the stay, confirm the arbitration award, and enter judgment, and
plaintiffs cross motion to confirm the arbitration award in
part, and to vacate the award in part, and to enter judgment.
After consideration of the parties' cross motions, the memoranda
and materials in support, the responses in opposition, and the
replies in support, and for the following reasons, defendant's
motion is GRANTED, and plaintiffs motion is DENIED.
I. Factual Background
Plaintiff Linda LaPrade filed suit against defendant Kidder
Peabody alleging gender discrimination in employment. Per an
earlier agreement between the parties, and upon defendant's
motion, the court stayed LaPrade's civil action pending
arbitration on June 24, 1992.*fn1 Arbitration hearings
commenced in September 1993.
On October 8, 1999, after six years, the National Association
of Securities Dealers ("NASD") Arbitration Panel ("the Panel")
rendered its decision dismissing plaintiffs statutory
discrimination claims, as well as her defamation claims, in
their entirety. The Panel further ordered that defendant pay
plaintiff $65,000 inclusive of interest, that plaintiff pay 12%
of the NASD forum fees assessed, or $8,376, and that defendant
pay 88% of the forum fees, or $61,424. Finally, the panel
ordered that each party pay its own attorneys' fees and costs.
On October 9, 1999, defendant filed a motion to lift the stay,
to confirm the arbitration award, and to enter judgment.
Plaintiff filed a cross motion to confirm and vacate different
parts of the arbitration award, and to enter judgment, as well
as a motion in opposition to defendant's motion to confirm the
arbitration award. Plaintiffs cross motion opposes Kidder
Peabody's motion only in so far as it seeks to confirm that part
of the award that requires plaintiff to pay $8,376 in
arbitration fees. Thereafter, replies were filed by the parties.
A federal court may lift a stay of proceedings to confirm an
arbitration award. See Kanuth v. Prescott, Ball & Turben,
Inc., 949 F.2d 1175, 1178 (D.C. Cir. 1991) (district court
lifted stay of diversity action to confirm arbitration award and
order entry of judgment). Moreover, this Court stayed this case
pending arbitration and retained jurisdiction for purposes of
any appropriate proceedings upon completion of arbitration. See
LaPrade v. Kidder, Peabody & Co., 146 F.3d 899, 903 (D.C. Cir.
1998), cert. den., 525 U.S. 1071, 119 S.Ct. 804, 142 L.Ed.2d 664
(1999) (holding that court that stays civil action pending
arbitration retains jurisdiction to confirm arbitration award).
Further, pursuant to the NASD Code of Arbitration Procedure §
10330(a), the parties in this case agreed that any arbitration
award could be entered as a judgment in a court of competent
jurisdiction. Thus, this Court properly retained jurisdiction.
B. Standard of Review for Arbitration Awards
Generally, public policy favors leaving arbitration awards
untouched. See Wall Street Associates, L.P. v. Becker Paribas,
Inc., 818 F. Supp. 679, 682 (S.D.N.Y. 1993) (citing
Shearson/American Exp., Inc. v. McMahon, 482 U.S. 220, 226,
107 S.Ct. 2332, 96 L.Ed.2d 185 (1987)). In addition, a court
must confirm an arbitration award where some colorable support
for the award can be gleaned from the record. See Sargent v.
Paine Webber Jackson & Curtis, Inc., 882 F.2d 529, 532
(D.C. Cir. 1989). Arbitration awards are subject to "very limited
review" to avoid undermining the goals of arbitration,
namely, settling disputes efficiently and avoiding lengthy and
expensive litigation. Willemijn Houdstermaatschappij, BV v.
Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997).
Accordingly, reviewing courts have broad latitude to confirm
Concomitantly, the grounds for disturbing arbitral awards are
very narrow. The standard of review for arbitration awards is
articulated in the Federal Arbitration Act ("FAA").
9 U.S.C. § 1-14 (West 1990). Under the FAA, a court must grant a request
for confirmation unless the award is "vacated, modified, or
corrected." 9 U.S.C. § 9 (West 1990). In addition, the FAA,
empowers a federal court to vacate an arbitration award
(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.
(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.
Moreover, "[c]ourts have also recognized a limited nonstatutory
ground for vacating an arbitration award where the arbitrator
has acted in `manifest disregard of the law.'" In the Matter of
Baird, 939 F. Supp. 15, 16 (D.C. 1996) (citing Al-Harbi v.
Citibank, 85 F.3d 680, 682 (D.C. Cir. 1996)) (citing Kanuth v.
Prescott, Ball & Turben, Inc., 949 F.2d 1175, 1178 (D.C. Cir.
1991)) (citing Wilko v. Swan, 346 U.S. 427, 436, 74 S.Ct. 182,
187, 98 L.Ed. 168 (1953) (dicta)); cf. First Options of Chicago
v. Kaplan, 514 U.S. 938, 942, 115 S.Ct. 1920, 1923,
131 L.Ed.2d 985 (1995) (holding that an arbitration award will be set aside
only if the award was made in . . . "`manifest disregard' of the
Predictably, "manifest disregard" is a very high standard of
review. The United States Court of Appeals for the District of
Columbia has explained that "manifest disregard of the law may
be found if [the] arbitrator[s] understood and correctly stated
the law but proceeded to ignore it." Kanuth, 949 F.2d at 1179.
