Court Opinion

ID: 2807842
Source: CourtListenerOpinion
Date Created: 2015-06-12 15:05:33.172768+00
Date Added: 2024-06-11T11:30:06.078093
License: Public Domain

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14-P-350                                                Appeals Court

                DANIEL CONWAY     vs.   CLC BIO, LLC.

                             No. 14-P-350.

       Middlesex.        December 10, 2014. - June 12, 2015.

           Present:    Kantrowitz, Green, & Sullivan, JJ.

Arbitration, Judicial review, Award, Authority of
     arbitrator. Massachusetts Wage Act.

     Civil action commenced in the Superior Court Department on
February 17, 2012.

     A motion to vacate an arbitration award was heard
by Douglas H. Wilkins, J., and judgment was entered by him.

     David B. Summer for the plaintiff.
     Michelle Y. Bush for the defendant.

     SULLIVAN, J.     The plaintiff, Daniel Conway (Conway),

appeals from the denial of his motion to vacate an arbitration

award, see G. L. c. 251, § 12, concerning a claim for unpaid

wages under The Wage Act.     See G. L. c. 149, §§ 148, 150 as

amended by St. 2009.     We affirm, and in so doing, reiterate the
                                                                   2

standard of review applicable to complaints to vacate a

commercial arbitration award.

     Background.    To place our discussion in context, we set

forth the facts found by and rationale of the arbitrator.

Conway was employed by the defendant, CLC Bio, LLC (CLC), a

bioinformatics company, from October, 2007, until his

termination in January, 2012.    Conway's employment at CLC was

governed by an employment contract that provided for his base

salary and potential bonus payments or commissions. 1   The

contract also contained an arbitration clause that mandated

arbitration of "any dispute or controversy arising out of or

relating in any way to [Conway's] employment with and/ or

termination from [CLC]." 2

     1
       The commissions clause provided that "[CLC] shall pay
[Conway] a commission as set forth in Appendix A, which is
attached hereto and hereby incorporated by reference.
[Conway's] commission shall be deemed to have been earned by
[him] and owing by [CLC] when the invoice applicable to the
specific products and services sold has been paid in full by the
customer."
     2
         The arbitration clause of Conway's contract provided in
part:

          "The Employee agrees that any dispute or controversy
     arising out of or relating in any way to the Employee's
     employment with and/ or termination from the Company
     (including, but not limited to, all claims, demands or
     actions under any federal, state or local statute or
     regulation regarding employment discrimination, and/or all
     claims, demands or actions concerning the interpretation,
     construction, performance or breach of this Agreement)
     shall be settled by arbitration held in Boston,
                                                                     3

     Conway's employment at CLC was terminated on January 12,

2012.    On January 18, 2012, CLC sent Conway a letter offering to

pay severance and outstanding bonus payments to Conway in

exchange for a release of claims.    Conway failed to respond, but

CLC tendered $30,325 in bonus payments to Conway on March 1,

2012, payments which included a $10,990 Individual Sales Bonus

(ISB).    In the interim, on February 17, 2012, Conway filed a

complaint against CLC in a Superior Court, alleging breach of

contract, breach of the covenant of good faith and fair dealing,

and violations of the Wage Act stemming from claims for

severance pay, unpaid vacation time, and future and late-paid

commissions.    CLC moved to stay the proceedings and compel

arbitration pursuant to the arbitration provision in Conway's

employment contract.    See G. L. c. 251, § 1, as appearing in St.

1991, c. 398, § 96.    The motion judge granted CLC's motion and

the parties proceeded to arbitration.

     In arbitration Conway claimed, among other things, that CLC

violated the Wage Act by failing to effectuate payment of the

ISB on the date of his termination.    See G. L. c. 149, § 148.

