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RAIOLA v. UNION BANK OF SWITZERLAND

July 9, 2002

SUZANNE RAIOLA, CLAIMANT,
V.
UNION BANK OF SWITZERLAND, LLC, RESPONDENT.



The opinion of the court was delivered by: Shira A. Scheindlin, United States District Judge

OPINION AND ORDER

On February 15, 2002, an arbitration panel of the National Association of Securities Dealers ("NASD") issued an arbitral award (the "Award") denying all claims brought by claimant Suzanne Raiola ("Raiola") against respondent Union Bank of Switzerland, LLC ("UBS"). UBS now moves to confirm the Award and Raiola moves to vacate the Award. For the reasons stated below, UBS's motion is granted and Raiola's motion is denied.

I. BACKGROUND

On July 14, 1998, Raiola filed a complaint in this Court alleging discrimination on the basis of her sex in violation of Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000e et seq. See Raiola I, 47 F. Supp.2d at 501. She claimed that all of the male employees in her department were either interviewed for a position or offered a position with the merged entity, and that she was terminated despite the fact that she was senior to many of these men and had previously received outstanding evaluations and bonuses. See id. UBS moved to compel arbitration pursuant to Sections 2-4 of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 2-4, and to dismiss the complaint or stay the action pending arbitration. See id. On May 5, 1999, this Court granted UBS's motion, holding that Raiola's signature on the form commonly known as a Uniform Application for Securities Industry Registration or Transfer (the "U-4 Form") "constitute[d] an agreement to arbitrate employment claims" and that "Raiola's claims f[e]ll within the scope of her agreement." Id. at 503-506; see also 4/30/99 Judgment, Ex. E to Hayes Dec.

On April 28, 2000, Raiola filed a Statement of Claim with the NASD alleging that she was discriminated against on the basis of her sex.*fn1 See Award, NASD Dispute Resolution Inc. ("Award"), Ex. 2 to Declaration of Robin D. Fessel, attorney for UBS, in Support of UBS Warburg LLC's Motion to Confirm the Arbitration Award and in Opposition to Claimant's Motion to Vacate ("Fessel Dec."), at 1; NASD Arbitration Statement of Claim Information Sheet, Ex. 1 to Fessel Dec. The NASD arbitration panel (the "Panel") conducted two pre-hearing conferences on May 17, 2001, and October 18, 2001, during which it heard opening and closing statements, heard witness testimony, and made evidentiary rulings. See Award at 3; Resp. Mem. at 3; see also, e.g., Transcript of Arbitration Proceedings ("Tr."), Ex. 3 to Fessel Dec., at 199 (evidentiary ruling). The Panel heard from three witnesses called by Raiola and three witnesses called by UBS. See Resp. Mem. at 3. On February 7, 2000, the Panel issued an Award denying Raiola's claims "in their entirety" and denying UBS's request for costs and attorneys' fees. Award at 2. Half of the forum fees were assessed against Raiola and half against UBS. See id. at 3.

II. LEGAL STANDARD

"Arbitration awards are subject to very limited review in order to avoid undermining the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation." Willemijn Houdstermaatschappit, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997) (quotation marks omitted); see also Insurance Co. of North Am. v. Ssangyong Engineering & Const. Co., Ltd., No. 02 Civ. 1484, 2002 WL 377538, at *4 (S.D.N.Y. Mar. 11, 2002). The FAA lists specific instances where an award may be vacated.*fn2 See 9 U.S.C. § 10 (a). In addition, the Second Circuit has recognized that a court may vacate an arbitration award that was rendered in "manifest disregard of the law." Greenberg v. Bear, Stearns & Co., 220 F.3d 22, 28 (2d Cir. 2000). However, "review for manifest error is severely limited." Id. To find manifest disregard, a court must find that: "(1) the arbitrators knew of a governing legal principle yet refused to apply it or ignored it altogether, and (2) the law ignored by the arbitrators was well defined, explicit, and clearly applicable to the case." Id.

"In very limited situations, a court may vacate an award because arbitrators have manifestly disregarded the evidence." McDaniel v. Bear Stearns & Co., Inc., 196 F. Supp.2d 343, 351 (S.D.N.Y. 2002). However, "judicial review of an arbitrator's factual determinations is quite limited." Beth Israel Med. Ctr. v. Local 814, No. 99 Civ. 9828, 2000 WL 1364367, at *6 (S.D.N.Y. Sept. 20, 2000). "A court may only vacate an arbitrator's award for manifest disregard of the evidence if `there is strong evidence contrary to the findings of the arbitrator and the arbitrator has not provided an explanation of his decision.'" McDaniel, 196 F. Supp.2d at 351 (quoting Beth Israel Med. Ctr., 2000 WL 1364367, at *6). "A court may not review the weight the arbitration panel accorded conflicting evidence." Id.; see also Sobol v. Kidder, Peabody & Co., Inc., 49 F. Supp.2d 208, 216 (S.D.N.Y. 1999), aff'd, No. 97-7828, 1998 WL 695041 (2d Cir. 1998). "Nor may a court question the credibility findings of the arbitrator." McDaniel, 196 F. Supp.2d at 351 (citing Beth Israel Med. Ctr., 2000 WL 1364367, at *6; Greenberg, 1999 WL 642859, at *1).

The party seeking vacatur of an arbitration award bears the burden of proving manifest disregard. See Greenberg, 220 F.3d at 28. But, even if that party proves that the arbitrators' decision is based on a manifest error of fact or law, a court must nevertheless confirm the award if grounds for the decision can be inferred from the facts of the case. See Willemijn Houdstermaatschappij, 103 F.3d at 13; Greenberg, 2000 WL 1229755, at *2.

III. DISCUSSION

Raiola argues that the Award was in "manifest disregard of the law" because the Panel's decision was "irrational" and "without evidentiary support," was "in part based on perjured testimony," and was "void against public policy." Affirmation of Pamela D. Hayes in Support of Motion to Vacate Arbitrators' Award and Demand for Trial De Novo, ("Hayes Aff.") ¶ 7; Hayes Dec. at 2. None of her arguments justifies vacatur.

A. Ample Evidence Supported the Panel's Conclusion

Raiola claims that UBS violated Title VII, which makes it unlawful ...


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