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D.H. v. Gottdiener, 462 F.3d 95 | Casetext Search + Citator
D.H. v. Gottdiener
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462 F.3d 95 (2d Cir. 2006)
holding Fed.R.Civ.P. 55, related to default judgments, inapplicable to a proceeding under Title 9 to confirm an arbitration award, noting that Rule 55 “does not operate well in the context of a motion to confirm or vacate an arbitration award,” such that granting a default judgment in a “confirmation/vacatur proceeding” would be “generally inappropriate”
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Appeal from the Southern District of New York, Richard Owen, J.
Jay R. Fialkoff, Moses Singer LLP, New York, New York (Jayson D. Glassman, of counsel), for Plaintiffs-Appellees.
Before: WINTEE and KATZMANN, Circuit Judges, and MUETHA, District Judge.
Judit and Ernest Gottdiener, Ervin Tausky, and Suan Investments (collectively "the Investors") appeal from a grant of default judgment to D.H. Blair Co., Inc. ("D.H.Blair") and Kenton E. Wood (collectively "Broker"). The default judgment granted Broker's motion to confirm in part and vacate in part the award of an arbitration panel.
At the commencement of the arbitration, the Investors initially sought "1) compensatory damages . . .; 2) interest; 3) return of commissions . . .; 4) punitive damages . . .; 4)[sic] costs; and 5) attorneys' fees," but in their "post-hearing submissions," which were considered by the arbitrators before rendering a decision, the Investors requested slightly different relief, including "1) compensatory damages . . .; 2) punitive damages . . .; 4) costs . . .; 5) pre-judgment interest; and 6) a finding that each respondent violated Section 517.301, Florida Statutes." The differences in the relief sought are monetarily significant in that the compensatory and punitive damages requested were higher and the request for "prejudgment interest" followed the request for compensatory and punitive damages and costs, implying that prejudgment interest should apply to each.
On January 29, 2003. the arbitrators awarded $255,000 in compensatory damages and $450,000 in punitive damages to the Investors. Both awards included pre-judgment interest accruing from May 22, 1995, "until the date the Award is paid in full." The Investors moved to have the arbitrators recalculate the compensatory damages to include damages required under Florida law, and Broker filed a response defending the award. On March 12, 2003, the arbitration panel denied the motion.
c) Investors'Florida Petition
We first address the Investors' claim that the S.D.N.Y. lacked personal jurisdiction over them. "We review district court decisions on personal jurisdiction for clear error on factual holdings and de novo on legal conclusions." Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L., 264 F.3d 32, 36 (2d Cir. 2001) (citing U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 151 (2d Cir. 2001)). We hold that the district court properly exercised personal jurisdiction over the parties for two reasons. First, the Investors consented to personal jurisdiction in New York. Second, even absent consent, the Investors transacted business in and had sufficient contacts with New York to allow New York courts to exercise personal jurisdiction over them.
Parties can consent to personal jurisdiction through forum-selection clauses in contractual agreements. See Nat'l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 315-16, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964) ("And it is settled . . . that parties to a contract may agree in advance to submit to the jurisdiction of a given court. . . ."); 4 Charles Alan Wright Arthur R. Miller, Federal Practice and Procedure § 1064, at 344 (3d ed. 2002). Here, the Investors consented to jurisdiction in the S.D.N.Y. when they executed their "Cash Account Agreements" with Broker. These Agreements contained a forum-selection clause explicitly stating that the Investors "consent to the jurisdiction of the state and federal courts in the City of New York for the purpose of . . . enforcing any award of arbitrators."
While forum-selection clauses are regularly enforced, Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991), several conditions must be met. A court must first determine that the existence of the clause was reasonably communicated to the parties. See Effron v. Sun Line Cruises, Inc., 67 F.3d 7, 9 (2d Cir. 1995). The Investors do not claim an unawareness of the jurisdictional consent clause; it was plainly printed on the Cash Account Agreements. Second, a forum-selection clause will be upheld unless "the clause was obtained through fraud or over-reaching." Jones v. Weibrecht, 901 F.2d 17, 18 (2d Cir. 1990) (citing The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)). The Investors make no claim that their consent to the Cash Account Agreements was procured by fraud or overreaching.
