Scurtu v. Hospitality and Catering Management Services, Slip Copy, 2012 WL 4061759 (S.D.Ala. September 13, 2012).
In the 2008 U.S. Supreme Court decision, Hall Street Associates L.L.C. v. Mattel, Inc., the Court held that an arbitration award under the Federal Arbitration Act (FAA) “must” be confirmed “unless” it is vacated, modified, or corrected “as prescribed,” in §§ 10 and 11 of the FAA. Hall Street instructs courts to grant confirmation of an arbitration award, except when one of the “prescribed” exceptions applies.
A federal court in the Southern District of Alabama recently reaffirmed the 11th Circuit’s narrow following of Hall Street holding that the FAA’s specifically enumerated bases provides the only justification to vacate or modify an arbitration award.
In what appears to have been an extremely contentious dispute, the plaintiffs filed suit against the defendant alleging the defendant defrauded the plaintiff and breached the parties’ agreement whereby the defendant was to train the plaintiffs in the hospitality and catering industry. After a circuitous journey through the courts and arbitration process, and after the parties reached an apparent settlement that was later purportedly breached, the arbitrator issued his final order awarding plaintiff’s damages in the amount specified in the settlement agreement. The plaintiffs, apparently not pleased with the amount awarded by the arbitrator, moved to vacate the award. In doing so, the plaintiffs did not (1) provide a legal standard for vacatur; (2) did not frame their legal argument consistent with the FAA grounds for vacatur; and (3) failed to provide evidence of attorneys’ fees, despite being awarded them by the arbitrator. Accordingly, the district court denied the parties’ motion to vacate.
While this case provides many practical pointers, the import of the court’s decision is this: the process for vacating an award in the 11th Circuit after Hall Street will likely be strict and narrow (“unless plaintiffs fit their grounds for seeking vcatur or modification of the arbitrator’s award into one or more of these narrow enumerated statutory boxes, their motion [will fail] as a matter of law.”).