United States District Court, S.D. New York
OPINION AND ORDER
Edgardo Ramos, U.S.D.J.
Buhannic and Patrick Buhannic (“Petitioners”),
proceeding pro se, petition this Court, pursuant to
the Federal Arbitration Act (“FAA”), 9 U.S.C.
§ 10, to vacate an arbitration award (the
“Award”). Petitioners allege that the Award was
procured by corruption and that the arbitrators refused to
hear pertinent evidence and exceeded their powers. In
response, Tradingscreen, Inc. and Joseph Ahearn
(“Respondents”) present a cross-motion seeking
confirmation of the award on the grounds that Petitioners
have not produced any evidence sufficient to satisfy the high
standard required to overturn an arbitration award.
reasons that follow, Petitioners' motion to vacate the
Award is DENIED, and Respondents' cross-motion seeking
confirmation of the Award is GRANTED.
17, 1999, Petitioners, together with Joseph Ahearn, founded
TradingScreen, Inc., and entered into a Founders'
Agreement (the “Agreement”) that would govern
their business relationship. Pet'rs' Pet. ¶¶
17-18, Doc. 1. At all relevant times, Petitioners acted as
directors of TradingScreen, Inc. and held the majority of the
founders' stock. Id. ¶¶ 13, 22.
Furthermore, Phillippe Buhannic also acted as CEO at all
relevant times. Id. ¶¶ 16, 18.
Agreement set forth conditions governing how the three
founders could vote shares and how TradingScreen, Inc. could
repurchase a founder's shares in the event of his
termination. Id. ¶¶ 18, 20. In particular,
Section 13 provided that each of the founders agreed to vote
their shares to elect and, thereafter, retain Phillippe
Buhannic as a director of TradingScreen, Inc., and as the
chairman of TradingScreen, Inc.'s board of directors
until November 1, 2001. Id. ¶ 21. Section 22
provided that no amendment could be made to the Agreement
absent “Required Consent.” Id. ¶
22. Section 4.1 went on to define “Required
Consent” as the “written consent of the company
(TradingScreen, Inc.) and holders of the majority of shares
held by the Founders.” Id. For all practical
purposes, the “holders of the majority of shares held
by the Founders” were Phillippe and Patrick Buhannic.
early 2011, Philippe Buhannic proposed to amend Section 13
and 22 of the Agreement by requiring founders to vote their
shares “as directed by the holders of a majority of the
shares held by the Founders” in connection with the
election of directors, and by allowing future amendments to
be effected solely by a majority of the founders except
“to the extent any such amendment directly affects
[TradingScreen, Inc.'s] rights” regarding the
buy-back of a founder's shares. Award at 7-8, Doc. 1. In
other words, the two amendments eliminated the requirement
for Ahearn's consent because Petitioners held the
majority of the founders' shares. Bruce Rosenthal,
corporate counsel to TradingScreen, Inc., informed
Petitioners that they could sign the 2011 Amendment dated
March 13, 2011 and it could subsequently “be proposed
for ratification by the Board effective as of that
date.” Id. at 8. Petitioners signed the 2011
Amendment and executed it on behalf of TradingScreen, Inc.,
but never presented the 2011 Amendment to the Board for
consideration and Joseph Ahearn did not sign the amendment.
Id. Nonetheless, Petitioners allege that the 2011
Amendment and all amendments that followed were never
challenged by Ahearn or questioned in any way because he was
“totally comfortable with them.” Pet'rs'
Pet. ¶ 24.
2015, Petitioners executed the 2015 Amendment acting alone as
majority owners of the founders' shares. Award at
8. The 2015 Amendment went even further than its
predecessor, totally eliminating Section 22's requirement
that TradingScreen, Inc. consent to future amendments that
affected its buy-back rights. Id. at 9. Once again,
Phillippe Buhanic signed the resolution on behalf of
TradingScreen, Inc. and the board was not informed.
1, 2016, Petitioners executed the 2016 Amendment.
Id. at 10. In relevant part, the 2016 Amendment
repealed the provision allowing TradingScreen, Inc. to
buy-back the shares of a terminated founder, required the
founders to vote to elect and continue in office Phillippe
Buhannic as a director and chairman of the board without any
stated end date, and stipulated that only a simple majority
of the founders-and not the company-may amend the Agreement.