We disagree. The Cash Account Agreements were an agreement to jurisdiction in the New York courts for both confirmation and vacatur proceedings. As such, the enforcement of the jurisdictional consent clause is neither unjust nor unreasonable. The purpose of the clause was to consent to New York jurisdiction for all arbitration-related proceedings, including "compelling arbitration, staying litigation pending arbitration, and enforcing any award of arbitrators." The use of the word "enforce" rather than the word "confirm" is significant. To enforce is "[t]o give force or effect to." Black's Law Dictionary (8th ed. 2004). Because "[arbitration awards are not self-enforcing," they must be given force and effect by being converted to judicial orders by courts; these orders can confirm and/or vacate the award, either in whole or in part. Hoeft v. MVL Group, Inc., 343 F.3d 57, 63 (2d Cir. 2003). Here, Broker petitioned the court to confirm in part and vacate in part the arbitration award. That request simply sought to give effect to the arbitration award. The partial vacatur of the award sought by Broker does not alter the nature of the action, which we believe is properly considered to involve "enforcing" the arbitration award.
Even absent consent, the S.D.N.Y. still had personal jurisdiction over the Investors. The Investors agree that subject matter jurisdiction in the S.D.N.Y. is based on diversity of citizenship. In diversity cases, the issue of personal jurisdiction is governed by the law of the forum state, here, New York's Civil Practice Law and Rules ("N.Y.C.P.L.R.") section 302, New York's long-arm statute, see Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 29 (2d Cir. 1996), so long as the district court's exercise of jurisdiction comports with the requirements of due process. See Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996).
N.Y. C.P.L.R. § 302(a)(1) permits a court to exercise personal jurisdiction over an out-of-state party if that party "transacts any business within the state" and if the claim arises from these business contacts. See CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986). To meet the transacting business element under N.Y. C.P.L.R. § 302(a)(1), it must be shown that a party "`purposely availed [himself] of the privilege of conducting activities within New York and thereby invoked the benefits and protections of its laws. . . .'" Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 779, 787 (2d Cir. 1999) (quoting Parke-Bernet Galleries v. Franklyn, 26 N.Y.2d 13, 308 N.Y.S.2d 337, 256 N.E.2d 506, 509 (1970)) (alterations in original). "To determine whether a party has `transacted business' in New York, courts must look at the totality of circumstances concerning the party's interactions with, and activities within, the state." Id.
There are sufficient business contacts to support personal jurisdiction over the Investors under New York's long-arm statute. The Investors entered into a brokerage account agreement with Broker and executed numerous stock trades through Broker's New York offices on various New York exchanges. See, e.g., Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 154 (2d Cir. 1999) (holding that personal jurisdiction was proper under N.Y. C.P.L.R. § 302(a)(1) based on defendants' active account with plaintiff security broker from which a series of transactions were made that formed the basis of the lawsuit). Furthermore, the Investors' contacts with New York provided fair warning of the possibility of being subject to the jurisdiction of New York. See Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 522 N.E.2d 40, 43 (1988).
To meet the "arising out of requirement of N.Y. C.P.L.R. § 302(a), there must be "a substantial nexus" between the transaction of business and the claim. Agency Rent A Car, 98 F.3d at 31; McGowan v. Smith, 52 N.Y.2d 268, 437 N.Y.S.2d 643, 419 N.E.2d 321, 323 (1981). The action in the S.D.N.Y. arose out of the arbitration award, which resolved the Investors' claims against Broker for fraudulently and negligently handling the Investors' investment accounts. These accounts were located and managed in New York. Thus, there is a sufficient nexus between the transaction of the business and the claim to comply with the requirements of N.Y. C.P.L.R. § 302(a).
Finally, the constitutional requirements of personal jurisdiction are satisfied because application of N.Y. C.P.L.R. § 302(a) meets due process requirements. See United States v. Montreal Trust Co., 358 F.2d 239, 242 (2d Cir. 1966).
The Investors also argue that the district court erred in denying their motion to transfer venue to the S.D. Fla. We review a denial of a motion to transfer venue for abuse of discretion. A Olinick Sons v. Dempster Bros., Inc., 365 F.2d 439, 444 (2d Cir. 1966).
