Professional Documents
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Publish United States Court of Appeals For The Tenth Circuit
Publish United States Court of Appeals For The Tenth Circuit
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
Plaintiff - Appellant,
v. No. 16-2041
Defendant - Appellee.
_________________________________
Lori D. Proctor, Cooper & Scully, P.C., Houston, Texas, for Plaintiff-Appellant.
Jennifer J. Foote (Dusti D. Harvey with her on the brief), Harvey and Foote Law Firm,
LLC, Albuquerque, New Mexico, for Defendant-Appellee.
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decision only in very unusual circumstances. Oxford Health Plans LLC v. Sutter,
133 S. Ct. 2064, 2068 (2013) (quoting First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938, 942 (1995)). That limited judicial review . . . maintain[s] arbitrations
(quoting Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 588 (2008)).
Section 10(a) of the FAA delineates the four very unusual circumstances for
vacating arbitration awards. Oxford Health Plans LLC, 133 S. Ct. at 2068; see 9
U.S.C. 10(a). Here, we consider whether an arbitrator exceeded his authority under
10(a)(4) and whether he manifestly disregarded the law in awarding certain costs
and fees to the prevailing party. Under our restrictive standard of review, we
conclude that the arbitrator did not exceed his authority or manifestly disregard the
law. So we affirm.
1. Standard of Review
review legal questions de novo and factual findings for clear error. CEEG
(Shanghai) Solar Sci. & Tech. Co. v. LUMOS LLC, 829 F.3d 1201, 1205 (10th Cir.
2016). An error is clear if the district courts findings lack factual support in the
record or if, after reviewing all the evidence, we have a definite and firm conviction
that the district court erred. Id. at 1205-06 (quoting Middleton v. Stephenson, 749
Though [w]e do not owe deference to the district courts legal conclusions,
2
omitted). Our task is to assess whether the district court correctly followed the
Brown v. Coleman Co., 220 F.3d 1180, 1182 (10th Cir. 2000) (emphasis added). So
our review is extremely limited. Dominion Video Satellite, Inc. v. Echostar Satellite
L.L.C., 430 F.3d 1269, 1275 (10th Cir. 2005). In addition, we have emphasized that a
court should exercise great caution when a party asks for an arbitration award to be
set aside. Ormsbee Dev. Co. v. Grace, 668 F.2d 1140, 1147 (10th Cir. 1982).
circumstances warrant vacatur of an arbitral award. San Juan Coal Co. v. Intl
Union of Operating Engrs, Local 953, 672 F.3d 1198, 1201 (10th Cir. 2012) (citing
Major League Baseball Players Assn v. Garvey, 532 U.S. 504, 509 (2001)
(per curiam)).The Court has also said that if the arbitrator is even arguably
construing or applying the contract and acting within the scope of his authority, that a
court is convinced he committed serious error does not suffice to overturn his
decision. United Paperworkers Intl Union, AFL-CIO v. Misco, Inc., 484 U.S. 29,
38 (1987); Oxford Health Plans LLC, 133 S. Ct. at 2068 (describing the sole
question for courts as whether the arbitrator (even arguably) interpreted the parties
3
contract, not whether he got its meaning right or wrong). Even so, [t]he arbitrator
may not ignore the plain language of the contract. Misco, 484 U.S. at 38.
even though the parties may allege that the award rests on errors of fact or on
misinterpretation of the contract. CEEG, 829 F.3d at 1206 (quoting Misco, 484 U.S.
at 36); see also ARW Expl. Corp., 45 F.3d at 1463 (Even erroneous interpretations
however good, bad, or ugly. Oxford Health Plans LLC, 133 S. Ct. at 2071.
determination for the arbitrators decision that the parties bargained for. San Juan
Coal Co., 672 F.3d at 1201 (alteration in original) (quoting Major League Baseball
Players Assn, 532 U.S. at 509). It would also create a system in which arbitration
review process. Oxford Health Plans LLC, 133 S. Ct. at 2068 (quoting Hall Street
Alongside this highly deferential standard of review, the law sets a high hurdle
for reversal of an arbitral award. Enforcing the strong federal policy favoring
arbitration, this court has required parties seeking to set aside an arbitration award to
establish a statutory basis or a judicially created exception for doing so. Bowen v.
