Wonderland Greyhoudn Park v. Autotote Systems

• Decision Date: 19 December 2001
• Docket Number: 01-1911,Nos. 01-1849,s. 01-1849
• Citation: Wonderland Greyhoudn Park v. Autotote Systems, 274 F.3d 34 (1st Cir. 2001)
• Parties: (1st Cir. 2001) WONDERLAND GREYHOUND PARK, INC.; WESTWOOD GROUP, INC., Plaintiffs, Appellees/Cross-Appellants, v. AUTOTOTE SYSTEMS, INC., f/k/a AUTOTOTE LTD., Defendant, Appellant/Cross-Appellee. Heard Dec. 4 2001
• Court: U.S. Court of Appeals — First Circuit

Page 34

274 F.3d 34 (1st Cir. 2001)

WONDERLAND GREYHOUND PARK, INC.; WESTWOOD GROUP, INC., Plaintiffs, Appellees/Cross-Appellants, v.AUTOTOTE SYSTEMS, INC., f/k/a AUTOTOTE LTD., Defendant, Appellant/Cross-Appellee.

Nos. 01-1849, 01-1911

United States Court of Appeals For the First Circuit

Heard Dec. 4 2001

Decided December 19, 2001

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS.Hon. Joseph L. Tauro, U.S. District Judge

David M. Olasov with whom Baer Marks & Upham LLP, Scott A. Roberts, A. Lauren Carpenter, and Sullivan, Weinstein & McQuay, P.C. were on brief for appellant/cross-appellee.

Kevin M. Considine with whom James W. Stetson was on brief for appellees/cross-appellants.

Before Selya, Circuit Judge, Stahl, Senior Circuit Judge, and Lynch, Circuit Judge.

LYNCH, Circuit Judge.

This case comes to us on cross appeals from the district court opinion vacating an arbitral award as manifestly in disregard of the law.On August 28, 2000, Wonderland Greyhound Park, Inc. and Westwood Group, Inc.(collectively, "Wonderland") had been ordered by the arbitrator to pay Autotote Systems, Inc. $456,043.84 due on a million dollars advanced by Autotote to Wonderland in 1992.The arbitrator had, however, also found that Autotote was in violation of a divisible contractual obligation to provide Wonderland with some additional equipment, which thereby permitted Wonderland to terminate the contract.The district court found these two conclusions to be internally inconsistent and so vacated the award and remanded to the arbitrator for proceedings consistent with its opinion.Wonderland Greyhound Park, Inc. v. Autotote Sys., Inc., 144 F. Supp. 2d 25, 29(D. Mass.2001).Autotote appeals from that decision.Wonderland appeals the district court's decision to remand the case to the arbitrator.¹

Our review of the district court's ruling on an arbitration award is de novo.Bull HN Info. Sys., Inc. v. Hutson, 229 F.3d 321, 330(1st Cir.2000).Judicial review of the arbitrator's decision is "extremely narrow and exceedingly deferential."Id.(quotingWheelabrator Envirotech Operating Servs. v. Mass. Laborers Dist. Council Local 1144, 88 F.3d 40, 43(1st Cir.1996)).An arbitrator's award must be enforced "if it is in any way plausible, even if we think [he] committed serious error."Gupta v. Cisco Sys., Inc., No. 01-1122, 2001 WL 1504671, at *2(1st Cir.Dec. 3, 2001).A court may only vacate an arbitrator's award in very rare circumstances, such as where there was misconduct by the arbitrator, where the arbitrator exceeded the scope of his arbitral authority, or when the award was made in manifest disregard of the law.Bull HN Info. Sys. Inc., 229 F.3d at 330-31;see9 U.S.C. § 10(2000).Although the district court articulated the appropriate standard of review, we believe it misunderstood the arbitrator's opinion and accordingly did not properly apply the principles.The arbitrator's opinion was far from being in manifest disregard of the law and the district court was required to affirm it.

We start with a preliminary argument made by Wonderland.Wonderland says that the arbitral award exceeded the arbitrator's authority as to remedy, even if the arbitrator was correct that the contract was divisible.However, the arbitral clause in the agreement contains no limitations whatsoever on the arbitrator's power, but simply requires the parties to arbitrate all grievances between them:

Any controversy or claim not settled by the parties arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration in accordance with the Rules of the American Arbitration Association, and judgement upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof.

Wonderland's argument is based entirely on clauses within the contract as to remedies for breach of contract.One clause states:

In the event that [Wonderland] shall default in the performance of any provisions of this Agreement on its part to be performed . . . and such default shall not be cured within a period of ten (10) days after notice shall have been given by AUTOTOTE to [Wonderland] specifying such default, then AUTOTOTE may terminate this Agreement by delivering to [Wonderland] written notice of such termination prior to the expiration of thirty (30) days after the expiration of said ten (10) day period; and in the event of any such termination AUTOTOTE shall remove its personnel, materials and equipment from the RACETRACK, and the cost of such removal shall be paid for by [Wonderland].

There is an identical clause for when Autotote defaults in the performance of the contract.There is also a clause in the contract that states:

The remedies expressly provided in this Agreement for breach thereof by AUTOTOTE or [Wonderland] shall constitute the sole and exclusive remedies to the aggrieved party, and all other remedies which might be otherwise available under the law of any jurisdiction are hereby waived by both AUTOTOTE and [Wonderland].

It was within the province of the arbitrator to construe the contract, including these remedial provisions, in the first instance.Id. at 330("[I]t is the arbitrator's view . . . of the meaning of the contract that [the parties] have agreed to accept.")(quoting United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 37-38(1987)).Accordingly, it was within the power of the arbitrator to conclude that the contractual remedial clause here did not limit the remedy for Wonderland's failure to meet its installment repayment obligation.The arbitrator did not exceed the scope of his arbitral authority and the award can therefore only be challenged for manifest disregard of the law.An award is in manifest disregard of the law if either "the award is contrary to the plain language of the contract," or "it is clear from the record that the arbitrator recognized the applicable law, but ignored it."Gupta...