Symank Bus. Sys. v. Fedex Ground Package Sys.
| Decision Date | 28 January 2022 |
| Docket Number | Civil Action 3:21-CV-0936-B |
| Parties | SYMANK BUSINESS SYSTEMS, Petitioner, v. FEDEX GROUND PACKAGE SYSTEM, INC., Respondent. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court is Petitioner Symank Business Systems (“SBS”)'s Motion to Vacate Arbitration Award (Doc. 2). For the reasons stated below, the Court DENIES the motion to vacate.
This is a case arising out of Respondent FedEx Ground Package System Inc. (“FXG”)'s termination of its business relationship with SBS and the arbitration that followed. Doc. 2, Pet'r's Mot., 1-2. SBS was a contractor hired to deliver packages for FXG. Id. at 2. The parties' relationship was governed by an Independent Service Provider Agreement (“ISP Agreement”), which contained an arbitration provision. Id. at 1-2. In 2018, FXG notified SBS that it intended to terminate the ISP Agreement. Id. at 2. The parties then entered into a pre-termination mutual settlement and release agreement (“Settlement and Release Agreement”) wherein, “in consideration for not terminating the ISP Agreement immediately and releasing one another from all other claims, FXG would provide SBS time to find suitable buyers to transfer the ISP Agreement.” Id. at 1-2. However, FXG ultimately terminated the ISP without allowing SBS to transfer the agreement. Id. at 2. SBS filed suit against FXG, asserting claims for breach of the Settlement and Release Agreement, wrongful termination, wrongful refusal to consent to assignment, breach of the duty of good faith and fair dealing, and tortious interference with contract. Id. at 1-2.
Pursuant to the ISP Agreement, the dispute was submitted to arbitration with the Judicial Arbitration and Mediation Services (“JAMS”). Doc. 6, Resp., 7; see Doc. 2, Pet'r's Mot., 1 . The ISP Agreement's arbitration provision provided that the arbitrator could decide matters on dispositive motions, see Doc. 1-11, ISP Agreement, ¶ 16.5(A), and encompassed “any claim or controversy between the Parties arising since the effective date of this Agreement and . . . relating in any way to this Agreement and/or the relationship between the Parties resulting from this Agreement.” Id. ¶ 16.3. The ISP Agreement also specified that the Agreement and its provisions were “governed by and construed in accordance with” Pennsylvania law. Id. ¶ 18.10.
Arbitration began in October 2019. Doc. 6, Resp., 7. “The discovery period in the arbitration ran from February through October 30, 2020[, ] . . . [and] SBS and [FXG] each engaged in both written discovery and depositions.” Id. SBS and FXG “agreed that the ‘arbitrator shall have the authority to act upon motions for summary disposition.'” Id. (quoting Doc. 1-11, ISP Agreement, ¶ 16.5(A)). FXG filed its summary-disposition motion on November 20, 2020. Id. SBS's response to the motion was due on December 4, 2020, and a hearing for oral argument on the motion was set for December 17, 2020. Id. SBS did not respond by December 4, but on December 7, 2020, sought an extension of its time to respond until December 31, 2020. Id. FXG did not oppose SBS's request and the arbitrator extended the response deadline as requested. Id. On December 31, 2020, SBS filed its response “as well as its own affirmative motion for summary disposition.” Id. at 8; Doc. 2-10, SBS's Mot. Summ. Disposition. In support of its motion, SBS “submitted 450 pages of briefing and exhibits that it claimed demonstrated that [FXG]” was not entitled to summary disposition. Doc. 6, Resp., 8. See generally Doc. 2-10, SBS's Mot. Summ. Disposition. But SBS did not request additional “time to conduct discovery to develop facts” in support of its own claims or to preclude summary disposition for FXG. Doc. 6, Resp., 8.
