Opinion ID: 1643072
Heading Depth: 1
Heading Rank: 4

Heading: Application of Standards to the News's Challenges to the Arbitration Awards

Text: Because of our disposition of the fraud claim in Part IV.E. of this opinion, where we uphold the award of compensatory and punitive damages made as a result of a finding for the plaintiffs on that claim, as adjusted to eliminate duplication of damages, we pretermit consideration of the challenges to the award of the same damages under the breach-of-contract, conversion, and breach-of-fiduciary-duty claims. Even if we upheld every challenge the News makes to those claims and disallowed any recovery under them, the same recoveries separately sustainable under the fraud claim would, in the final analysis, leave the awards fully intact.
The News asserts that the arbitrators exceeded their power in consolidating the arbitration cases for hearing. The panel's prehearing order consolidating the cases stated, in pertinent part: The Panel has determined that the parties shall consolidate procedurally all matters possible without compromising substantive rights of either party. Either party will be heard as the cases proceed on the issue of whether substantive rights of the parties are being abrogated on a case by case, issue by issue basis. The News contends that the hearing degenerated into a de facto consolidation of all of the cases. The agreement does not expressly permit or prohibit consolidation of cases submitted to arbitration. The News relies principally on Protective Life Insurance Corp. v. Lincoln National Life Insurance Corp., 873 F.2d 281 (11th Cir.1989), for its argument that absent a provision in the arbitration agreement allowing for consolidation the arbitrators had no authority to consolidate the cases. In Protective Life, a panel of the United States Court of Appeals for the Eleventh Circuit determined that, under § 4 of the FAA the power of federal courts is `narrowly circumscribed' to determining if an arbitration agreement exists and, if so, to directing the parties to proceed to arbitration in accordance with the terms of the arbitration agreement, and that therefore, if the arbitration agreement does not include a provision for consolidation, federal courts may not read [such a provision] in. 873 F.2d at 282. This holding does not address the power of an arbitrator, as distinct from a federal district judge, to consolidate claims for hearing. `[P]rocedural questions which grow out of the dispute and bear on its final disposition' are presumably not for the judge, but for an arbitrator, to decide. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002). To like effect see Dean Witter Reynolds, Inc. v. McDonald, 758 So.2d 539, 542 (Ala.1999); and Southern United Fire Insurance Co. v. Howard, 775 So.2d 156, 163-64 (Ala.2000). The UAA, as revised in 2000, provides in § 10 that consolidation of separate arbitration proceedings may be ordered where four criteria are satisfied, all of which are satisfied in the present arbitration proceeding. At the hearing, the panel employed the rule of witness exclusion, so that no plaintiff was allowed to sit in on another plaintiff's testimony, until the former plaintiff had testified. In Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 449, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003), the United States Supreme Court made these comments in concluding that an arbitrator, not a court, should decide the question of contract interpretation involved in the issue whether class arbitration could take place: [T]he relevant question here is what kind of arbitration proceeding the parties agreed to.... [That question] concerns contract interpretation and arbitration procedures. Arbitrators are well situated to answer that question. (First emphasis original; second emphasis added.) Accordingly, based on this state of the law, we cannot say that the arbitrators exceeded their powers in consolidating the cases for purposes of holding one hearing; in doing so they were exercising their discretion in structuring arbitration procedures.
As noted, paragraph 10 provides: In any event, News Dealer shall not claim any additional compensation for good will, but acknowledges that his entire compensation under this agreement is the difference between the wholesale and resale price of the newspapers purchased and sold by him. The News argues that this provision precluded the plaintiffs from claiming damages for goodwill, mental anguish, or, for that matter, punitive damages. Certainly paragraph 10 is reasonably susceptible of the interpretation that a dealer's sole redress for any breach of the agreement or for any tortious conduct by the News, no matter how wrongful, would be the compensation otherwise due under the arrangement between the parties. The agreement, by its literal terms, purports to grant the dealer only the right to purchase newspapers from the News at a prescribed wholesale rate, to sell them to subscribers and customers in their assigned area for the suggested resale price, and to pay the News for those newspapers by the 10th day of each month. The agreement specifies that it is up to the dealer to collect money in payment of such copies of said newspapers. The actual practice relating to collections as found by the panel, however, was as follows: Dealers receive a monthly bill from The News. This bill charges the dealer for papers sold to him during the preceding month. It also debits the dealers for a bond, the cost of supplies or equipment and other specified charges. Generally, however, this bill reflects a credit balance for the dealer since the dealer is given credit for all monies paid to The News by customers in the dealer's given area. Accordingly, construing the subject provision of paragraph 10 in the context of the parties' practice of a monthly settling up, the panel could have understood the provision to limit a dealer's remedy against the News in contract or tort to that monthly credit balance for the dealer that might exist at any given time. That sum, of course, would already be due the dealer, independent of any civil wrong by the News. The panel found the provisions in question to be invalid and void as contrary to public policy, citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., supra; Ex parte Celtic Life Insurance Co., 834 So.2d 766 (Ala.2002); Ex parte Thicklin, 824 So.2d 723 (Ala.2002); Cavalier Manufacturing, Inc. v. Jackson, 823 So.2d 1237 (Ala.2001), cert. denied, 535 U.S. 986, 122 S.Ct. 1536, 152 L.Ed.2d 464 (2002), overruled on other grounds, Thicklin, supra; and American General Finance, Inc. v. Branch, 793 So.2d 738 (Ala.2000). The News argues that the arbitrators exceeded their powers, citing Vulcan Chemical Technologies, Inc. v. Barker, 167 F.Supp.2d 867 (W.D.Va.2001), vacated on other grounds, 297 F.3d 332 (4th Cir.2002), and Amanda Bent Bolt Co. v. International Union, United Automobile, Aerospace, Agricultural Implement Workers of America Local 1549, 451 F.2d 1277 (6th Cir.1971). The News acknowledges that the district court's decision in Vulcan Chemical was vacated in its entirety by the Fourth Circuit Court of Appeals. Therefore that decision cannot stand as authority for anything. In Amanda Bent Bolt a labor arbitrator awarded relief explicitly prohibited under an agreement that also specified that the arbitrator would have `no power to add to, subtract from or modify any of the terms of this agreement.' 