Confirmation / Vacation of Arbitration Awards

ARBITRATION AWARD CONFIRMED, FINDING ARBITRATION CLAUSE APPLIED, DESPITE FAILURE TO NAME BOTH PARTIES IN FORM CONTRACT

October 1, 2008 by Carlton Fields

Plaintiff, Philip Green, filed a wrongful discharge complaint in federal court in the Southern District of Texas against Defendant, Service Corporation International (“SCI”), an affiliate of his former employer. SCI moved to compel arbitration of the claim under Green’s employment contract, which contained an arbitration clause which explicitly applied to the employer’s “affiliates.” Green objected to SCI’s motion to compel arbitration, arguing that the employment contract left blank the name of the employer, though the cover page of the contract identified SCI. The Court granted SCI’s motion to compel arbitration, finding that the only possible reading of the contract indicated that SCI, as an “affiliate” of Plaintiff’s employer, was clearly covered by the arbitration clause, insofar as Green was plainly aware of the identity of his employer, and SCI was indisputably its affiliate. Reconsideration was denied.

When the panel convened, Green challenged the panel’s jurisdiction, raising the same contract interpretation issue again, which the panel rejected, entering an award against Green. Green moved to vacate the award, raising the same issue yet again to a court which already had rejected the argument twice. Not surprisingly, the Court denied Green’s motion to vacate and confirmed the award. Still not willing to give up, Green has filed a notice of appeal. Green v. Service Corp. Int’l., Case No. 06-833 (USDC S.D. Tex. August 25, 2008).

This post written by John Pitblado.

ARBITRATION CONFIRMATION DECISIONS

September 22, 2008 by Carlton Fields

Courts have continued to brush aside objections and confirm arbitration awards, with an uneven consideration of the impact of Hall Street Associates on the manifest disregard of law doctrine.

Arbitration awards have been confirmed: Cline v. Chase Manhattan Bank USA, Case No. 07-650 (USDC D. Utah Sept. 11, 2008) (Magistrate Judge’s Report & Recommendation; District Court’s Order Approving the R&R) (rejecting arguments that there was no valid arbitration agreement, arbitrator bias and the lack of a fundamentally fair hearing); Hartford Fire Ins. Co. v. The Evergreen Org., Inc., Case No. 07-7977 (USDC S.D.N.Y. Sept. 9, 2008) (confirming after remanded by court to arbitration panel for clarification of award); Southern N. J. Building Laborers’ Dist. Council v. GMAC Constr., Inc., Case No. 08-2896 (USDC D.N.J. July 24, 2008) (award not completely irrational); Commercial Union Ins. Co. v. Lines, Case No. 02-0573 (USDC S.D.N.Y. June 11, 2008) (opinion and Final Judgment) (issues resolved in a reasonable and sound manner) (Notice of Appeal filed July 8, 2008).
Several courts have considered the manifest disregard of law doctrine: Hereford v. D. R. Horton, Inc., 2008 WL 4097594 (Ala. Sept. 5, 2008) (under Hall Street Associates, “manifest disregard of law is no longer a proper basis under the Federal Arbitration Act for vacating, modifying, or correcting an arbitrator’s award”) (Alabama Supreme Court decisions are available only by subscription); Kuest v. Citigroup Global Markets Inc., No. 07-35005 (9th Cir. Aug. 26, 2008) (very short opinion affirming district court’s confirmation of award, in part based on there being no manifest disregard of law, without mentioning Hall Street Associates) (see December 5, 2006 blog post on the underlying district court ruling); DMA Int’l, Inc. v. Qwest Communciations Int’l, Case No. 08-358 (USDC D. Col. Sept. 12, 2008) (articulate but not reach Hall Street Associates impact since the award was not in manifest disregard of law; also rejects claims of arbitrator partiality and arbitrator error); Legacy Trading Co. v. Hoffman, Case No. 07-1383 (USDC W.D. Ok. Aug. 18, 2008) (rejecting manifest disregard of law challenge without mentioning Hall Street Associates; also rejects evident partiality of arbitrator and public policy challenges to the award).
Ameritech Corp. v. Int’l Brotherhood of Elec. Workers, No. 05-2574 (7th Cir. Sept. 10, 2008) addressed an interesting scenario in which there were two consecutive arbitrations with differing results, and the question arose as to which award controlled. The parties agreed to participate in a third arbitration under Fed. R. App. Pro. 33, with the result of the resulting arbitration controlling. The court held the parties to that agreement.
An award was partially vacated in Verizon Washington, DC Inc. v. Communications Workers of Am., Case No. 07-1460 (USDC D.D.C. Aug. 5, 2008) because the arbitrator had clearly disregarded a contractual provision which limited the duration of back pay awards, awarding back pay for a longer period of time than that provided for in the contract, exceeding the authority granted by the contract. See the opinion and the remand Order.

This post written by Rollie Goss.