The arbitrator set oral argument on both summary-disposition motions for January 14, 2021. Id. In preparation, both parties “submitted further briefing in support of their positions.” Id. See generally Doc. 1-5, FXG's Reply; Doc. 1-6, SBS's Sur-Reply. SBS never asked to postpone the oral argument. See Doc. 2, Pet'r's Mot. (not claiming to have asked for a postponement before the scheduled hearing). However, during the January 14, 2021, hearing, “[a]fter about two hours of argument . . . SBS's counsel asked . . . whether the arbitrator would postpone a decision on [FXG's summary-disposition] motion to allow SBS to take a deposition of [FXG manager Ben Palumbo (“Palumbo”)] . . . if the arbitrator was going to rule against SBS.” Doc. 6, Resp., 8. The arbitrator denied SBS's request for the delay and additional deposition. Id. That same day, SBS filed an “Emergency Submission Directly Contradicting False Testimony and Argument, Potential Perjury, and Misleading Representations Regarding Respondent [FXG]'s Motion for Summary Disposition” (“Emergency Submission”), in which it claimed that FXG and Palumbo had presented “false-and potentially perjured-testimony” at the hearing when they stated that there was no written evidence that FXG ever consented to the assignments. Doc. 2-9, Emergency Submission, 1. The Emergency Submission included internal FXG correspondence that SBS claimed showed FXG's consent to the assignments and precluded summary disposition for FXG. Id. at 3, 4, 8-9, 11-12. On January 20, 2021, SBS also filed a motion to compel Palumbo's deposition and to delay the arbitrator's decision until after Palumbo was deposed. See Doc. 2-2, Arb. Decision, 1, 13.
Without separately ruling on SMS's motion to compel, on January 26, 2021, “[t]he arbitrator issued a 13-page decision . . . denying SBS's [summary-disposition] motion and granting [FXG]'s motion.” Doc. 6, Resp., 9. The decision held that FXG's initial and final terminations of the ISP Agreement were lawful, FXG did not breach a duty of good faith under Pennsylvania law or tortiously interfere with SBS's contract with the intended assignees, and SBS's motion to compel deposition of a corporate designee was moot given the arbitrator's summary-disposition ruling. Doc. 2-2, Arb. Decision, 9-14. The arbitrator found that the assignment of SBS's contract under the ISP Agreement was not completed before FXG's final termination of that contract because certain conditions precedent to the assignment were not fulfilled, and that FXG lawfully terminated the agreement because SBS committed acts inconsistent with the ISP Agreement's “honesty and integrity” provision. Id. at 2-12.
SBS filed a motion to reconsider the arbitrator's ruling. Doc. 2-8, Mot. Recons. In this motion, SBS raised thirty-three points of error, claiming “each . . ., considered alone, . . . [would] require reconsideration” of the summary disposition. Id. at 2-16. FXG moved to strike the motion for reconsideration as outside proper JAMS procedures and alternatively moved that the motion should be denied. Doc. 7, Resp't's App., 56. The arbitrator denied the motion for reconsideration, ending the arbitration process. Id. at 62.
On April 26, 2021, pursuant to the Federal Arbitration Act (“FAA”), SBS filed its Complaint and Motion to Vacate Arbitration Award in this Court. Doc. 1, Compl.; Doc. 2, Pet'r's Mot. The motion asserts under 9 U.S.C. § 10(a)(3) or § 10(a)(4). See Doc. 2, Pet'r's Mot., 4-5. For simplicity's sake, the Court has grouped these points of error into seven broader arguments, stated below.
See id. ¶¶ 1, 4, 14, 15, 17. SBS claims that the arbitrator violated § 10(a)(3) by refusing to postpone the hearing and summary-disposition decision until Palumbo could be deposed since Palumbo's testimony would allegedly have shown that material fact issues precluded summary disposition for FXG. Id. ¶ 4. SBS also claims Palumbo's deposition was necessary for it to “test the veracity of” statements contained in an anonymous letter on which the arbitrator apparently relied, id. ¶ 14, and to resolve “serious questions regarding the accuracy and validity of [an FXG internal investigative] report, which SBS demonstrated was backdated.” Id. ¶ 15, 17.
See id. ¶¶ 1, 3, 6-7, 9, 11, 16, 19-21, 25-29. SBS claims that the arbitrator incorrectly applied the summary-judgment standard under Pennsylvania law by granting summary judgment for FXG, despite the presence of contested facts, on the issues of whether:
Id. ¶ 23. SBS claims that the arbitrator inconsistently applied Pennsylvania procedural law “regarding the insufficiency of oral testimony” and the effect of “later created affidavits.” Id.
See id. ¶¶ 2, 5, 14-18, 24. SBS...
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