Id. at 10-11. The 2016 Amendment was not presented
to the board of directors, was not signed by Joseph Ahearn,
and did not even contain a signature line for TradingScreen,
Inc. Id. at 10.
thereafter, Petitioners instituted an arbitration seeking a
determination on the validity of the Amendments pursuant to
an arbitration provision in the Agreement. Pet'rs'
Pet. ¶ 14. The events leading to the arbitration are
poorly recited by the parties and are thus unclear to the
Court. However, it is clear that Petitioners brought a
separate action against TradingScreen, Inc. on October 6,
2016 claiming wrongful termination following Phillippe
Buhannic's removal as CEO on June 28, 2016. Exhibit F,
3, 2017, evidentiary hearings commenced and continued over 3
days until May 5, 2017. Award at 1. The arbitration was
conducted pursuant to the rules of the International Centre
for Dispute Resolution (the “ICDR”) of the
American Arbitration Association, and was presided by George
Gluck, Richard Ziegler, and Chairman Eugene I. Farber (the
“Arbitrators”). Award at 19; Resp'ts'
Mem. Opp'n at 1, Doc. 7. Petitioners were represented by
David Goldstein and Alon Harnoy of Shiboleth
Award at 1. Respondents were represented by John
Vassos and Laurie Foster of Morgan Lewis & Bockius LLP.
Id. The Arbitrators heard testimony from five
witnesses, and received over 150 exhibits, and extensive pre-
and post-hearing briefing. Id. The central question in
the arbitration was whether the Amendments were valid and
enforceable. Award at 2.
evidentiary hearing on May 3, 2017, Ms. Foster stated that
she knew Chairman Farber from an unrelated arbitration over
fifteen years earlier. Foster Decl. ¶¶ 2-3, Doc. 8.
In response, Chairman Farber confirmed the prior arbitration
appearance off the record to the parties also on May 3, 2017.
Resp'ts' Mem. Opp'n at 4. That same day, Chairman
Farber sent a letter to the ICDR case manager formally making
the disclosure. Id. at 5. The ICDR case manager, in
turn, provided the disclosure to all counsel and directed,
“if any party has any objection to Arbitrator
Farber's service based on the supplemental disclosure,
please file them with the ICDR on or before May 4,
2017.” Id. On May 4, 2017, the ICDR case
manager emailed all counsel confirming that “we
received no objections to Arbitrator Farber's
supplemental disclosure.” Id.
26, 2017, the three-member panel issued its unanimous Award
in which it invalidated the Amendments. Award at 1-2, 19. In
deciding the issue, the Arbitrators determined that
Petitioners' unilateral execution of the Amendments was
not made with the consent required by Section 22 of the
Agreement. Id. at 11. Guided by the U.S. Supreme
Court decision in Curtiss-Wright Corp v.
Schoonejongen, 514 U.S. 73 (1995), the Arbitrators
decided that the Petitioners did not have the actual or
implied authority to unilaterally execute the Amendments.
Id. at 12.
October 17, 2017, Petitioners brought this action to vacate
the Award. Pet'rs' Pet. at 1. This Court has
jurisdiction under 28 U.S.C. § 1332 based on diversity
of citizenship. Id. On November 9, 2017,
Respondents filed a cross-petition to confirm the Award.
Resp'ts' Mot., Doc. 6.
provides a “streamlined” process for a party
seeking “a judicial decree confirming an award, an
order vacating it, or an order modifying or correcting
it.” Hall St. Assocs., L.L.C. v. Mattel,
Inc., 552 U.S. 576, 582 (2008). District courts
“treat a petitioner's application to confirm or
vacate an arbitral award as akin to a motion for summary
judgment.” City of New York v. Mickalis Pawn Shop,
LLC, 645 F.3d 114, 136 (2d Cir. 2011) (quotation marks
omitted). The arbitrator's rationale for an award need
not be explained. Leeward Constr. Co., Ltd. v. Am. Univ.
of Antigua-Coll. of Med., 826 F.3d 634, 638 (2d Cir.
2016). Rather, a court is required to enforce an arbitration
award as long as there is a “barely colorable
justification” for the outcome reached. Id.
Confirmation of an arbitration award is thus “a summary
proceeding that merely makes what is already a final
arbitration award a judgment of the court.”
Citigroup, Inc. v. Abu Dhabi Inv. Auth., 776 F.3d
126, 132 (2d Cir. 2015) (quoting D.H. Blair & Co.,
Inc. v. Gottdiener, 462 F.3d 95, 110 (2d ...