United States of America v. SF Green Clean LLC, No. 4:2014cv01905 - Document 31 (N.D. Cal. 2014)
Court Description: ORDER GRANTING MOTION TO CONFIRM AND DENYING CROSS-MOTION TO VACATE ARBITRATION AWARD. Signed by Judge JEFFREY S. WHITE on 8/8/14. (jjoS, COURT STAFF) (Filed on 8/8/2014)
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United States of America v. SF Green Clean LLC Doc. 31 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 UNITED STATES OF AMERICA, Petitioner, 11 For the Northern District of California United States District Court 10 No. C 14-01905 JSW v. 12 SF GREEN CLEAN, LLC, 13 Respondent. / ORDER GRANTING MOTION TO CONFIRM AND DENYING CROSS-MOTION TO VACATE ARBITRATION AWARD 14 15 This matter comes before the Court upon consideration of Petitioner United States of 16 America’s (“Petitioner”) motion to confirm the arbitration award by the American Arbitration 17 Association (“AAA”) and for entry of judgment in favor of the Presidio Trust (which was 18 petitioner in the arbitration action) and Respondent SF Green Clean, LLC’s (“Respondent”) 19 cross-motion to vacate the arbitration award. Having carefully reviewed the parties’ papers and 20 considering their arguments and relevant authority, the Court hereby GRANTS Petitioner’s 21 motion to confirm and DENIES Respondent’s cross-motion to vacate. 22 23 BACKGROUND The parties arbitrated their dispute about possession of a property located at 222 Halleck 24 Street, Building 222, in the Presidio of San Francisco, San Francisco, California (“the 25 Premises”) before the AAA. (Compl. ¶ 9.) On May 15, 2006, the Presidio Trust (as Landlord) 26 and Hermes Investment Group, LLC (as Tenant) executed a lease for the Premises (“the 27 Lease”). (Id. at ¶ 10.) The Lease included an arbitration clause which specified that “[i]n the 28 event of a dispute over Tenant’s right to possession of the Premises,” the dispute would be Dockets.Justia.com 1 submitted to the AAA for resolution. (Id.) On January 4, 2010, the Lease was amended by a 2 First Amendment, executed by the Presidio Trust, Hermes, and Respondent SF Green Clean. 3 (Id. at ¶ 11.) The First Amendment incorporated the terms and conditions of the original Lease 4 and specifically provided that Respondent was added as a tenant as if it had executed the 5 original Lease, “and had signed the Lease in every instance that the Lease was signed by” 6 Hermes. (Id. at ¶ 12.) operate its business on the Premises. (Id. at ¶ 14.) On or about January 17, 2014, the Presidio 9 Trust filed an initial Statement of Claim with AAA naming Respondent SF Green Clean, LLC 10 and Hermes Investment Group, Inc. as respondents. (Id. at ¶ 15.) Hermes Investment Group, 11 For the Northern District of California The term of the Lease expired on July 1, 2013. However, Respondent has continued to 8 United States District Court 7 Inc. entered into a written stipulation that possession should be awarded to the Presidio Trust. 12 (Id. at ¶ 16.) Respondent did not answer the claim, but through email correspondence 13 challenged the appropriateness of the arbitration and the qualifications of the Arbitrator. (Id.) 14 The matter came on for a hearing before the Arbitrator on February 7, 2014. (Id. at ¶ 15 17.) On February 25, 2014, the Arbitrator issued a written Award (“the Award”) in the 16 Presidio Trust’s favor. (Id. at ¶ 18.) The Award ordered Respondent to deliver possession of 17 the Premises to the Presidio Trust unless Respondent paid the Presidio Trust a nominal rent of 18 $3,000, in which case the Award would be stayed until midnight on September 1, 2014. (Id.) 19 The Arbitrator also determined that the Presidio Trust was entitled to recover its fees, costs, and 20 expenses, and therefore ordered Respondent to pay the Presidio Trust a total amount of 21 $18,687.50. (Id.) Finally, the Award provided that Respondent should reimburse the Presidio 22 Trust $5,650 for the administrative fees and expenses of the arbitration proceedings. (Id.) To 23 date, Respondent has paid only the nominal rent of $3,000 and refused to pay the additional fees 24 and expenses owed. (Id. at ¶ 19.) 25 Subsequently, on April 24, 2014, Petitioner filed a complaint in this Court to confirm the 26 arbitration award. On April 30, 2014, Petitioner filed a motion to confirm the arbitration award. 