Confirmation / Vacation of Arbitration Awards

Over the past several months, a number of district and circuit courts have addressed the propriety of arbitration awards. This post briefly summarizes the salient factors from each case:

• Awards confirmed: Bradley v. Merrill Lynch & Co., Inc., Case No. 08-0269-cv (2d Cir. Sept. 2, 2009) (opponent failed to raise any substantial issues with the award, other than that it was unfavorable); Int’l. Brotherhood of Teamsters Local 177 v. UPS, Case No. 09-CV-0903 (D. N.J. Oct. 9, 2009) (none of the exceptions under the functus officio doctrine is applicable, and the award issued did not reflect a manifest disregard of the agreement); Silicon Power Corp. v. GE Zenith, Case No. 08-4331 (E.D. Pa. Sept. 29, 2009); Hughes v. Aloha Tower Development, Corp., Case No. CV 09-00277 (D. Haw. Sept. 9, 2009) (Aloha “bargained for the arbitrator’s interpretation award and is now bound by it”); Marketstar Corp. v. Prosper Bus. Development Corp., Case No. 2:07-CV-00132 (D. Utah Sept. 4, 2009) (also denying motion for pre-judgment interest); Fruehauf Trailer Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, Case No. 98-514 (Bankr. D. Del. Oct. 5, 2009).

• Lack of prejudice: In OneBeacon Am. Ins. Co. v. Mitchell, the Second Circuit Court of Appeals issued a summary order upholding the District Court’s determination that the petitioner was not prejudiced in the arbitration proceedings, and that the arbitration award was justified. OneBeacon Am. Ins. Co. v. Mitchell, Case No. 08-3432-cv; 08-3488-cv (2d Cir. Oct. 9, 2009).

• Remand to arbitrators: In On Time Staffing LLC v. Coast to Coast Installations, Inc., the District of New Jersey ruled on Plaintiff On Time Staffing’s Petition to Confirm the Interim Award. The Court confirmed the arbitration award against Coast to Coast, but remanded to the arbitrators for clarification as to whether the interim award is intended to be a “separate independent claim.” On Time Staffing LLC v. Coast to Coast Installations, Inc., Case No. 09-4158 (D. N.J. Oct. 8, 2009).

This post written by John Black.

Awards upheld

TIG Ins. Co. v. Global Int’l Reinsurance Co. Ltd., 09-Civ-1289 (USDC S.D.N.Y. Aug. 7, 2009) (arbitration award confirmed, no manifest disregard of law)

UTGR Inc. d/b/a Twin River v. Mutuel/Gaming Clerks of Rhode Island, Local 334, No. 09-046-S (USDC D.R.I. Aug. 6, 2009) (arbitrator’s award in CBA dispute confirmed)

Waddell v. Holiday Isle, LLC, No., CV-09-0040 (USDC S.D. Ala. Aug. 4, 2009) (several motions to vacate arbitration award denied, no manifest disregard, one motion to vacate granted as beyond the submission)

WellPoint, Inc. v. John Hancock Life Ins. Co., No. 07 C 943 (7th Cir. Aug. 7, 2009) (affirming district court’s denial of motion to vacate arbitration award)

Parsons, Brinckerhoff, Quade & Douglas, Inc. v. Palmetto Bridge Constructors, No. RDB-09-633 (USDC D. Md. Aug. 25, 2009) (motion to confirm arbitration award granted) .

Award reversed

Globe Newspaper Co. v. Int’l Assoc. of Machinists, Local 264, District 15, No. 08-cv-11945 (USDC D. Mass. Aug. 5, 2009) (vacating arbitrator’s award in CBA dispute as against public policy)

This post written by John Pitblado.

Following a dispute over eight reinsurance agreements, Century Indemnity moved to confirm in part and vacate in part an arbitration award ordering Fencourt Reinsurance to pay a certain sum owed under the agreements. The paragraph at issue stated that “all other claim for relief are denied,” meaning that Century could not recover interest, attorneys’ fees and court costs under the agreement. The District Court for the Eastern District of Pennsylvania denied Century’s motion to vacate, finding the portion of the agreement concerning interest, fees and costs was ambiguous as it did not explicitly specify whether it applied before or after arbitration proceedings. Accordingly, the arbitration panel’s interpretation was not “completely irrational” nor did the panel exhibit a “manifest disregard” for the agreement. Century Indem. Co. v. Fencourt Reinsurance, Case No. 09-MC-53 (E.D. Pa. July 22, 2009).

This post written by John Black.

A court has vacated a FINRA arbitration award on the ground that the arbitrators exhibited manifest disregard of controlling law. Plaintiff moved to vacate the arbitration award denying its claims in FINRA proceedings that the defendant sold it Cuban bearer bonds that had been defaulted on in the wake of the 1959 communist revolution. After a two-day evidentiary hearing, the arbitators denied all of plaintiff’s claims. Plaintiff sought to vacate the defendant’s award on the ground that the arbitrators exceeded their powers, urging that they ignored the Cuban Assets Control Regulations, which prohibits transactions involving Cuban assets. The arbitration decision recognized the Regulations as applicable, but made no other mention of them, and made no findings of fact or conclusions of law regarding them. The court therefore awarded plaintiff its principal, compounded at the legal rate of interest. See More Light Investments v. Morgan Stanley DW Inc., Case No. CV 08-580 (USDC D. Ariz. July 29, 2009).

This post written by Brian Perryman.