The Court further notes the strong federal policy in favor of
settling labor disputes through the arbitration process. United
Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593,
596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424 (1960). Although § 301
of the Labor Management Relations Act does not provide for the
award of attorneys' fees, parties to an arbitration seeking to
enforce an arbitrator's decision have been awarded attorneys'
fees where the opposing party refused to abide by the decision
without justification. See, e.g., Hunt v. Commodity Haulage
Corp., 647 F. Supp. 797 (E.D.N.Y. 1986) (attorneys' fees awarded
to union where employer refused to abide by the arbitration
without justification); cf. Int'l Chemical Workers v. BASF
Wyandotte Corp., 774 F.2d 43 (2d Cir. 1985) (district court did
not abuse discretion in denying motion for attorneys' fees in
union's suit to enforce arbitration award where employer had a
justifiable basis for litigation).
Although plaintiff herein is not seeking to enforce an award,
the policy behind compensating a party for attorneys' fees
incurred in needlessly enforcing an arbitration agreement is
nonetheless applicable. Defendant's position was without color,
and forced plaintiff to go to court to enforce a contractual
obligation clearly owed. See Vaughan, 369 U.S. 527, 82 S.Ct.
997, 8 L.Ed.2d 88 (1962). However, unlike Vaughan and other §
301 cases, defendant in the case at bar did not maintain his bad
faith position throughout the litigation. Rather, defendant
finally conceded his liability in the answer to the complaint in
this action, after his petition for writ of certiorari in the
previous action was denied.
As discussed above, generally attorneys' fees should only be
awarded to compensate for expenses necessary to counter bad
faith. Sierra Club, 776 F.2d at 392. In Int'l Union of P.I.W.
v. Western Indus., 707 F.2d 425 (9th Cir. 1983), the trial
court awarded attorneys' fees to a union enforcing an
arbitration award against an employer who refused to comply
without justification. The employer appealed only the issue of
attorneys' fees, and the union, on appeal, demanded additional
appellate attorneys' fees. The appellate court affirmed the
award of attorney's fees by the trial court. However, the court
held that, inasmuch as the issue of attorneys' fees under the
facts presented was not settled law in the circuit, the
employers' challenge on appeal was not wholly devoid of merit,
and consequently, appellate attorneys' fees were denied. Id.
Analogously, in the instant case, since the time he answered
the complaint, defendant has only contested his liability for
attorneys' fees. Thus, when defendant conceded that he owed the
arbitration fee, the "bad faith" conduct ceased, and the only
remaining dispute between the parties involved the first
impression issue of attorneys' fees. In other words, although
one may find Maggio's argument unpersuasive, in light of the
novel nature of the issue, a reasonable attorney could have
concluded that facts supporting a denial of attorneys' fees
might be established. This is particularly noteworthy since
attorneys' fees, as discussed above, should only be awarded to
counter bad faith conduct. Thus, given the standard to be
applied, litigation over a first impression issue cannot be
characterized as bad faith conduct.
However, defendant did maintain a non-colorable defense, in
that he instigated the current litigation up to the point at
which he conceded his liability for the arbitration fee.
Thereafter, defendant no longer maintained a non-colorable
defense, and thus he is not liable for attorneys' fees incurred
beyond that point.
C. Defendant's Conduct
The issue of attorneys' fees under the bad faith exception is
concededly one requiring a "high degree of specificity" in
factual findings. Weinberger v. Kendrick, 698 F.2d 61, 80 (2d
Cir. 1982), cert. denied, 464 U.S. 818, 104 S.Ct. 77, 78
L.Ed.2d 89 (1983). As evidence of his good faith, defendant
points to his letter to plaintiff, dated January 24, 1989, in
which he offered to put the arbitration fee into an
interest-bearing escrow account. This offer was repeated.
However, a party's subjective beliefs as to good or bad faith
relevant to the Court's decision, Colucci v. New York Times
Co., 533 F. Supp. 1011, 1012 (S.D.N.Y. 1982) (citations
The undisputed facts in this case reveal that on May 31, 1988,
the American Arbitration Association ("A.A.A.") billed defendant
for plaintiff's services. Plaintiff made five further demands
for payment. The third time plaintiff demanded costs plus
interest and attorneys' fees. Defendant's attorney informed
plaintiff that he would instruct defendant to pay the bill.
However, defendant withheld payment, and in one of his letters
to plaintiff alleged that plaintiff had misled the Court, and
that the arbitration award was influenced by an economic
interest in finding for a member of the union. Defendant also
characterized plaintiff's relationship with the union as "cozy".
Nevertheless, as pointed out above, defendant had no right to
withhold payment of the arbitrator's fee, even if his
allegations had some merit. See Wright-Austin, 422 F. Supp. at
1370-71. In short, defendant's vexatious actions appear to have
been designed simply to punish plaintiff, and even if they had
not been, defendant's refusal to pay the arbitrator's fee
without any legal justification was, in and of itself, bad faith
As noted above, defendant continued to act in bad faith as
long as he refused to pay the arbitration fee. It is that
unquestionably bad faith conduct for which plaintiff is entitled
to an award of attorneys' fees. Thus, attorneys' fees incurred
prior to the commencement of this action and up to the point
defendant filed his answer are hereby awarded to plaintiff along
with the arbitration fee, costs, and interest.
For the reasons stated above, this Court holds that defendant,
as a matter of law, acted in bad faith only up until plaintiff
received defendant's answer, and as to that point there is no
genuine issue of material fact. Fed.R.Civ.P. 56; Celotex,
477 U.S. 317, 106 S.Ct. 2548. Accordingly, plaintiff's motion for
summary judgment pursuant to Rule 56 of the Federal Rules of
Civil Procedure is partially granted as follows: defendant shall
remit to plaintiff monies owed for plaintiff's arbitration fee,
plus interest, court filing costs and attorneys' fees incurred
up to the point at which plaintiff received defendant's answer.
Plaintiff is directed to file the proper documentation with the
Court, consistent with this opinion, as to the amount owed.
Plaintiff is to submit documentation within thirty days of the
date of this order; defendant may then object to the amount of
attorneys' fees by filing papers within twenty days thereafter.
Finally, based on the above discussion, defendant's motion for
summary judgment is denied.
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