27 Respondent filed a cross-motion to vacate the arbitration award on May 23, 2014. 28 2 1 On June 23, 2014, Respondent filed an answer in which it raised eight counterclaims. 2 Petitioner filed a motion to dismiss and/or strike Respondent’s counterclaims on July 1, 2014.1 3 The Court shall address specific additional facts in the remainder of this Order. 4 5 ANALYSIS A. Standard of Review. 6 The Federal Arbitration Act (“FAA”), 9 U.S.C. § 9, provides that “within one year after 7 the [arbitration] award is made any party to the arbitration may apply to the court so specified 8 for an order confirming the award, and thereupon the court must grant such an order unless the 9 order is vacated, modified, or corrected.” Pursuant to the FAA, 9 U.S.C. § 10, a court may vacate an arbitration award on the 11 For the Northern District of California United States District Court 10 following grounds: “(1) where the award was procured by corruption, fraud, or undue means; 12 (2) where there was evident partiality or corruption in the arbitrators, or either of them; (3) 13 where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon 14 sufficient cause shown, or in refusing to hear evidence pertinent and material to the 15 controversy; or of any other misbehavior by which the rights of any party have been prejudiced; 16 or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a 17 18 This Court finds Respondent’s counterclaims to be untimely. Under the FAA, a motion to vacate an arbitration award must be served on the adverse party, the Petitioner in this case, within three months from the date the arbitration award is filed. 9 U.S.C. § 12. “The clear import of this statutory instruction is that challenges to an arbitration award are to be brought via a timely motion to vacate, not by way of defenses based upon the statutory grounds for vacating raised in response to a motion to confirm.” See Carpenters 46 Northern Cal. Counties Conference Bd. v. Meddles, 535 F. Supp. 775, 778 (9th Cir. 1981). The arbitration award in this case was filed on February 25, 2014. Thus, any motion to vacate was required to be served on or before May 25, 2014. Respondent’s motion to vacate was timely served and filed on May 23, 2014. Respondent’s additional answer and counterclaims were untimely filed on June 24, 2014. Absent clear authority from the Ninth Circuit, this Court is unwilling to depart from the strong federal policy of finality from arbitration. This Court finds, as a matter of law, that the failure to file a motion to vacate, modify, or correct the arbitration award within three months after the award was filed or delivered precludes Respondent from raising any defenses to the arbitration award that could have been raised in a timely motion to vacate. Accordingly, because Respondent’s counterclaims do nothing more than raise defenses to the arbitration award that could have been raised in its timely motion to vacate, the Court dismisses the counterclaims as untimely under 9 U.S.C. § 12. Therefore, Petitioner’s motion to strike and/or dismiss Respondent’s counterclaims is moot. The Court hereby vacates the hearing set for August 15, 2014. 1 19 20 21 22 23 24 25 26 27 28 3 1 mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 2 10(a)(1)-(4). 3 “These grounds afford an extremely limited review authority, a limitation that is 4 designed to preserve due process but not to permit unnecessary public intrusion into private 5 arbitration matters.” Kyocera Corp. v. Prudential Bache T Servs., 341 F.3d 987, 998 (9th Cir. 6 2003); see also G.C. & K.B. Invs., Inc. v. Wilson, 326 F.3d 1096, 1105 (9th Cir. 2003) (noting 7 that courts “have interpreted sections 9 and 10 [of the FAA] narrowly.”) (italics in original). 8 C. 9 Respondent requests that this Court vacate the Award for a variety of reasons which the Court shall address below. 11 For the Northern District of California United States District Court 10 Respondent’s Motion to Vacate Award. 1. Evident Partiality of Arbitrator. 12 Respondent alleges that the Arbitrator should be disqualified based on his evident 13 partiality. Respondent contents that such partiality is apparent based upon the fact that (1) 14 Arbitrator Finkelstein conducted an ex-parte prearbitration conference and (2) Respondent was 15 excluded from participating in the selection of the Arbitrator. 