Confirmation / Vacation of Arbitration Awards

RECENT RULINGS UPHOLD ARBITRATION AWARDS ON VARIOUS GROUNDS

May 6, 2009 by Carlton Fields

Manifest disregard of law: Dealer Computer Services, Inc. v. Dayton Ford, Inc., Case No. 08-3508 (USDC D.N.J. April 9, 2009) (granting motion to confirm, finding no manifest disregard of law).

Evident Partiality: Martik Brothers, Inc. v. Kiebler Slippery Rock, LLC, Case No. 08-1756 (USDC W.D. Pa. April 20, 2009) (granting petition to confirm, no evident partiality where arbitrator and plaintiff’s counsel engaged in casual conversation about golf and travel).

Sufficiency of evidence: Campbell v. American Family Life Assurance Co. of Columbus, Inc., Case No. 08-5806 (USDC D. Minn. April 14, 2009) (denying motion to vacate award, finding insufficient evidence submitted to overcome arbitrator’s grant of summary judgment award to defendant, based on unambiguous terms of parties’ insurance contract)

Exceeding authority: Reliastar Life Ins. Co. of New York v. EMC Nat’l Life Co., No. 07-0828 (2d Cir. April 9, 2009) (reversing trial court’s vacatur of portion of arbitrators’ award for attorneys fees against defendant for failing to arbitrate in good faith, finding such an award does not exceed submission, even though agreement required parties to pay own fees and costs); Dupont v. Tobin, Carberry, O’Malley, Riley & Selinger, PC, No. 08-1414 (2d. Cir. April 16, 2009) (affirming district court’s confirmation of award, arbitrators did not exceed authority in finding facts and interpreting agreement); Thule AB v. Advanced Accessory Holding Corp., Case No. 09-91 (USDC S.D.N.Y. April 2, 2009) (denying motion to vacate, reviewing accountant did not exceed authority by applying different methodology than requested by plaintiff).

Miscellaneous confirmations: Schmidt v. Citibank (South Dakota), N.A., Case No. 08-165 (USDC E.D. Va. April 10, 2009) (granting defendant’s motion to confirm, denying several motions by pro se plaintiff on numerous grounds); Mutual Marine Office, Inc. v. Transfercom Ltd., Case No. 08-10367 (USDC S.D.N.Y. April 15, 2009) (granting petition to confirm as defendant failed to raise arguments in arbitration and thus waived them); Jones v. PPG Industries, Inc., Case No. 07-1537 (USDC W.D. Pa. April 27, 2009) (granting motion to confirm arbitrator’s award in favor of employer on discrimination claims on various grounds).

This post written by John Pitblado.

VARYING RULINGS WITH RESPECT TO ARBITRATION AWARDS

April 15, 2009 by Carlton Fields

Courts Confirm Awards Finding Sufficient Support In Record: New Jersey Reg'l Council of Carpenters v. Patock Constr. Co., Case No. 08-4952 (USDC D.N.J. Mar. 11, 2009) (sufficient basis to find that respondent improperly subcontracted with a non-signatory subcontractor and lost work opportunity damages were proper); Tlumacki v. CAN Ins. Cos., No. A-4024-05T5 (N.J. Super. Ct. App. Div. Mar. 31, 2009) (sufficient evidentiary basis for the award existed and no showing of impartiality).

Confirming Awards Based On Arbitrator’s Interpretation Of Agreement: Blair Commc'ns, Inc. v. Int'l Bhd. of Elec. Workers, Local Union No. 5, Case No. 07-162 (W.D. Pa. Mar. 26, 2009) (“work preservation” agreement in collective bargaining agreement did not violate public policy); Global Reinsurance Corp. of Am. v. Argonaut Ins. Co., Case No. 07-7514 (USDC S.D.N.Y. Mar. 23, 2009) (arbitrator employed a plausible construction of reinsurance treaties’ definition of “loss occurrence,” and properly applied “follow the fortunes” doctrine).

