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Gold v. Opera Solutions, LLC

United States District Court, S.D. New York

August 1, 2017

STEVEN GOLD, Petitioner,


          J. PAUL OETKEN United States District Judge

         This action is brought pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., to confirm an arbitration award in favor of Petitioner Steven Gold (“Gold”) and against Respondent Opera Solutions, LLC (“Opera”). (Dkt. No. 1 (“Petition”).) Opera moves to modify the arbitration award pursuant to 9 U.S.C. § 11. (Dkt. No. 31.) For the reasons that follow, Opera's motion to modify the award is denied, and Gold's petition to confirm the award is granted.

         I. Background

         Unless otherwise indicated, the following facts are taken from the allegations in the Petition and the supporting materials attached thereto.

         On October 8, 2012, pursuant to an Employment Agreement, Opera hired Gold to serve as its Executive Vice President. (Petition ¶ 2; Dkt. No. 1-1 (“Employment Agreement”).) Under the Employment Agreement, Gold was guaranteed an annual base salary of $300, 000, in addition to benefits, a bonus, and equity grants. (Employment Agreement § 6(a)-(d).) At the center of the present dispute is the proper calculation of the bonus.

         According to the Employment Agreement, if Gold was “employed with [Opera] at the end of 2013 . . . he [is] entitled to a total bonus of up to $700, 000, as follows: (A) a guaranteed bonus in the amount of $300, 000 (the ‘2013 Guaranteed Bonus'); and (B) a performance-based bonus of up to $400, 000, to be calculated and paid by [Opera] on a pro-rata basis for booked revenue achieved by [Gold] in excess of $21.4 million up to a maximum of $50 million (the ‘2013 Performance Bonus') (together the ‘2013 Total Bonus').” (Employment Agreement § 6(c)(ii) (emphasis added).) However, if Gold “is terminated by [Opera] without Cause prior to his receipt of payment of the 2013 Guaranteed Bonus or the 2013 Performance Bonus, [Opera] shall pay [Gold] a pro-rated portion of the 2013 Total Bonus, based on the booked revenue achieved by [Gold] at the time of termination.”[1] (Id. (emphasis added).) On January 28, 2014, Opera terminated Gold, purportedly for cause, and refused to pay Gold's bonus, among other things. (Petition ¶¶ 10-11.)

         Pursuant to § 16 of the Employment Agreement, Gold initiated arbitration proceedings against Opera on July 15, 2015. (Id. ¶ 12.) The Honorable George C. Pratt was appointed as arbitrator. (Id. ¶ 13). After holding an arbitration hearing, Judge Pratt issued a Final Decision and Award on October 13, 2016. (Id. ¶¶ 18, 20; Dkt. No. 1-2 (“Award”)).

         In his decision, Judge Pratt analyzed § 6(c)(ii) of the Employment Agreement. He first addressed whether Gold was employed “at the end of 2013, ” thus entitling him to the 2013 Guaranteed Bonus of $300, 000. (Award at 8-10.) He found that Opera had attempted to terminate Gold on December 30, 2013, which Opera argued was one day prior to “the end of 2013, ” to avoid paying Gold's bonus.[2] (Id. 8.) Judge Pratt rejected Opera's literal interpretation of the phrase “at the end of 2013, ” and concluded that “December 30th is reasonably viewed as the ‘end of the year.'” (Id. at 9.) He reasoned that Opera's interpretation would give it the right to “arbitrarily” cancel Gold's bonus, which is inconsistent with the guaranteed bonus provided under the Employment Agreement. (Id.) Judge Pratt construed this “inconsistency” against Opera, reasoning that the law disfavors interpretations of contracts that “would make the performance by one party the cause of the other party's non-performance.” (Id. (quoting Wakefield v. N. Telecom, Inc., 769 F.2d 109, 112 (2d Cir. 1985)).) Judge Pratt held that Gold was, for purposes of the Employment Agreement, employed by Opera “at the end of 2013.” (Id.)

         Judge Pratt then turned to an apparent inconsistency in § 6(c)(ii) of the Employment Agreement. (Id. at 9-10.) Under that provision, if Gold is terminated without cause “prior to his receipt of payment of the 2013 Guaranteed Bonus . . . [Opera] shall pay to [Gold] a pro-rated portion” of the bonus based on Gold's performance. (Employment Agreement § 6(c)(ii).) Opera paid out its 2013 bonuses in March of 2014, after Gold was terminated. (Award at 10.) As such, even though Gold was employed “at the end of 2013” and entitled to the 2013 Guaranteed Bonus, because he was terminated before receiving the bonus, § 6(c)(ii) entitles him to a significantly smaller, pro-rated bonus based on his performance.[3] Judge Pratt did not resolve the inconsistency presented by § 6(c)(ii), however, because he found that Opera's breach of the Employment Agreement “terminated the Employment Agreement and undercut any reliance by Opera on the pro-rata provision.” (Id.) In particular, Judge Pratt found that Opera committed an “anticipatory breach” of the Employment Agreement when it “told Gold that Opera would not pay his guaranteed $300, 000 bonus” and committed a second breach by “purportedly terminating Gold for cause” where no such cause was present. (Id. at 22‒24.)

         Judge Pratt therefore awarded, in relevant part, $300, 000 in damages for Gold's 2013 Guaranteed Bonus. (Id. at 27.) Opera now moves pursuant to § 11(a) of the FAA to modify the Award.

         II. Discussion

         A. Legal Standard

         “It is well established that ‘[a]rbitration awards are subject to very limited review' in federal court.” Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. Source One Staffing LLC, No. 16 Civ. 6461, 2017 WL 2198160, at *1 (S.D.N.Y. May 17, 2017) (quoting Rich v. Spartis, 516 F.3d 75, 81 (2d Cir. 2008)). Under the FAA, “a reviewing court must confirm an arbitration award unless one of several narrow grounds for vacatur or modification is present.” Id. (citing 9 U.S.C. §§ 9‒11). At issue in this case is whether modification of the award is warranted because the arbitrator made “an evident material miscalculation of figures.” 9 U.S.C. § 11(a).

         To warrant modification, “[t]he miscalculation must be ‘clear on the face of the award or can be clearly inferred therefrom.'” N.Y.C. Dist. Council of Carpenters Pension Fund v. Brookside Contracting Co., Inc., No. 07 Civ. 2583, 2007 WL 3407065, at *2 (S.D.N.Y. Nov. 14, 2007) (quoting Al-Azhari v. Merit Capital Assocs., Inc., No. 99 Civ. 9795, 2000 WL 151914, at *2 (S.D.N.Y. Feb. 14, 2000)). “Section 11(a) does not permit modification where the award is ‘not the result of some careless or obvious mathematical mistake, but rather the disposition of a substantive dispute that lays at the heart of the arbitration.'” Fellus v. Sterne, Agee & Leach, Inc., ...

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