Opinion
03 Civ. 6338 (HB), 89369
November 24, 2003
OPINION ORDER
Petitioner Robert Lewis Rosen Associates, Ltd. ("RLR") moves for an order, pursuant to the Federal Arbitration Act, 9 U.S.C. § 9, confirming and entering judgment on an arbitration award issued by Arbitrator Howard C. Edelman ("Edelman") on July 31, 2003, (hereinafter "Final Award") and for attorneys' fees and costs. Petitioner also moves for an injunction, prohibiting Webb from making any further filings, both administrative and judicial, concerning the matter currently pending before this Court. Respondent William Webb ("Webb") cross-moves, pursuant to 9 U.S.C. § 10(a)(3), to vacate the final award or alternatively for a stay of this proceeding pending resolution of an administrative action that he intended to file before the California Labor Commission ("Commission"), challenging petitioner's status as an unlicensed talent agency. For the foregoing reasons, petitioner's motion to confirm the Final Award is granted and his motion to enjoin respondent's future filings is denied. Respondent's cross-motions to vacate the Final Award or alternatively to stay this proceeding are both denied.
I. BACKGROUND
A. Factual Background
RLR is a New York corporation that manages the entertainment careers of many individuals. Robert Rosen ("Rosen") is the principal of RLR and the individual with whom Webb most frequently interacted. Webb first formally engaged RLR's services under a written contract dated October 7, 1986. According to this agreement, RLR was to serve as Webb's "personal manager, representative and advisor for the purposes of supervising and guiding [his] profession career in the [e]ntertainment [f]ield" for the next four years. (Agreement between RLR and Webb, dated 10/7/86 ("10/7/86 Agree't" or "Agreement")).
1. Letter Agreement
Pursuant to this Agreement, Webb agreed to utilize RLR as his sole manager, handing RLR the exclusive right to, among other roles, supervise his career and review his contracts. RLR, however, had the express "right to perform the same or similar services for others" and made clear that the agreement did not create a partnership or joint venture between the pair. For its services, RLR bound Webb to pay 10% of the gross consideration made from any "engagements, contracts and agreements entered into by [Webb] during the [4 year] term hereof or substantially negotiated during the term hereof and executed within six (6) months thereafter, and upon any extensions or renewals thereof and substitutions thereof, and upon any resumptions of any engagements, contracts and agreements which may have been discontinued during the term hereof and resumed within one (1) year thereafter." In this Agreement, RLR "acknowledge[d] that we are not engaged hereunder for the purpose of soliciting or providing employment for you. To the extent that we solicit or provide employment for you, you acknowledge that such services shall be incidental to the primary services agreed to be provided to you . . ." Finally, the Agreement stipulated that "[a]ny controversy or claim arising out of or relating to this agreement, or the breach thereof, shall be submitted to arbitration in New York, New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrators) (including, without limitation, interest, costs, expenses and attorneys fees as the Arbitrator(s) may award in its discretion) may be entered in any court having jurisdiction thereof and mandated that New York law govern all such disputes.
2. Expiration and Extension of Letter Agreement
After the Agreement expired in October 1990, despite having no formal contract in effect, Webb continued to consult with RLR about entertainment employment opportunities, under the same monetary arrangement. During that time, RLR negotiated contracts for Webb to direct both the MSG Network's New York Yankees' telecasts and Fox's telecasts of the "A" baseball Game of the Week. Also during this time, Rosen negotiated Webb's renewal contract with MSG. It was not until June 8, 1997 that Webb signed an agreement, "amend[ing] the contract between you and us dated October 7, 1986." (Extension Agreement, signed June 8, 1997 ("6/8/97 Ext. Agree't" or "Extension Agreement")). The Extension Agreement "extended" the lapsed Agreement "through and including October 12, 2001," maintaining "all other terms and conditions of said contract. . . . in full force and effect," thereby incorporating the agreement to arbitrate disputes. It is undisputed that during the period between the expiration of the Agreement and the onset of the Extension Agreement (October 7, 1990 through June 8, 1997) (hereinafter "the lapsed period"), though RLR and Webb voluntarily maintained their business relationship in the same form as they had agreed upon in the Agreement, Webb was not bound by the lapsed provisions. (Preliminary Arbitration Opinion, dated 10/23/01 ("10/23/01 Arb. Op.")).
Networks broadcast A, B, C, and D games, with the A game being the most prestigious and therefore the most desirable (monetarily) to direct.
Webb asserts that Robert Rosen's son, Gary Rosen, negotiated this renewal, against Webb's express instruction that Gary not be involved. In his March 11, 2003 Opinion, Edelman discredited this assertion and held that "Gary Rosen had no meaningful involvement in negotiating the 1997 MSG extension."
During the arbitration proceedings, Webb claimed that because he did not have a copy of the Agreement when he signed the Extension Agreement, he did not recall that there was an arbitration clause, and therefore did not intend to agree to arbitrate future disputes. Edelman discounted this assertion.
3. Webb's Anticipatory Repudiation
Though the pair continued to interact productively for some time, their relationship soured in the fall of 2000, when Webb notified RLR of his desire to discontinue utilizing RLR's services. Webb alleges that his discontent with RLR's services began in the Fall of 1995, when RLR breached its duty of loyalty to Webb by promoting Robert Fishman, one of its other clients, for the coveted Fox broadcast of Major League Baseball's "A" Game of the Week. Webb asserts that Rosen promoted Fishman, in conversations with Ed Goren, then the Executive Producer of Fox Sports, and Mark Filippelli, the targeted producer of the Fox "A" game. As a result of Rosen's alleged disloyalty, Webb maintains that he was "fraudulently induced" to sign the Extension Agreement — arguing that he would not have maintained a business relationship with Rosen had he known that Rosen was sabotaging his chances for success on a highly desired contract. Webb also asserts that it was his belief that the Extension Agreement did not prohibit him from negotiating some contracts on his own behalf and maintaining the proceeds of such successful contracts in full.