451 F.2d at 1280. Thus, the arbitrator's action, by the express terms of the underlying agreement, exceeded his power. The News also asserts that the arbitrators disregarded Leonard v. Terminix International Co., 854 So.2d 529 (Ala.2002). The News quotes from that case, however, only the statement that limitations on damages that may be recovered are not, per se, against public policy, 854 So.2d at 534, and summarizes its holding as being that an arbitration clause is not unconscionable solely because it purports to preclude a particular remedy or limit damages. The arbitration panel did not express its holding in terms of a per se violation of public policy; many factors can enter into a determination that contractual terms are contrary to public policy. As noted, the panel cited American General Finance, supra, in support of its finding. That case explained the multi-factorial analysis appropriate in assessing an arbitration award for unconscionability. Thus, constrained by the limited reach of our review under the exceeded powers ground, we cannot say that the arbitration panel exceeded its authority, in the face of Leonard, by holding the provision invalid and void as unconscionable. Likewise, the News's alternative approach of arguing that the arbitration panel manifestly disregarded the law of Leonard must fail. Leonard, like American General Finance, lists various considerations attending a determination of unconscionability. Further, because Leonard was not released until after the panel had issued its decision, it was not available to the panel to be disregarded.
The News's argument concerning the arbitration panel's alleged manifest disregard of the law relating to the statute of limitations for fraud consists in its entirety of the following: The Panel also manifestly disregarded the statute of limitations applicable to fraud claims in the state of Alabama. In 1995, over seven years ago, The News sent letters to all dealers and distributors (including [the plaintiffs]) concerning the zip code change. (Exhibit A to this brief.) If, as the [plaintiffs] now contend, they believed The News had no right to change any term of the agreement at its expiration (including the area of primary responsibility), that letter should have put them on notice that The News held a different view. The statute of limitations for a fraud claim in Alabama is two years. Ala.Code § 6-2-3 (1975). The first of these cases was filed in 1999. The limitations period for [the plaintiffs'] fraud claims expired well before they commenced an action. We note the absence of citation to caselaw. The letter attached as an exhibit to the News's brief explained to dealers that, when their existing agreements expired, a reorganization of their distribution area along zip-code lines might be necessary to meet the requirements of advertisers. Section 6-2-3 is a tolling statute, under which a claim must not be considered as having accrued until the discovery by the aggrieved party of the fact constituting the fraud, after which he must have two years within which to prosecute his action. The argument presented on this point, devoid of any discussion of the extensive body of caselaw that has developed concerning just what constitutes a discovery of fraud, does not satisfy the stringent standard for establishing a manifest disregard of the law.
The only laws relating to fraud the News argues that the arbitration panel disregarded are (1) the law of promissory fraud; (2) application of the two-year statute of limitations prescribed for fraud claims by § 6-2-3, Ala.Code 1975; and, (3) in relation to the fraud claim asserted by Teresa McLendon, the elements of misrepresentation and detrimental reliance. Additionally, the News contends: The Panel also failed to even consider how the actions of the News in these cases were in any way inconsistent with the representations allegedly made. The News offered to renew the dealer agreements of the four appellees, Horn, Glass, Jay, and Teresa McLendon, who were performing satisfactorily. Nothing in the record suggests that the News ever said anything that could be rationally construed to promise that not one word of the agreement originally signed would ever be changed as part of a renewal offer. We cannot discern from this latter argument exactly what law of fraud the News argues the panel manifestly disregarded. No citation to statutory or case authority is provided. This failure detracts from a focused appellate review. See Crutcher v. Wendy's of North Alabama, Inc., 857 So.2d 82 (Ala.2003). Horn, Glass, James McLendon, and Teresa McLendon declined to renew their agreements by executing revised agreements, because the News insisted in the revised agreements that the first sentence of paragraph 8 be changed to eliminate any possibility of an automatic renewal. The News does not take the position that it had at one time intended to honor the right of a dealer to an automatic renewal in the absence of the failure of the dealer to perform satisfactorily, but later changed its mind; rather, it insists that at no time did it intend for a dealer to have a right to an automatic renewal. A claim of promissory fraud is based upon a promise to act or not to act in the future. Padgett v. Hughes, 535 So.2d 140, 142 (Ala.1988). We agree with the News that the plaintiffs' fraud claims arising from the News's alleged misrepresentation that their dealer agreements would be automatically renewed from year to year if they fully performed their dealer obligations