Amoco Pipeline Co., 254 F.3d 925, 932 (10th Cir. 2001); see Burlington N. & Santa
Fe Ry. Co. v. Pub. Serv. Co. of Okla., 636 F.3d 562, 567 (10th Cir. 2010). Aside from
4
these limited circumstances, 9 of the FAA requires courts to confirm arbitration
awards. Denver & Rio Grande W. R.R. Co. v. Union Pac. R.R. Co., 119 F.3d 847, 849
Section 10(a) of the FAA, 9 U.S.C. 10(a), delineates four statutory grounds
Oxford Health Plans LLC, 133 S. Ct. at 2068. The first three grounds encompass
U.S.C. 10(a)(1)-(3). The fourth ground, which is the only ground that THI of New
Mexico at Vida Encantada (THI) invokes, applies where the arbitrators exceeded
their powers, or so imperfectly executed them that a mutual, final, and definite award
upon the subject matter submitted was not made. Id. 10(a)(4).
A party seeking relief under 10(a)(4) bears a heavy burden. Oxford Health
his grave erroris not enough. Id. at 2070. Because the parties bargained for the
construing or applying the contract must stand, regardless of a courts view of its
(de)merits. Id. (quoting E. Associated Coal Corp. v. Mine Workers, 531 U.S. 57, 62
consider one question: whether the arbitrator arguably interpreted the parties
5
law by an arbitrator is not reversible. See Denver & Rio Grande W. R.R., 119 F.3d at
arbitrators decision have emerged over the years). For instance, this court has held
governing lawis subject to reversal. ARW Expl. Corp., 45 F.3d at 1463 (quoting
Jenkins v. PrudentialBache Sec. Inc., 847 F.2d 631, 634 (10th Cir. 1988)). It is not
enough . . . to show that the [arbitrator] committed an erroror even a serious error.
Stolt-Nielsen S.A. v. Animalfeeds Intl Corp., 559 U.S. 662, 671 (2010). To warrant
setting aside an arbitration award based on manifest disregard of the law, the record
must show that the arbitrators knew the law and explicitly disregarded it. Hollern v.
Wachovia Secs., Inc., 458 F.3d 1169, 1176 (10th Cir. 2006) (quoting Dominion Video
II
With this framework in mind, we turn to the facts of this case. In May 2007,
Encantada, LLC, a nursing home in Las Vegas, New Mexico, to obtain nursing-home
1
This exceptions viability has been uncertain, however, since the Supreme
Courts decision in Hall Street. There, the Court questioned whether manifest
disregard names a new ground for review or refers to the 10 grounds collectively.
552 U.S. at 585. It then emphasized that expanding the detailed categories would
rub too much against the grain of the 9 language, where provision for judicial
confirmation carries no hint of flexibility. Id. at 587; see also Abbott v. Law Office
of Patrick J. Mulligan, 440 F. Appx 612 (10th Cir. 2011) (unpublished) (explaining
the uncertainty as to whether manifest disregard is still a viable ground to overturn an
arbitration award after Hall Street).
6
care. During her stay at THI, Ms. Duran fell several times. During one fall, she broke
her femur and hip. She suffered a stroke soon after undergoing surgery for her
injuries. Less than five months after admission, Ms. Duran died while in THIs care.
Before admitting Ms. Duran to THI, her daughter and personal representative,
the Admission Agreement or the provision of care or services to Ms. Duran, and
all issues pertaining to the scope of the Arbitration Agreement. Appellants App.
Vol. 1 at 43. The Arbitration Agreement also said that it shall be governed by and
Acting on behalf of Ms. Durans estate, Mary Louise Lovato, Ms. Durans
granddaughter and the personal representative of the estate, sued THI (and others
who are not parties to this appeal) in New Mexico state court for wrongful death and
other tort claims. In response, THI filed a motion in federal court to compel
arbitration, which the district court granted over Ms. Lovatos opposition. THI of
N.M. of Vida Encantada, LLC v. Lovato, 848 F. Supp. 2d 1309, 1334-35 (D.N.M.
2012).