4. Arbitration Proceeding
Soon thereafter, on April 18, 2001, RLR initiated an arbitration proceeding before the American Arbitration Association ("AAA") to collect money owed by Webb under the Agreement and the Extension Agreement. During the course of the arbitration, Webb countered with several defenses and numerous counterclaims. Edelman made a preliminary finding on October 23, 2001 that claims arising out of the lapsed period were not arbitrable as there was no agreement in effect to arbitrate claims.
Webb raised the following counterclaims: (1) breach of fiduciary duty in lieu of pushing Fishman over Webb, (2) breach of duty of good faith and fair dealing in lieu of promoting Fishman over Webb, (3) unjust enrichment in lieu of pushing Fishman over Webb, (4) unjust enrichment in lieu of having Robert Rosen's son Gary negotiate the renewal of the MSG contract, against Webb's express wishes, (5) declaratory judgment that Agreement expired and was not extended by Extension Agreement, (6) breach of contract for promoting Fishman, (7) and fraud in the inducement in signing of the Extension Agreement.
During several points of the arbitration proceeding, Webb attempted to secure discovery relating to RLR's actual performance during the period embodied by the Extension Agreement. Edelman denied Webb's requests, and on July 22, 2002, by letter Order, explicitly ruled that "[a]ll other requests for expanded discovery are denied at this time, including my prior determination rejecting Mr. Cousin's request that I order discovery as to RLR's performance or non-performance during the period covered by the May 21, 1997 Extension Agreement. (Arbitration Opinion, dated July 22, 2002 ("7/22/02 Arb. Op.") at para. 6.). In his March 11, 2003 Interim Opinion, Edelman elucidated the rationale behind his evidentiary orders, explaining that because the Agreement did not mandate that RLR perform a specific amount of services for Webb, but rather set out generally the ways in which RLR could assist Webb, "the level of RLR's services to Webb during the period in dispute is [ ] not before me." (3/11/03 Arb. Op. at 15). After all, the Agreement obligated Webb to remit payment of 10% to RLR even for engagements that Webb secured without RLR's assistance.
Edelman also held that Webb had not made out a claim for fraudulent inducement because (1) before signing the Extension Agreement, Webb knew from Filippelli that Rosen had been pushing Fishman over him, yet still signed the Extension, and (2) Webb did not, and could not, prove the necessary element of injury since he actually received the Fox "A" job, despite Rosen's alleged disloyalty. (Arbitration Opinion, dated March 11, 2003 ("3/11/03 Arb. Op.")). In this same Opinion, Edelman further held that "Webb also had to know that any arrangement he entered into during the life of the Extension Agreement would trigger the ten per cent fee."
This arbitration, held before Arbitrator Howard C. Edelman (hereinafter "Edelman"), resulted in the issuance of a Final Award on July 31, 2003. Edelman's Final Award ordered the following:
1. Respondent William Webb shall pay Claimant RLR the sum of Three Hundred Fifty-Five Thousand Eighty-Four Dollars and Thirty-Two Cents ($355,084.32), which reflects amounts due Claimant as of May 31, 2003. This sum includes manager's fees due, the costs of this arbitration including fees of the American Arbitration Association and the Arbitrator's compensation, attorneys' fees and other related costs. Payments shall be rendered forthwith but in no event later than thirty days after Webb's receipt of this Award.
2. Additional payments due Claimant RLR pursuant to the 2000 Fox Renewal, the 2001 MSG Renewal and the 2005 and 2006 Fox Renewal shall be made within thirty days after William Webb's receipt of these payments.
3. Interest at the rate of six per cent (6%) per annum shall accrue after payments are due in accordance with Paragraphs (1) and (2) above.
RLR and Webb, through their respective counsel, each received this Final Award on or around August 4, 2003.
B. Procedural History
On October 31, 2001, Webb filed a Complaint against RLR and Robert Rosen, asserting claims related to the disputes discussed herein. The matter was assigned to this Court and was placed on the Court's suspense calendar in July 2002, awaiting resolution of some or all of Webb's claims through arbitration. On July 31, 2003, Edelman issued his Final Award, ordering Webb to make payments to RLR in the amounts and times specified. Now pending before this Court are (1) RLR's motion to confirm Edelman's Final Award, (2) Webb's cross-motion to vacate Edelman's Final Award, (3) Webb's alternative motion to stay proceedings pending resolution of a future administrative proceeding before the Commission, and (4) RLR's motion to enjoin Webb from filing any further actions related to these facts.
Also pending before this Court is RLR's motion to dismiss Webb's allegedly non-arbitrable claims stemming from the same business relationship described herein. This motion will be the subject of a separate Opinion, to be issued in the near future.
On October 31, 2003, RLR filed an Order to Show Cause, seeking an order enjoining Webb permanently from continuing or initialing any action relating to the subject of this Opinion, and specifically, permanently enjoining the California Labor Commission from hearing Webb's Petition, currently pending. Oral arguments on this motion were held on November 6, 2003. As this motion merely requests and expands upon, in an expedited fashion, relief already sought, it will be resolved within this Opinion.
