United States District Court, M.D. Tennessee, Nashville Division
ALTRUIST, LLC, an Arizona limited liability company, Petitioner,
MEDEX PATIENT TRANSPORT, LLC, a Tennessee limited liability company, KLEIN CALVERT, KYLE CALVERT, Respondents,
SUSAN K. BIGELOW, JOANNA MILKOVICH, Counter-Respondents.
WAVERLY D. CRENSHAW, JR. CHIEF UNITED STATES DISTRICT JUDGE.
before the Court are conflicting requests: (1)
Petitioner's Petition to Confirm Arbitration Award (Doc.
No. 1); and (2) Respondents' Motion to Vacate Arbitration
Award (Doc. No. 12). For the reasons that follow, the
arbitration award will be confirmed.
October 23, 2014, Altruist, LLC and Medex Patient Transport,
LLC (doing business as Caliber Patient Care)
(“Medex”) entered into a Franchise Agreement
relating to the provision of emergency medical transportation
services. The Franchise Agreement provided that all disputes,
except for those involving intellectual property rights or
claims for injunctive relief, were to be settled by binding
arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association
filed a demand for arbitration on May 27, 2016, alleging
intentional misrepresentation/fraud in the inducement,
negligent misrepresentation, breach of contract, breach of
the covenant of good faith and fair dealing, violation of the
Tennessee Consumer Protection Act (“TCPA”), and
misrepresentation by concealment. It sought rescission,
punitive damages, and attorney's fees.
claims were arbitrated from April 25 through 28, 2017. On
July 5, 2017, an AAA arbitrator issued an Interim Award that
resolved all claims, except the award of attorney's fees,
which required further briefing as to the amount.
Interim Award, the arbitrator found in favor of Altruist and
its co-owners, Susan K. Bigelow and Joanna Milkovich, on
three grounds - breach of the contract, fraudulent
inducement, and violation of the TCPA. He also found
rescission under the TCPA to be appropriate, and awarded
$235, 611.71 (representing damages, interest, AAA fees, and
the arbitrator's fees and expenses), of which $29, 968.94
had already been paid. The award was assessed against Medex
d/b/a Caliber and its owners, Klein and Kyle Calvert.
Final Award (“Award”) assessing an additional
$211, 015.81 in attorney's fees and costs was rendered on
August 14, 2017, making the total $416, 758.58. Respondents
seek to vacate the award on the ground that the arbitrator
manifestly disregarded the law in various respects. Altruist
requests confirmation of the award, attorney's fees for
having to defend this action, and post-judgment interest at a
rate set by Tennessee statute.
Standard of Review
Federal Arbitration Act (‘FAA') expresses a
presumption that arbitration awards will be confirmed.”
Nationwide Mut. Ins. Co. v. Home Ins. Co., 429 F.3d
640, 643 (6th Cir. 2005). Towards that end, “[w]hen
courts are called on to review an arbitrator's decision,
the review is very narrow; it is one of the narrowest
standards of judicial review in all of American
jurisprudence.” Samaan v. Gen. Dynamics Land Sys.,
Inc., 835 F.3d 593, 600 (6th Cir. 2016).
itself provides four grounds for vacating an award:
(1) where the award was procured by corruption, fraud, or
(2) where there was evident partiality or corruption in the
arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient cause
shown, or in refusing to hear evidence pertinent and material
to the controversy; or of any other misbehavior by which the
rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so
imperfectly executed them that a mutual, final, and definite
award upon the subject matter submitted was not made.
9 U.S.C.A. § 10.
circuits have recognized “manifest disregard of the
law” as a further ground for vacatur of an arbitration
award, either as a collective shorthand for the enumerated
grounds, see McCarthy v. Citigroup Glob. Markets
Inc., 463 F.3d 87, 91 (1st Cir. 2006), or as an
independent factor, see Kyocera Corp. v. Prudential-Bache
Trade Servs., Inc., 341 F.3d 987, 998 (9th Cir. 2003).
In Hall St. Assoc., L.L.C. v. Mattel, Inc., 552 U.S.
576, 585 (2008), however, the Supreme Court cautioned against
treating this “supposed addition . . . as the
camel's nose” for further expansion.
Hall Street, the Sixth Circuit has stated in
dicta that “[w]hether ‘manifest
disregard of the law' may still supply a basis for
vacating an arbitrator's award as ‘a judicially
created supplement to the enumerated forms of FAA relief . .
is an open question.'” Samaan, 835 F.3d at
600. Nevertheless some panels have “held that despite
the Supreme Court's language in Hall Street, the
‘manifest disregard' doctrine remains a viable
ground for attacking an arbitrator's decision.”
Marshall v. SSC Nashville Operating Co.,
LLC, 686 Fed.Appx. 348, 352 (6th Cir. 2017).
Coffee Beanery, Ltd. v. WW, L.L.C., 300 Fed.Appx.
415, 418-19 (6th Cir. 2008), for example, the court
considered “manifest disregard, ” observing that
Hall Street addressed efforts by “private
parties to supplement by contract the FAA's statutory
grounds for vacatur, ” and that, while “the
Supreme Court significantly reduced the ability of federal
courts to vacate arbitration awards for reasons other than
those specified in 9 U.S.C. § 10, . . . it did not
foreclose federal courts' review for an arbitrator's
manifest disregard of the law.” Likewise, in Grain
v. Trinity Health, Mercy Health Servs. Inc., 551 F.3d
374, 380 (6th Cir. 2008), the Sixth Circuit considered
“manifest necessity” as a factor, noting that,
while the Supreme Court's “reference to the
‘exclusive' statutory grounds for obtaining relief
casts some doubt on the continuing vitality of [this]
theory” as an additional factor, the “Supreme
Court suggested manifest disregard” could still be used
as a “shorthand” for the enumerated factors.