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### STATE OF MICHIGAN

COURT OF APPEALS

TODD SANTOMAURO,

Plaintiff/Counter-DefendantAppellant, UNPUBLISHED December 20, 2016

v No. 328404 Oakland Circuit Court PULTEGROUP, INC., BRANDON JONES, CHRIS LEIMBACH, and HEATHER SHAFFER, LC No. 2014-143464-CD

Defendants/Counter-PlaintiffsAppellees.

Before: K. F. K ELLY , P.J., and G LEICHER and S HAPIRO , JJ.

P ER C URIAM

. When plaintiff Todd Santomauro accepted a job with defendant P ulte Group, Inc., he agreed to arbitrate any claims arising from his employment. Pu lte discharged him sixteen years later. Santomauro initiated an arbitration action alleging a v ariety of claims including breach of contract, discrimination and reta liation in viola tion of the Ci vil Rights Act, MCL 37.2101 et seq ., and fraud and misrepresentati on. Paul Glendon, the arbitrator selected by the parties, found that Santomauro had deliberately spoiled evidence by removing the ha rd drive of his Pulte-owned laptop computer before returning it to the company, and dismiss ed the action. Santomauro challenges this sanction on sev eral grounds, none of which have merit. We affirm.

I

The facts underlying Santomauro’s arbitration action are not r elevant to the dispute before us, so we will not discuss them. Shortly after Santomau ro’s termination, Pulte’s counsel requested that Santomauro return his laptop computer to the att orney’s office. Santomauro complied by handing a laptop bag containing the laptop to a leg al assistant at Foley & Lardner, L.L.P. Santomauro testified that the laptop was fully function al when he returned it. The legal assistant averred that she observed the laptop in the bag, but did not examine it any further. She placed the laptop bag in a room within the law firm containing other case documents. Approximately one month later, a forensic examiner attempted to inspect the laptop’s contents. He determined that the hard driv e and four screws that held it in place had been removed.-2- Thirteen days prior to the scheduled arbitration, Pulte filed a motion seeking discovery sanctions based on Santomauro’s alleged removal of the hard dri ve and his deletion of emails from his account before he returned the laptop. The hearing on this motion was not transcribed. In a lengthy written opinion, Gl endon found that Santomauro had removed the hard drive “and did so willfully, for the purpose of preventing Defendants from discovering evidence detrimental to his complaints and/or deletion of such evidence[.]” Glendon deemed untrue Santomauro’s denial that he removed the hard drive, and concluded, “I find t hat Plaintiff intentionally destroyed evidence, for whi ch he must be sanctioned.”

Glendon considered adopting an a dverse inference sanction that the missing evidence on the hard drive would have proven detrimental to Santomauro’s ca se. Glendon rejected that option, reasoning that Santomauro’s “lack of credibility about destruction of evidence undercuts his credibility about everything else and thus adversely affect s his entire portfolio of complaints.” Given this finding, Glendon determined that “a fu ll hearing on the merits of [Santomauro’s] complaints essentially would be a charade, needlessly subjecting Defendants to further prejudice in having to e xpend significant resources def ending as best they can against baseless claims.” (Emphasis i n original.) Glendon summarized:

Suffice it to say that all identified alternative sanctions ha ve been carefully considered in this case and the arbitrator is convinced that th e willfulness and severity of Plaintiff’s misconduct in destroying evidence, the significance of prejudice it caused to the Defen dants, and the interests of fai rness, justice, orderliness and efficiency in th e administration of this altern ative dispute resolution process warrant a sanction of most proportionate sev erity: dismissal of all of Plaintiff’s claims, which is so ordered.

Santomauro filed a complaint in the circuit court seeking to v acate the arbitration ruling. Pulte filed a counterclaim requesting that the circuit court co nfirm the arbitration award. The circuit court ruled that the parties’ arbitration agreement env isioned that the arbitrator could exercise the same powers as a judge, and found no legal basis f or disturbing the arbitrator’s decision. Santomauro now appeals.

II

Santomauro contends that the arbitrator “refused to consider e vidence material to” his causes of action and he was denied both due process of law and the opportunity to advance his civil rights, MCL 691.1703(1)(c). I nterwoven in this argument are claims that the arbitrator exceeded his powers and displayed evident partiality. Like the circuit court, we discern no legal basis for disturbing the arb itrator’s sanction ruling.

We review de novo a circuit court’s decision to enforce or vac ate an arbitration award. City of Ann Arbor v American Federation of St ate, Co & Muni Emplo yees (AFSCME) Local 369

, 284 Mich App 126, 144; 771 NW2d 843 (2009). An arbitrator deri ves his or her authority from the parties’ contract and arbitration agreement and remains bou nd to act within the terms of the agreement. Dohanyos v Detrex Corp (After Remand) , 217 Mich App 171, 176; 550 NW2d 608 (1996). “Judicial review of arbitration awards is limited.” Konal v Forlini , 235 Mich App 69, 74; 596 NW2d 630 (1999). “[A] reviewing court’s ability to rev iew an award is restricted to-3- cases in which an error of law appears from the face of the awa rd, or the terms of the contract of submission, or such documentation as the parties agree will con stitute the record.” Detroit Automobile Inter-Ins Exch v Gavin , 416 Mich 407, 428-429; 331 NW2d 418 (1982) ( DAIIE ). “A court may not review an arbitra tor’s factual findings or decisi on on the merits[, ]” may not second guess the arbitrator’s interpretat ion of the parties’ contract, and may not “substitute its judgment for that of the arbitrator.” AFSCME Local 369 , 284 Mich App at 144. “The inquiry for the reviewing court is merely whether the award was beyond the cont ractual authority of the arbitrator.” Id . If the arbitrator did not disregard the scope of his authori ty as expressly set forth in the parties’ agreement, the n judicial review ceases. Id . “[A]s long as the arbitrator is even arguably construing or applying th e contract and acting within the scope of his authority, a court may not overturn the decision even if convinced that the arbitr ator committed a serious error.” Id . (quotation marks and citations omitted).