II. DISCUSSION
A. Confirm or Vacate Award1. Standard of Review Favors Confirmation
The Federal Arbitration Act, (hereinafter "the Act"), 9 U.S.C. § 1-14, as interpreted by the Supreme Court, embodies a strong policy favoring arbitration. See Mastrobuono v. Shearson Lehman Button, Inc., 514 U.S. 52 (1995). "In furtherance of the twin goals of arbitration — settling disputes efficiently and avoiding long expensive litigation-and to ensure that arbitration never becomes merely a preliminary step to judicial resolution, review of an arbitral judgment is extremely deferential." In re Engel et al v. Refco, Inc., 746 N.Y.S.2d 826, 837 (N.Y.Sup.Ct. 2002). See also Transit Cas. Co. v. Trenwick Reinsurance Co., Ltd., 659 F. Supp. 1346, 1350-51 (S.D.N.Y. 1987), aff'd, 841 F.2d 1117 (2d Cir. 1988); Tinaway v. Merrill Lynch Co., 658 F. Supp. 576, 578 (S.D.N.Y. 1987). Accordingly, an arbitration award is subject to very limited review by district courts ( see Folkways Music Publishers, Inc. v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993)), which should not vacate arbitration awards without "great hesitation" ( see Karppinen et al. v. Karl Kiefer Mach. Co., 187 F.2d 32 (2d Cir. 1951)). With this standard in mind, Webb contends that Arbitrator Edelman (1) prohibited Webb's introduction of relevant evidence, and (2) "manifestly disregarded the law." (Respondent's Memorandum of Law In Support of Cross-Motion to Vacate and In Opposition to Petition to Confirm, or Alternatively For a Stay ("Resp. Mem.") at 1).
2. Limited Grounds for Vacatur
a. Statutory Grounds Under Federal Arbitration Act
The Act, 9 U.S.C. § 9-10, governs the treatment of arbitration awards by the judiciary and provides for the confirmation of such awards unless particular conditions have been violated.
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, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as proscribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made.9 U.S.C. § 9. In the present case, while the Agreement mandated arbitration, it did not specify the particular court at which the arbitration award should be confirmed; therefore, it was appropriate for RLR to file this action in the Southern District — the district where the award was granted.
Despite a strong public policy favoring arbitration, the Act sets out specific, albeit limited, instances whereby an arbitration award may be vacated. A district court may vacate an arbitration award only (1) where the award was procured by corruption, fraud, or undue means; (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. § 10(a)(1)-(4) (emphasis added).
Webb relies upon 9 U.S.C. § 10(a)(3) in asserting that because Edelman refused to hear evidence pertaining to RLR's performance under the Extension Agreement, the Final Award must be vacated. Webb cites to Edelman's June 2002 denial of Webb's requests for discovery concerning RLR's performance under the Extension Agreement ("[a]ll other requests for additional discovery are denied"). Webb also highlights Edelman's explicit denial by letter Order on July 22, 2002 ("[a]ll other requests for expanded discovery are denied at this time, including my prior determination rejecting Mr. Cousin's request that I order discovery as to RLR's performance or non-performance during the period covered by the May 21, 1997 Extension Agreement."). (Declaration of Brian S. Cousin In Support of Respondent's Cross-Motion to Vacate Arbitration Award, In Opposition to Petition to Confirm, and Alternatively for a Stay ("Cousin Decl.") at 4-5). As a result, Webb asserts that Robert Rosen refused, at his deposition, to answer questions concerning his performance under the Extension Agreement, on the basis of his counsel's advice that the subject was beyond the scope of the discovery authorized by the Arbitrator. (Resp. Mem. at 9; Cousin Decl. Exh. 11). Although I agree that Edelman restricted discovery into RLR's performance under the Extension Agreement, I find that Edelman was justified in imposing this discovery limitation.
"It is well settled that arbitrators are afforded broad discretion to determine whether to hear evidence." Fiero Brothers, Inc. v. Southwest Securities, Inc., 99 Civ. 3613, 2000 U.S. Dist. LEXIS 5566, at *7 (S.D.N.Y. April 26, 2000), citing Areca, Inc. v. Oppenheimer Co., Inc., 960 F. Supp. 52, 55 (S.D.N.Y. 1997) (citations omitted). Obviously, it is the role of the Arbitrator, as it is the role of any judicial or quasi-judicial figure, to limit discovery to those subjects that will lead to relevant information. See Fed.R.Civ.P. 26(b)(1). In this case, unlike many cases where vacatur is sought under this provision, Edelman did not merely refuse to allow discovery because it was repetitive or burdensome, but rather determined that discovery into RLR's performance under the Extension Agreement was beyond the scope of the matters before him.
First of all, as discussed more fully in section II.A.2b, infra, Edelman determined that the Agreement between RLR and Webb "did not prescribe a specific level of services which RLR was to perform for Webb" (3/11/03 Arb. Op. at 14-15); therefore, whether RLR expended great effort or moderate effort to promote Webb was immaterial to the outcome — Webb's duty to pay the commission would attach in both instances.
Whether Edelman was correct in classifying the Agreement as one that did not require RLR to perform a particular level of services, and if not, whether Edelman's error is actionable, is discussed fully in Section II.A.2b, infra, pertaining to manifest disregard of the law.