constitute allegations of promissory fraud. In its decision, the arbitration panel addressed the fraud claims in this manner: Under Alabama law, a cause of action for fraud based upon a misrepresentation arises where a party reasonably relies upon a misrepresentation of a material fact and suffers damage because of his or her reliance. Ex parte ERA Marie McConnell Realty, Inc., 774 So.2d 588, 591 (Ala.2000). The News consistently represented to dealers, including plaintiffs, that the Dealer Agreements would be maintained so long as the dealer performed satisfactorily. The News'[s] practice concerning renewals was consistent with that representation. That representation was false. The News knew that this representation was false when it was made at the commencement of each plaintiffs' dealership relationship and when it was consistently reaffirmed by The News during the so-called annual renewal meetings with The News'[s] circulation department managers. Plaintiffs relied on those representations in going forward with the purchase of their branches and in entering into the Dealer Agreements. Plaintiffs also relied on those representations by devoting their lives and fortunes to build their businesses, acting in reliance on the News'[s] repeated assurances that the contractual relationship was a lasting one and was not subject to unilateral termination without cause. The plaintiffs gave The News the highest form of loyalty  blood, sweat and tears in the service of their businesses. Their reward in exchange for this loyalty was a discovery during Toby Pearson and Jim Keeble's reign that they had been duped. These false representations were intended by The News to allow it to `have its cake and eat it too.' The Panel concludes that The News committed actionable fraud against the plaintiffs. As such, having established that The News is guilty of fraud, then the plaintiffs are entitled to recover for such actual damages that they suffered. These damages include plaintiffs' loss of investments and loss of income streams, as well as plaintiffs' mental anguish. In addition to actual damages, punitive damages are available in a fraud action where the plaintiff proves by clear and convincing evidence that the wrongdoer's conduct is malicious, oppressive, or gross, and that the misrepresentation that is the basis of the fraud is made with the knowledge of falsity and with the purpose of injuring the party. Ala.Code 1975 § 6-11-20. Plaintiffs would not have gone forward with the purchases of their branches had the truth been disclosed. Likewise, they would have attempted to sell their dealerships in the open marketplace had they known that the market value for these dealerships was about to be abruptly destroyed by the changes in the automatic renewable term provision as explained to them by News employees clearly enhances the values of their franchises [sic]. It was only after investing large sums of money into businesses plaintiffs considered to be lifelong that The News chose to disclaim any significance of the automatic renewable provision. The News insists that it has always been its practice to emphasize the one-year aspect of the Dealer Agreement to prospective dealers. The Panel heard no credible evidence supporting this contention. Thus, the Panel concludes that The News'[s] misrepresentations regarding the Dealer Agreement were made knowingly, and that punitive damages are recoverable by plaintiffs for such conscious misrepresentations. In order to prove a claim for promissory fraud, the plaintiff must prove: `(1) [T]hat the defendant made a false representation of a material fact; (2) that the false representation was relied upon by the plaintiff; (3) that the plaintiff was damaged as a proximate result of the reliance; (4) that the representation was made with a present intent to deceive; and (5) that when the representation was made the defendant intended not to perform in accordance with it.'  Howard v. Wolff Broadcasting Corp., 611 So.2d 307, 311 (Ala.1992) (emphasis omitted), cert. denied, 507 U.S. 1031, 113 S.Ct. 1849, 123 L.Ed.2d 473 (1993), cert. denied sub nom. I.M.T.C., Inc. v. N.L.R.B., 507 U.S. 1032, 113 S.Ct. 1851, 123 L.Ed.2d 474 (1993). Arthur Rutenberg Homes, Inc. v. Norris, 804 So.2d 180, 184 (Ala.2001). All in all, it is clear that the panel found that at the time of the misrepresentations the News had the intention not to be bound by its promise of automatic renewal in the absence of cause not to renew and that it intended to deceive the plaintiffs in that regard. We must accord great weight to the arbitration panel's factual findings. Some courts have concluded that an arbitrator's findings of fact are virtually unassailable. Under the manifest disregard standard ... the governing law must clearly apply to the facts of the case, as those facts have been determined by the arbitrator. See Wonderland Greyhound Park, Inc. v. Autotote Sys., Inc., 274 F.3d 34, 36-37 (1st Cir.2001) (`An arbitrator's factual findings are generally not open to judicial challenge, and we accept the facts as the arbitrator found them.'). Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200, 213 (2d Cir.2002). We accept the facts as the arbitrator found them. Boston Med. Ctr. v. Service Employees Int'l Union, Local 285, 260 F.3d 16, 18 (1st Cir.2001). In the consolidated hearing of the six arbitration cases, the arbitration panel heard ore tenus testimony from all witnesses except Horn, who testified by deposition. At the very least, we would accord the panel's factual findings derived from the testimony of the live witnesses the deferential review such findings are owed under the ore tenus standard. SouthTrust Bank v. Copeland One, L.L.C., 886 So.2d 38 (Ala.2003); Aetna Life Ins. Co. v. Character, 873 So.2d 1075 (Ala.2003); and Ex parte Lamar Adver. Co., 849 So.2d 928 (Ala.2002). Of course, we have no occasion to evaluate the evidence in any way unless that issue is properly before us as a legitimate component of a legally cognizable ground of arbitral review. The only attack the News makes on the panel's findings relating to the elements of promissory fraud is by way of the following paragraph in its initial brief to this Court: The Panel's findings with regard to present intent, if it can be called a finding, make no sense whatsoever. The Panel found that The News had represented to the appellees that the dealer agreements would be maintained so long as the dealer performs satisfactorily. The Panel then found