Polin v. Kellwood Co.

• Decision Date: 29 June 2000
• Docket Number: No. 93 Civ. 7876 (RO).,93 Civ. 7876 (RO).
• Citation: 103 F.Supp.2d 238
• Parties: Charles S. POLIN Plaintiff, v. KELLWOOD COMPANY, Kellwood Sportswear, Enoch Harding, Jr., and Harry Holding, Defendants.
• Court: U.S. District Court — Southern District of New York

103 F.Supp.2d 238

Charles S. POLIN Plaintiff, v. KELLWOOD COMPANY, Kellwood Sportswear, Enoch Harding, Jr., and Harry Holding, Defendants.

No. 93 Civ. 7876 (RO).

United States District Court, S.D. New York.

June 29, 2000.

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Arthur M. Wisehart, Wisehart & Koch, New York City, for Petitioner.

Steven R. Wall, Morgan, Lewis & Bockius LLP, New York City, for Respondent.

OPINION AND ORDER

OWEN, District Judge.

Plaintiff Charles S. Polin, the former president of She Knows!!, a division of defendant Kellwood Company, commenced this litigation in this Court in 1993, alleging that he was fraudulently induced by Kellwood to accept employment; that defendants Harding, head of Kellwood Sportswear, and Kellwood Sportswear itself, tortiously and negatively interfered with his employment relationship with Kellwood; and that Kellwood then terminated his employment in an act of wrongful age discrimination. After four years of pre-trial litigation and numerous rancorous discovery disputes,¹ the parties began discussing arbitration as a means to settle the controversy, and on September 27, 1997, Polin's counsel, Arthur Wisehart, wrote to Kellwood's counsel, Steven Wall, giving him the name of Jonathon Liebowitz as an arbitrator. By January 15, 1998, both sides had designated Liebowitz as the neutral arbitrator, and Liebowitz that day wrote both Wisehart and Wall accepting and confirming with them a per diem fee rate for his service of $2000 per day.² Two partisan arbitrators had already been chosen: Kenneth Kleinman, by Kellwood, and Martin Freeman, by Polin. Thereafter on February 25, 1998, the parties in a by-then written Arbitration Agreement confirmed that it was in their "mutual best interest to submit to final and binding arbitration all the claims brought by Polin."³ The agreement specified that the arbitration was to be "subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, ... and the terms and conditions of this Agreement."⁴ It provided that in the event of a conflict between the AAA rules and the arbitration agreement, the agreement would control, and that on review of any arbitration award the Federal Arbitration Act, 9 U.S.C. §§ 10 and 11, should apply. The agreement further provided 1) that "the arbitration panel shall have the authority to provide whatever remedies are currently available under law for the claims asserted by Polin in the action captioned Polin v. Kellwood Company et al., Civil Action No. 93-7876(RO), as part of its final and binding arbitration award[s]," 2) that (the AAA rules applying) the "arbitrator may grant any remedy or relief that the arbitrator deems just and equitable, including any remedy or relief that would have been available to the parties had the matter been heard in court. The arbitrator shall, in the award, assess arbitration [f]ees, expenses, and compensation as provided in Section 36, 37, and 38 in favor of any party[,]" 3) that "[t]he arbitrator shall have the authority to provide for the reimbursement of representative's fees, in whole or in part, as part of the remedy, in accordance with applicable law," and 4) that under AAA rules "All expenses of the arbitration ... shall be borne equally by the parties, unless they agree otherwise or unless the arbitrator directs otherwise in the award." (emphasis added). Here, Polin and Kellwood did agree "otherwise", to wit, that Polin would pay for Martin Freeman, the arbitrator selected by him, and Kellwood would pay not only the administrative costs of the arbitration and the full costs of the arbitrator it selected, Kleinman, but also the full costs of the neutral arbitrator, Liebowitz, that Wisehart had proposed. Also, here, "the arbitrator[s][did] direct[] otherwise in the award." See infra pp. 246-50. Further, they agreed "that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction," which included this Court. This action in this Court was then placed on the suspense calender.