Secondly, and centrally, instead of bringing a strict breach of contract claim, RLR asserted that Webb anticipatorily repudiated the Extension Agreement. A claim of anticipatory repudiation, unlike an ordinary claim for breach, does not require that the movant affirmatively display his performance under the contract. Rather, "when a party repudiates contractual duties prior to the time designated for performance and before all of the consideration has been fulfilled, the repudiation entitles the nonrepudiating party to claim damages for total breach." Norcon Power Partners, LP. v. Niagara Mohawk Power Corp., 92 N.Y.2d 458, 462-63 (1998) (internal quotations omitted). The non-breaching party need not prove that he performed satisfactorily under the contract, as the breach relieves him of his duty (if any existed) to perform. Instead, the non-breaching party must show that "it was ready, willing and able to perform its obligations under the contract." Inter-Power of New York, Inc. v. Niagara Mohawk Power Corp., 259 A.D.2d 932, 934 (3d Dep't 1999).
Though unnecessary to the result decided herein, under the standard of review applicable to confirmations of arbitration awards, this court offers the following collection of record evidence, that was available to Edelman, which supports RLR's performance (even if not mandated) under the Extension Agreement. See Rosen, Tr. at 417: 8-19 (During period of Extension Agreement, Rosen "[c]ontinued to manage [Webb's] career, ensure that his employers were happy with the services and consult with him from time to time."); Rosen, Tr. at 803: 7-11 ("A: It's an agreement between Fox and Webb for him to direct an unspecified number of NHL hockey games for Fox. Q: Sir, who negotiated this agreement? A: I did, with Steve Rothman."); Rosen, Tr. at 807: 6-10 ("A: It's an agreement between Fox and Mr. Webb to direct a horse race called Santa Anita Derby. Q: Who negotiated this agreement? A: I negotiated it with Steve Rothman."); Rosen, Tr. at 809: 18-23 (A: It's for a horse race called the Donn Handicap and it's an agreement between Fox Sports and William Webb. Q: Who negotiated this agreement? A: I negotiated it with Larry Jones at Fox."); Rosen, Tr. at 811: 3-8 ("A: It's an agreement to Bill Webb with Fox to do Bass Fishing Tournament called the Ranger Boats Millennium Tournament. Q: Who negotiated it? A: I negotiated with Bobby Hacker with Fox."); Client Booking Sheet for NHL contract, admitted into evidence by RLR, listing details of contract, dated 9/17/97 (Brown Reply Aff. Ex. E); Agreement Between Fox Sports and Webb for Santa Anita Derby, addressed to Webb c/o RLR, Attn: Rob Rosen (Brown Reply Aff. Ex. F); Agreement Between Fox Sports and Webb for Donn Handicap, addressed to Webb c/o RLR, Attention Bob Rosen (Brown Reply Aff. Ex. G); Deal Memorandum for Webb's contract with Fox Sports for Ranger Boats Millennium Tournament, addressed to Bill Webb, C/o RLR.
In this case, it is undisputed that in the fall of 2000, Webb informed Rosen that he no longer wished to receive RLR's services under the Extension Agreement — which was scripted to terminate in October 2001. As a result, all that RLR had to demonstrate was that it was "ready, willing, and able" to serve as Webb's manager from the inception of the Extension Agreement until the point of repudiation. In finding for RLR, Edelman determined that RLR met its burden. As Webb does not claim that RLR failed to meet this burden, but rather asserts that RLR failed to meet the heightened burden of proving actual performance, I need not address the proof offered by RLR on this subject.
Further, although Webb raised several counterclaims and defenses to RLR's claims in the arbitration proceeding, notably missing from Webb's repertoire was any defense based on RLR's lack of performance. See supra, footnote 4. If Webb had raised such a defense, he might have been justified in attacking Edelman's restriction of "relevant" discovery. Webb's one counterclaim found arbitrable and not dismissed as a matter of law by Edelman, was based on the theory of fraudulent inducement, owing to RLR's alleged breach of loyalty in promoting Fishman over Webb. Webb consistently cites this trigger, not any general lack of action on the part of RLR, as the basis for his repudiation,
Further, even if Webb had included a defense based on RLR's lack of performance, it is likely that this Court would have still determined that Edelman's discovery restriction did not warrant vacatur because Edelman interpreted the Agreement as one not requiring specific performance by RLR. While "arbitrators should hear all evidence proffered that is `pertinent and material,' an error in their determination of `pertinent and material' must be one that deprives a party of a fundamentally fair arbitration process." Polin v. Kellwood Co., 103 F. Supp.2d 238, 261 (S.D.N.Y. 2000), citing Tempo Shain Corp. v. Bertek, 120 F.3d 16, 20 (2d Cir. 1997). On this basis, Edelman could have preliminarily determined that a defense based on insufficient performance would not succeed, and could thus have restricted discovery pertinent to such a defense. But, the fact that Webb did not even assert such a defense in his Answer, and instead chose solely to rely on his claim of fraudulent inducement, makes Edelman's discovery restriction, yet more acceptable.
b. Manifest Disregard of the Law
Under the same theory, Webb also asserts that Edelman "manifestly disregarded the law" of contracts by failing to require RLR to prove that it had sufficiently performed under the Extension Agreement before finding in favor of RLR on its breach of contract claim. Webb avers that Edelman failed to hold RLR responsible for its burden of proving one of the basic elements of a breach of contract claim — notably, the element of the movant's performance. As a result, Webb asserts that the award should be vacated under a judicial ground for vacatur that is available when such award "exhibits a manifest disregard of law." Duferco Int'l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003) (internal quotation omitted). I disagree.