COURTS CONFIRM ARBITRATION AWARDS, RULING ON CLAIMS OF MANIFEST DISREGARD OF LAW

August 18, 2008 by Carlton Fields

Four recent opinions confirmed arbitration awards, in part rejecting claims that the award was in manifest disregard of law. In three of the cases, there was no discussion of the impact of the Supreme Court’s Hall Street Associates opinion on the manifest disregard of law doctrine.

A district court has confirmed an arbitration award which adjudicated claims relating to underwriting fees allegedly owed in connection with a municipal bond transaction, holding that the arbitrators: (1) properly found an oral agreement subject to arbitration; (2) reasonably concluded that the arbitration was commenced timely; (3) afforded the parties a fundamentally fair hearing by considering all evidence offered; and (4) did not manifestly disregard the law. The court did not discuss Hall Street Associates. Finally, the court found that an award that was not a reasoned award was not arbitrary and capricious. Grigsby & Associates, Inc. v. M Securities Investment, Inc., Case No. 06-23-35 (USDC S.D. Fla. July 30, 2008).

In an action concerning the collection on a promissory note, a court has confirmed an award over claims that it was in manifest disregard of law, except to vacate it to the extent that the award provided for pre-judgment interest, which was clearly contrary to “controlling Tennessee law.” There is no discussion of Hall Street Associates. Hicks v. The Cadle Co., Case No. 04-2616 (USDC D. Col. July 23, 2008).

In Remote Solution Co. v. FGH Liquidating Corp., Case No. 06-4 (USDC D. Del. July 31, 2008), the court confirmed an award, finding no manifest disregard of law (without discussing Hall Street Associates), and that the arbitrator did not exceed his authority by awarding attorneys’ fees pursuant to a contractual provision. The agreement called for a reasoned award, and the arbitrator provided a very brief one paragraph “tentative ruling,” with an offer to provide a more detailed award if requested. The court found this to be sufficient, in part because no one requested a more detailed award.

In Supreme Oil Co. v. Abondolo, Case No. 07-6479 (USDC S.D.N.Y. July 31, 2008), an arbitration of ERISA and Labor-Management Relations Act (“LMRA”) claims, the court held that the manifest disregard of law doctrine was not a basis to vacate an award under the FAA after Hall Street Associates, but that it was unclear whether the doctrine survived with respect to claims under the LMRA. The court declined to reach that issue, however, based upon its finding that the facts before it did not demonstrate manifest disregard of law.

This post written by Rollie Goss.

UK COURT FINDS PARTIES NOT REQUIRED TO DISPENSE WITH LEAVE TO APPEAL ARBITRAL AWARD UNDER SECTION 69 OF ARBITRATION ACT OF 1996

July 31, 2008 by Carlton Fields

Royal and Sun Alliance (“R&S”) reinsured liabilities for certain BAE Companies. The parties entered into a Reinsurance agreement which contained a dispute resolution agreement (“DRA”). The DRA provided for English law to be the governing law and referred various disputes to arbitration incorporating the Rules of the London Court of International Arbitration (“LCIA Rules”). A dispute arose, and an arbitration panel made a partial award in favor of BAE. R&S sought to appeal the award to the English Courts on a point of law.

The question that arose was whether section 69 of the UK Arbitration Act of 1996 required an agreement of the parties permitting an appeal, or an agreement of the parties to dispense with the requirement to seek leave of the court. The Court resolved the issue in R&S’s favor as a pure question of construction, holding that Section 69 could not be held to require an agreement between the parties to dispense with the requirement to seek leave of the court. Royal & Sun Alliance Ins. v. BAE Systems, [2008] EWHC 743 (Comm. Apr. 15, 2008).

This post written by Lynn Hawkins.

COURT CONFIRMS ARBITRATION AWARD OVER OBJECTION THAT ARBITRATION PANEL HAD ACTED IN EXCESS OF ITS AUTHORITY

July 17, 2008 by Carlton Fields

In this non-insurance case, the party which lost in arbitration sought to have the award vacated under the Federal Arbitration Act on the basis that the panel had exceeded its authority. This opinion contains a good discussion of this standard for vacating an award on this basis in the Third Circuit. The standard is whether the award is “completely irrational” and “draws its essence” from the underlying agreement. “In considering the arbitrator’s interpretation of the contract, the question becomes whether “the interpretation can in any rational way be derived from the agreement, viewed in the light of its language, its context, and any other indicia of the parties’ intention.” Exxon Shipping Co. v. Exxon Seamen’s Union, 73 F.3d 1287, 1295 (3d Cir. 1996).” Finding that the motion to vacate the award was, in reality, merely a challenge to the arbitrators’ factual and legal determinations, the court denied the motion to vacate and confirmed the award. Southco, Inc. v. Reell Precision Manufacturing Corp., Case No. 08-189 (USDC E.D. Pa. May 27, 2008).

This post written by Rollie Goss.