The arbitration proceedings were held in New York City and began with opening statements on April 1, 1998, and continued April 2 and 3, Wisehart presenting evidence on behalf of Polin. The proceedings were then adjourned to June 1. On May 22, however, apparently in response to Kellwood's opening statement that She Knows!! lost eight million dollars, Polin, by subpoena to Kellwood, demanded the production of a large volume of financial documents. Kellwood moved to quash the subpoena contending that it was not permitted by the arbitration agreement which precluded any further discovery under the circumstances, that Polin had already been provided with over 5000 pages of financial records, and that compliance with Polin's new demand "would take weeks, if not months, to gather such documents, and a tractor-trailer to deliver such documents." Later on the day that Kellwood submitted its motion, Wisehart, wishing to have a hearing and ruling on the motion, telephoned neutral arbitrator Liebowitz and Steven Wall, Kellwood's attorney. Unknown to them, Wisehart had a reporter at his end taking the conversation down. Liebowitz refused to rule on the motion because he had not read the papers and asserted that two arbitrators were necessary to make a ruling. While still on the phone, however, Liebowitz complained that his April 6 invoice had not been paid by Kellwood (the party) as Wisehart and Wall had agreed.⁵ He specifically reminded Wisehart and Wall in apologetic terms that he had the authority under the AAA rules to suspend the proceeding until he was paid, though he did not wish to do that. At the end of the conversation, somehow Liebowitz sensed that Wisehart was recording it,⁶ and upon being told that it was so, Liebowitz informed Wisehart that the recording was unauthorized and would be rejected if offered as part of the arbitration record. The transcript, as it turns out, however, is instructive here. Sometime later, the panel granted Kellwood's motion to quash.

In any event, in order to avoid Liebowitz effecting a delay of the proceedings, which Wisehart had specifically stated he did not want since it would cause him "substantial injury", see supra note 5, on June 1, Kellwood's law firm forthwith paid Liebowitz' April 6 invoice, aware some "glitch" had delayed Kellwood Company processing the invoice. Wisehart continued Polin's direct case that day and the next, at which time the proceedings were adjourned to August 5. Liebowitz then submitted another bill to Kellwood on June 10, and again, in order to avoid delay, Kellwood's law firm paid that bill on June 24.

The proceedings resumed on August 5 with Wisehart continuing Polin's direct case for three days through August 7, at which time Wisehart rested Polin's direct case. The record then reads:

ARBITRATOR LIEBOWITZ: Plaintiff rests.

Mr. Wisehart, have you presented all witnesses and documentary evidence, who or that, in your professional judgment, should have been presented on behalf of your client, Mr. Polin, on your direct case?

MR. WISEHART: Yes, subject to my specific— subject to certain exceptions I've noted as to evidence that was not made available.

ARBITRATOR LIEBOWITZ: I don't understand that answer. What evidence?

MR. WISEHART: The rulings that we couldn't produce.

ARBITRATOR LIEBOWITZ: Except for rulings of the panel, the other side was heard and we made rulings. Your answer is yes?

MR. WISEHART: Except for those rulings that we took exception to.

ARBITRATOR LIEBOWITZ: There's always exceptions to rulings and to adverse rulings. Other than that, you've put your case in and had your chance; right? That's all we want to know.

MR. WISEHART: Right.

(Tr. of Aug. 7, 1998 at 1364-65).

Thereupon, Wall stated he was going to move to dismiss all the claims, asserting insufficient evidence to sustain them. Wisehart immediately complained that he was being treated unfairly because he was going to call two more witnesses, Sherri Polivka and Paul Celona but couldn't. The panel reminded Wisehart that he could have called Celona as part of his direct case had he chosen to, but to give Wisehart every opportunity to present Polin's case, the panel scheduled a telephone conference for August 14, a week later, so Wisehart could present an offer of proof as to Celona and Polivka, Polin's alleged successor at She Knows!!.

At that telephone conference, (as the panel later recited in its opinion of April 10, 1999, at 35), Wisehart represented that Celona would testify that Enoch Harding, president of Kellwood Sportswear, located in Rutherford, refused to or incorrectly supplied pants, samples, or patterns. Wisehart also represented that Celona would testify that Kellwood Sportswear did not understand the juniors market which She Knows!! was in and was unwilling to understand that market. He represented Celona would testify that Harry Holding, Kellwood's vice president of marketing, accused Harding of "sabotaging" She Knows!!, and that Tim November, a Kellwood Sportswear scheduler, told Celona he could not ship available goods to She Knows!! because Harding had prohibited him and he was fearful of Harding. The panel, accepting Wisehart's representations, agreed to hear Celona, but it rejected the offer of proof as to Polivka.

With this before it, on October 14, 1998, the panel granted Kellwood's motion for judgment on the fraudulent inducement and age discrimination claims (arbitrator Freeman dissenting) but, based essentially on Wisehart's offer of proof as to Celona, the panel denied the motion to dismiss Polin's claim that Harding and Kellwood Sportswear tortiously interfered with Polin's employment relation with defendant Kellwood Company and required Kellwood to go forward with its proof on this issue.

But before this could happen, the panel and the parties participated in a subsequent telephonic conference because Wisehart...