This ground originated in dicta in Wilko v. Swan, 346 U.S. 427, 436-37 (1953) ("the interpretations of the law by the arbitrators in contrast to manifest disregard are not subject, in the federal courts, to judicial review for error in interpretation."). Though this ground is readily available to litigants, it is rarely successful. "Our reluctance over the years to find manifest disregard is a reflection of the fact that it is a doctrine of last resort — its use is limited only to those exceedingly rare instances where some egregious impropriety on the part of the arbitrators is apparent but where none of the provisions of the FAA apply." Duferco Int'l Steel Trading, 333 F.3d at 389.
In order for this extraordinary ground to be met, the movant must surmount three separate hurdles. First, the party must prove that the law that was allegedly ignored was clear, and in fact explicitly applicable to the matter before the arbitrators." Duferco Int'l Steel Trading, 333 F.3d at 390. See also Goldman v. Architectural Iron Co., 306 F.3d 1214, 1216 (2d Cir. 2002) ("[m]anifest disregard can be established only where a governing legal principle is well defined, explicit, and clearly applicable to the case") (internal quotations omitted), "Second, once it is determined that the law is clear and plainly applicable, we must find that the law was in fact improperly applied, leading to an erroneous outcome." Duferco Int'l Steel Trading, 333 F.3d at 390. Third, in order to prove that the arbitrator intentionally disregarded the law, the movant must prove that the arbitrator knew of the law and understood its applicability to the situation before him or her. Id; see also DiRussa v. Dean Witter Reynolds, Inc., 121 F.3d 818, 823 (2d Cir. 1997) (arbitrators knowledge of the law is presumed to be no more than that of the law presented to him or her by the parties).
In an attempt to fulfill the first stage of the test, Webb proposes, citing British American Eastern Co., Inc. v. Wirth Ltd., 592 F.2d 75, 78 (2d Cir. 1979), that inherent in a breach of contract claim, the claim brought by RLR, is the movant's burden of proving performance. Webb asserts that "[i]t is black letter law that every breach of contract claim requires proof by the party claiming breach that it performed under the contract." (Resp. Mem. at 2.) While Webb is correct that basic contracts require performance on each side, Webb fails to appreciate that Edelman found the Agreement between RLR and Webb to be of a different class — one that did not require RLR's performance as a condition precedent to Webb's obligation to remit payment. Therefore, while the elements of a basic contract action are clear, they are not clearly applicable to the present action.
Well aware of the portion of the Agreement that set out the potential services to be provided by RLR, after reviewing the Agreement in its entirety, Edelman determined that "[t]he contract into which they entered did not prescribe a specific level of services which RLR was to perform for Webb." (3/11/03 Arb. Op. at 14-15.) In making this finding, Edelman referenced a different section of the Agreement, which stated:
The Agreement defines RLR's duties as follows: "(a) to supervise your employment and, on your behalf, to consult with employers to assure the proper use of your services; (b) To confer with you in connection with all matters concerning your professional career, (c) To exploit your name, personality and talent in all media and in connection therewith to approve and arrange for the advertising, promotion and publicity of you and your professional pursuits and the sue, dissemination, reproduction and publication of your name, voice and likeness; (d) To represent you and to consult with you for the purpose of reviewing and evaluating the terms of all agreements for your employment by any third party." (10/7/96 Agree't at 1.).
The Manager's Fee shall be payable to us with respect to all agreements entered into by you during the term hereof and executed within six (6) months thereafter, and upon any extension or renewals thereof and substitutions therefore, and upon any resumptions of any engagements, contracts and agreements which may have been discontinued during the term hereof and resumed within one (1) year thereafter. For the purposes hereof, the term `substitutions' shall include without limitation, any engagement, contract or agreement entered into with an employer within three (3) months after the expiration or termination of any previous engagement, contract or agreement for services of the same or similar nature entered into during the term hereof with the same employer.
(3/11/02 Arb. Op. at 15). Edelman then noted that "[t]his language makes no reference to a certain level of services which RLR must provide." ( Id.) Therefore, Edelman classified the Agreement between RLR and Webb as one where RLR would serve as Webb's exclusive manager, and would collect 10% of all gross consideration secured by Webb during the period encompassed by the Agreement, even if Webb negotiated or secured the arrangement with no assistance from RLR. Clearly, this relationship is quite different from an "ordinary contract" that requires one side's performance of a specific task before the other side is obligated to remit payment.
Webb attempts to show that Edelman erred in classifying the Agreement as one that did not require RLR's specific performance. Webb cites British American for the proposition that a contract such as the one between RLR and Webb, as it is similar to the agreement found by the Second Circuit in British American not to be "a pure commission or royalty contract providing compensation solely for past efforts," requires proof of performance. British American Eastern Co., Inc., 592 F.2d at 78.; (Resp. Mem. at 2). If the RLR/Webb Agreement-is indeed similar to the agreement in British American, a determination which this Court need not make, Webb may have Second Circuit support for his proposition that Edelman improperly classified the Webb/RLR Agreement. However, as British American involved a circuit court review of a district court opinion, not a district court review of an arbitration award, the case provides no guidance as to how this Court should review a potential misclassification of a contract in an arbitration award. This Court finds that even if Edelman should have determined that the Agreement required a certain level of performance by RLR, because "[m]anifest disregard is something more egregious than a mere legal error or misunderstanding" ( Lancer Insurance Co. v. Tolling Manufacturers Insurance Co., Ltd., 89 Civ. 8279, 1990 U.S. Dist. LEXIS 10880, at *8 (S.D.N.Y. Aug. 20, 1990), citing Merrill Lynch, Pierce, Fenner, and Smith, Inc., v. Bobker, 808 F.2d at 933.), such an error would not rise to the level of manifest disregard of the law. Further, because "[i]t is not our role to substitute our judgment for those of arbitrators hired by the parties" ( Duferco Int'l Steel Trading, 333 F.3d at 392), this Court will not conduct an independent analysis of the RLR/Webb Agreement.
