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You are here: Home / Arbitration / Court Decisions / SDNY Confirms Arbitration Award in Employment Dispute, Finds Arbitrator Did Not Manifestly Disregard Law

SDNY Confirms Arbitration Award in Employment Dispute, Finds Arbitrator Did Not Manifestly Disregard Law

February 1, 2022 by Alex Bein

A federal court in the Southern District of New York recently confirmed an arbitration award in an employment dispute between Gould Paper Corp. and its former employee David Berkowitz. On July 19, 2019, Berkowitz initiated arbitration proceedings against Gould under JAMS rules. Berkowitz generally alleged age discrimination, and Gould asserted counterclaims for conversion and unjust enrichment. The arbitrator issued a final award dated February 18, 2021, and an amended award dated March 17, 2021, finding for Berkowitz on his age discrimination claim and for Gould on its unjust enrichment counterclaim. In the award, the arbitrator ordered Gould to pay a net amount to Berkowitz of $45,533.49 and rejected all other relief sought by the parties, including fees, costs, liquidated damages, and emotional distress damages.

On August 4, 2021, Berkowitz filed a petition in federal court seeking to confirm the award of compensatory damages and to vacate and/or modify the award so as to grant an additional award of attorneys’ fees and costs, liquidated damages, and emotional distress damages. As a threshold issue, the court considered whether Berkowitz’s petition to modify the award was timely filed. Under the Federal Arbitration Act, the statutory period during which a motion to vacate or modify may be filed is three months after the arbitration award is “filed or delivered.” According to the court, neither party disputed whether the three-month limitation applied, but they disagreed over when the period began to run — namely, when the award was first transmitted to the parties by email, or when Berkowitz was first “served” with the award by mail in compliance with established JAMS procedures. However, noting that the question of when an award is considered “filed or delivered” has not been definitively settled in the Second Circuit, the court declined to rule on the issue.

Next, the court considered Berkowitz’s entitlement to a modification of the award so as to grant attorneys’ fees and costs, liquidated damages, and emotional distress damages pursuant to 9 U.S.C. § 11(c), which allows a court to modify or correct an award “[w]here the award is imperfect in matter of form not affecting the merits of the controversy.” Noting that this provision of the FAA has been interpreted narrowly to permit modification “to reflect the clear intent of the arbitrator,” the court concluded that the arbitrator had in fact indicated a clear intent not to award such damages, and rejected Berkowitz’s argument accordingly.

The court then considered whether the arbitrator’s refusal to award attorneys’ fees and costs, liquidated damages, and emotional distress damages constituted “manifest disregard of the law” warranting vacatur in part. Noting that a movant seeking vacatur based on “manifest disregard” bears a heavy burden in establishing that (1) the arbitrator knew of a governing legal principle yet refused to apply it or ignored it altogether and (2) the law ignored by the arbitrator was well defined, explicit, and clearly applicable to the case, the court concluded that Berkowitz was unable to meet this standard. Specifically, the court found that Berkowitz had failed to adequately cite controlling law or statutory provisions supporting his entitlement to the requested fees, costs, and damages in the underlying arbitration and thus could not meet the first prong of the “manifest disregard” standard.

Finally, the court considered whether the arbitrator exceeded his authority in refusing to award attorneys’ fees and costs, liquidated damages, and emotional distress damages to Berkowitz. Noting that Berkowitz’s “real objection” was that the arbitrator committed a legal error in denying the damages sought, the court concluded that Berkowitz’s claim that the arbitrator exceeded his authority was without merit. Based on the above, the court denied Berkowitz’s petition and granted Gould’s motion to confirm.

Berkowitz v. Gould Paper Corp., No. 1:21-cv-06582 (S.D.N.Y. Jan. 12, 2022).

Filed Under: Arbitration / Court Decisions, Confirmation / Vacation of Arbitration Awards

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