16 A court may vacate an arbitration award for evident partiality under 9 U.S.C. § 10(a)(2) 17 where the arbitrator was actually biased or the arbitrator failed to disclose information giving 18 the reasonable impression of bias in favor of one party. Woods v. Saturn Distribution Corp., 78 19 F.3d 424, 427 (9th Cir. 1996). The party challenging the arbitration award has the burden of 20 showing evident partiality. Id. 21 To demonstrate evident partiality, a party moving for vacatur “must establish specific 22 facts indicating actual bias toward or against a party or show that [the challenged arbitrator] 23 failed to disclose to the parties information that creates a reasonable impression of bias.” 24 Lagstein v. Certain Underwriters at Lloyd’s, London, 607 F.3d 634, 645-46 (9th Cir. 2010) 25 (internal quotation marks and alterations omitted). “[V]acatur of an arbitration award is not 26 required simply because an arbitrator failed to disclose a matter of some interest to a party.” Id. 27 at 645. Instead, an arbitrator is “required to disclose only facts indicating that he might 28 reasonably be thought biased” against one party and favorable to another. Id. at 646 (internal 4 1 quotation marks and citation omitted). Examples of the “level of partiality” found to constitute 2 “evident partiality” include cases where “(1) an arbitrator’s financial interest in the outcome of 3 the arbitration was not disclosed to the parties, (2) a familial relationship made the arbitrator’s 4 impartiality suspect when not disclosed, and (3) an arbitrator’s former employment by one of 5 the parties was not disclosed.” Pacific West Securities, Inc. v. George, 2014 WL 894843, at *2 6 (N.D. Cal. Mar. 4, 2014) (citing Ardalan v. Macy’s Inc., 2012 WL 2503972, at *3 (N.D. Cal. 7 June 28, 2012)) (citations omitted). 8 9 i. Ex-Parte Communications. Respondent argues the Court should vacate the award for evident partiality on the basis that Arbitrator Finkelstein conducted an ex-parte prearbitration telephone conference without 11 For the Northern District of California United States District Court 10 notice to or participation of Respondent. 12 To vacate an arbitration award on the basis of ex-parte communications, the movant 13 must show two things: “First, the ex-parte conversation must have deprived the [movant] of a 14 fair hearing and influenced the outcome of the arbitration. Second, [the movant] must show that 15 ‘the subject matter of the conversation [went] to the heart of the dispute’s merits.’” Schwartz v. 16 Merrill Lynch & Co., 2010 WL 517585, at *3 (S.D.N.Y. Feb. 8, 2010) (quoting Spector v. 17 Torenberg, 852 F. Supp. 201, 209 (S.D.N.Y. 1994)). 18 However, even taking Respondent’s allegations as true, the Court is not persuaded by 19 the argument that evident partiality should invalidate the Arbitrator’s decision. The alleged 20 prejudice – Respondent’s lack of notice and ultimate absence from the prearbitration telephone 21 conference, which included setting dates for discovery – does not indicate that (1) Respondent 22 was deprived of a fair hearing which influenced the outcome of the arbitration; or (2) indicate 23 that the subject matter of the conversation went to the heart of the dispute’s merits. 24 Furthermore, just because the ex-parte communication was a matter of interest to Respondent 25 does not require this Court to vacate the award. 26 27 28 ii. Selection of the Arbitrator. Respondent also argues the Court should vacate the award for evident partiality on the basis that it had no opportunity to participate in the selection of Arbitrator Finkelstein in 5 1 violation of its right under 5 U.S.C. § 577(a). This section provides that “the parties to an 2 arbitration proceeding shall be entitled to participate in the selection of the arbitrator.” 3 Respondent once again fails to meets its burden to show evident partiality. 