that The News'[s] practice was consistent with that representation. The Panel does not explain, nor could it, how The News having acted in a manner consistent with the representation it allegedly made could somehow show an intent to deceive or not to perform. If anything, The News having acted in such a manner would show an absence of an intent to deceive. The appellees themselves testified that they did not believe any employee of The News was out to deceive them when they first signed a dealer agreement. We again note the absence of any citation to authority. The News does not acknowledge the fact that when Keeble was given the responsibility for continuing the dealers' contracts he took the position on behalf of the News that the plaintiffs had never had any right to an automatic renewal and had never had any property interest in their branches other than in the unexpired portion of the one-year term. With respect to the argument that the plaintiffs themselves testified that they did not believe any employee of the News was out to deceive them when they first signed a dealer agreement, the evidence to which the parties' briefs draw our attention involves different statements by different employees of the News to different plaintiffs at different times and places, and the various plaintiffs testified that they either had no reason to believe that the particular employee did not believe what he or she was saying at the time, or they simply did not know what that employee's belief was. At any rate, the following legal principles are pertinent to a situation where a plaintiff alleging promissory fraud against a corporation has received an innocent misrepresentation by one of the corporation's employees: This court has, as most others, repeatedly held that a corporation cannot escape liability in fraud cases by showing that the agent through whom it acted was without knowledge of the true facts. The issue in those cases is whether the corporation had knowledge of the true facts. Shelter Modular Corp. v. Cardinal Enters., Inc., 347 So.2d 1334, 1338 (Ala.1977). [W]e emphasize that the only two defendants against whom the plaintiffs have asserted claims were Leisure American and Alpine Bay [both corporations]; no individuals were named as defendants. . . . [T]he beginning point of our analysis focuses on the conduct, particularly the intent, of Alpine Bay, a corporate entity, as made known through the conduct of its agent and not the intent of individual agents themselves who are not defendants. . . . . It is axiomatic that a corporate employee's individual defense of lack of intent does not of itself end the inquiry with respect to the corporation's requisite intent to defraud. The corporation is acting as a legal entity and, if an individual corporate agent's conduct, though not fraudulent of itself, combines with the conduct of other corporate agents so as to amount to corporate fraud, the corporation may not escape liability simply by pointing to one innocent link in the chain. . . . .... Alpine Bay mistakenly sets forth the promissory fraud issue as whether there is sufficient evidence to support the finding that [its two agents], acting for Alpine Bay, intended to deceive [the plaintiffs] and intended not to perform the repurchase agreement at the time it was made. The correct question is whether Alpine Bay had the requisite intent to defraud the plaintiffs. Leisure American Resorts, Inc. v. Knutilla, 547 So.2d 424, 425-26 (Ala.1989). This Court accepted the fact in Leisure American that the corporation's left hand did not know what its right hand was doing, 547 So.2d at 427, but concluded that that circumstance did not insulate the corporation from liability. In the final analysis, the News makes no real argument concerning the sufficiency of the fraud evidence presented at the arbitration hearing. Although its above-quoted argument portrays the two specified findings by the panel as logically incompatible, that criticism does not in any way serve to present a claim that the evidence presented at the hearing was insufficient to prove the elements of promissory fraud. Without suggesting that such an evidentiary insufficiency would in fact constitute a manifest disregard of the law with respect to the panel's holdings on the fraud claims, we simply point out that the question of the sufficiency of the evidence to support those holdings (except as to Teresa McLendon) is not a matter we are called upon to consider. It is important to note another issue not raised in these appeals. The News does not refer to, or in any way rely on, the legal proposition that fraud or misrepresentation cannot be predicated upon a verbal statement made before execution of a written contract when a provision in that contract contradicts the verbal statement. Tyler v. Equitable Life Assurance Soc. of the United States, 512 So.2d 55, 57 (Ala.1987). It has been generally held that, when a person signs a writing containing language that is clearly contrary to pre-execution parol representation, reliance is unjustified. Ramsay Health Care, Inc. v. Follmer, 560 So.2d 746, 749 (Ala.1990). (The justifiable reliance standard for evaluating reliance in fraud cases was supplanted by the reasonable reliance standard in Foremost Insurance Co. v. Parham, 693 So.2d 409 (Ala.1997).) If, as a matter of contract law, as the News contends, paragraph 8 unambiguously granted either party the right to terminate the agreement as of any annual renewal date by the simple expedient of timely notice, and because it is undisputed that each of the plaintiffs read paragraph 8 before they signed their respective agreements, some even initialing that paragraph, significant questions of reasonable reliance would have been at issue. As previously noted, our disposition of the fraud claim makes it unnecessary to reach the contract claim because the same compensatory damages are recoverable under either claim. We make this observation concerning the absence of any issue about reasonable reliance (except, incidentally, as to Teresa McLendon), to head off any possible misapprehension by the bench and bar that we are somehow implicitly recognizing an exception to reasonable-reliance requirement in fraud cases. Rather, because we are addressing on the merits only the specific contentions the News makes relating to alleged instances of manifest disregard of the law as to the fraud claim, we have no occasion to consider generally the doctrine of reasonable reliance.
