The opinion of the court was delivered by: Stein, District Judge.
R. Kent Atherton has petitioned this Court to modify, or in the alternative, partially vacate, an arbitration award on the grounds that the arbitrators manifestly disregarded the law in rendering their decision. In response, Online Video Network, Inc., doing business as Cenus Technologies ("Cenus"), has moved to confirm the award. As set forth below, this is not one of those "exceedingly rare instances" where "some egregious impropriety on the part of the arbitrators is apparent." Duferco Int. Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 389 (2d Cir. 2003). Atherton's petition is accordingly denied and Cenus's motion to confirm the award is granted.
The following facts are not contested: Cenus, an "internet software company," recruited Atherton, an experienced marketing executive, to head its sales and marketing of an "on-line streaming video product." (Arbitration Panel Award, Background at ¶ 2). The parties entered into an Executive Employment Agreement (the "Agreement") effective March 3, 2000, for three years' duration, during which time Atherton would be Cenus's Senior Vice President — Marketing and Sales, at a base salary of $250,000. Id. in early 2001, Cenus reduced Atherton's salary to $150,000 per year, and in October, 2001, Cenus further reduced his salary to $120,000 per year. (Id. at ¶ 10).
By letter dated February 22, 2002 — four months after the most recent reduction in his base salary — Atherton terminated his employment with Cenus, pursuant to the "Termination for Good Reason" provision of the Agreement, which entitled Atherton to certain compensation, including six months extra salary plus all his options, whether vested or not, if he terminated his employment for "Good Reason." (Id. at ¶ 11). The Agreement defined "Good Reason," in pertinent part, as any reduction of Atherton's base salary. (See Agreement § 5(e)). However, a reduction in base salary would not constitute "Good Reason" unless Atherton gave Cenus written notice within 15 calendar days after Atherton knew or should have known of the reduction in his base salary and Cenus thereafter failed to cure the event within thirty days after receipt of that notice. (See id.).
Pursuant to the February 22 letter in which he terminated his employment, Atherton sought to be compensated in accordance with the terms of the "Good Reason" provision of the contract, but Cenus refused to do so. Atherton subsequently invoked the Agreement's arbitration provision, and filed a claim with the Arbitration Panel of the AAA (the "Panel" or "the arbitrators") alleging breach of contract and violation of the New York and Connecticut wage payment statutes. The Panel denied Atherton's claims and ruled that he did not terminate his employment for "Good Reason," because he did not notify the company in writing within 15 days of knowing of the reduction in his salary. (See id., Award of Arbitrator at ¶¶ 1-6).
Atherton then filed a "Motion for Modification of Award" with the arbitrators, claiming that they had not addressed his breach of contract claim for unpaid wages. That motion was denied on the grounds that the Panel's authority to modify an award was limited to correcting "any clerical, typographical or computational errors in the award." (See Ruling on Motion for Modification of Award). Atherton does not contest the Panel's determination that he did not terminate his employment with "Good Reason." However, he claims that the Panel "manifestly disregarded the law" by ignoring his breach of contract claim. He now moves this Court to modify, or in the alternative, partially vacate, the Panel's award.
A. "Manifest Disregard of the Law"
As the U.S. Court of Appeals for the Second Circuit wrote approximately one month ago in an analogous case, "[I]t is well established that courts must grant an arbitrator panel's decision great deference." Duferco Int. Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003). The Federal Arbitration Act (the "FAA") permits a district court to vacate an arbitration award in certain narrow circumstances, all of which "invoke corruption, fraud or some other impropriety on the part of the arbitrators." Id.; see 9 U.S.C. § 10(a).*fn1 In addition, the Second Circuit has also recognized that an arbitration award may be vacated if it is in "manifest disregard of the law." See Duferco, 333 F.3d at 388; Halligan v. Piper Jaffray. Inc., 148 F.3d 197, 202 (2d Cir. 1998) (citing Wilko v. Swan, 346 U.S. 427, 436-37, 74 S.Ct. 182, 187, 98 L.Ed. 168 (1953)). However, manifest disregard is "severely limited," Duferco, 333 F.3d at 388 (quoting Gov't of India v. Cargill Inc., 867 F.2d 130, 133 (2d Cir. 1989)), and judicial review is "highly deferential to the arbitral award and obtaining judicial relief for arbitrators' manifest disregard of the law is rare." Id. at 389. This doctrine is one "of last resort" and is to be limited to "those exceedingly rare instances where some egregious impropriety on the part of the arbitrators is apparent." Id.
An arbitrator's award is in "manifest disregard of the law" in those cases "where a governing legal principle is well defined, explicit, and clearly applicable to the case, and where the arbitrator ignored it after it was brought to the arbitrator's attention in a way that assures that the arbitrator knew its controlling nature."' GMS Group. LLC v. Benderson, 326 F.3d 75, 78 (2d Cir. 2003) (quoting Goldman v. Architectural Iron Co., 306 F.3d 1214, 1216 (2d Cir. 2002)). "A legal principle clearly governs the resolution of an issue before the arbitrator if its applicability is "obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator.'" Westerbeke Corporation v. Daihatsu Motor Co., 304 F.3d 200, 209 (2d Cir. 2002) (quoting Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933 (2d Cir. 1986)).
The petitioner has the burden of demonstrating "the existence of a clearly governing legal principle [and] the arbitrator's manifest disregard of such a principle." Id. In line with the general policy in favor of arbitration, "if a ground for the arbitrator's decision can be inferred from the facts of the case, the award should be confirmed." GMS Group, 326 F.3d at 78 (quotation omitted); Westerbeke, 304 F.3d at 212 n. 8 (courts are "obliged to give the arbitral judgment the most liberal reading possible.... [W]e will confirm the award if we are able to ...