Court Opinion

ID: 3008954
Source: CourtListenerOpinion
Date Created: 2015-10-09 05:13:11.9946+00
Date Added: 2024-06-11T15:03:16.424870
License: Public Domain

Opinion issued October 8, 2015

                                     In The

                              Court of Appeals
                                    For The

                         First District of Texas
                            ————————————
                             NO. 01-13-00708-CV
                           ———————————
                      STAGE STORES, INC., Appellant
                                       V.
                        JON GUNNERSON, Appellee

                    On Appeal from the 61st District Court
                            Harris County, Texas
                      Trial Court Case No. 2013-21878

                          CONCURRING OPINION

      This case presents an issue of contract interpretation: What did the parties

mean when they agreed to a “reasoned award”?

      The Court holds that the “award’s failure to provide any reasoning regarding

Stage’s third contention prevents a determination that the award is reasoned.” It
                                           2

concludes that, under an exception to the functus officio doctrine, the matter can be

remanded to the arbitrator to complete the adjudication of the award. I agree with

the Court and join it. But I would also go further and directly hold that the award is

not reasoned—not simply say that we are prevented from determining that the

award is reasoned. I write separately to explain why the arbitrator’s award was not

“reasoned.”

       “[T]he scope of judicial review for an arbitrator’s decision is among the

narrowest known at law because to allow full scrutiny of such awards would

frustrate the purpose of having arbitration at all—the quick resolution of disputes

and the avoidance of the expense and delay associated with litigation.” 1 “A court

sits to determine only whether the arbitrator did his job—not whether he did it

well, correctly, or reasonably, but simply whether he did it.” 2 To determine

whether the arbitrator “did her job,” we examine the parties’ agreement, which

describes that job and the procedures to be used in the arbitration. 3

1
      MCI Constructors, LLC v. City Of Greensboro, 610 F.3d 849, 857 (4th Cir. 2010).
2
      U.S. Postal Serv. v. Am. Postal Workers Union, 204 F.3d 523, 527 (4th Cir. 2000)
      (internal quotation marks omitted).
3
      Hall St. Assocs. v. Mattel, Inc., 552 U.S. 576, 586, 128 S. Ct. 1396, 1404 (2008)
      (holding that Federal Arbitration Act permits parties to choose many features of
      their arbitration including variety of procedural issues).
                                             3

    The Award Was Not “Reasoned” Under the Definition Used by Cat Charter

A.      A reasoned award must at least mention the parties’ key contentions

        I agree with the Court that we look to the generally accepted meaning of the

phrase “reasoned award” as used in the parties’ agreement. The Court, following

the Eleventh Circuit’s decision in Cat Charter, concludes that an award is

“reasoned” so long as it “mention[s] . . . expressions or statements offered as a

justification.” 4 The Eleventh Circuit’s definition was not based on the use of that

phrase in arbitration proceedings but on one dictionary definition of the word

“reasoned.”

        Nevertheless, the Cat Charter definition is a helpful place to begin for three

reasons. First, the Cat Charter definition predates the parties’ agreement. Second,

other courts have relied on that definition, including Rain CII Carbon, LLC v.

ConocoPhillips Co.,5 which was issued before the parties’ agreement by the circuit

court with federal jurisdiction over Texas. Third, other authorities have produced

similar definitions. For example, in their treatise on commercial arbitration,

Thomas Oehmke and Joan Brovins write: “A reasoned award would usually

include a detailed listing, or at least mention, of expressions or statements offered

4
        Cat Charter, LLC v. Schurtenberger, 646 F.3d 836, 844 (11th Cir. 2011).
5
        674 F.3d 469, 473 (5th Cir. 2012).
                                           4

as a justification of the arbitral decision.” 6 Similarly, other scholars have equated a

“reasoned award” with an award that reveals “the arbitrator’s mode of decision.”7

All of these definitions require some discussion of the arbitrator’s justifications for

her decision—albeit sometimes so short as to be described as merely mentioning

the justification.