4 Respondent does not establish specific facts indicating actual bias against it or show that 5 Arbitrator Finkelstein failed to disclose information that creates a reasonable impression of bias. 6 Moreover, the First Amendment to the Lease provides that, “all references to ‘Tenant’ in the 7 Lease are deemed to refer to Hermes Investment Group, Inc., an Arizona corporation and SF 8 Green Clean, LLC, a California limited liability company, collectively, as if both entities had 9 executed the Lease, and had signed the Lease in every instance that the Lease was signed by Original Tenant [Hermes].” (Proctor Decl. Ex. B at 56.) Thus, when Respondent signed onto 11 For the Northern District of California United States District Court 10 the Lease in January 2010, Respondent effectively participated in the selection of the Arbitrator 12 by agreeing, before the dispute arose, that AAA would provide the neutral arbitrator. 13 2. 14 Respondent asserts that binding arbitration is a “voluntary procedure” and that “[a]n 15 agency may not require any person to consent to arbitration as a condition of entering into a 16 contract or obtaining a benefit.” See 5 U.S.C. § 572(c). Respondent seems to argue that if this 17 Court finds Respondent bound by the binding arbitration agreement, the Court should find the 18 agreement unenforceable because of the agreement’s procedural unconscionability. 19 The Matter is Arbitrable. In terms of an arbitration agreement, procedural unconscionability occurs when the 20 agreement is a contract of adhesion, presented to the signee on a take-it-or-leave-it basis, and 21 the signee is required to sign the arbitration agreement as a condition of executing the lease. 22 However, even presentation of a “standardized arbitration agreement to a party of lesser 23 bargaining power on a take-it-or-leave-it basis” does not suffice for the court to find the 24 arbitration provision to be unconscionable. Castro v. Cintas Corp. No. 3, 2014 WL 1410524, at 25 *6 (N.D. Cal. Apr. 11, 2014). Instead, “there must be some evidence that, in consequence of 26 the imbalance, the party in the weaker position was defrauded or coerced into agreement to the 27 arbitration clause.” Id. 28 6 1 Here, Respondent has presented no evidence that it was defrauded or coerced into 2 agreeing to the arbitration clause in the Lease. In particular, Respondent has not shown that it 3 was forced to sign the agreement as a condition of leasing the property. Moreover, the Lease’s 4 arbitration clause includes the language: “The agreement by the parties to this arbitration 5 provision is voluntary.” (Proctor Ex. B at 33 (emphasis added).) The inclusion of this language 6 suggests that agreement of the binding arbitration provision was voluntary and not a condition 7 of entering into the leasing contract. Additionally, when signing the First Amendment, 8 Respondent raised no issue with the arbitration clause and thereby agreed to all terms of the 9 Lease, including the binding arbitration clause. The Court thus finds Respondent’s contention 11 For the Northern District of California United States District Court 10 that arbitration agreement is unconconsionable to be unpersuasive. In the alternative, Respondent also argues that by not signing the Hermes arbitration 12 clause on the actual page of the original Lease where Hermes did, it should not be bound by the 13 terms of the arbitration agreement. Respondent asserts that arbitrability should be decided by 14 the Court, not by the Arbitrator. Respondent relies on Oxford Health Plans, LLC v. Sutter, 15 which found that the “question of whether parties have a valid arbitration agreement at all is for 16 the courts to decide.” 133 S. Ct. 2064, 2068 n.2 (2013). 17 This Court finds that the Lease provided a clear arbitration clause that was set forth in 18 accordance with the FAA, and which was acknowledged and accepted by John Sperling, the 19 individual who signed the Amendment on behalf of Respondent. (Proctor Decl., Ex. B at 32- 20 33.) The First Amendment to the Lease incorporates the terms and conditions of the Lease and 21 specifically provides Respondent was added as a co-tenant and that “[e]xcept as herein modified 22 or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in 23 full force and effect.” (Id. at 56.) Accordingly, when the Lease was ratified on June 22, 2007, 24 Respondent became bound by all the terms and conditions of the Lease, in the same manner and 25 to the same extent as though Respondent had been included in the Lease from its inception. 26 Thus, this Court finds Respondent’s argument that it should not be bound by the terms of the 27 arbitration agreement because it only signed the First Amendment and never signed directly 28 beneath the arbitration clause in the original Lease to be unpersuasive. 