Ironically, British American goes further to hinder than to assist Webb's hope for vacatur. The fact that the district court in British American made the same "mistake" that Webb finds Edelman to have made, supports the fact that Edelman had at least a "barely colorable" justification for his determination.
Suffice it to say that by quoting and referencing the portions of the Agreement that defined each party's obligations under the contract, before concluding that the Agreement did not require a particular level of performance by RLR, Edelman provided sufficient justification, in this Court's view, for his ultimate finding. It is clear that Edelman scrutinized the language of the Agreement in coming to his conclusion. "Even a `barely colorable' justification for the outcome reached will save an arbitral award." Duferco Int'l Steel Trading, 333 F.3d at 391, citing Willemijn Houdstermaatschappij v. Standard Microsystems Corp., 103 F.3d 9, 13 (2d Cir. 1997). This Court finds that Edelman had more than a "barely colorable" justification to support his determination.
Webb cites Wonderland Greyhound Park, Inc. v. Autotote Systems, Inc., 144 F. Supp.2d 25, 29 (D. Mass. 2001) to support his claim that courts should vacate arbitration awards on grounds of manifest disregard of the law, when an arbitrator finds that a party breached a contract when the other side has not performed his required role. However, not only does Webb unfairly categorize the basis of the district court's holding, but, even more notably, Webb fails to report that the Second Circuit overturned the district court's vacatur ( 274 F.3d 34, (1st Cir. 2001)), and found that the arbitrator's award was not in manifest disregard of the law.
Even assuming that a clearly applicable governing principle existed, which it most certainly did not, Webb provides no support for a finding that Edelman knew of this alleged principle yet refused to apply it or ignored it forthright. See Hoeft, III et al. v. MVL Group Inc., et al., 343 F.3d 57 (2d Cir. 11-24-2003). Respondent only asserts that "Mr. Webb highlighted to the Arbitrator the Paragraph 1 provisions requiring performance by RLR and showed that RLR did nothing to perform them." (Resp. Mem. at 5) (emphasis added). However, Webb assumes by this statement that which he must prove — that the Agreement required performance by RLR. As discussed earlier, simply because it does not comport with Webb's interpretation, Edelman's determination is not an error "capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator." Fine v. Bear, Stearns Co., Inc. et al., 765 F. Supp. 824, 827 (S.D.N.Y. 1991), citing Merrill Lynch, Pierce, Fenner, and Smith, Inc. v. Bobker, 808 F.2d 930, 933-34 (2d Cir. 1986). Therefore, as Webb offers nothing more than his bare assertion that he reads the Agreement differently than did Edelman, Webb has not proven that Edelman manifestly disregarded the law.
Therefore, as neither ground asserted by Webb suffices to necessitate vacatur of Edelman's Final Award, the Award should be confirmed.
B. Staying Proceedings or Enjoining Future Actions
1. Stay of Proceedings Inappropriate
Webb asserts that this Court should stay its determination pending resolution by the California Labor Commission of Webb's petition to determine controversy, which asserts that RLR is not entitled to collect manager's fees because it is an unlicensed talent agency. (Resp. Mem. at 10). I disagree. In the Second Circuit, the general rule with regard to stays of district court proceedings is that "as a principle of sound judicial administration, the first suit should have priority, absent the showing of balance of convenience in favor of the second action." William Glucker Co. v. Int'l Playtex Corp. 407 F.2d 177, 178 (2d Cir. 1969) (quotations and citations omitted). "The balance of convenience between competing jurisdictions should be left to the sound discretion of the district court." Capital Records, Inc. v. Optical Recording Corp., 810 F. Supp. 1350, 1353 (S.D.N.Y. 1992) (citing Joseph Bancroft Sons Co. v. Spunize Co. of America, 268 F.2d 522 (2d Cir. 1959)). Courts may stay a pending action when a related action in another jurisdiction "will be an adequate vehicle for the complete resolution of the issues between the parties." Consolidated Edison Co. of N.Y. v. U.S., 30 F. Supp.2d 385, 389 (S.D.N.Y. 1998) (citing Herbstein v. Bruetman, 743 F. Supp. 184, 190 (S.D.N.Y. 1990)) (citations omitted). RLR has not provided sufficient reason, pursuant to this standard, to suggest that a stay is necessary, or even appropriate.
If this Court does not stay its determination, and the Commission subsequently finds that RLR was indeed operating as an unlicensed talent agency when it serviced Webb, it would rule that RLR should not have collected the manager's fees, awarded to it by Edelman, and confirmed herein. Therefore, while the result reached by this Court may turn out to be inconsistent with a later finding made by the Commission, this Court need not halt its determination, in anticipation of such a result.
This Court need not consider the merits of Webb's petition before the Commission as it is the exclusive role of the Commission to adjudicate the merits of the claims contained therein. See Cal. Labor Code § 1700.44(a).