7
Arbitration Act (NMUAA) governed the dispute: I would like to receive a copy of
the written agreement to arbitrate which controls this process. I am assuming that the
assumption is not correct would you please advise me of your respective positions?
Appellants App. Vol. 2 at 219. The arbitrator received a copy of the Arbitration
Agreement, though the timing of receipt is not evident from the record. Neither party
compensatory damages and authorized a post-arbitration motion for further relief and
costs. After extensive briefing by the parties concerning Ms. Lovatos Post-
Arbitration Motion for Fees and Costs, the arbitrator awarded Ms. Lovato an
THI filed a motion in district court to vacate or modify the arbitrators award,
and Ms. Lovato filed a motion to confirm it. The district court upheld the award. THI
appealed, challenging only the confirmation of the costs and interest award.2
2
During appellate briefing, THI conditionally withdrew its challenge to paying
Ms. Lovatos half-share of the arbitrators fees ($39,051.25), which is included
within that award, because it had agreed to pay those fees in its motion to compel
8
III
The district court applied the maximum deference standard of review within
the framework of 10(a)(4) of the FAA and appropriately deferred to the arbitrator
in confirming the award of costs and interest. CEEG, 829 F.3d at 1205. The district
court correctly stated that irrespective of whether the Court concurs with the
the Arbitrator here construed the relevant contract. Appellants App. Vol. 2 at 332.
The arbitrator did so when he reasoned that the Arbitration Agreement states that it
is governed by and interpreted under the [FAA] but does not exclude jurisdiction
for the arbitration under the [NMUAA,] a statute which applies to all arbitration
agreements contracted within New Mexico. Id. at 162. Thus, unless this conclusion
ignored the plain language of the parties agreement, the arbitrators award must
stand.
Relying extensively on cases from other circuits, THI argues that the costs and
his powers under 10(a)(4). Appellants Br. at 11. THI argues that the Arbitration
arbitration. See Appellants Reply Br. at 16-17 & n.12 (stating that [THI] will
remain true to its word but advising that it is not willing to pay those costs pursuant
to the Award that is predicated on the NMUAA); Appellees Supp. App. at 21 n.2
(Regardless of the arbitral forum/rules of the procedure that ultimately are used to
administer the arbitration proceeding here, [THI] is agreeable to paying the
administrative costs of arbitration.).
9
Agreement designates the FAA, not the NMUAA, as the governing law, and the FAA
does not authorize the recovery of costs and interest by the prevailing party.
the relevant provisions, giving meaning and significance to each word or phrase
within the context of the entire contract, as objective evidence of the parties mutual
expression of assent. H-B-S Pship v. Aircoa Hosp. Servs., Inc., 114 P.3d 306, 313
(N.M. Ct. App. 2005) (emphasis added). THI focuses only on one sentence: This
Agreement shall be governed by and interpreted under the Federal Arbitration Act, 9
As a threshold matter, THI has not established that the FAA affirmatively
prohibits an award of costs and interestonly that it does not expressly authorize
one. Although the FAA displaces conflicting state law, Preston v. Ferrer, 552 U.S.
346, 353 (2008), state law is preempted only to the extent that it actually conflicts
with federal law and would undermine the goals and policies of the FAA, Volt
Info. Sciens., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 477-
78 (1989). We have previously recognized that the FAA and the NMUAA may apply
to the same arbitration agreement so long as the NMUAA doesnt conflict with the
FAA.3 See THI of N.M. at Hobbs Ctr., LLC v. Patton, 741 F.3d 1162, 1169-70 (10th
3
Ms. Lovato also points out that the arbitrator twice advised the parties that he
understood that the NMUAA applied in the arbitration and that THI did not say
otherwise. The arbitrator first informed the parties of his view in his January 22,
10
Two contractual terms support the arbitrators award of costs and interest.