The implicit assumption in this test is that "the law" that the
arbitrators ignored is clear and unambiguous. In its "manifest
disregard" test, the Second Circuit has explicitly added that
implicit assumption: "(1) the arbitrators knew of a governing
legal principle yet refused to apply it or ignored it
altogether, and (2) the law ignored by the arbitrators was well
defined, explicit, and clearly applicable to the case." DiRussa
v. Dean Witter Reynolds Inc., 121 F.3d 818, 821 (2d Cir. 1997),
cert. den., 522 U.S. 1049, 118 S.Ct. 695, 139 L.Ed.2d 639
(1998).*fn3 The burden falls on the party seeking to alter
the arbitration award — here, plaintiff — to "establish that the
arbitrators appreciated the existence of a governing legal
principle but expressly decided to ignore it." Johnston Lemon &
Co., Inc., v. Smith, 886 F. Supp. 54, 56 (D.C. 1995) (citing
Kanuth, 949 F.2d at 1182).
The contours of the manifest disregard standard are nebulous.
It is clear that this standard does not authorize a district
court to "conduct the same de novo review of questions of law
that an appellate court exercises over lower court decisions."
In the Matter of Baird, 939 F. Supp. 15,
17 (D.C. 1996) (citing Al-Harbi, 85 F.3d at 684). It is also
clear that an arbitration panel is free to consider and reject
the parties' arguments in due course. Id. at 17. Arguably, the
manifest disregard standard demands "more than error or
misunderstanding with respect to the law." Id. However, on a
spectrum with fair consideration and rejection of an argument at
one end, and clear misconduct at the other, it is unclear where
manifest disregard falls. While it definitely falls closer to
clear misconduct, whether it is a hair's width away, or an arm's
length away, is uncertain. Here, plaintiff makes no claim that
any of the four enumerated grounds is present. Therefore, the
Court must review the arbitral award under the manifest
C. Plaintiff's "Manifest Disregard" Showing
Plaintiff claims that her arbitration panel disregarded this
circuit's law concerning allocation of arbitral fees. Therefore,
plaintiff must show that the governing law is well-defined and
clearly applicable, that the Panel was aware of the governing
law, and that the Panel expressly sidestepped it. In addition,
there must be no colorable support for the Panel's award in the
record; if it seems that the Panel rejected plaintiffs argument
after fair consideration, then plaintiffs showing falls short,
and the Court must enter the Panel's judgment.
1. The Panel's Knowledge of the Governing Law
Taking the steps of plaintiffs showing out of turn, plaintiff
has shown that the Panel was aware of what she contends is our
circuit's arbitral fee allocation jurisprudence. As proof of the
Panel's knowledge, plaintiff submitted a series of letters from
plaintiff to the Panel and from defendant to the Panel arguing
the parties' respective interpretations of the governing law.
These letters, and, in particular, the August 26, 1999 letter
from Valerie Bailey Johnston to plaintiffs counsel informing him
that the parties' letters discussing the allocation of arbitral
fees had been forwarded to the Panel, demonstrated that the
Panel was well aware of plaintiffs fee allocation
2. The Governing Law Concerning Allocation of Arbitral
However, plaintiff's arguments are only that — arguments. The
governing law in this area is far from "well defined, explicit,
and clearly applicable to the case." DiRussa, 121 F.3d at 821.
Plaintiff relies heavily on Cole v. Burns Int'l Sec. Svcs.,
105 F.3d 1465, 1485 (D.C. Cir. 1997) and its progeny*fn5 for
the proposition that a plaintiff cannot be required to arbitrate
her public law claims if a condition of employment requires her
to pay all or part of the arbitrator's fees and expenses. See
Plaintiffs Cross-Mot. at 2-4. In Cole, the D.C. Circuit
considered the assignment of arbitration fees to an employee who
forced to sign a pre-dispute arbitration agreement under which
only the employer could compel arbitration, and who was in
arbitration proceedings because he had lost his job. See Cole,
105 F.3d at 1485. The court articulated its holding in a larger,
public policy context:
. . . [I]t would undermine Congress' intent to
prevent employees who are seeking to vindicate
statutory rights from gaining access to a judicial
forum and then require them to pay for the services
of an arbitrator when they would never be required to
pay for a judge in court. Id. at 1484.
Plaintiff was required to arbitrate her claims pursuant to her
Uniform Application for Securities Industry Registration or
Transfer ("Form U-4"). Therefore, she argues, under the spirit
and the letter of Cole, she cannot be required to pay any part
of the arbitration fees, much less $8,376.
The Cole court demarcated acceptable and unacceptable fees
in some detail. The court's general principle was that a
plaintiff can be charged with any reasonable costs akin to the
filing fees and other administrative expenses that attend
pursuing a federal court action, but not with fees that do not
have a federal court counterpart. Id. at 1484. Acceptable
charges therefore included filing, administrative, room rental,
court reporter's, and attorney's fees. Id. at n. 12.
Unacceptable charges included the arbitrator's honorarium,
expenses, and any other costs associated with the arbitrator's
services. Id. at n. 15.
Defendant argues that Cole is not applicable to plaintiffs
case because Cole addressed the rules and procedures of an
American Arbitration Association ("AAA") case, and plaintiffs
case was arbitrated under National Association of Securities
Dealers ("NASD") rules. In Cole, the court highlighted the
fact that the procedures governing arbitration in the securities
industry are very different from the AAA procedures at issue in
The arbitration agreement in this case presents an
issue not raised by the [Form U-4 arbitration]
agreement in Gilmer [v. Interstate/Johnson Lane
Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26
(1991)] . . . This was not an issue in Gilmer (and
other like cases), because, under NYSE Rules and NASD
Rules, it is standard practice in the securities
industry for employers to pay all of the arbitrators'
fees. Employees may be required to pay a filing fee,
expenses, or an administrative fee, but these
expenses are routinely waived in the event of
financial hardship. Id. at 1483-4 (citation omitted)
Defendant further argues that the forum fees assigned to LaPrade
are more like Cole's acceptable administrative fees than the
prohibited arbitration fees.