Where it clearly appears on the face of the award or in the re asons for the decision, being substantially a part of the award, that the arb itrators through an error of law have been led to a wrong conclusion, and that, but for such error a substantially different award must have been made, the award an d decision will be set aside. The character or seriousness of an error of law that will require a court of law to vacate an arbitr ation award must be so material or so substantial as to have governed the award, and the error must be one but for w hich the award would have been substantially otherwise. [ Dohanyos , 217 Mich App at 176 (citations omitted).]

To the extent that Santomauro raises constitutional concerns, o ur review is de novo. O’Connell v Director of Elections , ___ Mich App ___, ___; ___ NW2d ___ (2016) (Docket No. 334365

, issued August 25, 2016); slip op at 4.

“[I]n discharging their duty, arbitrators can fairly be said t o exceed their power whenever they act beyond the material terms of the contract from which t hey primarily draw their authority, or in contravention of controlling principles of law .” DAIIE , 416 Mich at 434. To determine whether an arbitrator has exceeded his powers, we loo k to the parties’ contract. Gordon Sel-Way, Inc v Spence Bros, Inc , 438 Mich 488, 496; 475 NW2d 704 (1991).

The Pulte ADR policy provides as follows concerning discovery procedures and remedies:

After selection of the arbitrator , the parties shall have the r ight to take depositions and to obtain discovery regarding the subject matter of the act ion and to use and exercise all of the same rights, remedies, and procedures, and be subject to all of the same duties, liabilities, and objections as provided in the state code of civil procedure. The arbitrator shall have the authority to rule on motions (including the power to issue orders and de termine appropriate remedies) r egarding discovery, for summary judgment, and to issue any protective or ders necessary to protect the privacy and/or right s of parties and/or witnesses.

. . .
* * *-4- The arbitrator shall have the s ame authority to award remedies and damages on the merits of the dispute as provided to a judge and /or jury under parallel circumstances. However , the arbitrator shall only be permitted to award those remedies in law or equity which are requested by the part ies and which are supported by the credible, relevant evidence. The arbitrator s hall issue a written opinion and award which includes the factual and legal basis of the opinion and award. [Emphasis added.]

This grant of authority regardi ng “remedies” echoes a circuit j udge’s power to sanction a litigant’s misconduct. And that power includes imposing the ul timate sanction—dismissal— when a party willfully destroys evidence.

In Brenner v Kolk , 226 Mich App 149, 156; 573 NW2d 65 (1997), this Court address ed “the proper analysis for a tri al court to apply when, although no discovery order has been violated, a party has failed to preserve vital evidence.” We e xplained that “[i]n cases involving the loss or destruction of evide nce, a court must be able to ma ke such rulings as necessary to promote fairness and justice.” Id . at 160. Denying courts the power to sanction for such conduc t “would only encourage unscrupulous parties to destroy damaging evidence before a court order has been issued,” we observed. Id . Those conclusions foreshadowed our holding that “the trial court has the authority, derived from its inherent powers, to s anction a party for failing to preserve evidence that it knows or should know is relevant befo re litigation has commenced.” Id . “Dismissal is a drastic step that should be taken cautiously ,” and a trial court should “carefully evaluate all available options on the record” before imposing it. Id . at 163. Glendon followed that procedure here. He concluded that the only reali stic alternative remedy—a presumption against Santomauro—would waste everyone’s time, as Santomauro’s dishonesty regarding the hard drive had thoroughly and irrevocably contami nated Glendon’s view of the evidence. The sanction he selected fell within the authority g ranted by the arbitration agreement, and so we may not disturb it.

Our conclusions regarding Glendon’s authority to levy a dismis sal sanction augur our resolution of Santomauro’s remaining claims. The record reflec ts that Santomauro was placed on notice that a discovery sanction was sought, and was afforde d ample opportunity to submit evidence on his own behalf. N o due process violation occurred. Nor has Santomauro brought forward evidence of Glendon’s par tiality. Santomauro insists t hat Glendon’s refusal to hear Sanotmauro’s motion for sanctions demonstrates Glendon’s bias. We are unable to draw any inference of bias from this f act, as Glendon likely concluded t hat any discovery violations committed by Pulte were irrelevant, given that Santomauro’s con duct warranted dismissal.

Finally, we reject Santomauro’s argument that the “after-acqui red evidence rule” should apply in this case. That doctrine applies when an employer wou ld have terminated an employee for reasons discovered later, in addition to those actually cit ed for the termination. See Landin v Healthsource Saginaw, Inc , 305 Mich App 519, 540; 854 NW2d 152 (2014). Here, the remova l of the hard drive apparently o ccurred after Santomauro had been terminated from his Pulte-5- employment. The after-acquired evidence rule contemplates the existence of employmentrelated misconduct or malfeasan ce. It has no role to play in t his case.

We affirm.

/s/ Kirsten Frank Kelly /s/ Elizabeth L. Gleicher /s/ Douglas B. Shapiro