Court Opinion

ID: 821095
Source: CourtListenerOpinion
Date Created: 2013-02-22 15:38:16.33112+00
Date Added: 2024-06-11T12:33:22.643566
License: Public Domain

12-895
Giller v. Oracle USA, Inc.

                             UNITED STATES COURT OF APPEALS
                                 FOR THE SECOND CIRCUIT

                                      SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING
A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall Courthouse, 40 Foley Square, in the City of New York, on the 22nd day of
February, two thousand thirteen.

Present:
         ROBERT A. KATZMANN,
         GERARD E. LYNCH,
                     Circuit Judges,
         KATHERINE B. FORREST,
                     District Judge.*
________________________________________________

JAMES GILLER,

           Petitioner-Appellant,

                  v.                                    No. 12-895

ORACLE USA, INC.,

         Respondent-Appellee.
________________________________________________

For Petitioner-Appellant:          GARY MARTIN MEYERS, Law Offices of G. Martin Meyers,
                                   P.C., Denville, NJ

       *
        The Honorable Katherine B. Forrest, of the United States District Court for the
Southern District of New York, sitting by designation.
For Defendant-Appellee:            CHRISTOPHER JOHN COLLINS, Kelley Drye & Warren, LLP,
                                   New York, NY

        Appeal from the United States District Court for the Southern District of New York
(Koeltl, J.).

       ON CONSIDERATION WHEREOF, it is hereby ORDERED, ADJUDGED, and

DECREED that the judgment of the district court is AFFIRMED.

       In this case involving the arbitration of an employment dispute, Plainitff-Appellant James

Giller appeals from a February 13, 2012 ruling issued by the United States District Court for the

Southern District of New York (Koeltl, J.), granting Defendant-Appellee Oracle’s motion to

dismiss Giller’s petition to vacate the arbitration award. Giller argues that the arbitrator

manifestly disregarded the law in rejecting most of his breach of contract and discrimination

claims against Oracle, his former employer. We presume the parties’ familiarity with the facts

and procedural history of this case.

       When reviewing the district court’s denial of a petition to vacate an arbitration award, we

review questions of law de novo and findings of fact for clear error. Scandinavian Reins. Co. v.

St. Paul Fire & Marine Ins. Co., 668 F.3d 60, 71 (2d Cir. 2012). However, “arbitration awards

are subject to very limited review,” Willemijn Houdstermaatschappij, BV v. Standard

Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997) (internal brackets omitted), and “[a] party

petitioning a federal court to vacate an arbitral award bears the heavy burden of showing that the

award falls within a very narrow set of circumstances” delineated by the Federal Arbitration Act

(“FAA”) and case law, Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383,

388 (2d Cir. 2003). Courts may vacate an arbitration award under the FAA where, inter alia,

“the arbitrator[] exceeded [her] powers” as delineated by the parties’ agreement to arbitrate. 9

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U.S.C. § 10(a)(4). In addition, we continue to recognize “manifest disregard of the law” as a

valid ground for vacatur as a “judicial gloss” on the grounds specified by Section 10 of the FAA.

T.Co. Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339-40 (2d Cir. 2010)

(internal quotation marks omitted).1 Here, Giller relies principally on manifest disregard of the

law in support of his petition for vacatur.2

       “Our review under the doctrine of manifest disregard is severely limited,” Duferco, 333

F.3d at 389 (internal quotation marks omitted), and we will vacate an award on this ground “only

in those exceedingly rare instances where some egregious impropriety on the part of the

arbitrator is apparent,” T.Co. Metals, 592 F.3d at 339 (internal quotation marks and brackets

omitted). Such impropriety requires “more than error or misunderstanding with respect to law or

an arguable difference regarding the meaning or applicability of laws urged upon an arbitrator.”

Id. (citation and internal quotation marks omitted). To carry this “exceedingly heavy burden,”

the petitioner must show that a “clear and plainly applicable” law “was in fact improperly

applied, leading to an erroneous outcome.” Goldman Sachs Execution & Clearing, L.P. v.

Official Unsecured Creditors Comm. of Bayou Grp., LLC, 758 F. Supp. 2d 222, 225-26

(S.D.N.Y. 2010) (quoting Duferco, 333 F.3d at 390), amended by 2011 WL 2224629 (S.D.N.Y.

       1
         Whether manifest disregard exists as an independent ground for vacatur remains
uncertain. See Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758, 1768 n.3 (2010)
(“We do not decide whether manifest disregard survives our decision in Hall Street Associates,
L.L.C. v. Mattel, Inc., as an independent ground for review or as a judicial gloss on the
enumerated grounds for vacatur set forth at 9 U.S.C. § 10.” (citation and internal quotation
marks omitted)).
       2
         To the extent Giller relies on 9 U.S.C. § 10(a)(4) in urging us to vacate the arbitration
award, his argument fails for essentially the same reasons as his argument that the arbitrator
acted in manifest disregard of the law.

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May 31, 2011), aff’d, 2012 WL 2548927 (2d Cir. July 3, 2012) (summary order). In short, we

will enforce an arbitration award so long as there is a “barely colorable justification for the

outcome reached.” ReliaStar Life Ins. Co. of N.Y. v. EMC Nat’l Life Co., 564 F.3d 81, 86 (2d

Cir. 2009) (quoting Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d 255, 260

(2d Cir. 2003)). We find no “egregious impropriety” in the arbitrator’s denial of Giller’s claims

and accordingly affirm.

