the US District Court for the Southern District of New York to confirm two London arbitration awards entered against Transfield ER Cape Ltd. Constellation also sought to enforce the awards against ER Cape’s alleged alter ego, Transfield EL Limited, which was not a party to the arbitrations. The District Court held that the arbitration awards against ER Cape should indeed be enforced, concluding that forum non conveniens did not prevent adjudication in US Court and that venue was appropriate. The Court noted that the petitioner’s choice of home forum is entitled to substantial deference, the balance of private and public interests did not strongly favor ER Cape, and that the mere existence of adequate alterative forums in insufficient to override petitioner’s choice of forum. The Court, however, ruled that Constellation had failed to plead sufficient factual content to support a claim for alter ego liability and accordingly dismissed the petition against ER Limited. Constellations’ petition for attorneys’ fees and costs was also denied. Constellation Energy Commodities Group, Inc. v. Transfield ER Cape Ltd., No. 10-cv-04434 (USDC S.D.N.Y. July 29, 2011).

This post written by John Black.

NO MANIFEST DISREGARD OF THE LAW FOR AWARD REINSTATING UNION EMPLOYEE WHO VIOLATED COMPANY RULES

August 24, 2011 by Carlton Fields

The Tenth Circuit Court of Appeals recently affirmed the denial of a motion to vacate an arbitration award that reinstated a union-member employee who had been terminated by the employer ostensibly for “just cause.” In holding that the arbitrator did not commit a “manifest disregard of the law” and that the award drew its essence from the governing collective bargaining agreement, the court found that the arbitrator could conclude that: (1) the employee was not terminated for “just cause,” an undefined term in the CBA, notwithstanding the employee’s violation of company rules; (2) the violation was “forgivable,” and (3) the employee should be placed on probation (a “last chance agreement”), notwithstanding that such a remedy was not provided in the CBA. Chevron Mining Inc. v. United Mine Workers of America Local 1307, No. 10-8074 (10th Cir. Aug. 12, 2011).

This post written by Michael Wolgin.

ARBITRATOR’S UNDISCLOSED RELATIONSHIP WITH COUNSEL RESULTS IN VACATION OF AWARD

August 23, 2011 by Carlton Fields

Recently, a Texas Court of Appeals issued a ruling on an appeal from an order confirming a $22 million arbitration award in a partnership dispute. The appellants argued on appeal that their rights were prejudiced by the evident partiality of the arbitrator because the arbitrator failed to disclose his personal and professional relationship with appellee’s counsel. The court, assessing all contacts between the individuals, found this argument persuasive, noting that the standard for disclosing such relationships reflects the determination that courts should not involve themselves in evaluations of partiality that are better left to the parties. The court found that the relationship between the arbitrator (a US Magistrate Judge) and the appellee’s counsel (a former US District Court clerk) stretched for years and that the social relationship had business overtones. Accordingly, the court concluded that the arbitrator’s duty of disclosure had been triggered and the failure to disclose the relationship constituted evident partiality. The court reversed the confirmation award and judgment, vacated the award, and remanded for further proceedings. Karlseng v. Cooke, No. 05-09-01002 (Tex. Ct. App. June 28, 2011).

This post written by John Black.