       Cat Charter and Rain CII Carbon demonstrate that the award must respond

to the losing party’s key contentions. In Cat Charter, the Eleventh Circuit held that

an award was reasoned because it said: “[W]e find that Claimant . . . has proven its

claim against [Respondent] by the greater weight of the evidence.”8 Importantly,

the controversy in that case “turned primarily upon credibility determinations made

by the [Arbitration] Panel. Either the transaction proceeded along the lines of a

duly executed contract—the Defendants’ story—or the transaction . . . was

punctuated by misrepresentations and dubious behavior on the Defendants’ part—

6
       See 3 THOMAS H. OEHMKE WITH JOAN M. BROVINS, COMMERCIAL ARBITRATION
       § 118:5) (3d ed. 2003).
7
       Stephen L Hayford, A New Paradigm for Commercial Arbitration: Rethinking the
       Relationship Between Reasoned Awards and the Judicial Standards for Vacatur,
       66 GEO. WASH. L. REV. 443, 445 (1998). It also describes reasoned awards as
       “substantive.” Id. at 448, 455, 460–61. The Alabama Supreme Court described
       Professor Hayford as “a recognized authority on judicial review of arbitration
       awards.” Birmingham News Co. v. Horn, 901 So. 2d 27, 53 (Ala. 2004), overruled
       by Horton Homes, Inc. v. Shaner, 999 So. 2d 462 (Ala. 2008), overruled by
       Hereford v. D.R. Horton, Inc., 13 So. 3d 375 (Ala. 2009).
8
       Cat Charter, 646 F.3d at 844.
                                           5

the Plaintiffs’ story.” 9 Thus, looking at the circumstances of that case, the award

explained the arbitrators’ decision “in the swearing match between the Plaintiffs

and the Defendants, the Panel found the Plaintiffs’ witnesses to be more

credible.”10

      In Rain CII Carbon, the Fifth Circuit also looked at the entire set of

circumstances of the arbitration in concluding that the arbitrator addressed the

parties’ key contentions. There, the arbitrator was asked to determine which of two

price formulas more accurately estimated the true market price of green anode

coke. 11 The arbitrator made this decision “based upon the testimony, exhibits,

arguments, and submissions.” 12 The Fifth Circuit held that this award was

“reasoned” because “the preceding paragraph thoroughly delineates [the

defendant’s] contention . . . a contention that the arbitrator obviously accepted.”13

That “contention” was a detailed argument explaining why the defendant’s formula

was more accurate. Thus, the award did not lack reasoning; rather, the arbitrator

merely adopted the reasoning articulated by one of the parties.

9
      Id.
10
      Id. at 844–45.
11
      Rain CII Carbon, 674 F.3d at 471.
12
      Id. at 471, 474.
13
      Id. at 474.
                                         6

       Cat Charter and Rain CII Carbon demonstrate that the entire set of

circumstances surrounding the arbitration must be considered in determining

whether an award qualifies as “reasoned.” And, because the circumstances of those

cases demonstrated why the arbitrators had rejected the losing parties’ contentions,

neither court addressed whether there may be situations when a reasoned award

must do more than merely mention a justification.

B.     The award does not mention one of Stage’s key contentions

       The award here does not mention any justification for rejecting the third of

Stage’s key contentions—notice and an opportunity to cure—because the award

both (1) failed to identify this contention and (2) consider or explain why the

arbitrator rejected it.

       1.     The section of the award identifying the parties’ contentions omits
              Stage’s third contention

       The employment agreement provides compensation benefits to Gunnerson if

he terminates the agreement for “good reason.” Good reason includes any action

by Stage that “materially reduces, decreases or diminishes the nature, status or

duties and responsibilities” of Gunnerson provided that Gunnerson gives “notice to

the Company of the existence of the event or condition within ninety (90) days of

the initial existence of the event or condition and, upon receipt of such notice, the

Company has a period of thirty (30) days during which to cure the event or
                                           7

condition.” Additionally, good reason does not include “voluntary retirement of the

Executive or any other voluntary action taken by” Gunnerson.

