Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-2_03-cv-02237/USCOURTS-arwd-2_03-cv-02237-1/pdf.json

Nature of Suit Code: 891
Nature of Suit: Agricultural Acts
Cause of Action: 07:181 Packers &amp; Stockyard Act

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AO72A

(Rev. 8/82)

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FORT SMITH DIVISION

RAYMOND WINFREY, RICHARD

and CATHY JONES, LONNIE OSMAN,

DEWEY and CONNIE DRUMMOND,

MARK and SHALANE PENSE,

GERALD and DENISE PROVENCE,

and DWAIN KELLY PLAINTIFFS

Civil No. 03-2237

SIMMONS FOODS, INC. DEFENDANT

MEMORANDUM OPINION AND ORDER

Currently before the Court are Plaintiffs’ Amended

Application for Order Confirming Arbitration Award and for

Entry of Judgment (Doc. 33), Defendant’s Response (Doc. 34),

Defendant’s Motion to Vacate Arbitrators’ Award (Docs. 36 &

48), Plaintiffs’ Response (Docs. 37-38, 49), and Defendant’s

Reply (Doc. 50). For the following reasons, Plaintiffs’

Amended Application for Order Confirming Arbitration Award and

for Entry of Judgment (Doc. 33) is GRANTED and Defendant’s

Motion to Vacate (Doc. 36) is DENIED. 

I. BACKGROUND

On October 24, 2003, Plaintiffs filed their Complaint

seeking damages for termination of an agreement to raise

chickens under the provisions of the Packers and Stockyard

Act, 7 U.S.C. § 192(a). (Doc. 1). Plaintiffs further

asserted claims for fraud and promissory estoppel. Id.

Defendant moved to compel arbitration on December 30, 2003.

(Doc. 5). On April 14, 2004, the Court found that Plaintiffs

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and Defendant entered into an agreement to arbitrate and that

Plaintiffs’ claims fell within the scope of the agreement.

(Doc. 17). Accordingly, the Court ordered the parties to

submit to arbitration in accordance with their agreement and

administratively terminated the action subject to being

reopened upon conclusion of the arbitration proceedings. Id.

On November 24, 2004, Plaintiffs filed their Motion to

Reopen or, in the Alternative, to Compel Compliance with the

Arbitration Clause (Doc. 18) requesting the Court to

reconsider its order compelling arbitration and set the case

for trial or, alternatively, to order the completion of

arbitration contending Defendant failed to comply with

arbitration procedures governing the selection of the

arbitration panel. Defendant requested that the Court remove

Plaintiffs’ appointed arbitrator from serving in the dispute

due to bias. (Doc. 22). The Court denied both motions and

ordered the parties to proceed with the arbitration

proceedings with the parties’ respective arbitrators to choose

the neutral third arbitrator. (Doc. 31). In its decision, the

Court noted:

The arbitration agreement provided that each

party would appoint one arbitrator and that those

two arbitrators would appoint the third arbitrator

to complete the panel. (Doc. 18, Ex. A).

Plaintiffs contend Defendant failed to appoint its

arbitrator within the time period specified in the

arbitration agreement. Plaintiffs further contend

that after appointing its arbitrator, Defendant

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breached the agreement by substituting another

person as its arbitrator. In its motion, Defendant

contends that Plaintiffs’ arbitrator should be

disqualified on the grounds he is biased.

It is an established principle that issues of

procedural arbitrability should be left to the

arbitrator to decide. Stroh Container Co. v.

Delphi Industries, Inc., 783 F.2d 743 (8 Cir. th

1986)(citations omitted). Whether Defendant

complied with the procedure set forth in the

agreement for appointing arbitrators and whether an

arbitrator should be disqualified due to bias are

issues for the arbitration panel to decide. See

Cox v. Piper, Jaffray & Hopwood, Inc., 848 F.2d 842

(8 Cir. 1988)(judicial review may not be obtained th

about the qualifications of the arbitrators or

other matters prior to the making of an award).

 

Id. at p. 2.

After a hearing, the three-person arbitration panel

consisting of Defendant’s arbitrator, John Everett;

Plaintiffs’ arbitrator, J. Dudley Butler; and Frank Hamlin who

was chosen by both party arbitrators; awarded Plaintiffs a

total of $510,000.00 in damages and ordered Defendant to pay

the arbitration costs. (Doc. 33, Ex. 1). Plaintiffs now ask

this Court to confirm that award, while Defendant moves to

vacate the award pursuant to 9 U.S.C. § 12, due to the

“evident partiality of arbitrator J. Dudley Butler.” (Doc.

36). 

II. DISCUSSION

Plaintiffs move for entry and confirmation of the

arbitration award. Defendant seeks to vacate the award on the

basis that Plaintiffs’ chosen arbitrator, J. Dudley Butler,

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exhibited evident partiality toward Plaintiffs. Plaintiffs

contend Defendant’s motion to vacate is without merit as : (1)

all three arbitrators were attorneys, two of whom were chosen

by Defendant; (2) the award was unanimous; (3) there was no

record made of the proceeding with which to review the alleged

partiality; and (4) the arbitration panel found Mr. Butler was

fair and impartial. 

A district court’s review of an arbitration award is

extremely limited. See Major League Baseball Players Ass’n v.

