Opinion
No. FST CV 11 6009668 S
November 21, 2011
MEMORANDUM OF DECISION RE MOTIONS (#117, #131, #129 AND #137)
This case comes to this court as an application to vacate arbitration being Pleading No. 117 the objection thereto being Pleading No. 131, a motion to confirm No. 129 and the objection thereto pleading No. 137. The defendants Christopher Murphy, Jeremy Weemhoff and Mark Janssens, herein after called the defendants moved the court pursuant to Connecticut General Statutes § 52-418 for an Order vacating a permanent injunction entered against them, and in favor of their former employer, plaintiff Williams Trading, LLC by a panel of arbitrators operating under the auspices of the Financial Industry Regulatory Authority ("FINRA"). The defendants claim the permanent injunction order entered by the FINRA arbitration panel should be vacated either because (1) the award exceeds arbitrable powers by manifestly disregarding the law, or (2) the award contravenes established public policy.
The defendants claim the panel exceeded its authority by issuing an order that is contrary to Connecticut law. The defendants further claim the panel manifestly disregarded the law. The defendants claim that the award should be vacated on public policy grounds. The defendants claim that the award should be vacated under Connecticut General Statutes § 52-418.
On or about May 23, 2011, Williams Trading, LLC ("WTCO") sought, and received an ex parte temporary injunction order prohibiting each defendant from wrongful misuse of WTCO's confidential trade secret and business information. In its order, the court enjoined defendants from further disclosing, transferring or using in any way WTCO's confidential trade secret information. The court further ordered defendants to return all misappropriated confidential information to WTCO, and provide WTCO with a statement under oath that they possessed no additional proprietary trade secret information. Defendants did not comply with this order. The court ordered defendants to cease all contact with any WTCO clients. The court's orders were based upon documentary evidence and affidavit testimony provided by plaintiff, in support of its motion.
On May 26, 2011, WTCO filed a mandatory Statement of Claim with the Financial Industry Regulatory Authority ("FINRA") seeking the appointment of a FINRA Arbitration Panel to permanently enjoin defendants from further wrongful misuse of WTCO's Confidential information. Under the FINRA Rules, by which all parties to this action were voluntarily bound, all disputes must be resolved through arbitration.
Subsequently, the parties jointly vetted and selected three qualified FINRA arbitrators to hear their dispute. Additionally, the parties entered into a binding agreement to arbitrate by executing FINRA Arbitration Submission Agreements. The Submission was unrestricted and provided, in part:
The undersigned parties ("parties") hereby submit the present matter in controversy, as set forth in the attached statement of claim, answers and all related cross claims, counterclaims, and/or third party claims which may be asserted to arbitration in accordance with the FINRA By-Laws, Rules, and Code of Arbitration procedure.
The parties agree to abide by and perform any award(s) rendered pursuant to this Submission Agreement. The parties further agree that a judgment and any interest due thereon, may be entered upon such award(s) and, for these purposes, the parties hereby voluntarily consent to submit to the jurisdiction of any court of competent jurisdiction which may properly enter such judgment.
By signing the Submissions, the parties also agree to be bound by the procedures and rules of FINRA.
On June 10, 2011, and again on June 14, 2011, the parties participated in full evidentiary hearings before the pre-selected FINRA arbitration panel. Their current employer, Access Securities, LLC ("Access"), also participated. After receiving and reviewing extensive documentary evidence, and hearing two days of testimony, on June 20, 2011, the FINRA Panel essentially confirmed this court's orders by issuing a one-year permanent injunction against defendants, and Access Global.
This case involves an unrestricted arbitration submission. The law regarding the scope of judicial review of arbitration awards resulting from unrestricted submissions is narrowly confined and well-settled. "When the parties agree to arbitration and establish the authority of the arbitrator through the terms of their submission, the extent of our judicial review of the award is delineated by the scope of the parties' agreement . . . When the review scope of the submission is unrestricted, the resulting award is not subject to de novo review even for errors of law so long as the award conforms to the submission. East Greyrock, LLC et al. v. OBC Associates, Inc. et al., No X08 CV 044002173S 2010 WL 3448075 (Conn.Super. Aug. 2, 2010) citing McCann v. Commissioner of Environmental Protection, 288 Conn. 203, 214-15, 952 A.2d 43 (2008) (internal citation omitted). Moreover, because our courts highly favor arbitration as a means of settling disputes between private parties, courts "undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution." Where an arbitration submission does not state otherwise, as in the case here, "arbitrators are empowered to decide factual and legal questions," and a court may not review the evidence of the arbitrators' determinations regarding the legal questions involved. "In other words, [u]nder an unrestricted submission, the arbitrator's decision is considered final and binding; thus, the courts will not review the evidence considered by the arbitrators nor will they review the award for errors of fact or law."
In an unrestricted submission arbitration, the court is not permitted to review the facts, review the legal standard governing the facts, or review the application of the controlling legal standard to the facts to reach an ultimate conclusion.
There are recognized exceptions to this standard of review, and they include those circumstances when an award violates clear public policy or contravenes one or more of the statutory proscriptions of Connecticut General Statutes § 52-418. In those situations there is a heightened standard of review.
When addressing the question of whether an award should be set aside under the statute, the court is looking at whether the award "manifests an egregious or patently irrational application of the law . . . because the arbitrator exceeded (his) powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made." In other words, was there a "manifest disregard" of the law.
The court finds that there is no violation of Connecticut General Statutes § 52-418. The court finds that the panel did not exceed its authority by issuing the order it issued. The court finds that the panel did not manifestly disregard the law. The court does not find a violation of public policy. All other claims made if any, by the defendants not expressly addressed herein are denied.
The court has reviewed the papers as submitted and all relevant documents and denies the motion to vacate the Arbitration Award No. 117 and sustains the Objection No. 131. The court further grants the application to confirm the FINRA Arbitration Award No. 129 and overrules the Objection No. 137.