United States District Court, S.D. New York
May 3, 2004.
BARRY MANILOW and APPOGGIATURA MUSIC, INC., f/s/o BRUCE SUSSMAN Petitioners,
SNORKEL PRODUCTIONS, INC, Respondent
The opinion of the court was delivered by: P. KEVIN CASTEL, District Judge
MEMORANDUM AND ORDER
Petitioners bring this action seeking confirmation of an
interim arbitration award unanimously issued by a three-member
arbitration panel. The Court has jurisdiction by reason of
diversity of citizenship and pursuant to provisions of the
Federal Arbitration Act, 9 U.S.C. § 9. Because there is no valid
basis to vacate, modify, or correct the award, the petitioners'
motion to confirm is granted.
The petitioners authored and/or have rights to a play,
Harmony, and entered into an agreement with the respondent
dated October 10, 2002 granting it certain rights to act as
producer of the play. (Approved Production Contract for Musical
Plays ("Contract") ¶ 1.01, attached at Verified Petition to
Confirm Arbitration Award ("Petition") Ex. 3; Supplementary
Agreement, attached at Petition Ex. 4) The Contract contained
provided that the respondent's rights would expire if it did not
produce Harmony in a prescribed period of time. (Contract §§
1.03, 2.01, 19.02-03) The Contract required that all disputes be submitted to a
specified mechanism for arbitration. (Contract §§ 20.01-20.10) It
expressly permitted the arbitrators "to render a partial award
before making a final award and grant such relief, injunctive or
otherwise, in such partial award as they deem just and
equitable." (Contract § 20.09)
Petitioners invoked the arbitration procedures and alleged,
inter alia, that respondent failed to exercise in a timely
manner an option for the extension of rights under the Contract,
and that the respondent's rights under the Contract had expired.
(Demand for Arbitration, attached at Petition Ex. 1) A
three-person arbitration panel was convened and hearings were
held on January 29 and 30, 2004, spanning 700 pages of
transcripts. Post-hearing memoranda were submitted by the
parties. The arbitrators issued an interim award declaring that
respondent's rights as Harmony producers had terminated under
the Contract, and directing respondent to cease acting as
producer for Harmony. (Petition Ex. 7) It is the interim award,
transmitted to the parties on March 20, 2004, which is at issue.
Under 9 U.S.C. § 9, "any party to the arbitration may apply to
the court so specified for an order confirming the award, and
thereupon the court must grant such an order unless the award is
vacated, modified, or corrected as prescribed in sections 10 and
11 of this title." "Arbitration awards are subject to very
limited review in order to avoid undermining the twin goals or
arbitration, namely, settling disputes efficiently and avoiding
long and expensive litigation." Folkways Music Publishers, Inc.
v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993). The Court's role in
confirming or vacating an arbitration award is "severely
limited." See Ganguly v. Charles Schwab & Co., Inc., 2004 WL
213016 at *3 (S.D.N.Y. Feb. 4, 2004). Courts have viewed an
interim arbitration award of equitable relief as sufficiently
final for a court to grant affirmation. See, e.g., Southern Seas
Navigation Ltd. of Monrovia v. Patroleos Mexicanos of Mexico
City, 606 F. Supp. 692 (S.D.N.Y. 1985) (Weinfeld, J.).
Respondent does not dispute the application of any of these
principles, including the Court's power to confirm this interim
award. Nor does it invoke the language of sections 10 or 11 of
title 9. Rather, it relies on the judicial doctrine of "manifest
disregard" arguing that a court may set aside an award if it
finds "both 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." Greenberg v.
Bear, Stearns & Co., 220 F.3d 22, 28 (2d Cir. 2000), cert.
denied 531 U.S. 1075, 121 S.Ct. 770 (2001), quoting DiRussa
v. Dean Witter Reynolds Inc., 121 F.3d 818, 821 (2d Cir. 1997).
Application of the "manifest disregard" doctrine requires its
proponent to meet a "very stringent burden." Greenberg, 220
F.3d at 28. Respondent argues that the arbitration panel's
failure to specifically address its affirmative defense of
promissory estoppel amounts to "manifest disregard" of the law
and prevents the confirmation of the award. (Respondent's
Opposition ¶¶ 15-22) Notably, respondents do not contend that
there was any "manifest disregard" of the facts by the
arbitrators. (Respondent's Reply at p. 4)
The panel expressly requested additional briefs on the issues
of waiver and estoppel. (Id. at p. 745) The act of requesting
such specific submissions is inconsistent with the claim that the
panel ignored the very doctrines on which their request was
based. I note that the panel's interim award states in part that:
"[c]laimants' actions after October 9, 2003 do not constitute a
waiver of their rights under the APC Agreement." (Attached at
Petition Ex. 7) It is reasonable to conclude that this language
reflects the panel's rejection of respondent's estoppel
contentions, which were briefed in tandem with the waiver issue.
True, waiver and estoppel are distinct doctrines, but the very case
which respondents cite to explain the distinction between the
two, elects, after discussing the distinction, to treat the two
defenses in tandem. See England v. Nettesheim, 222 A.D.2d 825,
827 (3d Dep't 1995) (cited Respondent's Reply at p. 5).
Cf. New York Jurisprudence 2d, Estoppel § 75 (updated to
March 2004) ("[a]lthough waiver and estoppel are sometimes used
interchangeably, they are rooted in different conceptions.")
At bottom, respondents endeavor to ascribe too much meaning to
the panel's failure to invoke the term estoppel in its six lines
of discussion in its one-page unanimous interim award. "[A] lack
of accompanying justification for the award will not render the
award ambiguous or in manifest disregard of the law. Arbitrators
need not give reasons for their determination." Folkways Music,
989 F.2d at 112, citing Wilko v. Swan, 346 U.S. 427, 436,
74 S.Ct. 182, 187 (1953). Moreover, the arbitrators expressly noted
that they had given "full consideration of the alternate theories
presented by the Parties. . . ." (Petition Exhibit 7) Because the
respondents have not satisfied their "very stringent burden,"
Greenberg, 220 F.3d at 28, needed to show "manifest disregard"
of the law, petitioners' motion is GRANTED, respondents' motion
to vacate is DENIED and the interim arbitration award is
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