CM South East Texas Houston, LLC v. Careminders Home Care, Inc.
662 F. App'x 701
| 11th Cir. | 2016Background
- Parties: Plaintiffs CM South East Texas Houston, LLC and South East Texas KCH Co., LLC sued CareMinders for breach of contract and arbitrated the dispute per their contracts.
- Arbitrator initially set a five-day final hearing for Dec 8–12, 2014, which was twice rescheduled to Feb 9–13, 2015 and then to Mar 9–13, 2015.
- CareMinders requested a postponement after a key witness, Gary Kneller, faced a family medical emergency; plaintiffs agreed to reschedule and asked for dates between May–September 2015.
- The arbitrator declined a long postponement, held a conference, and instead rescheduled the hearing narrowly to Mar 18–21, 2015; Kneller attended and testified, and his mother died five days after the hearing.
- The arbitrator awarded in favor of the plaintiffs; plaintiffs moved to confirm the award in federal court; CareMinders moved to vacate under FAA §10(a)(3) claiming arbitrator misconduct for refusing the longer postponement.
- District court denied vacatur and confirmed the award; Eleventh Circuit affirmed and denied plaintiffs’ request for appellate sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitrator misconduct under FAA §10(a)(3) requires vacatur for refusing to grant CareMinders’ requested long postponement | Award should be confirmed; arbitrator acted properly | Arbitrator refused agreed postponement and thus engaged in misconduct warranting vacatur | No misconduct warranting vacatur: arbitrator granted a shorter postponement with a reasonable basis and did not act unreasonably |
| Whether arbitrator’s refusal prejudiced defendant’s right to a fair hearing | No prejudice; hearing was fair | Prejudice because Kneller was distracted and could not present material testimony as he would have if postponed until May–Sept | No sufficient prejudice: Kneller testified at length and defendant failed to identify specific missed material testimony |
| Whether mutual agreement of parties to postpone makes arbitrator’s refusal per se unreasonable | N/A | A per se rule applies when both parties agree to postpone | Rejected: arbitrator can consider his convenience and need for expeditious resolution; no per se rule |
| Whether appeal was frivolous and sanctions appropriate under Fed. R. App. P. 38 | Plaintiffs sought sanctions | CareMinders’ appeal was frivolous and should be sanctioned | Denied sanctions: appeal not entirely baseless given limited Eleventh Circuit precedent on postponement-vacatur claims |
Key Cases Cited
- Johnson v. Directory Assistants, Inc., 797 F.3d 1294 (11th Cir. 2015) (party must show no reasonable basis for arbitrator’s refusal to postpone to establish misconduct)
- Schmidt v. Finberg, 942 F.2d 1571 (11th Cir. 1991) (arbitrator may consider convenience of parties and arbitrator and the need for expeditious resolution when scheduling)
- Robbins v. Day, 954 F.2d 679 (11th Cir. 1992) (vacatur requires prejudice that denies a party a fair hearing)
- Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16 (2d Cir. 1997) (example where denial of postponement prevented presentation of a key witness’s material testimony)
- Rosensweig v. Morgan Stanley & Co., Inc., 494 F.3d 1328 (11th Cir. 2007) (arbitration requires a fundamentally fair hearing, not perfection)
- B.L. Harbert Int’l, LLC v. Hercules Steel Co., 441 F.3d 905 (11th Cir. 2006) (warning against baseless post-arbitration litigation and discussion of sanctions)
- Gianelli Money Purchase Plan & Trust v. ADM Investor Servs., Inc., 146 F.3d 1309 (11th Cir. 1998) (standard of review: factual findings for clear error, legal conclusions de novo)