The arbitrator found that the ISB, despite being called a

     Massachusetts, in accordance with the Rules of the American
     Arbitration Association, before an arbitrator who shall
     have experience in the area of the matter in dispute. Each
     party shall bear its own costs and attorneys' fees in
     connection with any arbitration pursuant to this
     paragraph."
                                                                    4

"bonus," was in fact a commission subject to the protections of

the Wage Act.   She concluded, however, that the ISB did not

become "definitely determined" and "due and payable", see G. L.

c. 149, § 149, until the end of February, 2012, rather than the

date of Conway's termination, because the employment contract

provided that ISB commissions were to be paid to employees only

when the corresponding sales were paid in full by the customers. 3

The arbitrator found that CLC would have tendered the ISB

payment well before the end of February, 2012, if Conway had not

failed to respond to CLC's January 18, 2012, offer letter before

initiating formal litigation.   The arbitrator concluded that the

delay in payment of the ISB until March 1, 2012, was not wholly

attributable to CLC and was, therefore, not a violation of the

Wage Act.

     Conway subsequently filed a motion to vacate the

arbitrator's award in the Superior Court, disputing only the

arbitrator's determination regarding the ISB.   Conway contended

that the arbitrator exceeded her authority in failing to find a

violation of the Wage Act, and that the arbitrator's conclusion

to the contrary was not in accordance with the law.   A judge of

     3
       The statute provides in relevant part: "[t]his section
shall apply . . . to the payment of commissions when the amount
of such commission less allowable or authorized deductions, has
become definitely determined and has become due and payable to
said employee, and commissions so determined and due such
employees shall be subject to the provisions of Section one
hundred and fifty." G. L. c. 149, § 148.
                                                                     5

the Superior Court confirmed the arbitration award, and

dismissed Conway's complaint with prejudice.

     Discussion.    There is a "strong public policy" favoring

arbitration of commercial disputes.    Connecticut Valley Sanitary

Waste Disposal, Inc. v. Zielinski, 436 Mass. 263, 267 (2002)

(citation omitted).   Commercial arbitration awards, such as the

one at issue here, are subject to a narrow scope of judicial

review.    See G. L. c. 251, § 12; Superadio L.P. v. Winstar Radio

Prods., LLC, 446 Mass. 330, 333 (2006).

     Absent fraud, corruption, or other undue means in the

procurement of the agreement to arbitrate or a showing that the

award is otherwise void or voidable, an arbitrator's award is

binding.   Id. at 336-337.   McInnes v. LPL Financial, LLC, 466
Mass. 256, 262-263 (2013).    An arbitrator's findings of fact and

conclusions of law are binding even if erroneous.    Boston Water

Power Co. v. Gray, 6 Met. 131, 181 (1843).    Jones v. Boston Mill

Corp., 6 Pick. 148, 156 (1828).    Trustees of the Boston & Me.

Corp. v. Massachusetts Bay Transp. Authy., 363 Mass. 386, 390

(1973).    Dane v. Aetna Cas. & Sur. Co., 369 Mass. 966, 967

(1976) (Dane).   However, an arbitrator's award may be vacated if

the arbitrator exceeded her authority.    See G. L. c. 251,

§ 12(a)(3); Superadio L.P., supra at 334.

     Conway's assertion that the arbitrator exceeded her

authority is misdirected.    An arbitrator exceeds her authority
                                                                     6