      In opening statements, Stage addressed materiality, voluntariness, and lack

of notice and opportunity to cure. On the issue of notice, it argued:

      But he had already decided to leave. Before he even gave Stage any
      sort of notice, it was over. . . . He resigned and he left. And remember,
      there’s a 30-day cure period. Well, there was no opportunity to cure
      and he left before the end of the 30 days anyway. So even assuming,
      which we very much disagree with, that there was a breach of
      4.4.3(iii), there wasn’t an opportunity to cure. And we believe the
      evidence is going to show what the real reason [for his resignation]
      was: He wanted to go back home . . . He wanted to go into business
      with his best friend. . . . He wanted to be the CEO. He wanted to be an
      owner.

Stage argued the following regarding opportunity to cure:

      Did Stage really have an opportunity to cure? And Mr. Gunnerson
      admits that if he didn’t give them a chance to cure, then he doesn’t
      have good reason. Or had Mr. Gunnerson already made up his mind to
      leave? And if he had made up his mind to leave before he provided
      notice, then this decision is pretty easy, because there was no
      opportunity to cure.

In final argument, Stage again addressed the lack of notice and opportunity to cure:

      Mr. Gunnerson was also aware, it is undisputed, that he had to provide
      notice, that it had to be in writing, that it had to set forth the event and
      condition. He testified, if he didn’t set forth the event and condition he
      admits he didn’t have good reason. He also admits that if he didn’t
      give Stage the opportunity to cure within 30 days, he doesn’t have
      good reason.

Thus, Stage argued that Gunnerson did not have good cause not only because (1)

the diminution in his status was not material and (2) he voluntarily left Stage to
                                          8

take another job with his brother’s company in Ohio, but also because (3) he never

provided Stage with notice or an opportunity to cure.

      In her summary of the parties’ contentions, the arbitrator only identified two

major arguments—materiality and voluntariness—by Stage:

      Respondent asserts that Claimant voluntarily elected to leave his job
      as a result of another job offer, and that the changes to the
      organizational structure do not rise to the level of a material reduction,
      decrease or diminution of his status within the organization. As a
      result, Respondents take the position that no termination payment is
      due under the terms of the Agreement.

Thus, the award does not identify Stage’s third and critical contention that

Gunnerson did not give Stage proper notice of or an opportunity to cure any

material alteration in “the nature, status, or duties and responsibilities” from his

positon as Senior Vice President, Director of Stores.

      2.     The section of the award containing the rulings does not address
             Stage’s third key contention

      Likewise, the arbitration award’s three rulings—the first of which was

undisputed—do not address Stage’s third key contention. Rather, the arbitrator

simply announced that Gunnerson’s diminished status was good cause. Merely

stating that one party wins because that party prevailed on the ultimate issue does

not satisfy Cat Charter if the award does not “mention” a “justification” for why

that party won, unless the dispute is a “swearing match” between the parties or

other circumstances make the reasoning clear.
                                          9

      The Award Was Not “Reasoned” Under More Typical Definitions

      Although the arbitration award was not reasoned under Cat Charter, I write

separately to explain why, in my opinion, the Cat Charter definition is

unsatisfactory.

      The Cat Charter definition is a useful starting point but not adequate for all

circumstances. For a more comprehensive definition, it is useful to look at the

common and legal usage of the word “reasoned” before October 2012, when the

parties agreed that the arbitrator would issue a reasoned award. It is also important

to consider the parties’ reasons for choosing a reasoned award. From these, I would

conclude that, in some circumstances, a reasoned award requires not only the

mention of a justification but also some further elaboration. In my view, the

circumstances of the case and the parties’ contentions are critical issues in

determining whether a brief statement that only “mentions” a justification is

sufficient to provide a reasoned award.