Even without the forum-selection clauses in the Cash Account Agreements, venue in the S.D.N.Y. would be appropriate. In Cortex Byrd Chips, Inc. v. Bill Harbert Const. Co., the Supreme Court held that the FAA's venue provision must be read permissively to allow a motion to confirm, vacate, or modify an arbitration award either where the award was made or in any district proper under the general venue statute, 28 U.S.C. § 1391. 529 U.S. 193, 195, 204, 120 S.Ct. 1331, 146 L.Ed.2d 171 (2000). As this matter was before the district court based on diversity jurisdiction under 28 U.S.C. § 1332, the applicable venue statute provides that:
For present purposes, Section 1391(a)(2) is dispositive. "[A] substantial part of the events or omissions giving rise to the claim occurred" in the S.D.N.Y. Under Cortex, with regard to enforcement of arbitration awards, the "events giving rise to the claim" are those events giving rise to the claim resolved in the arbitration, not just the arbitration proceeding itself. Cortez, 529 U.S. at 198, 120 S.Ct. 1331. The fraud and manipulation alleged by the Investors involved conduct by Broker relating to securities traded on the New York exchanges or underwritten by Broker itself ("house stocks"), and the alleged breaches of fiduciary duties and negligent supervision arose out of Broker's conduct in New York. Thus, venue in the S.D.N.Y. was appropriate.
Although venue would also have been proper in Florida, the district court in the S.D.N.Y. did not abuse its discretion by refusing to transfer the case. See Bates v. C S Adjusters, Inc., 980 F.2d 865, 867 (2d Cir. 1992) (noting that the venue statute does not require the district court to determine the best venue, only a suitable one). Broker filed its New York Petition before the Investors filed their Florida Petition. As such, the first-filed rule weighs in favor of the S.D.N.Y. action."[W]here there are two competing lawsuits, the first suit should have priority, absent the showing of balance of convenience or special circumstances giving priority to the second." First City Nat'l Bank Trust v. Simmons, 878 F.2d 76, 79 (2d Cir. 1989) (internal quotations, citation, and alterations omitted).
The Investors claim that Broker commenced this action through an improper anticipatory filing during settlement talks and that this constitutes special circumstances sufficient to preclude application of the first-filed rule. See Ontel Prods., Inc. v. Project Strategies Corp., 899 F.Supp. 1144, 1150 (S.D.N.Y. 1995). However, even assuming that the claimed circumstances are special, the only evidence of settlement discussions — an April 7, 2003, fax rejecting a settlement offer but stating that "there may be some basis to conclude a settlement" — does not show active settlement discussions with the Investors. Moreover, Broker filed its New York Petition in the face of a quickly approaching deadline, after which it would not have had the right to contest the arbitration award at all. See 9 U.S.C. § 12 ("Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered."). With the deadline looming, the Investors could not have been surprised by Broker's filing.
Finally, the Investors have not satisfied their burden under 28 U.S.C. § 1404(a) by showing that transfer was warranted "for the convenience of the parties and witnesses, in the interest of justice." District courts have broad discretion in making determinations of convenience under Section 1404(a) and notions of convenience and fairness are considered on a case-by-case basis. In re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992). Some of the factors a district court is to consider are, inter alia: "(1) the plaintiffs choice of forum, (2) the convenience of witnesses, (3) the location of relevant documents and relative ease of access to sources of proof, (4) the convenience of parties, (5) the locus of operative facts, (6) the availability of process to compel the attendance of unwilling witnesses, [and] (7) the relative means of the parties." Albert Fadem Trust v. Duke Energy Corp., 214 F.Supp.2d 341, 343 (S.D.N.Y. 2002). Applying these factors, the district court was well within its discretion in denying the Investors' requested venue transfer. First, Broker chose New York as its forum, a decision that is given great weight. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). Second, New York is a convenient forum for all the parties: the Investors have homes in New Jersey and have at times claimed to be New Jersey residents; Broker is located in New York. Finally, documents and other evidence regarding the arbitral award are freely available in New York. Thus, the Investors cannot convincingly argue that New York is an inconvenient forum.