The remaining argument presented by the News concerning the law of fraud is, in its entirety, the following: The Panel also manifestly disregarded the law of Alabama in its handling of Teresa McLendon's fraud claim. Teresa McLendon did not show that The News made any promise or assurance to her when she first signed her first dealer agreement in 1999. She did not show that she relied on any such promise. Even if any promises or assurances had been made to her, she did not pay any money to anyone in exchange for entering into a dealer agreement. The arbitration panel expressly found that Teresa was told that her contract would be automatically renewed as long as she did her job. In the statement-of-facts portion of its initial brief to this Court, the News asserted that Teresa had no discussions with the News about the terms of a dealer agreement, citing to a page of her deposition and a page of her testimony at the hearing. In her deposition, Teresa did answer in the negative when asked if she had had any discussions with anyone from the News about paragraph 8 when she signed her agreement, but at the hearing, when counsel for the News posed the same question to her, she answered: Well, they told me that if I did my job [the agreement] would automatically renew. Earlier in her hearing testimony, she had told her own counsel that she had understood before signing her agreement that [a]s long as I did my job my contract would be automatically renewed and she said that the basis for that understanding was that [i]ts what The News told us. Obviously, the arbitration panel resolved any issue of a conflict in testimony and witness credibility in favor of Teresa McLendon. The other points made only tersely in this portion of the News's argument do not adequately articulate any manifest disregard of the law by the panel.
As set out earlier in detail, the arbitration panel awarded each plaintiff a certain amount to compensate him or her for loss of franchise value and a certain additional sum representing the present value of his or her loss of future profits for 20 [or, in the case of Horn, 10] years. Also, by way of further compensatory damages, the panel awarded each plaintiff $200,000 for mental anguish, with the exception of Horn, whom it awarded $300,000. At no point in its briefs to this Court does the News challenge the amounts awarded each plaintiff for mental damages, apart from arguing that it has no liability for damages at all. The News argues that in awarding each plaintiff damages both for the loss of franchise value and for lost future profits the panel disregarded Alabama law prohibiting the double recovery of damages. Alabama law is clear that an injured party cannot receive from a single tortfeasor duplicative damages for a single wrong. As summarized by Dean Jeanelle Mims Marsh and Professor Charles W. Gamble, both of the University of Alabama School of Law, in their text Alabama Law of Damages § 1-8 (4th ed. 1999): There is a general rule that there can be only one satisfaction of the same damage or injury. The different means of ascertaining damages in a given situation should not be applied so as to give double damages or double compensation for the same thing. The prohibition against double recovery underlies the equitable principle informing the law of subrogation pursuant to which a party should not recover twice for a single injury. American Economy Ins. Co. v. Thompson, 643 So.2d 1350, 1352 (Ala.1994). The plaintiffs do not dispute that the recovery of duplicative damages would be contrary to governing Alabama legal principles; they counter only that [t]he News errs in characterizing the awards as duplicative. Each award represents a separate and distinct injury which [the plaintiffs] suffered as a result of The News'[s] wrongful conduct. As noted earlier in this opinion, the panel certified in its decision that it had not allowed any duplicative recovery, and it declared at another point that [t]he loss of future profits is a separate and distinct element of compensatory damages from the loss of franchise value. We disagree. The plaintiffs' expert witness, James Williams, testified both by deposition and in person at the hearing that he had, at the plaintiffs' request, made two computations of damages, which he described to plaintiffs' counsel as follows: The first computation was the value of the franchise interest that was lost by the Plaintiffs in these newspaper dealership franchises. And then you asked me to also provide an assessment of damages for the lost earnings that could have been estimated from the franchises. Williams explained that, because each plaintiff was a hundred percent owner of his or her franchise and because Williams valued each as a going concern, the calculation of the value of the franchise interest for each was the same as a calculation of the fair-market value of the franchise. In computing that market value for each franchise, Williams used, in turn, two different methodsa market approach and an income approach. One method was used to corroborate the other and they should have, and did, yield similar results. Williams testified that [a] market approach is an approach where you are looking at transactions in the marketplace and arriving at a value based on comparables in a market, whereas [a]n income approach is where you are determining an earning stream and dividing it by a capitalization rate or discount rate where appropriate to determine an indication of value. In forming his opinion on the lost profits that each franchise of the plaintiffs would incur if the business was kept intact and going forward, Williams assumed a 20-year working life for each plaintiff, except for Horn, for whom he assumed a 10-year working life. He then projected profits for each year of that period, based on a variety of premises. At no time did Williams testify that an appropriate calculation of damages should, or properly could, add together the two separate damages concepts he had been asked to develop: the market value of a franchise as a going concern and the flow of profits it might generate over a 10- or 20-year period. The News cites caselaw that holds such a combination or duplication would violate the rule against the double recovery of damages. In Albrecht v. Herald Co., 452 F.2d 124 (8th Cir.1971), the plaintiff, a contract carrier for the defendant newspaper, was forced to sell his route at a loss because of illegally competitive conduct by the newspaper. Although the plaintiff's ensuing action was brought pursuant to federal antitrust law, [t]he damages referred to in the statute should be construed in the ordinary common law context as compensating plaintiff in full for the preventable and established loss sustained by reason of tortious or proscribed acts. 452 F.2d at 127-28. The jury had awarded the plaintiff damages both for the loss of the fair-market value of his route and for the loss of future profits. On appeal, the United States Court of Appeals for the Eighth Circuit pointed out that there was clear proof in the record of the value of the plaintiff's business as a going concern, and that value must necessarily take into consideration its future profit-earning potential. 