       First, Giller argues that when the arbitrator denied his claim for breach of contract arising

out of Oracle’s change to his Sales Target and commission rates for future fiscal years, the

arbitrator failed to address his separate claim of breach of the covenant of good faith and fair

dealing pursuant to Wakefield v. North Telecom, Inc., 769 F.2d 109 (2d Cir. 1985). We disagree.

New York law does not treat a breach of the covenant of good faith and fair dealing claim as one

that is separate from a breach of contract claim where the claims are based on the same facts.

See Harris v. Provident Life & Acc. Ins. Co., 310 F.3d 73, 80-81 (2d Cir. 2002) (“Under New

York law, parties to an express contract are bound by an implied duty of good faith, but breach

of that duty is merely a breach of the underlying contract.” (quoting Fasolino Foods Co. v.

Banca Nazionale del Lavoro, 961 F.2d 1052, 1056 (2d Cir. 1992))). Rather, our decision in

Wakefield recognizes two paths to establish a breach of contract claim: breach of the express

terms or breach of “[i]mplied contractual obligations.” Wakefield, 769 F.2d at 112.

       Here, the arbitrator concluded that Giller’s employment contract gave Oracle express

authority to change his Sales Target from year to year, even if that change reduced the

compensation that Giller was otherwise expecting to receive as CUNY issued yearly purchase

orders for Oracle’s services. We find no error, let alone “egregious impropriety,” in the

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arbitrator’s decision to deny Giller’s breach of contract claim based on the contractual terms

instead of relying on the implied covenant of good faith and fair dealing. The contractual

grounds on which the arbitrator relied on are more than sufficient for us to find a “barely

colorable” justification for the decision reached. See T.Co. Metals, 592 F.3d at 339 (“Even

where explanation for an award is deficient or non-existent, we will confirm it if a justifiable

ground for the decision can be inferred from the facts of the case.” (quoting Stolt-Nielsen SA v.

AnimalFeeds Int’l Corp., 548 F.3d 85, 93 (2d Cir. 2008), rev’d on other grounds, 130 S. Ct.

1758)).

          Giller additionally argues that the arbitrator manifestly disregarded the law in interpreting

the term “Sales Target” in his contract to include the likely forthcoming CUNY purchase orders.

It is well-settled that the manifest disregard of law “standard essentially bars review of whether

an arbitrator misconstrued a contract.” Id. “Interpretation of . . . contract[ual] terms is within the

province of the arbitrator and will not be overruled simply because we disagree with that

interpretation.” Yusuf Ahmed Alghanim & Sons W.L.L. v. Toys “R” Us, Inc., 126 F.3d 15, 25 (2d

Cir. 1997). Indeed, we have suggested that an arbitrator’s interpretation of the contract is “not

subject to judicial challenge, particularly on our limited review of whether the arbitrator

manifestly disregarded the law.” Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200, 214

(2d Cir. 2002).

          Giller primarily relies upon our opinion in In re Marine Pollution Serv., Inc., 857 F.2d

91, 94 (2d Cir. 1988), where we held that we would not uphold an arbitration decision if the

arbitrator has not actually interpreted the contract at issue and has instead merely made “noises”

of contract interpretation. This case is far from mere “noises” of contract interpretation, and

                                                   5
nothing in the award suggests that the arbitrator here “based [her] award on some body of

thought, or feeling, or policy, or law that is outside the contract.” Id. (internal quotation marks

omitted). The arbitrator found that the term “Sales Target,” which was also defined in the

contract as a “sales goal,” could reasonably include these future purchase orders CUNY, which,

even if “virtually assured” to issue, had not yet been booked and were not guaranteed. Giller

points to no legal authority contrary to this interpretation, nor anything suggesting that arbitrator

changed the contract and failed to hold the parties to their bargain rather than simply interpret

the provision before her. See Stolt-Nielsen, 130 S. Ct. at 1775-76.

       Giller’s other arguments likewise fail. With respect to his claim for age discrimination,

he contends that the arbitrator manifestly disregarded the law when she concluded that Oracle

did not constructively discharge him. Again, we disagree. An employee is constructively

discharged where his working conditions are “so difficult or unpleasant that a reasonable person

in the employee’s shoes would have felt compelled to resign.” Terry v. Ashcroft, 336 F.3d 128,

152 (2d Cir. 2003) (quoting Chertkova v. Conn. Gen. Life Ins. Co., 92 F.3d 81, 89 (2d Cir.

1996)). The arbitrator plainly applied the relevant standard and concluded that the evidence did

not meet it. Giller’s argument therefore amounts to a claim that the arbitrator evaluated the

evidence incorrectly. “[T]he Second Circuit does not recognize manifest disregard of the

evidence as [a] proper ground for vacating an arbitrator’s award.” Wallace v. Buttar, 378 F.3d

182, 193 (2d Cir. 2004) (quoting Success Sys., Inc. v. Maddy Petroleum Equip., Inc., 316 F.

Supp. 2d 93, 94 (D. Conn. 2004)).

       Similarly, with respect to his claim for discrimination aside from constructive discharge,

Giller argues that the arbitrator erred in concluding that Oracle had not discriminated against him

                                                  6
on the basis of age. He contests the arbitrator’s finding that he had “exhausted his usefulness” to

Oracle, particularly in light of the fact that the arbitrator also found that he was “the highest

producer in his Unit.” Again, this is a challenge to the arbitrator’s evaluation of the evidence. It

is not a proper ground for vacatur.

       We have considered all of the petitioner’s remaining arguments and find them to be

without merit. Accordingly, for the foregoing reasons, the judgment of the district court is

AFFIRMED.

                                           FOR THE COURT:
                                           CATHERINE O’HAGAN WOLFE, CLERK

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