Contech Construction Products, Inc. v. Heierli
764 F. Supp. 2d 96
D.D.C.2011Background
- Contech and Werner Heierli are BEBOTech shareholders in a dispute governed by Delaware law and CPR dispute-resolution provisions, including arbitration in Washington, D.C.
- Two related actions: Contech seeks to vacate a May 7, 2009 Partial Award; Heierli seeks to confirm the Partial Award and later the Final Award issued November 12, 2009.
- The Partial Award found Contech breached fiduciary duties and contract; Heierli could recover a value-based amount for his BEBOTech shares and interim attorneys’ fees, but damages were not proven.
- A put/call framework existed for Heierli to sell his BEBOTech shares to Contech under the Stockholders’ Agreement; dispute over the calculated purchase price led to a Final Award and separate enforcement actions.
- Contech and Heierli moved to vacate the awards and to confirm the Final Award; the court consolidated review and must decide enforceability of both awards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA governs review of arbitration awards | Contech argues D.C. UAA governs review | Heierli argues FAA governs default review | FAA governs the review of the awards |
| Whether arbitrator had authority to award attorneys’ fees and costs | Arbitrator lacked authority under CPR 16.2/10.3 and Delaware law | Arbitrator had jurisdiction under CPR Rules and Delaware law | Arbitrator had jurisdiction to award fees and costs; not exceeded powers |
| Whether final award should be vacated for manifest disregard of the law | GAAP-based challenge; misapplication of Delaware/CPR law | No manifest disregard; extensive record supports decision | No manifest disregard; award affirmed on narrow FAA review |
| Whether Delaware substantive law governs arbitral resolution | Delaware law governs administration/interpretation | Same; dispute noted for conflicts | Delaware substantive law governs arbitral resolution |
Key Cases Cited
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (parties may designate arbitrator to determine scope of arbitration)
- Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (FAA §10/11 exclusive grounds for vacatur/modification")
- United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (U.S. 1987) (limited grounds for reviewing arbitral awards)
- Republic of Argentina v. BG Group PLC, 715 F.Supp.2d 108 (D.D.C. 2010) (manifest disregard concerns discussed post-Hall Street; applicable in some circuits)
- Kanuth v. Prescott, Ball & Turben, Inc., 949 F.2d 1175 (D.C. Cir. 1991) (arbiter’s authority limitations; narrow excess-of-authority standard)