452 F.2d at 129. It is our opinion that the plaintiff has received all permissible damages ..., damages occasioned prior to the sale and the full market value on the sale of his route as a going concern.... Fair market value would be that price a willing seller could secure from a willing buyer.... Plaintiff has thus been made whole on his actual damages.... He is not entitled to sell the route, receive full compensation therefor, and still receive the profits the route might have made over his reasonable work-life expectancy. The trial judge did cut these damages down to future losses occurring after the sale for a period of three years. We feel this is also is duplicitous. The prospect of future earnings is considered in arriving at the fair market value of a given business. Here undoubtedly the value of the route rested not in its tangible assets of an old truck and paper wrapper (valued $600) but in the exclusive contract for distribution of a well regarded newspaper in a given area. Whatever that fair market value might be, plaintiff has received it. Capitalizing and discounting future profits is one method of figuring present value, but this does not mean that a person is entitled to present value plus future profits. 452 F.2d at 131. See to like effect Protectors Ins. Serv., Inc. v. United States Fid. & Guar. Co., 132 F.3d 612 (10th Cir.1998); C.A. May Marine Supply Co. v. Brunswick Corp., 649 F.2d 1049 (5th Cir.1981); and Bush v. National School Studios, Inc., 131 Wis.2d 435, 443-44, 389 N.W.2d 49, 53 (Wis.Ct.App.1986). (Lastly, National contends that the trial court erroneously permitted recovery for both lost income and lost `territory rights.' We agree. A dealer is entitled to damages resulting from the grantor's violation of the [Wisconsin Fair Dealership Law]. ... Two measures of damages are recognized: (a) lost profits, and (b) lost business value. C.A. May Marine Supply Co. v. Brunswick Corp., 649 F.2d 1049, 1053 (5th Cir.1981). Lost future profits is an appropriate measure of damages when based on adequate data, Lehrman v. Gulf Oil Corp., 500 F.2d 659, 668 (5th Cir.1974), and proven to a reasonable probability. Esch v. Yazoo Manufacturing Co., 510 F.Supp. 53, 56 (E.D.Wis.1981). On the other hand, lost business value focuses on the reduction in value of the business. Both good will and future profits are computed into lost business value. Therefore, damages awards that include lost profits and lost business value are impermissibly duplicitous. See C.A. May Marine, 649 F.2d at 1053.) In a situation involving the destruction of a business, there are two basic models for proof of damages. The first requires a projection of the profits the plaintiff would have earned over some future period if it had remained in the business; these amounts are then totaled to produce the damage[s] award. The second model attempts to determine the fair market or `going concern' value of the business, i.e., what a reasonable and willing buyer would have bought it for on the date of its destruction. This figure typically is based on a projection of the average future annual earnings which the business would produce and the capitalization of that figure. Both of these methods require an analysis of prior earnings history and the projection of those earnings, if any, into the future. The two methods, however, are conceptually different; they function as mutually exclusive alternative measures. Accordingly, a plaintiff is not entitled to recover both the going concern value of a destroyed business and the profits lost after its destruction. Such a damage award would be duplicative. Allen S. Joslyn, Measures of Damages for the Destruction of a Business, 48 Brook. L.Rev. 431-32 (1982) (footnotes omitted). In connection with this feature of its argument, the News does not contest the legitimacy of Williams's opinions concerning the amount of loss of franchise value experienced by each plaintiff and the present value of the loss of future profits of each plaintiff, and it does not assert that either would be an inappropriate method for calculating the plaintiffs' direct damages for the loss of their dealerships, if the plaintiffs were entitled to any damages at all. Rather, the News simply says that the arbitration panel should not have awarded each plaintiff both amounts because [a]n award of both future lost profits and the lost value of each of the [plaintiffs'] businesses is plainly duplicative. We agree. By its own acknowledgment, the panel was clearly aware that awarding duplicative damages was impermissible. It is apparent, however, even accepting Williams's testimony at full face value, that by awarding each plaintiff damages for loss of franchise value and damages for loss of future profits for 20 years [10 years for Horn], reduced to present day value the panel has awarded duplicative recoveries. Therefore, the most that could be awarded by way of compensatory damages to each plaintiff is his or her mental-anguish damages and either the loss of his or her franchise value or the loss of his or her future profits, reduced to present value. Therefore, we find that the panel manifestly disregarded the law of damages in this respect. Arbitrator White recognized this, leading him to dissent from the panel's decision on the basis that the damage[s] calculations by the majority of the Panel result in the plaintiffs' receiving duplicate damages for the same conduct. Beyond arguing the impropriety of allowing a double recovery of both the loss of franchise value and the loss of future profits, however, the News makes no argument concerning which of those two recoveries should be disallowed. It does not argue that either method of calculating damages is invalid under the circumstances. It does not, for example, contend that if the plaintiffs are entitled to recover any damages at all for