if she awards relief beyond the scope of the arbitration

agreement, beyond that to which the parties bound themselves, or

enters an award prohibited by law.     Superadio, supra.   "The fact

that an arbitrator [may have] committed an error of law does not

alone mean that [s]he has exceeded [her] authority."       City of

Boston v. Professional Staff Assn., 61 Mass. App. Ct. 105, 112

(2004) (quotation omitted).     Conway's employment contract

expressly provided the arbitrator with the authority to

arbitrate any "dispute or controversy arising out of or relating

in any way to the Employee's employment with and/ or termination

from the Company."   See n.2.    This arbitration clause, which

expressly referenced statutory claims, is sufficiently broad to

encompass both contractual and statutory claims.     See Joulé,

Inc. v. Simmons, 459 Mass. 88 (2011); Dixon v. Perry & Slesnick,

P.C., 75 Mass. App. Ct. 271, 278 (2009); Gilmer

v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (Gilmer). 4,5

     4
       Gilmer was decided under the provisions of the Federal
Arbitration Act, (FAA) 9 U.S.C. § 1, et seq. (2006) (FAA), which
governs agreements to arbitrate in interstate commerce, and
supersedes State law to the contrary. See infra.
     5
       Agreements to arbitrate implicate a number of State and
Federal statutes in addition to the FAA. Enforcement of
arbitration awards arising under private sector collective
bargaining agreements involving companies in interstate commerce
are governed by § 301 of the National Labor Relations Act, as
amended, 29 U.S.C. § 185 (1952) (NLRA). The State court has
concurrent jurisdiction to enforce awards governed by § 301 of
the NLRA. Morceau v. Gould-National Batteries, Inc., 344 Mass.
120, 123-124 (1962), citing Charles Dowd Box Co., Inc. v.
                                                                     7

Contrast Warfield v. Beth Israel Deaconess Med. Ctr., Inc., 454
Mass. 390 (2009).    Conway's "only contention that the arbitrator

exceeded his power is in substance a claim that the arbitrator

committed an error of law," and is not subject to judicial

review.    Dane, supra. 6

     Conway relies on cases decided under the statutory

arbitration provisions of the Education Reform Act of 1993,

G. L. c. 71, § 42 (Reform Act), in support of his contention

that the court is nonetheless authorized to review the award for

errors of law based on a violation of statute.    Arbitration

cases arising under § 42 of the Reform Act involving terminated

teachers with professional teacher status are inapposite in this

respect.    Arbitration of these cases under § 42 of the Reform

Act is a creature of statute.    In these cases, both the scope of

Courtney, 368 U.S. 502 (1962) (affirming Courtney v. Charles
Dowd Box Co., Inc., 341 Mass. 337 [1960]). G. L. c. 150C is the
State statute which also governs the enforceability of both
public and private sector collectively bargained agreements to
arbitrate, except as otherwise provided by the Education Reform
Act of 1993, G. L. c. 71, § 42. The statute at issue here,
G. L. c. 251, § 1, as appearing in St. 1991, c. 398, § 96,
governs other agreements to arbitrate in the Commonwealth.
     6
       The same rule applies to review of arbitration awards
under public sector collective bargaining agreements (other than
those governed by the statutory arbitration provisions Education
Reform Act of 1993, G. L. c. 71, § 42, see infra,) and private
sector collective bargaining agreements. See Lynn v. Thompson,
435 Mass. 54, 61-62 (2001), cert. denied, 534 U.S. 1131 (2002)
(interpreting G. L. c. 150C, § 11); United States of America v.
Enterprise Wheel and Car Corp., 363 U.S. 593 (1960); Greene v.
Mari & Sons Flooring Co., Inc., 362 Mass. 560, 563 (1972)
(interpreting 29 U.S.C. § 301, and G. L. c. 150C, respectively).
                                                                   8

statutory arbitration and the arbitrator's authority are

delimited by the Reform Act.   As the Supreme Judicial Court has

recently explained, "judicial review of an arbitrator's

interpretation of [an] authorizing statute . . . is 'broader and

less deferential' than in cases of judicial review of an

arbitrator's decision arising from an interpretation of a

private agreement."   School Comm. of Lexington v. Zagaeski, 469
Mass. 104, 112 (2014), quoting from Atwater v. Commissioner of

Educ., 460 Mass. 844, 856-857 (2011).   In the case of statutory

arbitration under § 42 of the Reform Act, where the source and

scope of an arbitrator's authority is defined by statute, a

court is "better position[ed]" to interpret the scope of the

arbitrator's authority granted by the authorizing statute and is

thus empowered to vacate an arbitration award if the arbitrator

has exceeded his statutory authority.   School Dist. of Beverly

v. Geller, 435 Mass. 223, 229-230 (2001) (Cordy, J., concurring)

