182 F. Supp. 3d 119
S.D.N.Y.2016Background
- FINRA arbitration awarded Ackerman $1,102,193 (unpaid wages), 9% prejudgment interest from Nov. 1, 2012, $247,532 attorneys’ fees, and costs against Odeon and two employees; award dated Nov. 19, 2015.
- Petitioners (Odeon, Van Alstyne, Schwartzberg) moved in state court to vacate/remand the unpaid wages portion; Ackerman removed to federal court and moved to confirm the award.
- Arbitration hearing lasted six days; Petitioners argued damages calculations and spreadsheets were produced late and they lacked adequate opportunity to respond.
- Petitioners contended arbitrators (1) refused to hear material evidence/postpone hearing and (2) acted in manifest disregard of law in awarding wages, interest, attorneys’ fees, and joint/several liability; they later sought to add a fraud/perjury ground based on post‑hearing FINRA action against Ackerman.
- District Court denied vacatur, refused amendment to add fraud ground, confirmed the award, awarded costs (but not attorneys’ fees) to Ackerman, and directed submissions to calculate prejudgment interest and costs.
Issues
| Issue | Plaintiff's Argument (Petitioners) | Defendant's Argument (Ackerman) | Held |
|---|---|---|---|
| Whether award should be vacated for arbitrator misconduct (refusing to hear evidence/postpone hearing) | Panel ignored motion to require itemized trades and admitted late damages materials, denying adequate time to respond | Panel allowed hearing of materials, found Petitioners had the underlying data and were not prejudiced | Court: No misconduct rising to lack of fundamental fairness; petitioners had notice and opportunity; vacatur denied |
| Whether award was in manifest disregard of law (wage award, interest date, joint liability) | Wage award speculative; interest start date and joint/several liability improper | Award had at least a "barely colorable justification"; chosen interest date reasonable; LLC statute inapplicable to employment‑based liability | Court: No manifest disregard; confirmed award as issued |
| Whether attorneys’ fees award was improper because Ackerman prevailed on only one of many claims | Fees should be reduced because claims were separable | Arbitrators could find claims not clearly separable; full fee award justified | Court: Arbitrators had a colorable basis; fee award upheld |
| Whether Petitioners may amend to plead fraud/procurement by fraud based on alleged perjury and FINRA consent order | Ackerman lied about FINRA investigation and later signed an AW&C, which materially affected credibility and damages | Ackerman believed investigation was closed during arbitration; post‑hearing AW&C does not show material fraud affecting wage claim | Court: Petitioners failed to show material fraud undiscoverable with due diligence; amendment denied |
| Whether prevailing party (Ackerman) is entitled to attorneys’ fees for this confirmation proceeding | – | Requested costs and fees for confirmation | Court: Costs awarded under Rule 54(d); attorneys’ fees denied because Petitioners’ challenge was not without justification |
Key Cases Cited
- Wallace v. Buttar, 378 F.3d 182 (2d Cir.) (federal vacatur limited; no de novo review)
- Tempo Shain Corp. v. Bertek, 120 F.3d 16 (2d Cir.) (section 10(a)(3) review limited absent fundamental fairness violation)
- United Paperworkers Int’l Union v. Misco, 484 U.S. 29 (U.S. 1987) (arbitration errors not enough for vacatur absent bad faith/gross misconduct)
- Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200 (2d Cir.) (standard for manifest disregard of law)
- Kurt Orban Co. v. Angeles Metal Sys., 573 F.2d 739 (2d Cir.) (courts will not probe arbitrators’ reasoning absent manifest disregard)
- McCann v. Coughlin, 698 F.2d 112 (2d Cir.) (attorneys’ fees allocation depends on separability of claims)
- Karppinen v. Karl Kiefer Mach. Co., 187 F.2d 32 (2d Cir.) (fraud procurement standard for vacatur)
- Wien & Malkin LLP v. Helmsley-Spear, 6 N.Y.3d 471 (N.Y.) (New York law: arbitrator’s award must be upheld if there is even a barely colorable justification)