420 F.Supp.3d 89
W.D.N.Y.2019Background
- In 2002 the Seneca Nation and New York entered a gaming Compact granting the Nation exclusivity in much of Western New York in exchange for graduated revenue-sharing (“State Contribution”); Compact effective Dec. 9, 2002.
- Compact provided a 14‑year initial term (Dec. 31, 2002 start of payments) with automatic 7‑year renewal unless either party objected; Compact specified percentage payments for years 1–14 but was silent about payments in the 7‑year renewal period.
- The Nation paid roughly $1.4 billion during the initial 14 years but, after automatic renewal on Dec. 9, 2016, stopped State Contribution payments and notified the State that Dec. 2016 payment would be final.
- Parties submitted the dispute to a three‑member arbitration panel. A 2–1 majority found the renewal provision ambiguous, considered extrinsic evidence, and concluded the Compact requires 25% State Contribution during Years 15–21; the majority awarded specific performance and quantified $255,877,747.44 owed for Jan. 1, 2017–Dec. 31, 2018.
- The Nation moved to vacate the Final Award under the FAA, arguing manifest disregard of IGRA because the Secretary of the Interior never approved revenue sharing for the renewal; the State cross‑petitioned to confirm.
- The district court held the Nation’s challenge timely (challenging the Final Award), found no statutory basis or manifest disregard to vacate, declined to refer the matter to the DOI, denied fees to the State, and confirmed the Partial Final and Final Awards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of Nation’s vacatur motion under FAA §12 | Nation: challenge is to the Final Award (specific performance), filed within 3 months, so timely | State: Nation actually attacks liability decided in Partial Final Award (Jan. 7), so filings are untimely | Court: Nation’s challenge properly targets Final Award (remedy); filings are timely |
| Whether award must be vacated for manifest disregard of IGRA (Secretary approval) | Nation: If renewal ambiguity exists, Secretary did not approve revenue‑sharing for Years 15–21; arbitrators thus amended Compact without DOI approval and manifestly disregarded law | State: Panel merely interpreted an already‑approved Compact under its arbitration mandate; interpretation is not an amendment and is not subject to Secretary approval | Court: No manifest disregard; panel considered IGRA issue and reasonably concluded it was interpreting—not amending—the approved Compact; vacatur denied |
| Whether statutory vacatur grounds exist under 9 U.S.C. §10(a) | Nation: (did not invoke §10 statutory grounds other than manifest‑disregard theory) | State: No statutory grounds for vacatur apparent | Court: No §10(a) grounds shown; none apply |
| Whether the court should invoke primary jurisdiction to refer question to DOI | Nation: Court should ask DOI whether Secretary approved revenue sharing for renewal | State: Referral would undermine arbitration agreement and is unnecessary | Court: Primary‑jurisdiction referral unwarranted; question is contractual interpretation within court/arbitrators’ competence |
Key Cases Cited
- Hall St. Assocs. v. Mattel, 552 U.S. 576 (U.S. 2008) (FAA does not itself confer federal jurisdiction)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (arbitration doctrine and federal‑court relationships)
- Vaden v. Discover Bank, 556 U.S. 49 (U.S. 2009) (federal‑question jurisdiction analysis in FAA context)
- Trade & Transport, Inc. v. Nat. Petroleum Charterers, Inc., 931 F.2d 191 (2d Cir. 1991) (when bifurcated liability award may be final under FAA)
- Michaels v. Mariforum Shipping, S.A., 624 F.2d 411 (2d Cir. 1980) (finality requirement for arbitration awards)
- Florasynth, Inc. v. Pickholz, 750 F.2d 171 (2d Cir. 1984) (confirmation of arbitration award is summary proceeding)
- D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006) (summary nature of confirmation and FAA policy favoring arbitration)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (arbitration enforcement principles)
- Porzig v. Dresdner, Kleinwort, Benson, N. Am. LLC, 497 F.3d 133 (2d Cir. 2007) (deference to arbitration awards)
- Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383 (2d Cir. 2003) (vacatur requires narrow statutory grounds)
- T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329 (2d Cir. 2010) (manifest‑disregard standard bars review of contract interpretation)
- Weiss v. Sallie Mae, Inc., 939 F.3d 105 (2d Cir. 2019) (recent articulation of manifest‑disregard standard)
- Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200 (2d Cir. 2002) (two‑part manifest‑disregard test)
- Jock v. Sterling Jewelers Inc., 646 F.3d 113 (2d Cir. 2011) (errors of law/fact insufficient for vacatur)
- Stolt‑Nielsen S.A. v. Animalfeeds Int’l Corp., 559 U.S. 662 (U.S. 2010) (arbitrator must not dispense own brand of industrial justice)
- Andros Compania Maritima, S.A. v. Marc Rich & Co., 579 F.2d 691 (2d Cir. 1978) (barely colorable justification standard for enforcing awards)
- Rocket Jewelry Box, Inc. v. Noble Gift Packaging, Inc., 157 F.3d 174 (2d Cir. 1998) (finality and definitiveness required for FAA review)