the loss of their dealerships, computation of the damages on the basis of loss of future profits would be an illegitimate approach or inferior to calculating damages based on the loss of franchise value. Indeed, in this State the rule [is] that in the event of the destruction or interruption of an established business, loss of profits may be recovered if the amount of actual loss is rendered reasonably certain by competent proof. Hunter v. Parkman, 265 Ala. 168, 176, 90 So.2d 274, 283 (1956). [L]ost profits are recoverable if they are proved with reasonable certainty. Johns v. A.T. Stephens Enters., Inc., 815 So.2d 511, 517 (Ala.2001). Even anticipated profits of an unestablished business may be recovered if such damages are proved with `reasonable certainty.' Super Valu Stores, Inc. v. Peterson, 506 So.2d 317 (Ala.1987); Morgan v. South Central Bell Telephone Co., 466 So.2d 107 (Ala.1985). Kirkland & Co. of Anniston, P.C. v. A & M Food Serv., Inc., 579 So.2d 1278, 1285 (Ala.1991). See also Mason & Dixon Lines, Inc. v. Byrd, 601 So.2d 68 (Ala.1992). Thus, we are left to determine, with no suggestion one way or the other from the News, which of the two duplicative damages components should be disallowed. Because Williams presented each to the panel as an independent and separately valid damages assessment, we have no basis in the record for preferring one over the other. Logic dictates, however, that we consider the larger award to subsume the smaller; certainly the reverse could not be true. This proposition has been stated as follows: It is well accepted that the fair market value of a privately held business is estimated to be the largest of the values determined by the following three methods: (1) Income Approach: the net present value of the business's profits; (2) Asset Approach: the difference between the market value of its assets and liabilities; or (3) Market Approach: the comparable fair market value of the business as determined by either comparable publicly traded corporations or comparable companies purchased in whole. Unless the company has significant asset holdings such as real estate, securities, or natural resources, the first or third method usually generates the largest value. George P. Roach, Correcting Uncertain Prophecies: An Analysis of Business Consequential Damages, 22 Rev. Litig. 1, 11-12 (Winter 2003) (emphasis added; footnotes omitted). It is also logical that in undertaking to eliminate one or the other, but not both, of two duplicative elements of an arbitration award, we should do the least violence practical to the substance of the award. It is obvious that the majority of the panel considered due and owing under its findings the full measure of damages it awarded for loss of future profits, as a fully independent damages component. Therefore, we disallow and vacate that portion of each award providing damages for the smaller separate component of loss of franchise value.
As a threshold proposition, the plaintiffs assert that any claim by the News that its federal constitutional due-process protections were violated by the punitive-damages awards is simply not reviewable, citing Davis v. Prudential Securities, Inc., 59 F.3d 1186 (11th Cir.1995). In that case, an individual initiated arbitration under the auspices of the American Arbitration Association against a stock brokerage firm and a stockbroker, pursuant to an underlying account agreement. He asserted tort claims and violations of state and federal securities laws. The arbitration panel awarded him both compensatory damages and punitive damages. He obtained court confirmation of the award, as provided by the account agreement, and the defendants in arbitration appealed to the United States Court of Appeals for the Eleventh Circuit. In refusing to set aside the punitive-damages award, the Eleventh Circuit held, among other things, that because the arbitration was a private proceeding arranged by a voluntary contractual agreement of the parties, it did not constitute state action and, thus, was not subject to scrutiny under the Due Process Clause of the United States Constitution. This holding has been criticized by legal commentators, as discussed in Knepp v. Credit Acceptance Corp. (In re: Knepp), 229 B.R. 821 (Bankr.N.D.Ala.1999), and is readily distinguishable on its facts from the situation at hand. In Davis, there was no court involvement until after the award was made. In these cases, but for the court action, there would have been no arbitration at all. These appeals are appeals from the circuit court judgments of confirmation, not from the underlying awards. Accordingly, we readily perceive the requisite state action underlying these appeals sufficient to justify our review of the awards under governing federal due-process considerations, to the extent the News has properly invoked review of those principles under its assertion that in making the awards the arbitrators acted in manifest disregard of the law. (The plaintiffs reference under a see also introduction three cases other than Davis in connection with their assertion that review for a due-process violation is not available: Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056, 1063-64 (9th Cir.1991), Barnes v. Logan, 122 F.3d 820 (9th Cir.1997), and Glennon v. Dean Witter Reynolds, Inc., 83 F.3d 132 (6th Cir.1996). Without discussing those cases in detail, we find their limited holdings, which in no way approach that of the Eleventh Circuit in Davis, to be clearly distinguishable, both factually and procedurally, from the present appeals.) Because our review under the manifest-disregard-of-the-law standard must be clearly focused, we set out in full the entire of the argument the News devotes to this issue in its two briefs to this Court. In its initial brief, the News presents its challenge to the punitive-damages award as follows: III. The Panel's Decision Is Inconsistent, Both Internally and with the Record. .... C. The Panel's Determination and Calculation of Damages Is Hopelessly and Irrationally Flawed. .... (iii) The Panel's Award of Punitive Damages Is Grossly Excessive. By arbitrarily determining the lost value of each of the appellees' businesses, by arbitrarily determining each of the appellees' lost profits, and then by adding those two components together, the Panel compounded its error. The Panel then multiplied that erroneousindeed, fictitiousamount by 2.5 to award punitive damages. As a result, the Panel compounded its error even further, to a ridiculous extreme. The punitive