A.    Reasons parties seek a reasoned award

      Requiring a reasoned award to include the arbitrator’s justification, without

the level of detail and expense associated with findings of fact and conclusions of

law, corresponds with the general purposes of reasoned awards. Unlike judicial

decisions, an arbitrator’s award is not subject to review for mistakes of law. 14 But

14
      Hall, 552 U.S. at 588.
                                          10

parties may have other reasons to ask for an explanation. Requiring a reasoned

basis for a decision helps ensure that the arbitrator critically evaluates the parties’

arguments.15 “A decision maker obliged to give reasons to support his decision

may find they do not; ‘the opinion will not write.’” 16 Forcing the arbitrator “to put

pen to paper” helps crystalize thinking. 17 Moreover, “[a] public statement of . . .

reasons helps provide the public with the assurance that creates . . . trust” in the

proceedings.18 Parties who know that the arbitrator considered their contentions

and understand why the arbitrator rejected them can also modify their future

conduct to avoid similar results.

      An award that offers no explanation would accomplish none of these

purposes.

B.    Other uses of the word “reasoned” in legal proceedings focus on
      substance

      A review of the common and legal usage of “reasoned” reveals a more

comprehensive rule for identifying the characteristics of a reasoned award. The

Oxford English Dictionary defines “reasoned” as: “Characterized by or based on

15
      Cf. Scott v. Monsanto Co., 868 F.2d 786, 791 (5th Cir.1989) (explaining that
      reasons must be given because a trial court’s discretion in granting a new trial is
      not “impenetrable” and to assure that the court “does not simply substitute [its]
      judgment for that of the jury”).
16
      Arlinghaus v. Ritenour, 543 F.2d 461, 464 (2d Cir. 1976), aff’d, 622 F.2d 629 (2d
      Cir. 1980).
17
      See id.
18
      Rita v. United States, 551 U.S. 338, 356, 127 S. Ct. 2456, 2468 (2007).
                                          11

reasoning, carefully studied.” 19 “Reasoning” is defined as “the action of the verb

reason, especially the process by which one judgment is deduced from another or

others which are given.”20 The verb “reason” is defined as “[t]o explain, support,

infer, deal with, by (or as by) reasoning” and “[t]o think out, to arrange the thought

of, in a logical manner.” 21 These definitions stress the transparency of the decision-

making process.

      Other dictionaries also define the word “reasoned” in a way that emphasizes

the process of reasoning. For example, The Shorter Oxford Dictionary defines

“reasoned” as “arrange the thought of in a logical manner, embody reason in;

express in a logical form. Also, think out, work out.” 22 “Reason” (verb) is defined

as “to think in a connected, sensible, or logical manner; to employ the faculty of

reason in forming conclusions . . .” 23

      Based on these dictionary definitions, the phrase “reasoned award” in its

common usage connotes an arbitrator’s award that provides at least a cursory

explanation of how the arbitrator reached her decision. And in a legal dispute
19
      13 OXFORD ENGLISH DICTIONARY 292 (2nd ed. 1991).
20
      Id.
21
      Id. at 290.
22
      2 SHORTER OXFORD ENGLISH DICTIONARY 2481 (6th ed. 2007).
23
      Id. For other examples, see WEBSTER’S NEW WORLD COLLEGE DICTIONARY 1210
      (5th ed. 2014) (defining reason as “to think logically about; think out
      systematically; analyze”); MERRIAM–WEBSTER’S COLLEGIATE DICTIONARY 1037
      (11th ed. 2003) (defining “reasoned” as “to justify or support with reasons” or “to
      discover, formulate, or conclude by the use of reason.”).
                                           12

between two opposing parties, this necessarily requires evaluating the parties’ key

contentions.