Agreement delegates broad authority to the arbitrator: The parties agree that all
include the determination of available legal and equitable remedies. [C]ourts favor
Machining Co. v. Local Lodge No. 1926, 536 F.2d 330, 334 (10th Cir. 1976); Bowen,
254 F.3d at 939; see also Rivera v. Am. Gen. Fin. Servs., Inc., 259 P.3d 803, 818
(N.M. 2011) (As a matter of law arbitrators have broad authority and are deemed
capable of granting any remedy necessary to resolve a case.). Parties who agree to
submit matters to arbitration are presumed to agree that everything, both as to law
and fact, necessary to render an ultimate decision is included in the authority of the
2014 introductory letter and asked them to provide their respective positions if they
disagreed with it. Appellants App. Vol. 2 at 219. THI concedes it did not formally
respond to the Arbitrators letter. Appellants Br. at 4. From this silence, the
arbitrator concluded that THI had impliedly assented to the application of the
[NMUAA] . . . . and its remedies. Appellants App. Vol. 2 at 162. Later, during the
arbitration proceeding, the arbitrator asked, Well, were under the Uniform
Arbitration Act, right? Id. at 222. Ms. Lovatos counsel responded, We are. Id.
THIs counsel did not respond.
4
See Supp. App. at 34 (Where, as here, an arbitration clause is drafted in
broad terms, it is broadly construed.).
11
Second, the Arbitration Agreement directs that the National Arbitration Forum
Code of Procedure (NAF Code) applies. See Appellants App. Vol. 1 at 43 ([T]he
parties agree that [any] Dispute(s) shall be resolved by arbitration, as provided by the
of the NAF Code allows an arbitrator to grant any legal, equitable or other remedy
or relief provided by law in deciding a Claim. NAF Code, Rule 20.D (2008). Also,
under Rule 37, an arbitrators final award may include fees and costs . . . as
permitted by law if the party seeking them makes a timely request, though the
opposing party has an opportunity to object. Id., Rule 37.C; see also id., Rule 37.D
referencing the applicable law, the NAF Code authorized the application of New
We acknowledge the parties did not arbitrate under the NAF Code, and the
district court found they were not [bound] . . . to follow the rules and procedures of
the NAF. Appellants App. Vol. 1 at 103. But the Arbitration Agreements reference
5
We also note that Rule 12(A)(1) of the NAF Code contemplates that a claim
may include the specific amount and computation of any interest [and] costs. Id.,
Rule 12(A)(1).
6
Section 44-7A-22(b) of the NMUAA allows an arbitrator to award fees and
expenses if authorized by law in a civil action. In civil actions, New Mexico law
allows the costs and interest awarded by the arbitrator in this case. See N.M. R. Civ.
P. for Dist. Cts. 1-054(d) (authorizing costs other than attorneys fees for prevailing
parties and describing recoverable costs); N.M. Stat. Ann. 56-8-4(A)-(B)
(authorizing pre- and post-judgment interest). Thus, the arbitrator had authority under
New Mexico law, as incorporated by the NAF Code, to award costs and interest.
12
still shows that an award of costs and interest was within the realm of their
agreement. See NAF Code, Rule 1.A (This Code shall be deemed incorporated by
Section 10(a)(4) permits courts to vacate an arbitral decision only when the
arbitrator strayed from his delegated task of interpreting a contract. Oxford Health
Plans LLC, 133 S. Ct. at 2070. Where, as here, the arbitrators decision has any
contractual basis, it should not be overturned under the deferential standard of review
afforded to arbitration awards. See id. at 2069-70. Because the costs and interest
award finds support in the terms of the Arbitration Agreement, the district court did
not err in confirming it. See, e.g., San Juan Coal Co., 672 F.3d at 1201 (explaining
that an arbitration award must be upheld if it has at least some foundation in the text
agreement).
Finally, THI asks us to apply the judicially created manifest disregard of the law
exception to vacate the arbitrators costs and interest award. Again, we apply the required
exception. For the reasons discussed above explaining why the arbitrator did not exceed
his authority, we affirm the district courts conclusion that the arbitrator did not act in
manifest disregard of the law. THI has presented no evidence showing the arbitrators
willful inattentiveness to the governing law. Dominion Video, 430 F.3d at 1275
13
(quoting ARW Expl. Corp., 45 F.3d at 1463). Nor has THI shown that the arbitrator
knew the law and explicitly disregarded it. Bowen, 254 F.3d at 932.
IV
Under the restrictive standard of review applicable to this appeal, THI falls
affirm the district courts order confirming the arbitrators award of costs and
interest.
14