Garvey, 532 U.S. 504 (2001). The underlying award is entitled

to an “extraordinary level of deference.” Schoch v. Infousa,

Inc., 341 F. 3d 785, 788 (8th Cir. 2003)(internal citations

omitted). An arbitrator’s broad authority is constrained by

the Federal Arbitration Act (herein FAA). See 9 U.S.C. § 1 et

seq. A district court may vacate an award where there was

evident partiality in the arbitrators. See 9 U.S.C. §

10(a)(2). 

In this case, the agreement drafted by Defendant,

provided:

...[E]ach party shall appoint one

arbitrator...Within 30 days after both arbitrators

have been appointed, the arbitrators shall jointly

appoint a third arbitrator. 

(Doc. 38, Ex. B). 

Defendant requested that this Court remove Mr. Butler as

an arbitrator based upon his partiality, however, we found

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that this was a procedural issue to be decided by the

arbitration panel. (Doc. 31). Defendant then presented its

request to the party arbitrators at the time, Frank Hamlin and

Mr. Butler. In a letter dated November 10, 2004, Frank

Hamlin, who was initially selected by Defendant as its party

arbitrator stated:

From my years of experience as a Mediator and

Arbitrator, when a clause reads like the one in

Paragraph 9 of the Broiler Agreement between

Simmons Foods, Inc. and Raymond H. Winfrey, there

is not any obligation for either party to pick

someone who is totally fair and impartial...There

is no requirement in Paragraph 9 of the agreement

in question that an Arbitrator with a[n][sic]

“alleged bias” cannot sit on the Arbitration panel.

Quite the contrary, when a clause is normally

drafted in this manner, each party is most likely

to select someone that they believe will basically

be fair and responsible in making their decision,

but also might see the case a little more from the

perspective of the party that appointed the

Arbitrator. 

(Doc. 38, Ex. C). Defendant later selected John Everett as

its party arbitrator (Doc. 38, Ex. F), and Frank Hamlin was

selected by Mr. Everett and Mr. Butler to serve as the third

arbitrator and Chairman of the panel. The entire panel again

found that the three arbitrators were “properly appointed

pursuant to the arbitration clause in question and [were]

qualified to serve and decide all issues in this matter.

(Doc. 38, Ex. D). 

Defendant cites numerous cases for its proposition that

even the appearance of bias on the part of an arbitrator is

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sufficient to vacate an award. However, the cases are

distinguishable from the situation here as they address the

partiality of neutral as opposed to party arbitrators or

situations where certain procedural rules governing the

arbitrations required specific disclosures by the arbitrators.

Defendant’s agreement did not specify any particular

procedural rules outside of the agreement itself to govern the

proceedings, and the agreement did not require the arbitrators

chosen by the parties to be neutrals. It is a basic principle

of contract law that any ambiguity should be construed against

the drafter, in this case, Defendant. See American Airlines,

Inc. v. Wolens, 513 U.S. 219 (1995). Additionally, in

general, partisan arbitrators are permissible. See Delta Mine

quoting ATSA of Cal., Inc. v. Continental Ins. Co., 754 F.2d

1394 (9 Cir. 1985). Accordingly, the Court finds that the th

arbitrators chosen by the parties in this matter were not

required to be neutrals.

Even if the Court agreed with Defendant that all three

arbitrators were to be completely neutral, Defendant cannot

show that the “evident partiality” had a prejudical impact on

the arbitration award, as required. The neutral arbitrator,

chosen by the parties’ arbitrators was aware of Defendant’s

concerns. In fact, this issue was twice considered by the

panel prior to the beginning of the arbitration proceedings

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with the conclusion that Mr. Butler could be fair and

impartial. Under the narrow standard of review for an

arbitration award, Defendant has not shown that any evident

partiality of Mr. Butler had a prejudicial impact on the

arbitration award. Accordingly, Plaintiffs’ Amended

Application for Order Confirming Arbitration Award and for

Entry of Judgment (Doc. 33) is GRANTED and Defendant’s Motion

to Vacate (Doc. 36) is DENIED. 

III. ORDER

As Defendant cannot show that any “evident partiality” on

behalf of Mr. Butler prejudicially affected the arbitration

award, no basis for vacating the award exists. Accordingly,

Plaintiffs’ Amended Application for Order Confirming

Arbitration Award and for Entry of Judgment (Doc. 33) is

GRANTED and Defendant’s Motion to Vacate (Doc. 36) is DENIED.

Further, in accordance with 9 U.S.C. § 9, the Court finds it

appropriate to confirm the Arbitrators’ Decision and Award

(Doc. 33, Ex. A) awarding damages in the amount of $510,000.00

to Plaintiffs as follows:

a. Raymond Winfrey: $112,000.00

b. Richard and Cathy Jones: $86,000.00

c. Lonnie Osman: $48,000.00

d. Dewey and Connie Drummond: $39,000.00

e. Mark and Shalane Pense: $97,000.00

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f. Gerald and Denise Provence: $87,000.00

g. Dwain Kelly: $41,000.00.

Additionally, Defendant is responsible for the total cost

of arbitration or $45,597.94 of which Defendant has already

paid half of that amount. A judgment will be filed

contemporaneously with this order.

IT IS SO ORDERED this 6th day of September 2006.

/s/ Robert T. Dawson

Honorable Robert T. Dawson

United States District Judge

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