7 1 Respondent also points to Petitioner’s failure to issue its arbitration guidelines until 2 approximately October 2007, over a year after the Hermes arbitration clause was drafted and 3 executed in May 2006. In doing so, Respondent argues that it failed to issue guidance on the 4 appropriate use of binding arbitration as provided by 5 U.S.C. § 575(c). Respondent’s 5 argument fails because Section 575(c) provides that, “prior to using binding arbitration . . . the 6 head of an agency, in consultation with the attorney general . . . shall issue guidance on the 7 appropriate use of binding arbitration . . . . ” 5 U.S.C. § 575(c) (emphasis added). Binding 8 arbitration had not been used before October 2007 and there is nothing in the statute that forbids 9 Petitioner from including an arbitration clause in a lease that predated the issuance of guidance. 5 U.S.C. § 575(c). Additionally, the Amendment to the Lease was signed well after the 11 For the Northern District of California United States District Court 10 issuance of the guidance in January 2010. 12 3. 13 Respondent argues that Arbitrator Finkelstein was guilty of misconduct when he denied 14 its request to extend the hearing for the appearance of Petitioner’s witness, Michael Fassler, an 15 employee of Petitioner who participated in the parties’ dealings regarding the Doyle Drive 16 Replacement Project. Respondent asserts that Mr. Fassler could have testified to facts 17 establishing either that Petitioner agreed to renew the lease or that it should have been estopped 18 from denying it had so agreed during the negotiations over Petitioner’s response to 19 Respondent’s complaints about the disruption of its business caused by the Doyle Drive 20 Replacement Project. Respondent further asserts that Mr. Fassler could have testified regarding 21 Respondent’s First Amendment defense to eviction – that the Petitioner’s determination not to 22 renew Respondent’s lease was in retaliation for its managing members’ complaints about the 23 Doyle Drive Replacement Project and in derogation of its First Amendment rights to free 24 speech and to petition the federal government for redress of a grievance. (See Respondent’s 25 Cross-Motion to Vacate at 6.) 26 Arbitrator Did Not Engage in Misconduct. The FAA, 9 U.S.C. § 10(a)(3), provides that an arbitration award may be vacated 27 “where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon 28 sufficient cause shown . . . ” However, because one of the policy purposes behind the FAA is 8 1 the expeditious resolution of disputes, the arbitrator has wide discretion to decide whether to 2 grant or deny a requested postponement. See Sink v. Aden Enters., Inc., 352 F.3d 1197, 1201 3 (9th Cir. 2003). The Court therefore will affirm the award if the Arbitrator had any reasonable 4 basis to deny the request for a continuance. See Partnerweekly, LLC v. Viable Marketing Corp., 5 2012 WL 1185673, at *3 (D. Nev. Apr. 9, 2012). Thus, a court’s review of an arbitration 6 decision under the FAA is “limited and highly deferential.” Coutee v. Barington Capital Grp., 7 L.P., 336 F.3d 1128, 1132 (9th Cir. 2003). 8 9 In fact, “[a]rbitrators enjoy ‘wide discretion to require the exchange of evidence, and to admit or exclude evidence, how and when they see fit.’” U.S. Life Ins. Co. v. Superior Nat. Inc. Co., 591 F.3d 1167, 1175 (9th Cir. 2010) (internal quotation marks and citation omitted). The 11 For the Northern District of California United States District Court 10 arbitrator need not explain his or her rationale for an award, and the Court should confirm an 12 award if “a ground for the arbitrator’s decision can be inferred from the facts of the case.” D.H. 13 Blair & Co. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006). “Only a barely colorable 14 justification for the outcome reached by the arbitrators is necessary to confirm the award.” Id. 15 (internal quotation and citation omitted). The party moving to vacate the award bears the 16 burden of proof. Id. To support vacatur, the arbitrator’s refusal “must demonstrate bad faith or 17 be so gross as to amount to affirmative misconduct.” United Paperworkers Int’l Union, AFL- 18 CIO v. Misco, Inc., 484 U.S. 29, 40 (1987). 