The case arose from an arbitration initiated under an employment agreement, after the chief operating officer of ACP Investment Group resigned. Addressing a provision in the agreement that required the COO’s forfeiture of only his unvested shares, the arbitrator determined that out of approximately 3 million shares that the COO had accrued, just over 2 million had vested. However, the arbitrator refused to value these shares or order their disposition because she believed that part of the dispute was outside the purview of the arbitration clause.
After the award, ACP sought clarification in a letter, asking the arbitrator whether the portions of the award addressing the vesting status of the COO’s shares were non-binding dicta, and arguing that the arbitrator’s determination was outside the jurisdiction of the American Arbitration Association. The arbitrator denied ACP’s request, reasoning that because the employment contract provided only for forfeiture of the COO’s unvested shares, she was acting within the scope of her authority by determining the vesting status of the shares.
ACP sought a temporary restraining order, which the court denied, and the COO moved to confirm the arbitration award. ACP argued that the arbitrator exceeded her scope, disregarded terms of the employment agreement, and that there were procedural irregularities during arbitration. The court dismissed ACP’s arguments, confirming the award, holding that the vesting determination was squarely within the scope of the arbitrator’s authority. The court also noted the great deference given by federal courts to arbitral panels, as well as the lack of any “abundantly clear” improper procedure at play. ACP Investment Group, LLC et al v. Blake, Case No. 15-CV-9364 (USDC S.D.N.Y. Oct. 13, 2016).
This post written by Gail Jankowski, a law clerk at Carlton Fields in Washington, DC.
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