The Investors advance several arguments as to why the district court's entry of default judgment should be set aside. In considering these, we review the district court's decision for abuse of discretion. Pecarsky v. Galaxiworld.com Ltd., 249 F.3d 167, 171 (2d Cir. 2001) (quotation marks and citation omitted).
Rule 55(a) provides that "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter the party's default." Rule 55 "tracks the ancient common law axiom that a default is an admission of all well-pleaded allegations against the defaulting party." Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004). Like all general provisions of the Federal Rules, Rule 55 is meant to apply to "civil actions," Fed.R.Civ.P. 2, where only the first step has been taken — i.e., the filing of a complaint — and the court thus has only allegations and no evidence before it.
We agree with the Investors that Rule 55 does not operate well in the context of a motion to confirm or vacate an arbitration award. See, e.g., N.Y. Typo-graphical Union No. 6 v. AA Job Printing, 622 F.Supp. 566, 567 (S.D.N.Y. 1985) (citing Traguth v. Zuck, 710 F.2d 90, 94 (2d Cir. 1983)). As the very name implies, they are motions in an ongoing proceeding rather than a complaint initiating a plenary action. 9 U.S.C. § 6 ("Any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise herein expressly provided."); Productos Mercantiles E Industriales, S.A. v. Faberge USA Inc., 23 F.3d 41, 46 (2d Cir. 1994) (noting that a district court "properly treated [a petition to the court for modification of an arbitration award] as a motion in accordance with the express provisions of the FAA").
However, treating the Petition as a motion does not lead to the conclusion that the Investors could simply await some initiative by the Broker or the court. Removed proceedings arrive in federal court in the procedural posture they had in state court. Sun Forest Corp. v. Shvili, 152 F.Supp.2d 367, 387 (S.D.N.Y. 2001) ("It is well established that the district court `takes the [removed] action in the posture in which it existed when it is removed from a state's court jurisdiction and must give effect to all actions and procedures accomplished in a state court prior to removal.'") (quoting Miller v. Steloff, 686 F.Supp. 91, 93 (S.D.N.Y. 1988)). The New York Petition contained a return date and, as allowed by Section 403(b) of the New York C.P.L.R., a demand for service of the response seven days before the return date. N.Y.C.P.L.R. § 403(b) ("An answer shall be served at least seven days before [the time of hearing specified in the notice of petition] if a notice of petition served at least twelve days before such time so demands. . . ."). The Investors removed the Petition after the due date for the response but before the return date. When the New York Petition arrived in federal court, its posture was unchanged: a motion with a return date. Sun Forest Corp., 152 F.Supp.2d at 387. That, indeed, is the logical outcome of the Investors' insistence that the Petition is a motion and not a complaint implicating Rule 55. The Investors, therefore, should have responded in some fashion, e.g., by seeking an extension, arguing the merits, raising jurisdictional or venue objections, etc. We trust that parties faced with this or similar situations in the future will take counsel from our remarks.
There was no need for the district court to hold a status conference, set a briefing schedule, or hold a hearing. Such acts are appropriate to ongoing proceedings leading to a trial. As the Investors themselves insist, the New York Petition should have been treated as a motion rather than a complaint. The Local Rules of the S.D.N.Y. do not require hearings for motions and allow them only when "directed by the court by order or by individual rule or upon application." S.D.N.Y. R. 6.1(c).
Finally, while S.D.N.Y. Local Rule 7.1 does require "all motions . . . [to] be supported by a memorandum of law," Broker's failure to supply such a memorandum does not excuse the Investors from timely responding to the New York Petition. A "district court has broad discretion to determine whether to overlook a party's failure to comply with local rules," Holtz v. Rockefeller Co., Inc., 258 F.3d 62, 73 (2d Cir. 2001), and "[n]othing in . . . the Civil Rules of the Southern District requires a court to" punish a party for non-compliance. Maggette v. Dalsheim, 709 F.2d 800, 802 (2d Cir. 1983). While the Investors' response to the Broker's motion might have sought some relief or sanction for the failure to submit a memorandum, the failure did not obviate the need to respond.
