Weiss v. Sallie Mae, Inc.
939 F.3d 105
2d Cir.2019Background
- Robin Weiss had a Sallie Mae student loan and received many automated collection calls; she pursued a TCPA claim and the parties submitted the dispute to arbitration.
- Weiss had two cell numbers: calls to the 8683 number (which she conceded were within the Arthur class period) and later calls to the 6452 number (which she said were new and not provided to Sallie Mae).
- The Arthur class settlement covered persons who received ATDS calls between Oct. 27, 2005 and Sept. 14, 2010, and included a broad general release barring “any and all” TCPA claims by class members.
- The arbitrator found Weiss to be a member of the Arthur settlement class and that she received adequate notice, but he nonetheless awarded $108,500 in statutory TCPA damages for a subset of calls (interpreting the class notice to limit relief to certain dates).
- Sallie Mae moved to vacate the award; the district court vacated the arbitration award for manifest disregard of the law because the arbitrator ignored the settlement’s unambiguous general release.
- The Second Circuit agreed that the arbitrator’s decision was internally inconsistent (finding class membership/adequate notice yet awarding damages despite the release) and remanded to the district court to order the arbitrator to clarify whether the notice was sufficient and, if so, to construe the general release and modify/vacate the award as needed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitrator manifestly disregarded the law by ignoring the Arthur settlement’s unambiguous general release | Weiss: arbitrator interpreted the class notice and thus his contract interpretation is entitled to deference; any misinterpretation alone is not vacatur-worthy | Sallie Mae: the release unambiguously bars Weiss’s TCPA claims and the arbitrator ignored that term, warranting vacatur | Court: Arbitrator’s omission created an irresolvable tension between his findings; remand required so arbitrator can address the release (vacatur of district court’s vacatur; send back for clarification) |
| Whether an arbitrator’s erroneous contract interpretation is reviewable under FAA standards | Weiss: arbitrator’s interpretation of contract terms is for arbitrator and should stand if even colorable | Sallie Mae: if arbitrator ignores an unambiguous contract term, that is beyond mere error and may constitute manifest disregard | Court: Contract interpretation is for arbitrator, but failure to address an unambiguous release prevents review; clarification required to determine if decision was within bounds |
| Whether Weiss may collaterally attack the sufficiency of Arthur class notice and avoid being bound | Weiss: class notice may have been constitutionally deficient, so she cannot be bound by the settlement’s release | Sallie Mae: arbitrator found notice adequate and Weiss is bound | Court: If arbitrator intended to find notice insufficient, he must say so; the record contains an express finding of adequate notice, so the arbitrator must clarify whether he was simultaneously finding notice insufficient |
| Appropriate remedy for an incoherent arbitral award | Weiss: affirm award; arbitration rulings get heavy deference | Sallie Mae: vacatur or modification is appropriate because award conflicts with settlement release | Court: Remand to district court to remand to arbitrator for clarification and, if necessary, interpretation of the release and modification/vacatur; further district-court review after clarification |
Key Cases Cited
- Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (arbitrator’s contract interpretation review under FAA §10(a)(4))
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (vacatur when arbitrator dispenses his own brand of justice)
- Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (limits on judicial review of arbitration awards)
- Schwartz v. Merrill Lynch & Co., 665 F.3d 444 (2d Cir.) (manifest-disregard standard remains applicable in Second Circuit)
- T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329 (2d Cir.) (standard of review for manifest disregard; heavy burden to vacate)
- Wolfert ex rel. Estate of Wolfert v. Transamerica Home First, Inc., 439 F.3d 165 (2d Cir.) (preclusive effect of class judgments turns on adequacy of notice)
- Hardy v. Walsh Manning Sec., L.L.C., 341 F.3d 126 (2d Cir.) (court may seek clarification from arbitrator about intent when assessing manifest disregard)