Court Opinion

ID: 2663263
Source: CourtListenerOpinion
Date Created: 2014-04-03 20:30:24.519118+00
Date Added: 2024-06-11T12:59:32.455335
License: Public Domain

FILED
                           NOT FOR PUBLICATION                             APR 03 2014

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

WETZEL’S PRETZELS, LLC, a                        No. 12-56716
California limited liability company,
                                                 D.C. No. 2:11-cv-04459-AHM-SP
              Plaintiff, Counter-Defendant,
Appellee,
                                                 MEMORANDUM*
  v.

TITO JOHNSON, an individual; and
TARIQ JOHNSON, an individual,

          Defendants, Counter-Claimants,
Appellants.

                    Appeal from the United States District Court
                        for the Central District of California
                     A. Howard Matz, District Judge, Presiding

                     Argued and Submitted February 12, 2014
                              Pasadena, California

Before: PAEZ and NGUYEN, Circuit Judges, and MOTZ, Senior District Judge.**

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable J. Frederick Motz, Senior District Judge for the U.S.
District Court for the District of Maryland, sitting by designation.
      Tito Johnson and Tariq Johnson (“the Johnsons”) appeal the district court’s

order denying their motion to vacate an arbitration award in favor of Wetzel’s

Pretzels, LLC. On appeal, the Johnsons urge us to vacate the arbitration award

because the arbitrator exceeded his powers by enforcing certain provisions in the

franchise agreement that required the Johnsons to assign their lease and property

interests to Wetzel’s Pretzels after the franchise agreement was terminated (“the

post-termination provisions”). See 9 U.S.C. § 10(a)(4).

      “The Federal Arbitration Act enumerates limited grounds on which a federal

court may vacate, modify, or correct an arbitral award.” Kyocera Corp. v.

Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 994 (9th Cir. 2003) (citing 9

U.S.C. §§ 1–16). In order for us to vacate the award on the ground that the

arbitrator exceeded his powers under § 10(a)(4), the Johnsons would have to show

that the award was “completely irrational, or exhibit[ed] a manifest disregard of

law,” see Biller v. Toyota Motor Corp., 668 F.3d 655, 665 (9th Cir. 2012) (internal

quotation marks and citations omitted), but they have made no such showing.

      An award is completely irrational only if it is not “derived from the

agreement, viewed in light of the agreement’s language and context, as well as

other indications of the parties’ intentions.” Id. (internal quotation marks and

citations omitted). The franchise agreement in this case expressly provided for the

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assignment of the Johnsons’ lease and property interests to Wetzel’s Pretzels once

the agreement was terminated, and it also made “[a]ny dispute arising out of or in

connection with this [a]greement” subject to arbitration. The award therefore is

plainly derived from the parties’ agreement. Moreover, under the franchise

agreement, all disputes related to the agreement except claims for “provisional

injunctive relief” were required to go to arbitration, and because the Johnsons

never sought a preliminary injunction from the district court regarding the post-

termination provisions, they were not deprived of their rights under the agreement

when the arbitrator enforced the post-termination provisions. Thus, the arbitrator

did not exceed his powers on this ground.

      Nor have the Johnsons convinced us that the award exhibited a manifest

disregard of law. “To vacate an arbitration award on this ground, it must be clear

from the record that the arbitrators recognized the applicable law and then ignored

it.” Biller, 668 F.3d at 665 (internal alteration, quotation marks, and citations

omitted). Nothing in the record presented to us establishes that the arbitrator, by

enforcing the post-termination provisions of the agreement, recognized applicable

law that would make those provisions unenforceable but ignored it.

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      Accordingly, the arbitrator did not exceed his powers, and because there is

no other reason to vacate the award, the award was appropriately confirmed on the

motion by Wetzel’s Pretzels.1

      AFFIRMED.

      1
        In light of our resolution of the case on this basis, we need not reach the
related issues of whether a party opposing the confirmation of an arbitration award
must do so by objecting to a motion to confirm the award that predates a motion to
vacate the award rather than allowing the award to be confirmed without
opposition and only then moving to vacate the award and whether an award can be
vacated after a final judgment only if the judgment can be under Fed. R. Civ. P.
60(b). See The Hartbridge, 57 F.2d 672, 673 (2d Cir. 1932) (per curiam).

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