But, given the prior dearth of caselaw on the treatment of removed petitions to confirm or vacate arbitration awards, the Investors are entitled to some slack. Nevertheless, whatever confusion existed as to the need to address the merits was dispelled by the clerk's entry of default, a concentration focusing event that calls for a party to lay all its cards on the table. Indeed, a meritorious claim or defense is always relevant to a motion seeking avoidance or vacatur of a default. See Pecarsky, 249 F.3d at 171 ("When deciding whether to relieve a party from default or default judgment, we consider the willfulness of the default, the existence of a meritorious defense, and the level of prejudice that the non-defaulting party may suffer should relief be granted."). Therefore, we believe that all arguments going to the merits of confirming or vacating the award should have been raised in the Investors' motion to vacate the clerk's entry of default. However, that motion was accompanied by cross motions to dismiss or transfer and focused almost exclusively on why the New York Petition should not be decided by the S.D.N.Y. The Investors' memorandum of law did note the relevance of the merits to the default issues and argued, although briefly, that, because Broker had never informed the arbitrators of the impropriety of prejudgment interest on punitive damages, the award of such interest did not taint the award. Although the Investors' papers noted the existence of their Florida Petition to vacate the award, they failed at any time to inform the S.D.N.Y. of their view that Florida law required an increase in the damages. While this issue was briefed in their post judgment Rule 59(e) motion, we believe that, given the ample notice of the peril of treating the S.D.N.Y. proceeding as one that would soon go away, this was an untimely raising of the issue. A district court facing a motion to vacate the clerk's default in these circumstances is more than justified in believing that it has heard whatever the movant has to say on the merits.
We conclude that default judgments in confirmation/vacatur proceedings are generally inappropriate. A motion to confirm or vacate an award is generally accompanied by a record, such as an agreement to arbitrate and the arbitration award decision itself, that may resolve many of the merits or at least command judicial deference. When a court has before it such a record, rather than only the allegations of one party found in complaints, the judgment the court enters should be based on the record. It does not follow, of course, that the non movant can simply ignore such a motion. If the non-movant does not respond, its failure to contest issues not resolved by the record will weigh against it.
Vt. Teddy Bear Co., 373 F.3d at 244 (internal quotation marks and citations omitted); see also United States v. One Piece of Property, 5800 S.W. 74th Ave., Miami Fla., 363 F.3d 1099, 1101 (11th Cir. 2004) [hereinafter "One Piece of Property"] ("[T]he district court cannot base the entry of summary judgment on the mere fact that the motion was unopposed but, rather, must consider the merits of the motion."). Even unopposed motions for summary judgment must "fail where the undisputed facts fail to show that the moving party is entitled to judgment as a matter of law." Vt. Teddy Bear Co., 373 F.3d at 244 (quoting Champion v. Artuz, 76 F.3d 483, 486 (2d Cir. 1996)) (internal quotation marks omitted).
Normally, confirmation of an arbitration award is "a summary proceeding that merely makes what is already a final arbitration award a judgment of the court," Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir. 1984), and the court "must grant" the award "unless the award is vacated, modified, or corrected." 9 U.S.C. § 9. The arbitrator's rationale for an award need not be explained, and the award should be confirmed "`if a ground for the arbitrator's decision can be inferred from the facts of the case,'" Barbier v. Shearson Lehman Hutton, Inc., 948 F.2d 117, 121 (2d Cir. 1991) (quoting Sobel v. Hertz, Warner Co., 469 F.2d 1211, 1216 (2d Cir. 1972)). Only "a barely colorable justification for the outcome reached" by the arbitrators is necessary to confirm the award, handy Michaels Realty Corp. v. Local 32B-32J, Service Employees Int'l Union, 954 F.2d 794, 797 (2d Cir. 1992). A party moving to vacate an arbitration award has the burden of proof, and the showing required to avoid confirmation is very high. Willemijn Houdstermaat schappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997) [hereinafter "Willemijn "].