      Because arbitration is a form of litigation, the legal meaning of “reasoned”

should also be considered. Courts and parties are very familiar with various

requirements for a reasoned explanation. Texas courts require expert opinions to

provide a reasoned basis. 24 Likewise, courts explain in their decisions that they

have a “reasoned basis” for a decision or lack a “reasoned basis” for a contrary

decision.25 An order granting a new trial must provide its reasons. 26 An injunction

24
      Burrow v. Arce, 997 S.W.2d 229, 236 (Tex. 1999) (affidavit that expert considered
      relevant facts and concluded that clients’ settlements were all fair and reasonable
      was conclusory because it did “not supply the basis for those opinions. The
      opinions must have a reasoned basis which the expert . . . is qualified to state.”);
      Allbritton v. Gillespie, Rozen, Tanner & Watsky, P.C., 180 S.W.3d 889, 892 (Tex.
      App.—Dallas 2005, pet. denied) (expert must “provide a reasoned basis for his
      opinion”); see also Elizondo v. Krist, 415 S.W.3d 259, 265 (Tex. 2013) (expert
      opinion was conclusory because it lacked “a demonstrable and reasoned basis on
      which to evaluate his opinion”).
25
      Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 579 (5th Cir. 1986);
      Aggarwal v. Gonzales, 165 Fed. App’x 322, 324 (5th Cir. 2006); Goodspeed v.
      Harman, 39 F. Supp. 2d 787, 794 (N.D. Tex. 1999); cf. Goldman v. Weinberger,
      475 U.S. 503, 520, 106 S. Ct. 1310, 1319 (1986) (Brennan, J., dissenting) (arguing
      that military’s yarmulke prohibition had no “reasoned basis” and therefore
      violated First Amendment).
26
      In re United Scaffolding, Inc., 301 S.W.3d 661, 663 (Tex. 2010) (holding order
      granting new trial “in the interests of justice and fairness” was not “a specific
      reason” for awarding new trial); In re United Scaffolding, Inc., 377 S.W.3d 685,
      668–89 (Tex. 2012) (explaining reasons must be “cogent,” “legally appropriate,”
      and “specific enough to indicate that the trial court did not simply parrot a pro
      forma template.”); In re Colum. Med. Ctr. of Las Colinas, Subsidiary, L.P., 290
S.W.3d 204, 211, 213 (Tex. 2009) (observing that appellate courts must “explain
      by written opinion their analyses and conclusions as to the issues necessary for
      final disposition of an appeal” and that trial court must provide its “reasoning,”
                                           13

must state “the reasons” for its issuance. 27 Various federal rules and statutes

require courts to provide reasons for their actions.28 Courts also frequently reject an

argument because a party fails to provide any reasoned basis for it. 29 In these

contexts, “reasoned” is synonymous with a principled basis.30

      which includes “an understandable, reasonably specific explanation,” when it
      grants new trial); cf. In re Volkswagen of Am., Inc., 22 S.W.3d 462 (Tex. 2000)
      (orig. proceeding) (Hecht, J., dissenting) (contending that trial court that grants a
      motion for new trial should be required “to state a reasoned basis for its ruling”).
27
      TEX. R. CIV. P. 683; see El Tacaso, Inc. v. Jireh Star, Inc., 356 S.W.3d 740, 747–
      48 (Tex. App.—Dallas 2011, no pet.) (observing that “the nature and extent of a
      trial court’s description of the reasons why an applicant will suffer irreparable
      injury will vary from case to case” and holding that injunction order failed to
      comply with this rule when “the trial court’s temporary injunction order simply
      recites the conclusory statement that [moving party] has shown that it will suffer
      an irreparable injury for which it has no other adequate legal remedy.”)
28
      See, e.g., FED. R. CIV. P. 59(d) (requiring trial court that grants new trial sua
      sponte to “specify the reasons in its order.”); Milena Ship Mgmt. Co. v. Newcomb,
      995 F.2d 620, 623 (5th Cir. 1993) (“In reviewing an agency action, we inquire
      whether the agency acted within its authority, adequately considered all the
      relevant factors, and provided a reasoned basis for its decision.”); Arlinghaus v.
      Ritenour, 543 F.2d 461, 464 (2d Cir. 1976) (holding that court should not merely
      repeat language of rule but should make “brief reasoned statement” for its
      decision), aff’d, 622 F.2d 629 (2d Cir. 1980); see also United States v. Diaz
      Sanchez, 714 F.3d 289, 293 (5th Cir. 2013) (stating that 18 U.S.C. § 3553(c)
      requires sentencing courts to “provide a reasoned basis for their sentences”).
29
      See, e.g., Larr v. Minn. Mut. Life Ins. Co., 924 F.2d 65, 67 (5th Cir. 1991); Bowers
      v. ConocoPhillips Co., No. 4:13-CV-3054, 2014 WL 2949446 (S.D. Tex. July 1,
      2014); In re Hernandez, No. H-06-4092, 2007 WL 1886279, at *4 (S.D. Tex. June
      29, 2007).
30
      See, e.g., Hughes v. City of Fort Collins, 926 F.2d 986, 990 (10th Cir. 1991)
      (examining whether proponent of position has articulated reasoned and principled
      basis for proposed extension, modification, or reversal of controlling law).
                                          14

