Court Opinion

ID: 2766819
Source: CourtListenerOpinion
Date Created: 2015-01-06 16:00:22.881547+00
Date Added: 2024-06-11T10:45:45.132377
License: Public Domain

14-253-cv
     Sotheby’s Int’l Realty v. Relocation Grp., LLC

                                 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.

 1          At a stated term of the United States Court of Appeals for the Second Circuit, held at the
 2   Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
 3   6th day of January, two thousand fifteen.
 4
 5   PRESENT:         GUIDO CALABRESI,
 6                    BARRINGTON D. PARKER,
 7                    DEBRA ANN LIVINGSTON,
 8                                      Circuit Judges.
 9
10
11   SOTHEBY’S INTERNATIONAL REALTY, INC.,
12                            Plaintiff-Appellee,
13
14           -v-                                                                No. 14-253-cv
15
16   RELOCATION GROUP, LLC,
17                                      Defendant-Appellant,
18
19   PETER ROSATO,
20                                      Defendant.
21
22
23
24                                                    KATHLEEN M. SCANLON, Law Offices of Kathleen M.
25                                                    Scanlon, PLLC, New York, NY, and THOMAS E.
26                                                    CROSBY, Crosby Law Firm. LLC, Guilford, CT, for
27                                                    Plaintiff-Appellee.
28
29                                                    JOHN R. HARNESS, Law Office of John R. Harness,
30                                                    Stamford, CT, for Defendant-Appellant.
31
 1                                                 BRIAN DEL GATTO and JULIA PARIDIS, Wilson, Elser,
 2                                                 Moskowitz, Edelman & Dicker LLP, Stamford, CT,
 3                                                 for Amicus Curiae NRT New England LLC d/b/a
 4                                                 Coldwell Banker Residential Brokerage.
 5
 6

 7          UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

 8   DECREED that the judgment of the district court is REVERSED.

 9          Defendant-Appellant Relocation Group, LLC (“Relocation Group”) appeals from the January

10   28, 2013, judgment of the United States District Court for the District of Connecticut (Young, J.)

11   (sitting by designation) granting the petition to vacate an arbitration award in Relocation Group’s

12   favor brought by Plaintiff-Appellee Sotheby’s International Realty, Inc. (“Plaintiff-Appellee”). The

13   district court vacated the award on the ground that the arbitration panel had acted in “manifest

14   disregard of the law” by improperly applying Conn. Gen. Stat. § 20-325a(b), which requires real

15   estate brokers to meet certain statutory prerequisites before commencing an action to recover a

16   commission. See Sotheby’s Int’l Realty, Inc. v. Relocation Grp., LLC, 987 F. Supp. 2d 157, 168-69

17   (D. Conn. 2013). On appeal, Relocation Group contends that the district court improperly applied

18   the manifest disregard of the law standard. We assume the parties’ familiarity with the facts of the

19   case and the issues presented for appellate review.

20          This Court reviews de novo the district court’s application of the manifest disregard of the

21   law standard. See GMS Grp., LLC v. Benerson, 326 F.3d 75, 77 (2d Cir. 2003). Manifest disregard

22   is a severely limited doctrine that imposes a heavy burden on the party seeking to vacate an arbitral

23   award. “[I]t is a doctrine of last resort—its use is limited only to those exceedingly rare instances

24   where some egregious impropriety on the part of the arbitrators is apparent.” Duferco Int’l Steel

25   Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 389 (2d Cir. 2003). Above all else, “[a] motion

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 1   to vacate filed in a federal court is not an occasion for de novo review of an arbitral award.” Wallace

 2   v. Buttar, 378 F.3d 182, 189 (2d Cir. 2004).

 3           As we have said before, “[a] court reviewing an arbitral award cannot presume that the

 4   arbitrator is capable of understanding and applying legal principles with the sophistication of a

 5   highly skilled attorney.” Id. at 190. For this reason, and because of the “great deference” that courts

 6   must grant an arbitration panel’s decision, id. at 189, this Court has imposed the following three

 7   requirements in order to find that an award was issued in manifest disregard of the law. “First, we

 8   must consider whether the law that was allegedly ignored was clear,” as “[a]n arbitrator obviously

 9   cannot be said to disregard a law that is unclear or not clearly applicable.” T.Co Metals, LLC v.

10   Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339 (2d Cir. 2010). Second, we must find that the

11   arbitrators did in fact err in their application of the law, and that the outcome reached was erroneous.

12   Id. “Even where explanation for an award is . . . non-existent, we will confirm it if a justifiable

13   ground for the decision can be inferred from the facts of the case.” Id. Third, we must find that the

14   arbitrators knew of the law’s existence and its applicability to the problem before them. Id.

15           The district court in this case failed to apply this test, opting instead for a detailed

16   examination of Conn. Gen. Stat. § 20-325a(b), citing numerous unpublished cases and quoting at

17   length from the statute’s legislative history. See Wallace, 378 F.3d at 189. Its analysis was

18   problematic. First, the law that is allegedly flouted must be clear. But the district court here did not

19   find § 20-325a(b) to be clear. Instead, the court noted that construing § 20-325a(b) by its terms

20   would be “definitively absurd,” Sotheby’s, 987 F. Supp. 2d at 167, without considering how a

21   statutory provision can be “absurd” on its face and yet clear. The second step requires a district court

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 1   to examine the record and the law for any “barely colorable justification” for the panel’s decision.

 2   Wallace, 378 F.3d at 190 (quoting Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344

 3 F.3d 255, 260 (2d Cir. 2003)). The district court also failed to address alternate readings of § 20-

 4   325a(b) that might have supported the arbitrators’ decision. The district court’s determination that

 5   the panel acted in manifest disregard of the law was, we believe, incorrect.

 6          We have considered all of Plaintiff-Appellee’s remaining arguments and find them to be

 7   without merit. For the foregoing reasons, the judgment of the district court is hereby REVERSED.

 8   We direct the district court to enter an order confirming the arbitration award.

 9                                                                FOR THE COURT:
10                                                                Catherine O’Hagan Wolfe, Clerk
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