(Geller). 7

     By contrast, in cases where the source and scope of the

arbitrator's authority emanate from a commercial agreement to

     7
       In other respects, the standard of review of arbitration
awards under the Reform Act is the same. That is, absent a
showing that the arbitrator exceeded her authority, "a reviewing
court is 'strictly bound by the arbitrator's factual findings
and conclusions of law, even if they are in error.'" School
Comm. of Marshfield v. Marshfield Educ. Assoc., 84 Mass. App.
Ct. 743, 752 (2014), quoting from School Comm. of Lowell v.
Robishaw, 456 Mass. 653, 660 (2010) (citations omitted).
                                                                    9

arbitrate claims, including statutory claims, the arbitrator is

fully "empowered to interpret the underlying contract and the

extent of [her] powers thereunder."   Geller, supra at 229

(Cordy, J., concurring).   Judicial review is therefore highly

limited.   Review for error of law or fact is precluded, unless

the arbitrator has otherwise exceeded her authority by exceeding

the scope of the agreement to arbitrate, or issuing an award

which violates public policy.   See Superadio, 446 Mass. at 330,

334; School Comm. of Lexington v. Zagaeski, supra at 112.

     Conway contends that this result is contrary to public

policy to the extent that it consigns the enforcement of

statutes (like the Wage Act) which are meant to benefit the

public as a whole, to private, unreported, unreviewable,

standardless adjudication.   We are foreclosed from considering

this contention, which has been rejected in a series of cases

beginning with Gilmer, supra, and culminating most recently

in American Exp. Co. v. Italian Colors Rest., 133 S. Ct. 2304

(2013) (Amex), enforcing private agreements to arbitrate.

See Feeney v. Dell, Inc., 466 Mass. 1001 (2013); McInnes v. LPL

Financial, LLC, 466 Mass. 256, 261-263 (2013).   A private

agreement to arbitrate in a contract in interstate commerce is

governed by the Federal Arbitration Act, (FAA) 9 U.S.C. § 1 et

seq. (2006) (FAA), which supersedes State law that conflicts

with its terms.   McInnes, supra at 264.   Preston v. Ferrer, 552
                                                                     10
U.S. 346 (2008).    "In all relevant respects, the language of the

FAA and [G. L. c. 251. § § 2 & 12] providing for enforcement of

arbitration provisions are similar, and we have interpreted the

cognate provisions in the same manner."     Warfield, supra at 394.

Under the FAA, absent a question of arbitrability,

countervailing Congressional command, or cognizable challenge to

the validity of the agreement to arbitrate, an agreement to

arbitrate statutory claims must be enforced.     9 U.S.C. §§ 2, 10

& 11.    Amex, supra.   Gilmer, supra.   Any attempt to refashion

our State law to permit de novo review of commercial arbitration

awards involving statutory claims would run afoul of the FAA,

which also prohibits review of an arbitrator's findings of fact

and rulings of law, so long the arbitrator does not otherwise

exceed her authority. 8   See 9 U.S.C. § 10(a)(4); Hall St. Assocs.

LLC v. Mattel, Inc., 552 U.S. 576 (2008); Oxford Health Plans

LLC v. Sutter, 133 S. Ct. 2064, 2070 (2013).     See also Wilko

v. Swan, 346 U.S. 427 (1953), abrogated on other grounds

     8
       Other grounds for vacating an award under the FAA include
corruption, fraud, undue means, or misconduct. 9 U.S.C.
§ 10(a). Similar grounds are set forth in G. L. c. 251, § 12.
We need not address whether "manifest disregard" for the law
remains a non-statutory grounds for vacatur under the FAA, see
Citigroup Global Mkts., Inc. v. Bacon, 562 F.3d 349 (5th Cir.
2009) (and cases cited), discussing Hall St. Assocs., LLC v.
Mattel, Inc., 128 S. Ct. 1396 (2008), since the claims made here
do not rise to the level of "manifest disregard," however that
term has been defined.
                                                                  11

by Rodriguez de Quijas v. Shearson/Am. Exp., Inc., 490 U.S. 477

(1989).

     The judgment confirming the arbitration award and

dismissing the complaint is affirmed.

                                   So ordered.