      Courts also speak of reasoned decisions, 31 reasoned analysis,32 and reasoned

explanations 33 when referring to the requirements for some explanation for action

taken by a court or government agency. 34 For example, the Texas Rules of

Appellate Procedure require courts of appeals to “write a brief memorandum

opinion no longer than necessary to advise the parties of the court’s decision and

the basic reasons for it.”35 In Gonzalez v. McAllen Medical Center, Inc., 36 the

Texas Supreme Court held that an intermediate appellate opinion did not comply

31
      Cullen v. Pinholster, 131 S. Ct. 1388, 1419 (2011) (Sotomayor, J., dissenting);
      Cannedy v. Adams, 706 F.3d 1148, 1156 (9th Cir. 2013), amended on denial of
      reh’g, 733 F.3d 794 (9th Cir. 2013), and cert. denied, 134 S. Ct. 1001, 187 L. Ed.
2d 863 (2014); Thompson v. Runnels, 705 F.3d 1089, 1096 (9th Cir. 2013), cert.
      denied, 134 S. Ct. 234 (2013), reh’g denied, 134 S. Ct. 730 (2013); Leonard
      Pipeline Contractors, Ltd. v. C.I.R., 142 F.3d 1133, 1135 (9th Cir. 1998) (holding
      Tax Court must “spell out its reasoning” and that “[a] reasoned decision as to what
      is reasonable in this context must bring together the disparate elements and give
      some account of how the judge has reached his conclusion.”).
32
      Jupiter Energy Corp. v. F.E.R.C., 407 F.3d 346, 349 (5th Cir. 2005) (“[A]n
      agency must cogently explain why it has exercised its discretion in a given
      manner” and “‘must supply a reasoned analysis’ for any departure from other
      agency decisions.”) (internal quotation marks omitted).
33
      Judulang v. Holder, 132 S. Ct. 476, 479, 181 L. Ed. 2d 449 (2011) (“When an
      administrative agency sets policy, it must provide a reasoned explanation for its
      action. That is not a high bar, but it is an unwavering one.”).
34
      CenterPoint Energy Entex v. R.R. Comm’n of Tex., 213 S.W.3d 364, 373 (Tex.
      App.—Austin 2006, no pet.) (citations omitted) (“[A]n agency must provide a
      basis for its rejection of uncontradicted, unimpeached testimony that is neither
      inherently improbable or conclusory. The Commission can reject such
      uncontradicted evidence if it explains or makes findings that permit courts to
      review the reasonableness of that rejection, but a failure to explain can result in
      reversal.”).
35
      TEX. R. APP. P. 47.4.
36
      195 S.W.3d 680, 681 (Tex. 2006).
                                           15

with this rule when it “concluded summarily: ‘Considering the record in its

entirety, we hold that appellants’ factual sufficiency challenge fails because the

jury’s verdict was not against the great weight of the evidence. We overrule

appellants’ first six issues.’” The Court explained that although detailed

evidentiary recitations are unnecessary, “merely stating” that a factual sufficiency

challenge is overruled “does not count as providing the ‘basic reasons’ for that

decision.”37 Instead, “a memorandum opinion generally should focus on the basic

reasons why the law applied to the facts leads to the court’s decision.” 38 The Texas