Requests To Vacate: McQueen-Starling v. UnitedHealth Group, Inc., Case No. 08-4885 (USDC S.D.N.Y. Mar. 20, 2009) (remanding to arbitrator for clarification of unaddressed “retaliation claim” in discrimination case); Int'l Longshoremen’s Ass'n (Local 1575) v. Horizon Lines, Inc., Case. No. 08-1530 (USDC D.P.R. Mar. 16, 2008) (award “does not suffer from inanition or manifest errors of law”); Jones v. PPG Indus. Inc., Case No. 07-1537 (USDC W.D. Pa. Mar. 13, 2009) (no manifest disregard of law); Williams v. Mexican Rest. Inc., Case No. 05-841 (USDC E.D.Tex. Mar. 18, 2009) (confirming award since errors of fact did not justify vacating awards; see March 25, 2009 post); Kesterson v. NCO Portfolio Mgmt. Inc., Case No. 08-182 (USDC N.D. Ind. Mar. 27, 2009) (adopting Report and Recommendation that petition to vacate award be granted following entry of default judgment for defendant’s failure to appear).

Miscellaneous: A. Bauer Mech. Inc. v. Joint Arbitration Bd. of the Plumbing Contractors’ Ass'n, No. 06-3936 (7th Cir. Mar. 25, 2009) (affirming default judgment for failure to respond to counterclaim to enforce arbitration board’s ruling; Caraballo v. City of Chicago, Case No. 07-2807 (USDC N.D. Ill. Mar. 18, 2009) (requiring plaintiffs to arbitrate consolidated FLSA claims); Laundry, Dry Cleaning Workers & Allied Indus. Health Fund v. Jung Sun Laundry Group Corp Case, No. 08-2771 (USDC E.D.N.Y. Mar. 16, 2007) (adopting Report and Recommendation that award be confirmed; respondent failed to appear at arbitration and confirmation proceedings and no manifest disregard of law).

This post written by Brian Perryman.

SECOND CIRCUIT AFFIRMS ORDER COMPELLING ARBITRATION OF CLASS CLAIM

March 30, 2009 by Carlton Fields

The Second Circuit has affirmed an order compelling arbitration and a judgment confirming a final arbitration award. Plaintiff-appellant appealed the order on the basis that the arbitration agreement required arbitration only of his individual claim, but permitted his class claim to be heard in court. The appellant contended that because claims may not be arbitrated as class actions under the rules of the NYSE and the NASD (incorporated by reference in the Settlement Agreement), the parties must have intended any class claims to be litigated in the courts.

Relying on the Supreme Court’s decision in Green Tree Financial v. Bazzle, the Second Circuit found that whether an arbitration contract forbids class arbitration falls under the domain of arbitrators, and therefore the district court properly compelled arbitration on the question of the arbitrability of class claims under the Settlement Agreement. The Court also rejected appellant’s claim that the arbitration decision should not have been confirmed because the arbitrators: (1) acted with a lack of fundamental rationality; (2) exceeded the scope of their authority; and (3) acted with manifest disregarded of the law. Vaughn v. Leeds, Morelli & Brown, No. 07-5637 (2d Cir. Mar. 16, 2009).

This post written by Lynn Hawkins.

VARYING RULINGS WITH RESPECT TO ARBITRATION AWARDS

March 25, 2009 by Carlton Fields

Courts have confirmed and vacated arbitration awards on different bases:

Arbitrator’s interpretation of agreement: awards confirmed – Asociacion de Empleados del Estado Libre Asociado de P. R. v. Union Internacional de Trabajadores de la Industria de Automoviles, No. 07-2636 (1st Cir. Mar. 6, 2009) (vacating partial vacation of award, since arbitrator employed a plausible construction of the contract at issue); Horizon Lines of P.R., Inc. v. Local 1575, Int’l. Longshoremen’s Assoc. AFL-CIO, Case No. 08-1611 (USDC D.P.R. Mar. 6, 2009) (confirming award since interpretation of agreement was plausible; Hall Street eliminated manifest disregard of law doctrine); System Council U-3 of the Int’l Brotherhood of Elec. Workers v. Jersey Central Power & Light Co., Case No. 07-5248 (USDC D.N.J. Feb. 25, 2009) (confirming award since it was rational and drew its essence from the agreement; panel had authority to bar irrelevant and cumulative evidence); awards vacated – Boardwalk Regency Corp. v. Unite Here Local 54, Case No. 08-16 (USDC D.N.J. Mar. 3, 2009) (vacating award as not drawing its essence from the contract); N.J. Carpenters Funds v. Professional Furniture Services, Case No. 08-3690 (USDC D.N.J. Feb. 26, 2009) (vacating award because arbitrator exceeded his authority in interpreting the contract at issue);

