The Tenth Circuit recently affirmed an arbitration award, but vacated the lower court’s ruling regarding post-award prejudgment interest. In a lengthy opinion, the Court discussed, and ultimately rejected, each of the defendant’s arguments for vacating the award, including: (1) that the arbitrator lacked jurisdiction; (2) that the defendants were not judicially estopped from asserting that the arbitrator lacked jurisdiction; (3) that the arbitrator acted outside the scope of his authority; (4) that he manifestly disregarded the law and violated public policy; and (5) that the district court failed to apply the proper deferential standard of review.
The Defendant first argued that the arbitrator lacked jurisdiction over certain claims heard in the second phase of the bifurcated arbitration. Unlike the “first-phase” claims, which arose directly out a promissory note between the parties (which contained an arbitration provision), all “second-phase” claims occurred after the plaintiff had been released from liability under the note. As such, the defendants argued that there was no meeting of the minds to arbitrate the second-phase claims. The Court disagreed, concluding that note’s arbitration clause applied to all controversies arising out of and related to the note, including defendant’s tortious actions after the note expired.
Next, the Defendant argued that they did not waive their right to have the second-phase claims tried in court, despite having joined in a motion to stay. The Court disagreed, finding that “defendants waived any objection to arbitration and were estopped from asserting that the arbitrator lacked jurisdiction because they had stated, when they joined [the] motion for stay, that this action must be arbitrated.”
Interestingly, in addressing the defendant’s claim of manifest disregard, the Court (which has not previously addressed judicially-created grounds for vacatur after Hall Street) discussed the Supreme Court’s May 2008 decision in Hall Street v. Mattel, but avoided the ultimate question of whether judicially-created grounds for vacatur survive, by stating that manifest disregard was not shown in any event. This fact is significant, as it demonstrates that this Court is sensitive that Hall Street may have eliminated the judicially created bases for vacating awards. Hicks v. The Cadle Co., Case Nos. 08-1306, 1307, 1429, 1435 (10th Cir. Dec. 7, 2009).