Opinion
Civil Action No. 00-10357-RWZ.
January 4, 2002
MEMORANDUM OF DECISION
Plaintiff, Seagate Technology International ("Seagate"), seeks to vacate an arbitration award that granted Defendant, Alliance Computer Systems ("Alliance"), all reasonable attorneys fees and American Arbitration Association ("AAA") administrative costs related to the arbitration proceedings. The arbitration arose from a commercial dispute. Plaintiff filed suit to collect the balance on an invoice for goods sold to Defendant. Defendant counterclaimed for monies allegedly advanced by it to Plaintiff and requested arbitration of all claims. Both parties then agreed to stay the court proceedings and arbitrate their dispute, pursuant to Paragraph 18.6 of the International Industrial Distribution Agreement ("Agreement"), which provided for arbitration of any controversy or claim arising out of or relating to the Agreement.
The arbitrator decided that since the dispute related to the purchase and sale of goods, it arose out of or related to the Agreement, and was properly subject to arbitration. In The Matter of Arbitration Between Alliance Computer Systems, Inc. v. Seagate Technology Inc., Interim Award of the Arbitrator, ¶ 12, July 2, 2001. He determined that neither party was entitled to recovery on the merits, but "since the essence of the lawsuit was SEAGATE's initial claim, ALLIANCE is the prevailing party herein for purposes of the award of attorney's fees and costs pursuant to paragraph 18.5 of the Agreement." Id. at ¶ 20. Alliance moved for confirmation of the award. Thereafter, Plaintiff filed its opposition, as well as a motion to vacate the award, alleging that the arbitrator exceeded the scope of his decision-making authority.
Plaintiff argues that the arbitration award should be set aside "where the contract containing the arbitration clause, by the arbitrator's own conclusion, does not govern the claims of either party submitted to arbitration, and hence does not cover the parties' dispute." As an initial matter, this statement misconstrues the arbitrator's decision. Although the arbitrator concluded that the purchase at issue was not covered by the Agreement, he found that the parties dispute as to that purchase did, in fact, fall within the purview of paragraph 18.6, as a "controversy or claim arising out of or relating to . . ." the Agreement. That aside, Plaintiff fails to point to any evidence of egregious overreaching, necessary to vacate an arbitration award.
Paragraph 13 of the arbitrator's decision, addressing Seagate's claim, states that "[i]nsofar as the dispute arising out of this purchase is a claim `arising out of or relating to' the agreement, it is properly subject to these arbitration proceedings." (emphasis in original). As to Alliance's claim, paragraph 15 states that "this claim is also one `relating to' [the Agreement] and is properly a part of this arbitration proceedings." (emphasis in original).
Judicial review of an arbitrator's decision is "extremely narrow and exceedingly deferential." Wonderland Greyhound Park, Inc. v. Autotote Systems, Inc., ___ F.3d ___, Nos. 01-1849, 01-1911 (1st Cir., Dec. 19, 2001) (citations omitted). If the award is "in any way plausible," regardless of whether a serious error was committed, the reviewing court must enforce it. Id.; Gupta v. Cicso Sys., Inc., No. 01-1122, 2001 WL 1504671 at *2 (1st Cir., Dec.3, 2001). In rare circumstances of arbitrator misconduct, such as exceeding the scope of one's arbitral authority or making an award in manifest disregard of the law, a court may vacate the award. Wonderland Greyhound Park, ___ F.3d ___. Plaintiff may not voluntarily agree to an arbitrator's interpretation of a contract, only to contest the arbitrator's authority when he renders an unfavorable decision. After all, it is "the arbitrator's view . . . of the meaning of the contract that [the parties] have agreed to accept." United Paperworks Int'l Union v. Misco, Inc., 484 U.S. 29, 37-8 (1987). Because the arbitrator's interpretation of the parties' Agreement was not only plausible, but indeed, logical, it is not subject to vacation based on Plaintiff's assertion of arbitral overreaching.
Plaintiff's second argument is loosely based on a manifest disregard of the law theory. Specifically, Plaintiff argues that the arbitrator erred in awarding attorney's fees and costs to Defendant, after finding that both parties' claims failed on the merits.
An award is in manifest disregard of the law if either "the award is contrary to the plain language of the contract," or "it is clear from the record that the arbitrator recognized the applicable law, but ignored it." Gupta, 2001 WL 1504671, at *2. Plaintiff's reliance on the so-called "American Rule," which states that each party bears the burden of its own legal expenses unless otherwise provided by contract or statute, ignores the fact that the parties' agreement specifically spoke to the burden of attorney's fees. Paragraph 18.5 provided that "in the event of any litigation or arbitration hereunder, the arbitrator or court shall award costs and reasonable attorney's fees to the prevailing party." (emphasis added). The arbitrator concluded, that although neither party's claims were viable, Alliance was the prevailing party for the purposes of paragraph 18.5 of the Agreement. He based his decision on the fact that Seagate initiated the lawsuit, presumably forcing Alliance to respond and ultimately file a counterclaim. Again, the decision to declare Alliance the prevailing party is within the province of the arbitrator and in no way conflicts with any provision in the contract, or with existing law.
Accordingly, Defendant's motion to confirm the arbitration award is allowed; Plaintiff's motion to vacate is denied. Judgment may be entered for Defendant.