19 Here, Respondent has not met its heavy burden to show misconduct. Respondent 20 merely speculates that Mr. Fassler would have testified in its favor but fails to establish that the 21 allegedly excluded evidence influenced the outcome of the arbitration or that the Arbitrator’s 22 refusal to stay the proceeding was a demonstration of bad faith, so gross as to amount to 23 affirmative misconduct. This Court finds that the Arbitrator had a reasonable basis to deny the 24 requested continuance in order to promote the policy of an expeditious resolution of the 25 arbitration proceeding. 26 Furthermore, this case does not rise to the level of arbitral misconduct sufficient to 27 vacate the Award as cited by the parties. For example, this case is not similar to the arbitral 28 misconduct in Gulf Coast Industrial Workers Union v. Exxon Co., USA, 70 F.3d 847, 848 (5th 9 1 Cir. 1995), where the arbitrator misled a party into believing that evidence was admitted, but 2 then ruled against the party because it failed to present evidence on the very point to which the 3 excluded evidence was central. Nor is this case similar to the arbitral misconduct in Teamsters, 4 Chauffeurs, Warehousemen and Helpers, Local Union No. 506 v. E.D. Clapp Corp., 551 F. 5 Supp. 570, 578 (N.D. N.Y. 1982), where the party was not given an opportunity to complete its 6 presentation of proof prior to issuance of the arbitration decision. 7 Thus, Respondent’s argument that the Arbitrator engaged in misconduct by not 8 extending the hearing ultimately fails because it has not met its burden of proof. Moreover, the 9 Court finds that a “barely colorable justification” for the outcome reached by the Arbitrator – to promote the policy of an expeditious resolution of the arbitration proceeding – can be inferred 11 For the Northern District of California United States District Court 10 from the facts of this case. 12 4. 13 Respondent argues that Arbitrator Finkelstein exceeded his powers in a number of ways, 14 15 Arbitrator Did Not Exceed His Authority. none of which is sufficient to vacate the Award. As a threshold matter, the Court notes that when a party moving to vacate an arbitration 16 award makes the argument that the arbitrator has exceeded his/her powers, a court’s inquiry 17 should focuses on “whether the arbitrator had the power, based on the parties’ submissions or 18 the arbitration agreement, to reach a certain issue, not whether the arbitrator correctly decided 19 that issue.” See Global Gold Mining LLC v. Caldera Resources, Inc., 941 F. Supp. 2d 374, 387 20 (S.D. N.Y. 2013) (emphasis in original). Accordingly, an arbitrator exceeds his authority if he 21 has considered issues beyond those the submitted by the parties or issues prohibited by the 22 terms of their agreement. Rame, LLC v. Popovich, 878 F. Supp. 2d 439, 445 (S.D.N.Y. 2012) 23 (quoting Jock v. Sterling Jewelers Inc., 646 F.3d 113, 122 (2d Cir. 2011)). 24 The Ninth Circuit has made clear that arbitrators “exceed their powers” within the 25 meaning of 9 U.S.C. § 10(a)(4) “not when they merely interpret or apply the governing law 26 incorrectly, but when the award is ‘completely irrational,’ . . . or exhibits a ‘manifest disregard 27 of law.’” Kyocera Corp., 341 F.3d at 997 (quoting French v. Merrill Lynch, Pierce, Fenner & 28 10 1 Smith, Inc., 784 F.2d 902, 906 (9th Cir. 1986) and Todd Shipyards Corp. v. Cunard Line, Ltd., 2 943 F.2d 1056, 1060 (9th Cir. 1991)). 3 Respondent argues that the award of $18,687.50 in attorneys fees for private counsel to 4 prepare for and conduct a one-day arbitration hearing was in excess of the Arbitrator’s powers 5 within the meaning of 9 U.S.C. § 10(a)(4). Respondent also argues that it did not agree to pay 6 AAA for the services it provided, in violation of 5 U.S.C. § 573(e), that “[t]he parties shall 7 agree on compensation for the neutral . . . . ” 8 9 This Court has already found that after Respondent signed the First Amendment, which became effective on January 22, 2007, it became bound by all terms and conditions of the Lease, in the same manner and to the same extent as though Respondent had been included in 11 For the Northern District of California United States District Court 10 the Lease from its inception. Accordingly, Respondent became bound by Article 24 of the 12 Lease which provides that “the prevailing party shall be entitled to