One of the grounds for which an award may be vacated — and that argued by Broker in its New York Petition with regard to the prejudgment interest award on punitive damages — is manifest disregard of the law. Wilko v. Swan, 346 U.S. 427, 436-37, 74 S.Ct. 182, 98 L.Ed. 168 (1953), rev'd on other grounds, Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 485, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989). A party seeking to vacate an arbitration award on the basis of manifest disregard of the law must satisfy a two-pronged test, proving that: "(1) the arbitrator knew of a governing legal principle yet refused to apply it or ignored it altogether, and (2) the law ignored by the arbitrator was well defined, explicit, and clearly applicable to the case." Hoeft v. MVL Group, Inc., 343 F.3d 57, 69 (2d Cir. 2003) (internal quotation marks and alterations omitted).
Manifest disregard of the law "clearly means more than error or misunderstanding with respect to the law." Merrill Lynch, Pierce, Fenner Smith, Inc. v. Bobker, 808 F.2d 930, 933 (2d Cir. 1986). The party challenging an award for manifest disregard of the law must demonstrate that the arbitrator actually knew about the relevant rule of law. A showing that the average person qualified to be an arbitrator would know the particular rule is insufficient to that end. DiRussa v. Dean Witter Reynolds Inc., 121 F.3d 818, 821 (2d Cir. 1997) ("[T]he term `disregard' implies that the arbitrator appreciates the existence of a clearly governing legal principle but decides to ignore or pay no attention to it."). DiRussa rejected the argument that manifest disregard could be satisfied by showing that "the controlling legal principle and subsequent error is so obvious to the average qualified arbitrator that any different conclusion is absurd," even though there was "no persuasive evidence that the arbitrators actually knew of — and intentionally disregarded" — the law. Id. at 822-23; see also Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir. 2004) (noting that manifest disregard was shown where arbitrators cited Second Circuit precedent but explicitly declined to apply it); Duferco Int'l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 390 (2d Cir. 2003) (including in the manifest disregard test "a subjective element, that is, the knowledge actually possessed by the arbitrators. . . . In determining an arbitrator's awareness of the law, we impute only knowledge of governing law identified by the parties to the arbitration.").
It is true that we have stated that "a court may infer that the arbitrators manifestly disregarded the law if it finds that the error made by the arbitrators is so obvious that it would be instantly perceived by the average person qualified to serve as an arbitrator." Willemijn, 103 F.3d at 13. However, the meaning of that phrase in the context of Willemijn was that an arbitrator's error in interpreting the legal doctrine relied upon by the parties can constitute manifest disregard if the average person qualified to serve as an arbitrator would not have made such an interpretation. Id. at 14 ("We only need decide whether there is any colorable justification for their decision"; if so, there is no manifest disregard.).
The phrase was also quoted in Duferco, 333 F.3d at 390; however, in that case the alleged error was an internally inconsistent application of law in the arbitration award, an error that, according to the appellant, would havebeen obvious to any person qualified to serve as an arbitrator. The issue was not whether the arbitrators were aware of the governing law.
Because the Broker's motion to confirm was unopposed, confirmation of the entire arbitral award is appropriate. The Investors claim a violation of their due process rights in that the S.D.N.Y.'s confirmation of the arbitration award "block[ed]" consideration of their Florida Petition to vacate the damage portion of the award. When the S.D.N.Y. rendered its decision on the New York Petition, the Florida Petition was pending in the S.D. Fla. and is now pending before the S.D.N.Y. This argument is a concession — albeit a necessary one — that the claims raised in the Florida Petition are barred by res judicata in light of the S.D.N.Y. decision, a conclusion fortified by our decision affirming the confirmation.
"Under the doctrine of res judicata, or claim preclusion, `[a] final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.'" St. Pierre v. Dyer, 208 F.3d 394, 399 (2d Cir. 2000) (quoting Federated Dept. Stores, Inc. v. Moitie, 452 U.S. 394, 398, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981)); see also Legnani v. Alitalia Linee Aeree Italians, S.p.A., 400 F.3d 139, 141 (2d Cir. 2005) ("`[T]he first judgment will preclude a second suit only when it involves the same `transaction' or connected series of transactions as the earlier suit. . . .'" (quoting Maharaj v. Bankamerica Corp., 128 F.3d 94, 97 (2d Cir. 1997))).
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