Supreme Court reversed and remanded the court of appeals’ judgment. 39

      Guidance for measuring whether an arbitrator’s award is “reasoned” should

also come from the requirement that district courts provide a “reasoned” basis for

criminal sentencings. The requirements for a reasonable explanation “are easily

recited, but are necessarily resistant to refinement into bright-line rules:

37
      Id.
38
      Id.
39
      Id. at 682. In a similar case, the Court concluded that a court of appeals violated
      Rule 47.4 when its entire justification “for reversing [a] trial court’s judgment
      [was contained] in [the following] single paragraph: ‘After a thorough review of
      the entire record, we find that the evidence conclusively establishes, as a matter of
      law, all vital facts to support a finding of payment. We must sustain Scott’s legal
      sufficiency issues because the evidence conclusively establishes the opposite of a
      vital fact found by the trial judge (i.e., nonpayment).’” Citizens Nat’l Bank in
      Waxahachie v. Scott, 195 S.W.3d 94, 96 (Tex. 2006).
                                           16

the . . . reason-giving requirement is a flexible, context-specific command.”40

Because of these flexibilities, a reasoned basis does not require “a full opinion in

every case. The appropriateness of brevity or length, conciseness or detail, when to

write, what to say, depends upon circumstances.”41 Some reasoning may be

implicit but clear from the context.42 In some instances the arbitrator may reject

arguments “implicitly and imprecisely.” 43

      Applying these rules demonstrates that Cat Charter’s definition is

overinclusive because it omits the potential that an award may implicitly reject a

key contention. In other circumstances it is overinclusive because it could be

read—unwisely—as requiring the arbitrator to address every contention, no matter

how minor or frivolous, of the losing party. The Cat Charter definition is

overinclusive if it requires the arbitrator to mention or discuss a party’s argument

that “lacks any factual basis or legal merit.” 44 Finally, it is overinclusive if it

requires the arbitrator to mention contentions that                 “are   ‘conceptually

straightforward,’ such that [the parties] may assume, even absent express analysis
40
      See United States v. Diaz Sanchez, 714 F.3d 289, 293 (5th Cir. 2013) (discussing
      requirement of reasoned basis for sentence).
41
      Rita v. United States, 551 U.S. 338, 356, 127 S. Ct. 2456, 2468 (2007).
42
      See id. (“Sometimes a judicial opinion responds to every argument; sometimes it
      does not; sometimes a judge simply writes the word ‘granted’ or ‘denied’ on the
      face of a motion while relying upon context and the parties’ prior arguments to
      make the reasons clear.”).
43
      See United States v. Spiller, 732 F.3d 767, 769 (7th Cir. 2013).
44
      See United States v. Simmons, 587 F.3d 348, 361 (6th Cir. 2009).
                                           17

by the [arbitrator], that the [award] reflects consideration of the argument.” 45 These

exceptions to the requirement of an explicit mention or discussion of a key

contention are appropriate because of the strong federal interest in promoting a

prompt and final arbitration.

      On the other hand, the Cat Charter definition can, in some circumstances,

also be underinclusive because it may be necessary not just to mention but to offer

a brief reason for rejecting the losing party’s key contentions. The major guidepost

for determining when an explicit discussion is required is that the award should set

forth enough detail, given the circumstances of the case, to show that the arbitrator

has considered the losing parties’ key arguments and “has a reasoned basis for”

rejecting them. 46 An arbitrator writing a reasoned award “must generally speak to

arguments that are clearly presented and in dispute.”47 The arbitrator “need not

engage in robotic incantations” of each and every argument, but should address the

key arguments.48

45
      Id. (quoting United States v. Vonner, 516 F.3d 382, 388 (6th Cir. 2008) (en banc)).
46
      See Rita, 551 U.S. at 356, 127 S. Ct. at 2468 (treating sentencing orders, which
      require a judge to “state” his reasons,” as similar to “reasoned decisions”).
47
      See Simmons, 587 F.3d at 361. (discussing requirements for reasoned decision for
      sentencing); see also Diaz Sanchez, 714 F.3d at 294 (a reasoned award should
      include “a few words . . . rejecting” the losing party’s key contentions).
48
      See Diaz Sanchez, 714 F.3d at 294; cf. United States v. Knight, 613 F.3d 1172,
      1173 (8th Cir. 2010) (stating that in sentencing order, the district court “need not
      specifically respond to every argument made by the defendant, or mechanically
      recite each” statutorily-prescribed sentencing factor) (quoting United States v.
      Struzik, 572 F.3d 484, 487 (8th Cir. 2009)); Spiller, 732 F.3d at 769 (“While a
                                          18

