814 N.W.2d 804
S.D.2012Background
- DT-Trak and Prue entered a stock purchase agreement with non-compete and related covenants; payments to Prue were disputed after he left DT-Trak.
- The agreement requires arbitration of disputes, with a three-person panel and written findings of fact and conclusions of law.
- Prue was awarded the ongoing payments after the arbitration panel found no breach of the non-compete.
- DT-Trak sought to vacate the award on grounds of evident partiality and insufficient findings; the circuit court denied.
- The South Dakota Supreme Court affirmatively evaluated FAA vs SDAA preemption but concluded the result is the same under either framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FAA preempts the SDAA under the agreement | DT-Trak argues FAA controls due to interstate commerce | Prue contends SDAA governs as chosen law | FAA and SDAA yield same outcome; preemption not required to decide |
| Whether there was evident partiality by a named arbitrator | DT-Trak claims Theeler biased due to prior contact with Price | Prue argues no demonstrated partiality; contact was minimal and non-dispositive | No evident partiality; award affirmed |
| Whether the panel's findings of fact and conclusions of law were sufficient | DT-Trak contends the findings were insufficient or undeveloped | Prue contends the panel complied with the agreement | Findings and conclusions sufficient; panel within authority |
| Whether there was an attorney-client relationship impacting partiality analysis | DT-Trak suggests potential conflict via Price's attorney contact | Not necessary to establish partiality; record shows no benefit to Prue | Irrelevant to partiality under the record; not vacating the award |
Key Cases Cited
- Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (U.S. 1968) (evident partiality standard: disclosure and appearance of bias must be considered)
- Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (U.S. 1995) (choice-of-law with arbitration does not automatically constrain arbitrator authority)
- Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (U.S. 1989) (preemption analysis guidance for arbitration and choice of law)
- Dinsmore v. Piper Jaffray, Inc., 1999 S.D. 56, 593 N.W.2d 41 (S.D. 1999) (FAA governs interstate arbitration agreements in SD)
- Vold v. Broin & Assocs., Inc., 2005 S.D. 80, 699 N.W.2d 482 (S.D. 2005) (state review of arbitration awards with similar standards)
- Spiska Eng’g, Inc. v. SPM Thermo-Shield, Inc., 2007 S.D. 31, 730 N.W.2d 638 (S.D. 2007) (narrow review of arbitrator findings; deference to award)
- March v. Thursby, 2011 S.D. 73, 806 N.W.2d 239 (S.D. 2011) (Foundational standard for meaningful review of arbitration findings)