damage awards in these cases are far out of any rational proportion to the actual compensatory damages even arguably sustained by these appellees. In Hyde's case, for example, the expert estimated the value of his business to be $160,000. Hyde had already recovered $83,000 of that amount, when he sold the single copy portion of the agreement. Thus his actual lost value, according to his own expert, would be $77,000. Hyde's damage[s] award, however, totals $2,142,280.00. The ratio of his total award to his actual damages is a multiple of roughly 26 to 1. See Georgia Power Co. v. International Brotherhood of Electrical Workers, Local 84, 995 F.2d 1030, 1032 (11th Cir.1993) (`An arbitrator's denomination of an award as compensatory will not prevent the court from determining that the award is in fact punitive'). When the duplicative and irrational aspects of each of the other so-called compensatory awards in these cases are considered, it is clear that a similar analysis applies to each of the punitive award. Such a multiple is irrational and in manifest disregard of the law. A grossly excessive award that is arbitrary and irrational under the guideposts set out in BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), is equally arbitrary and irrational under the FAA. Sawtelle v. Waddell [& Reed, Inc.], [304 A.D.2d 103, 754 N.Y.S.2d 264 (2003)]. It also exceeds Alabama's statutory cap of three-to-one, which the Panel itself cited in its decision. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (`By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.') Cole v. Burns Int. Sec. Servs., 105 F.3d 1465, 1487 (D.C.Cir.1997). In its reply brief, the News argues that the multiplier used by the Panel to award punitive damages is being applied to an arbitrary calculation of compensatory damages. As such, it runs afoul of Alabama's statutory cap on punitive damages. Ala.Code § 6-11-21. The News then again argues in support of the applicability of the cap statute, the applicability of which, for the reasons hereinafter explained, we will assume without deciding. We must note, however, that § 6-11-21 applies only to actions commenced more than 60 days after its effective date of June 7, 1999; all of the complaints in these cases were filed before that time. Lastly, the News simply notes in its reply brief: The News has argued that a grossly excessive award of punitive damages that is arbitrary and irrational under the due process guideposts set out in cases such as BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), and most recently State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585, No. 01-1289 (Supreme Court of the United States, April 7, 2003), is equally arbitrary and irrational under the standards of review of an arbitration decision. As already explained, we decline to undertake any review based on the amorphous arbitrary and irrational standard. To the extent that the News argues that  such a multiple is irrational and in manifest disregard of the law,  referencing the Hyde ratio it deems represents a multiple of roughly 26 to 1, we would have reservations concerning the propriety of such a ratio. To the extent that we have eliminated the duplicative loss of franchise value award from the total damages allotted each plaintiff, application of the ratio between compensatory damages and punitive damages adopted by the panel requires a corresponding reduction in punitive damages. That will be easy enough to calculate, however, because the panel made this explicit finding concerning the ratio it used in determining punitive damages: The Panel concludes that punitive damages are due to be awarded in these cases. We also conclude that a reasonable ratio in relationship to the compensatory damages is less than the 3:1 ratio maximum generally recognized by Alabama law. We find and hold that a fair, equitable and reasonable punitive damages ratio is 2.5 to compensatory damages. As quoted above, the News acknowledges that the expert estimated the value of [Hyde's] business to be $160,000, and that is the value the panel awarded him for loss of franchise value, but asserts that the panel should have reduced the award by $83,000 because it reasoned Hyde had sold the single-copy portion of his branch for that amount. This argument is not presented as an instance of the arbitrators' exceeding their powers or a manifest disregard of the law by the arbitrators, and no other discussion or explanation about it is provided. We are not told what, if anything the expert, Williams, might have had to say on that subject, or whether, or how, he might have taken it into account in his computations. In short, we have no basis under the narrow review we are conducting to look behind the panel's finding of $160,000 as the loss of franchise value for Hyde. The News does not challenge the panel's method of deriving the amount of punitive damages purely as a ratio of compensatory damages; neither does it question the propriety of a 2.5 ratio. Its only discussion of Alabama's statutory cap on punitive damages, as prescribed by § 6-11-21, is in relation to its argument that the 26-to-1 ratio it asserts results in Hyde's case exceeds Alabama's statutory cap of three-to-one, and its argument that the panel's application of its 2.5 ratio to an arbitrary calculation of compensatory damages ... runs afoul of the statutory cap. Apart from its discussion of the proportionality of the ratio perceived by the News to have been used in Hyde's case (and its general reference to the duplicative and irrational aspects of each of the other so-called compensatory awards in these cases), the News presents no argument to the effect that the panel manifestly disregarded controlling legal principles relating to its assessment of punitive damages. We note that the panel presented an extensive explanation of the numerous factors and criteria it considered in arriving at its assessment of punitive damages, over the course of paragraphs 250-273 of its decision, and it certainly cannot be said that it completely ignored or disregarded the legal principles laid down in BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), and State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003), as opposed to any argument, which would be unavailing under a manifest-disregard-of-the-law review, that the panel misunderstood or misapplied those legal principles. All in all, we find no instance where the News has successfully identified a manifest disregard by the panel of the law of punitive damages.