In a ruling that may impact the world of commercial arbitrations, the United States Court of Appeals for the Seventh Circuit affirmed a district court's denial of a motion to vacate an arbitration award on the basis that it was filed one-day too late.
In David M. Webster v. A.T. Kerney, Inc. et al., No. 06-3094, (7th Cir. Nov. 2, 2007), the arbitrator in an underlying employment dispute issued an award on January 4, 2006 by sending copies via mail and email to counsel for each party. On April 3, 2006, Webster sought to vacate the award in the United States District Court for the Northern District of Illinois, but erroneously filed a complaint instead of a motion to vacate. Thereafter, on April 5, 2006, Webster properly served and filed a motion to vacate the award.
The district court rejected Webster’s motion to vacate on the basis that it was not filed within the three-month limitations period as required by Section 12 of the Federal Arbitration Act. On appeal, Webster argued, among other things, that the limitations period did not begin to run until after the award was received in the mail or when the email transmitting the award was opened. In rejecting these arguments, the Seventh Circuit ruled that the statute of limitations began to run on the date the award was delivered which, under the AAA rules, occurs when an award is actually placed in the mail. The court further ruled that a different standard should not apply to email, as the date of delivery occurs when the email is actually sent. Accordingly, the court upheld the district court's finding that the limitation period began to run when the award was sent via mail and email on January 4, 2006. Click here to review a copy of the Seventh Circuit's decision.