Dalton Johnson v. Directory Assistants Inc.
2015 U.S. App. LEXIS 14600
| 11th Cir. | 2015Background
- DAI (advertising consultant) contracted with AWCRA; Johnson signed the contract listing "Alabama Women’s Center L.L.C." though no such entity was registered; contract contained an arbitration clause allowing the filing party to unilaterally select forum and law if good-faith negotiations failed.
- Dispute arose after plaintiffs stopped paying DAI; DAI repeatedly sought agreement on forum and law and gave deadlines; plaintiffs were largely nonresponsive and later withdrew from arbitration shortly before the hearing, citing "extraordinary circumstances."
- DAI filed for arbitration with the ADRC; Mark Connolly was appointed arbitrator; plaintiffs challenged him for prior service involving DAI but the ADRC denied replacement and plaintiffs participated in preliminary conferences before withdrawing.
- The arbitrator proceeded ex parte, held a hearing, and issued an award in favor of DAI for about $99,672, applying the contract’s liquidated-damages clause.
- Plaintiffs sued in state court seeking vacatur of the award (and asserting other claims); DAI removed to federal court and sought to compel arbitration of plaintiffs’ counterclaims; the district court construed the vacatur request as a motion, granted it on grounds of evident partiality, and compelled arbitration of counterclaims.
- Eleventh Circuit reviewed and concluded none of the statutory vacatur grounds (9 U.S.C. §10(a)) were met; it vacated the district court’s vacatur order and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was plaintiffs’ inclusion of a vacatur request in their complaint procedurally improper under the FAA? | The vacatur request was improper because FAA requires a separate motion under 9 U.S.C. §6. | The court may construe the complaint as a motion where parties have briefed the issue. | Court: treating the complaint as a motion was permissible (O.R. Securities control). |
| Was the arbitration award vacatable for evident partiality under §10(a)(2)? | Arbitrator/ADRC refusal to disclose number of prior ADRC–DAI cases and prior service created a reasonable impression of bias. | Disclosure and ADRC’s conduct did not create a reasonable impression of partiality; record lacks evidence of requested disclosures. | Court: plaintiffs failed to show nondisclosure created reasonable impression of partiality; vacatur on §10(a)(2) not warranted. |
| Was vacatur proper under §10(a)(3) for refusing to postpone hearing or refusing to hear material evidence? | Plaintiffs withdrew citing extraordinary circumstances and assert arbitrator should have postponed or considered their submitted evidence. | Plaintiffs gave no adequate, timely request to postpone, offered no evidence of financial hardship, and failed to identify specific evidence the arbitrator ignored. | Court: no reasonable basis to vacate under §10(a)(3); mere disagreement or late withdrawal insufficient. |
| Did arbitrator exceed powers under §10(a)(4) by finding good-faith negotiation and applying liquidated-damages clause? | Arbitrator misapplied law: DAI did not act in good faith and liquidated-damages were an unenforceable penalty. | Arbitrator construed and applied the contract; even arguable interpretation precludes vacatur under Oxford Health. | Court: arbitrator acted within powers; §10(a)(4) vacatur not justified. |
Key Cases Cited
- O.R. Securities, Inc. v. Professional Planning Associates, Inc., 857 F.2d 742 (11th Cir. 1988) (court may treat improperly‑captioned pleadings as motions when parties have fully briefed the issue)
- Scott v. Prudential Sec., Inc., 141 F.3d 1007 (11th Cir. 1998) (standards for vacatur under §10(a)(3) and deference to arbitrator’s scheduling decisions)
- Univ. Commons‑Urbana, Ltd. v. Universal Constructors, Inc., 304 F.3d 1331 (11th Cir. 2002) (evident partiality standard: actual conflict or nondisclosure that would lead a reasonable person to infer bias)
- Lifecare Int’l v. CD Medical, 68 F.3d 429 (11th Cir. 1995) (focus on whether undisclosed facts create reasonable impression of partiality)
- Frazier v. CitiFinancial Corp., LLC, 604 F.3d 1313 (11th Cir. 2010) (§10(a) statutory vacatur grounds are exclusive post‑Hall Street)
- Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (limits on judicial vacatur/remand beyond grounds in FAA)
- Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013) (an arbitrator’s decision must stand if it even arguably construes or applies the contract)