      The award should be reviewed in the context of the proceeding as a whole,

including the amount in controversy, the nature of the case, the complexity of the

evidence and arguments, and the procedures followed in the arbitration such as

whether the rules of evidence were followed, whether a court reporter was used,

and whether the parties’ contentions were reflected in writing. Thus, “a pragmatic,

totality-of-the-circumstances review” should be used to determine whether an

arbitrator’s award satisfies the contractually-agreed requirement of a reasoned

award.49

C.    Conclusion: Reasoned awards must give an explanation

      Each of these contexts—dictionaries, courts, and the reasons parties seek an

explanation in an arbitration award—suggest that a “reasoned award” must offer

some basic explanation for either rejecting the losing party’s key contentions or

accepting the prevailing party’s opposing response unless the contentions are

unclear, frivolous, their rejection is so conceptually straightforward that the

      sentencing court is not required to explain its view on every argument in
      mitigation or aggravation, it should give reasons to explain the prison sentence
      imposed.”); Ghassan v. INS, 972 F.2d 631, 636 (5th Cir.1992), cert. denied, 507
U.S. 971, 113 S. Ct. 1412 (1993) (internal citations omitted) (“The [Board of
      Immigration Appeals] need not ‘write an exegesis on every contention.’ . . . [but]
      its opinion must reflect that ‘it has heard and thought and not merely reacted.’”).
49
      See Diaz Sanchez, 714 F.3d at 294 (adopting “a pragmatic, totality-of-the-
      circumstances review into whether the district court evaluated the parties’
      sentencing arguments and rooted its sentence in permissible sentencing factors.”).
                                          19

justification for rejecting them is implied or is unnecessary, or the rejection of the

contention is implicit in other portions of the award.

      To be clear, the omitted issue must be a key issue. Admittedly, determining

a party’s key contentions may be difficult, particularly when, as here, a party does

not put those contentions in writing. But Stage’s third contention was potentially

dispositive and argued more than once in the oral argument, which a court reporter

transcribed, before the arbitrator. Gunnerson’s counsel conceded at oral argument

that Stage raised its notice and cure defense “a lot” during the arbitration. Finally,

Stage’s three contentions correspond to the three requirements for “good cause” in

the written contract. Therefore, I have little difficulty treating it as a key

contention.

      Second, as discussed earlier, an arbitrator need not address contentions that

are not clearly presented, conceptually straightforward, or frivolous on their face

no matter how much time a party spends on the issue. Even when the issue meets

these criteria, an award may contain reasoning that is implicit but clear from the

context.

      The entirety of the award as well as the circumstances of the dispute and the

arbitration proceeding may make it unnecessary to address a contention. But in this

case no circumstances justify the failure to address Stage’s notice and opportunity-

to-cure defense. That defense was a major part of Stage’s case and potentially case
                                          20

dispositive. Stage’s argument on the issue were not frivolous or unclear. Nor is the

arbitrator's rejection of them conceptually straightforward or simple. Finally, the

award does not implicitly address this contention. Thus, under both the Cat

Charter definition and my suggested definition, the award is not reasoned.50

                                               Harvey Brown
                                               Justice

Panel consists of Justices Keyes, Higley, and Brown.

Justice Brown, joining the majority and concurring.

Justice Keyes, dissenting.

50
      The arbitrator’s failure to explicitly address Stage’s materiality contention is an
      example of when a contention may be implicitly rejected because, as the Court
      notes, the award specifically mentions this contention by Stage so the parties know
      she considered it.