obtain, as part of the 13 judgment or award, all reasonable attorney’s fees, costs and expenses incurred in connection 14 with such litigation or arbitration . . . . ” (Proctor Decl. Ex. B at 32.) Thus, this Court finds that 15 the Arbitrator did not exceed his powers within the meaning of 9 U.S.C. § 10(a)(4) by awarding 16 $18,687.50 in attorney fees and $5,650 for AAA. It is neither “completely irrational” nor a 17 “manifest disregard of law” for the Arbitrator to award attorney’s fees, costs and expenses 18 incurred as a result of the present arbitration because Article 24 of the Lease provides for such 19 power. (See Proctor Ex. B at 32.) The Court rejects Respondent’s argument that the fee awards 20 ordered by the Arbitrator were in excess of the Arbitrator’s power. 21 Respondent also argues that despite its objection at the arbitration hearing, Petitioner 22 was represented by private attorney Theodore Griffinger of Stein & Lubin, LLP. Respondent 23 points to Section 104(h) of The Presidio Trust Act, 16 U.S.C. § 460bb App., Pub. L. 104-33, 24 Title I, § 103, which provides that, “[l]itigation arising out of the activities of the [Petitioner] 25 shall be conducted by the Attorney General; except that the Trust may retain private attorneys 26 to provide advice and counsel.” Petitioner, however, points out that the statute asserts that the 27 Attorney General shall conduct litigation, not arbitration. Petitioner relies on American Express 28 Co. v. Italian Colors Restaurant, 133 S. Ct. 2304, 2315 (2013), distinguishes between litigation 11 1 and arbitration by finding that “what the FAA prefers to litigation is arbitration.” In fact, the 2 arbitration agreement at issue in this case provides that “Landlord and Tenant each waives and 3 relinquishes any rights it might possess to have the dispute as to the arbitration matters litigated 4 in a court or jury trial.” (Proctor Decl. Ex. B at 27 (emphasis added).) The Court is not 5 persuaded by Respondent’s argument that the Arbitrator exceeded his authority by allowing 6 Petitioner to be represented by a private attorney. Respondent finally argues that the arbitration clause contains no cap or maximum award 7 8 as directed by the FAA, 5 U.S.C. § 575(a)(2), but Petitioner makes a persuasive counter- 9 argument that the arbitration clause does include a cap – the right to possession of the premises. Respondent also attempts to raise the argument that it also prevailed in the arbitration award 11 For the Northern District of California United States District Court 10 because the Petitioner was denied immediate possession. However, this argument fails because 12 Petitioner was awarded possession and fees, which is why Petitioner seeks confirmation of the 13 award and Respondent seeks vacatur of the award. In sum, this Court finds all of Respondent’s arguments that the Arbitrator exceeded his 14 15 authority to be unconvincing and therefore denies the Respondent’s motion to vacate the 16 Award. 17 D. 18 19 Petitioner’s Cross-Motion to Confirm Award. Petitioner brings a motion to confirm the arbitration award and enter judgment on its behalf under the FAA, 9 U.S.C. § 9, which provides in relevant part: 22 If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award . . . . 23 The parties’ agreement states that, “[t]he arbitrator’s judgment, which may include the 20 21 24 immediate eviction of Tenant, shall be final and binding on all parties, and judgment may be 25 entered and enforced in the United States District Court for the Northern District of California . 26 . . . ” (Proctor Decl. Ex. B at 33.) Therefore, the Court finds that the parties have agreed to 27 have this Court confirm the arbitration award. 28 12 1 2 CONCLUSION To effectuate the goals of the FAA, there is a strong presumption in favor of confirming 3 arbitration awards. See Jock, 646 F.3d at 121. Here, Respondent has not overcome that 4 presumption. Thus, for the foregoing reasons, Petitioner’s motion to confirm the arbitration 5 award is GRANTED and Respondent’s cross-motion to vacate arbitration award is DENIED. 6 The Court CONFIRMS the Arbitration Award. 7 8 9 IT IS SO ORDERED. Dated: August 8, 2014 JEFFREY S. WHITE UNITED STATES DISTRICT JUDGE 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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