Notably, in Webb's Opposition to RLR's Motion to Enjoin, twice he concedes that a stay is unnecessary. (Resp. Mem. Opp. Enjoin at 2) ("Each tribunal should be permitted to decide the different issues before it at its own pace. Neither forum's resolution of the issues before it can be said to interfere with the other forum's resolution of the issues before it."); (Resp. Mem. Opp. Enjoin at 8) ("Each tribunal may adjudicate the claims properly within its respective jurisdiction without interfering with — much less defeating — the other tribunal's jurisdiction to decide the claims properly before it.").
First of all, at the time that Webb filed his motion for a stay, he had not yet filed his petition with the California Labor Commission, and asserted only that he "intend[ed]" to make such a filing. (Resp. Mem. at 10). Remarkably, Webb requested that this Court issue a stay, "which is as much a refusal to exercise federal jurisdiction as a dismissal" ( Consolidated Edison Co. of N. Y., 30 F. Supp.2d at 389), when no other forum was then adjudicating the dispute. Henceforth, solely on the basis that Webb's request was premature, this Court should deny the stay.
Despite failing to file with the Commission prior to bringing his motion to stay this Court's proceedings, Webb informed the Court, in a letter dated October 21, 2003, that he subsequently filed his petition on October 3, 2003. Not only was Webb's motion seeking a stay fully briefed on October 2, 2003, but Webb waited eighteen days to alert this Court to the fact that had actually filed with the Commission. Webb had ample time to file this petition prior to moving for a stay, or secondarily, at least to notify this Court immediately after affecting the filing. Webb did neither. Further, on October 3, 2003, this Court expressly denied Webb the opportunity to file a sur-reply in this action. As a result, this Court deems it inappropriate now to consider a letter brief submitted by Webb on October 21, 2003. In any event, timely notice of the fact that Webb has filed with the Commission would not have altered my refusal to grant a stay.
Second, nowhere does Webb assert that the California Labor Commission has the jurisdiction to adjudicate the motions currently sub judice, nor that this Court has the authority to undertake the determination pending before the Commission. Instead, RLR only asserts that a determination by the Commission in Webb's favor would render a decision by this Court, confirming the arbitration award, improper. (Resp. Mem. at 10-11). Because RLR has not asserted that a forum exists, which could hear all claims arising from this dispute, policies favoring stays in order to avoid piece-meal litigation, are not invoked. See Colorado River Water Conservation District v. United States, 424 U.S. 800, 817 (1976) (because state court lacked jurisdiction to adjudicate entire matter, "conservation of judicial resources and comprehensive disposition of litigation" counseled against staying the federal action) (citations omitted).
Finally, even if the Commission subsequently determines that RLR should not have received any "manager's fees" from Webb, the Commission can order the disgorgement of all monies awarded to RLR by Edelman, and confirmed by this Court. Notably, Webb requests this exact relief in his Petition before the Commission. (Petition to Determine Controversy at 4) ("That Respondents shall be required to disgorge to Petitioner William Webb any monies either of them may receive from Webb (or others who may be in possession of Webb's monies) in connection with efforts to execute on the judgment that they are currently attempting to procure from the United States District Court for the Southern District of New York in Case No. 03 Civ. 6338 (HB)"). Therefore, since Webb has requested relief from the Commission, to reverse any inconsistencies, this Court refuses to delay its decision any further.
While this Court refuses to consider the merits of Webb's letter-brief, dated October 21, 2003, the relief sought in the Petition shows that there is an alternative course, anticipated by Webb, to issuing a stay.
Litigation between these parties, stemming from the incidents described herein, has been ongoing since October 31, 2001, and has already been stayed once, pending arbitration.
2. No Restriction on Future Litigation
RLR requests, pursuant to the All Writs Act, 28 U.S.C. § 1651 (1982), that this Court enjoin Webb from pursuing his action before the Commission and also enjoin him "from making any further filing in any court and/or administrative tribunal concerning the allegations presently pending before this Court . . ." (Petitioner's Memorandum in Opposition to Respondent's Cross-Motion For Stay ("Pet. Mem. Opp. Stay") at 4). RLR asserts that such extraordinary relief "is necessary and appropriate in aid of this Court's jurisdiction. (Pet. Mem. Enjoin at 7, citing In re Baldwin-United Corp., 770 F.2d 328, 338 (2d Cir. 1985). Webb counters that the All Writs Act must be interpreted in conjunction with the countervailing policy embodied in the Anti-Injunction Act, 28 U.S.C. § 2283 . Because it is undisputed that the California action raises a claim that has not been, and indeed could not have been, raised before this Court, there is no great threat of "relitigation of a federal judgment," and therefore the All Writs Act does not provide this Court with the authority to grant either of the injunctions that RLR seeks.
The All Writs Act grants federal courts the authority to "issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. § 1651 (1982).
The Anti-Injunction Act provides that "A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments." 28 U.S.C. § 2283. While the Anti-Injunction Act specifically refers to a state "court," not a state agency, and this case involves a potential injunction of an agency's actions ( see generally Town of Springfield v. McCarren et al., 549 F. Supp. 1134 (D. Vt. 1982)), RLR does not challenge the Act's application to this situation on such grounds. Because I find that an injunction pursuant to the All Writs Act is inappropriate, notwithstanding the applicability of the Anti-Injunction Act, I need not resolve the question of applicability. However, "cases interpreting [the in aid of jurisdiction] clause of the Anti-Injunction Act have been helpful in understanding the meaning of the All-Writs Act." In re Baldwin-United Corp., 770 F.2d at 335.
