Kubiak v. Canon McMillan School District, 690 F. App'x 80

Background

Plaintiff Cayla Kubiak sued Canon McMillan School District and individual employees claiming sexual-contact injuries; the case was removed to federal court and the parties agreed to binding arbitration.
The District Court issued a May 16, 2014 order sending the case to arbitration and stating the parties "agree that the case will be submitted to the arbitrator as a high-low arbitration" but that the specific high/low amounts "will be discussed and agreed upon" at a June 12, 2014 mediation; the order did not specify numeric parameters.
At the June 12, 2014 mediation the parties did not execute a written agreement setting high/low parameters; Kubiak contends they agreed to $1,000,000 (high) / $50,000 (low), defendants deny any such agreement and say defendants offered $50,000 which Kubiak rejected.
Defendants notified the arbitrator by letter (copied to Kubiak) that the mediation had failed and the case would proceed "without a high-low parameter" and that defendants retained the right to contest liability; Kubiak did not sign that letter.
The arbitrator granted summary judgment for defendants on all claims (finding no liability) on June 5, 2016 and made no award to Kubiak.
Kubiak moved in District Court to enforce the May 16, 2014 order as including a $1,000,000/$50,000 high-low agreement and requested the $50,000 low; the District Court granted the motion without an evidentiary hearing. Defendants appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether parties formed an enforceable high-low agreement with specific numeric parameters	Kubiak: parties agreed at mediation to $1,000,000/$50,000 high-low; thus low is payable despite arbitrator finding no liability	Defendants: no meeting of the minds on material terms; May 16 order reserved parameters for mediation and parties never agreed to numbers	Reversed District Court: May 16 order did not evidence agreement on material terms; no enforceable high-low on this record
Whether defendants waived argument that high-low was not agreed by failing to file a modification or sign arbitrator letter	Kubiak: defendants waived by not seeking Court modification and by not objecting	Defendants: no waiver; cannot be required to enforce a contract missing essential terms	Court of Appeals: no waiver — cannot enforce provision missing essential terms; waiver finding erroneous
Whether the dispute about whether an enforceable high-low was reached can be decided on the existing record	Kubiak: District Court resolved based on pleadings and record	Defendants: factual dispute about what occurred at mediation requires credibility findings	Held: factual dispute cannot be resolved on record; remand for evidentiary hearing to determine whether parties agreed to high-low parameters and, if so, their terms and effect given arbitrator's liability finding
Whether plaintiff may recover the low amount despite arbitrator's adverse liability ruling	Kubiak: enforcement of high-low entitles her to low regardless of liability finding	Defendants: cannot be required to pay when arbitrator found no liability absent an agreed rule shifting risk	Held: Court did not decide this on merits; remand to District Court to resolve after factual hearing (including whether parties intended low to bind regardless of liability)

Key Cases Cited

Edwards v. HOVENSA, LLC, 497 F.3d 355 (3d Cir. 2007) (standard of appellate review for enforcement of arbitration-related orders)
AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643 (U.S. 1986) (arbitration is contractual and depends on parties' agreement)
Mazzella v. Koken, 739 A.2d 531 (Pa. 1999) (settlement agreements require meeting of the minds on all material terms)
Tiernan v. Devoe, 923 F.2d 1024 (3d Cir. 1991) (when enforcement of settlement hinges on factual and credibility questions, an evidentiary hearing is required)
Garabedian v. Allstates Eng’g Co., 811 F.2d 802 (1st Cir. 1987) (same principle on need for hearing when factual disputes determine relief)