County of Nassau v. Chase
Opinion of the Court
SUMMARY ORDER
Joseph Zorc, Judith Chase, and them law firm Zorc & Chase (collectively, “Zorc and Chase”) challenge the district court’s grant of a motion from the County of Nassau (“Nassau”) to confirm an arbitration award. We assume the parties’ familiarity with the underlying facts, the procedural history, and the issues presented for review.
When reviewing a district court’s confirmation of an arbitration award, the Circuit Court reviews findings of fact for clear error and legal conclusions de novo. Idea Nuova, Inc. v. GM Licensing Group, Inc., 617 F.3d 177, 179-180 (2d Cir. 2010). However, both courts review arbitration awards with “strong deference” to the arbitrators. Id. Relief should be appropriately rare, with only a “very narrow set of circumstances delineated by statute and case law” permitting vacatur. Porzig v. Dresdner, Kleinwort, Benson, N. Am. LLC, 497 F.3d 133,138 (2d Cir. 2007).
[2] When, as here, a retainer contract specifies that any appeal from an arbitration award is to be governed exclusively by New York state law, the designation must be honored by the courts unless the state law conflicts with federal law. Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 470, 477-78, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). This is true even when the contract involves interstate commerce and would otherwise fall within the coverage of the Federal Arbitration Act (“FAA”). Id. at 476-78, 109 S.Ct. 1248;
Zorc and Chase assert that the arbitrators engaged in “manifest disregard of the law.” This is the federal, not state, standard for whether an arbitrator has so far exceeded the scope of authority that the award should be overturned. See Porzig, 497 F.3d at 139 (articulating “manifest disregard” as federal standard). Under New York state law, the appropriate standard is whether the arbitration award “violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator’s power.” N.Y.C. Transit Auth. v. Transp. Workers’ Union of Am., Local 100, AFL-CIO, 6 N.Y.3d 332, 336, 812 N.Y.S.2d 413, 845 N.E.2d 1243 (2005). Zorc and Chase fail to satisfy this standard.
Under New York law, arbitrators are not bound by principles of substantive law or legal procedure: An arbitrator “may do justice as he sees it, applying his own sense of law and equity to the facts as he finds them to be and making an award reflecting the spirit rather than the letter of the agreement.” Silverman v. Benmor Coats, Inc., 61 N.Y.2d 299, 308, 473 N.Y.S.2d 774, 461 N.E.2d 1261 (1984). Misapplication of law and errors of fact are insufficient to overturn an award. Motor Vehicle Accident Indemnification Corp. v. Aetna Cas. & Surety Co., 89 N.Y.2d 214, 223, 652 N.Y.S.2d 584, 674 N.E.2d 1349 (1996).
The arbitration award in this case violates no “strong public policy” of New York or federal law, and Zorc and Chase never argue that it does. Furthermore, the arbitration clause hei’e contains no limitations on the arbitrators’ power, so the arbitrators cannot have “clearly exceed[ed] a specifically enumerated limitation” on their power (again, Zorc and Chase never dispute this). Lastly, neither the arbitrators’ decision nor the actual award is irrational: The arbitrators adduced facts and explained how those facts support their ultimate decision. Specifically, the arbitrators found that Zorc and Chase’s billing practices were suspicious, that their explanations for their bills were not credible, and that Nassau had been grossly over-billed. These findings of fact are not irrational.
[4] Under New York state law, a sufficient showing of partiality can justify overturning an arbitration award. N.Y. C.P.L.R. § 7511(b)(ii). Zorc and Chase make this assertion but provide no evidence of any actual partiality by any arbitrator — they never even assert that any of their arbitrators had a predisposition to favor Nassau or had any improper motive that would favor Nassau. Instead, Zorc and Chase claim that because the arbitrators made factual findings adverse to them, the arbitrators must have been har
The district court’s grant of Nassau’s motion to confirm the arbitration award is AFFIRMED; the petition by Zorc and Chase to vacate the arbitration award is DENIED.
Reference
- Full Case Name
- COUNTY OF NASSAU, Plaintiff-Counter-Defendant-Appellee v. Judith L. CHASE, Joseph M. Zorc, Zorc & Chase, Defendants-Counterclaimants-Appellants
- Cited By
- 4 cases
- Status
- Published