See discussion of Commission's exclusive jurisdiction, supra note 13.
With regard to RLR's assertion that Webb's California action and any future actions, are and would be vexatious or harassing, "[t]he district court, in determining whether or not to restrict a litigant's future access to the courts [on such grounds], should consider the following factors: (1) the litigant's history of litigation and in particular whether it entailed vexatious, harassing or duplicative lawsuits; (2) the litigant's motive in pursuing the litigation, e.g., does the litigant have an objective good faith expectation of prevailing?; (3) whether the litigant is represented by counsel; (4) whether the litigant has caused needless expense to other parties or has posed an unnecessary burden on the courts and their personnel; and (5) whether other sanctions would be adequate to protect the courts and other parties." Safir v. United States Lines, Inc., 792 F.2d 19, 24 (2d Cir. 1986) cert. denied 419 U.S. 1099 (1987). RLR has not provided sufficient facts to meet its burden under this standard. Because this Court must be careful not to "foreclose what might be a meritorious claim ( see Safir v. United States Lines Inc., 792 F.2d 19, 24 (2d Cir. 1986)), it should not order injunctive relief, akin to the relief sought by RLR, without a proper showing that the actions or future actions, about which the injunctions are sought, are and will be meritless. RLR has made no such showing. Instead, RLR relies on the fact that the Commission's determination, should it find in Webb's favor, would effectively reverse this Court's finding in RLR's favor. But, without convincing proof that the petition before the Commission is meritless, or that, for some other reason, the Commissioner is sure to render an incorrect determination, this Court has no justifiable reason to foreclose the Commissioners' opportunity to adjudicate the petition.
A party's subjective statement regarding the merit of a suit against him hardly suffices as credible evidence. See California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 513 (1972) ("Opponents before agencies or courts often think poorly of the other's tactics, motions, or defenses and may readily call them baseless.").
RLR's assertion that "collateral lawsuits . . . create significant risk . . . [of] inconsistent judgments" (Pet. Mem. Opp. at 4, citing U.S. v. Int'l Brotherhood of Teamsters, 907 F.2d 277, 280-81 (2d Cir. 1990)), while more on point and surely true, does not counter the fact that the California agency and this Court are making two wholly separate determinations. If this Court had adjudicated the claim under the Talent Agency Act (putting aside the Court's lack of jurisdiction), RLR's concern over relitigation would have merit; however, as this claim was not raised before Edelman, and therefore does not factor into this Court's review for confirmation purposes, there is no concern over vacatur of this Judgment. See Hutton Constr. Co., Inc. v. County of Rockland, 87 Civ. 4027, 1997 U.S. LEXIS 7666, at *6 (S.D.N.Y. June 2, 1997) ("Under the relitigation exception, a federal court may halt state litigation that might undermine some of the res judicata or collateral estoppel effects of a federal judgment. However, an essential prerequisite for applying the relitigation exception is that the claims or issues which the federal injunction insulates from litigation in state proceedings actually have been decided by the federal court.") (internal quotations and citations omitted)). Therefore, the federal court's ability to protect its judgments through issuance of injunctions is more limited than the doctrine of res judicata. See Id. at 6-7. "A fundamental difference between the scope of the res judicata doctrine and the relitigation exception is that res judicata bars claims that might have and should have been raised but were not, whereas the relitigation exception protects only those matters that actually have been decided by a federal court, regardless of whether they could not have been raised before the court." Id. at 7 (internal quotations and citations omitted).
Because the two pending actions do not involve the same cause of action — the first being a petition to confirm an arbitration award under the FAA and the second being a petition to determine controversy under the California Talent Agencies Act — this Court's rendering a decision first will not create issues of resjudicata or collateral estoppel.
Finally, this Court takes no position on RLR's defenses to the matter before the Commission, regarding the statute of limitations and forum selection and choice of law clauses, as RLR should raise these challenges in its opposition to Webb's petition. Therefore, RLR's motion to enjoin Webb from pursuing the California Labor Commission action, and from litigating any and all future actions, regarding the subject matter adjudicated herein, is denied.
As this Court does not find sufficient reason to grant the narrow injunction to foreclose pursuance of the California Labor Commission action, it similarly and even more compellingly finds absolutely no authority for granting the broader relief, to enjoin all future actions by Webb against RLR, with regard to these facts.
III. CONCLUSION
For the foregoing reasons, (1) RLR's motion to confirm the arbitration award is granted, (2) Webb's motion to vacate the confirmation award is denied, (3) Webb's motion to stay proceedings is denied, and (4) RLR motion to enjoin the proceeding before the Commission as well as all other potential future filings by Webb with regard to these facts, is also denied. The Clerk of the Court is requested to close this motion and any other pending motions and remove this case from my docket.
The arbitration award includes, among other costs, RLR's attorney's fees, as permitted by the Agreement. However, to the extent that RLR seeks attorney's fees from this confirmation proceeding, such application is denied as (1) RLR failed to provide any basis for the award of attorney's fees for work performed with regard to the confirmation and even neglected to submit the amount of the fees or any discussion of attorney's fees outside of the opening and closing requests of a few words each, and (2) the Agreement only provides for attorney's fees "as the Arbitrators) may award in its discretion," which could not possibly include attorney's fees from this proceeding, as this proceeding by necessity post-dated the Arbitrator's award.