Vacation on miscellaneous grounds denied: MCI Constructors, Inc. v. Hazen and Sawyer, P.C., Case Nos. 99-2 and 02-96 (USDC M.D.N.C. Mar. 9, 2009) (two opinions in two related cases: 99-2 – request to vacate award denied – arbitrators could select procedures; reasoned award not required; award not in violation of public policy – 02-96: request to vacate award denied – panel not exceed powers; panel has authority to determine what evidence to hear; award not obtained by undue means; no breach of arbitration agreement); Regnery Publishing, Inc. v. Miniter, Case No. 08-709 (USDC D.D.C. Mar. 7, 2009) (ruling by AAA instead of arbitrator on Motion to Recuse not justify vacation of award); Williams v. Mexican Restaurant, Inc., Case No. 05-841 (USDC E.D.Tex. Feb. 27, 2009) (Magistrate Judge’s Report & Recommendation that award be confirmed even though it was “astonishing, eye-popping and, perhaps, soft-witted” since errors of fact not justify vacating awards) (objections have been filed to the R&R);

Evident material miscalculation: Volk v. X-Rite, Inc., Case No. 08-0054 (USDC S.D.Iowa Mar. 2, 2009) (attempt to select Michigan state law ineffective; no manifest disregard of law (without discussing Hall Street); award modified due to an evident material miscalculation);

Miscellaneous: Sathianathan v. Smith Barney, Inc., Case No. 04-2130 (USDC N.D.Cal. Mar. 3, 2009) (denying FRCP 60 motion for relief from Order confirming arbitration award – see Sept. 12, 2007 post regarding discovery with respect to the Rule 60 motion); Clearwater Ins. Co. v. Various London Market Reinsurers, Case No. 08-8695 (USDC S.D.N.Y. Feb. 5, 2009) (entering judgment for several liability on reinsurance arbitration award of $1.9 million – see Petition, Answer to Petition and Memorandum in Support of Confirmation).

This post written by Rollie Goss.

APPELLATE COURTS SPLIT ON CONTINUED VIABILITY OF “MANIFEST DISREGARD OF LAW” DOCTRINE

March 16, 2009 by Carlton Fields

We have posted several times about the manifest disregard of law doctrine for vacating arbitration awards, and on the implications for that doctrine of the Supreme Court’s holding last year that the grounds for vacating or modifying arbitration awards set out in the FAA are the “exclusive grounds” upon which federal courts may modify or vacate such awards. Hall Street Assocs., L.L.C. v. Mattel, Inc., 128 S. Ct. 1396 (2008). Hall Street left open the question of whether courts, as opposed to parties, could create different standards for vacating arbitration awards. In two recent opinions, the Fifth and Ninth Circuits have reached different conclusions about the impact of Hall Street on the judicially created “manifest disregard of law” doctrine.

In January, the Ninth Circuit issued an opinion stating that “in this circuit, an arbitrator’s manifest disregard of the law remains a valid ground for vacatur of an arbitration award under § 10(a)(4) of the Federal Arbitration Act.” Comedy Club, Inc. v. Improv West Assoc., No. 05-55739 (9th Cir. Jan. 29, 2009). This holding was predicated upon the Ninth Circuit characterizing the manifest disregard doctrine as an example of Section 10(a)(4) of the FAA, situations in which the arbitrator exceeds his/her authority. Recently, however, the Fifth Circuit concluded that Hall Street “unequivocally” restricted the grounds for vacatur to those set forth in the FAA, and that the “manifest disregard of law” doctrine is not a valid basis for vacating an arbitration award under the FAA. Citigroup Global Markets Inc v. Bacon, No. 07-20670 (5th Cir. March 5, 2009). These opinions demonstrate an increasing split of authority as to the continuing viability of the doctrine.

This post written by Lynn Hawkins.