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Coyne v. Hewlett-Packard Company

United States District Court, District of Columbia

April 5, 2018

JOSEPH COYNE, Petitioner,
v.
HEWLETT-PACKARD COMPANY, Respondent.

          MEMORANDUM OPINION

          KOYCE C. LAMBERTH UNITED STATES DISTRICT JUDGE

         Now before the Court is petitioner's Motion to Vacate Arbitration Award and respondent's Motion to Confirm Arbitration Award and in Opposition to Motion to Vacate Arbitration Award. Upon consideration of petitioner's Motion to Vacate Arbitration Award [ECF No. 1], respondent's Motion to Confirm Arbitration Award and in Opposition to Motion to Vacate Arbitration Award [ECF No. 9], petitioner's Reply Memoranda [ECF Nos. 16, 18], and respondent's Reply Memorandum [ECF No. 20], the Court on September 29, 2017 granted respondent's Sealed Motion to Confirm Arbitration and denied petitioner's Motion to Vacate Arbitration Award. [ECF No. 25]. This Memorandum explains the Court's ruling.

         I. Background

         During the times relevant to this matter, Joseph Coyne ("petitioner") was employed by Hewlett-Packard Company ("respondent") as a Business Development Manager on respondent's Software Sales Channels and Alliance Team. As a Business Development Manager, petitioner was responsible for developing business relationships with third-party resellers who in turn bring additional business opportunities to respondent. Petitioner is paid an annual base salary and receives variable Incentive Compensation ("commission"). Petitioner's commission eligibility is outlined by his Compensation Plan, consisting of annual sales letters and the FY2014 Global Sales Compensation Policy, which is incorporated by reference in the sales letters. On June 26, 2014, petitioner signed the last of four sales letters that he received during the 2014 fiscal year. The June 26, 2014, sales letter was extremely similar to the other three letters in form and substance, except for the added requirement that a deal be "sourced" as a condition to be eligible for commission. According to the Compensation Plan, respondent's management can adjust an employee's provisional commission for a variety of reasons

         The current dispute centers on a multi-million-dollar transaction between respondent and Defense Healthcare Management ("DHM Deal"). The DHM Deal consisted of the sale of cloud service automation products ("Opps sale") and enterprise license agreement products ("Apps sale"). It is not contested that the DHM Deal was facilitated by petitioner's work with a third-party reseller, Presidio Networked Solutions, Inc. First, respondent explains it denied petitioner all commission on the Apps sale because it was an extension of a business arrangement that respondent already had and was not "sourced" in accordance with his commission eligibility standards. Next, respondent states that petitioner was only awarded 50 percent credit for the Opps sale because the DHM Deal was not disclosed in time to be taken into account in setting petitioner's sales quota for Fiscal Year 2014. Therefore, petitioner's quota was set too low. Accordingly, petitioner received approximately $56, 000 in connection with his work facilitating the DHM Deal. Petitioner argues, however, that he has a contractual right to receive credit on the full amount of both sales in the amount of an additional $199, 180.

         Petitioner initiated arbitration, pursuant to an arbitration agreement with respondent, to challenge the respondent's decision regarding his commission. After an exhaustive two-day arbitration hearing, the arbitrator dismissed petitioner's breach of contract claim and unjust enrichment claim. Petitioner now moves to partially vacate the arbitrator's Award and Order regarding the dismissal of his unjust enrichment claim under the Federal Arbitration Act ("Act"). Petitioner argues that the arbitrator exceeded his power and manifestly disregarded the law by denying his claim for unjust enrichment.

         II. Legal Standard for Judicially Vacating an Arbitration Award

         A. Exceeded Powers

         The Federal Arbitration Act establishes the exclusive grounds by which a court may vacate an arbitration award granted under the FAA. See 9 U.S.C. §§ 10-11 (2013); see also Hall Street Associates, LLC v. Mattel, Inc., 552 U.S.576, 586-88 (2008). Sections 10 and 11 of the FAA sharply limit the judicial review of the evidentiary and legal findings of an arbitration panel to "egregious departures from the parties' agreed-upon arbitration: corruption, fraud, evident partiality, misconduct, misbehavior, exceeding powers, evident material miscalculation, evident material mistake, awards upon a matter not submitted; the only ground with any softer focus is imperfections, and a court may correct those only if they go to a matter of form not affecting the merits." Id. at 586 (internal quotations omitted).

         B. Manifest Disregard

         The Supreme Court held in Hall Street that the statutory grounds for vacatur established within §§10 and 11 of the FAA are exclusive, rendering the "manifest disregard" theory of attack on an arbitral award an uncertain proposition. Hall Street, 552 U.S. at 586. This issue has yet to be resolved in subsequent cases. In Stolt-Nielsen, 559 U.S. 662 (2010), the Supreme Court resolved the issue on one of the FAA's statutory grounds but acknowledged that manifest disregard may not have survived its Hall Street decision. Stolt-Nielsen, 559 U.S. at n. 3. Likewise, in 2013, this Court evaluated a "manifest disregard" claim with considerable suspicion "because the case law controlling this Court's reasoning has refused to revive 'manifest disregard' since its apparent death knell in Hall Street'[1] FBR Capital Mkts. & Co v. Hans, 985 F.Supp.2d 33, 36 (2013). Accordingly, this Court evaluates petitioner's "manifest disregard" claim in the present case with the same considerable suspicion. Assuming the doctrine survives, manifest disregard can only be established if "(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." Id.

         III. Analysis

         Petitioner's arguments that the arbitrator "exceeded [his] powers" and manifestly disregarded the applicable law of unjust enrichment are reviewed in light of the high presumption of validity owed to arbitration decisions. See id.

         A. ...


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