Court Opinion

ID: 3001128
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:13:06.204578+00
Date Added: 2024-06-11T15:03:13.552126
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 06-3094
DAVID M. WEBSTER,
                                             Plaintiff-Appellant,
                                v.

A. T. KEARNEY, INCORPORATED and
ELECTRONIC DATA SYSTEMS CORPORATION,
                                          Defendants-Appellees.
                         ____________
           Appeal from the United States District Court
      for the Northern District of Illinois, Eastern Division.
         No. 06 C 1811—Harry D. Leinenweber, Judge.
                         ____________
   ARGUED JUNE 7, 2007—DECIDED NOVEMBER 2, 2007
                    ____________

 Before BAUER, ROVNER, and SYKES, Circuit Judges.
  ROVNER, Circuit Judge. In this appeal we decide
whether David Webster filed his motion to vacate an
arbitration award in federal district court one day too
late. The district court concluded that the motion was
untimely, having determined that the statute of limita-
tions began to run when the award was placed in the
mail and stopped when the defendants were served
with notice of Webster’s motion three months and one
day later. Webster contends that both dates were im-
proper benchmarks. We conclude that under § 12 of the
Federal Arbitration Act (“FAA”), Webster’s motion was
2                                            No. 06-3094

untimely. In reaching this decision, we have found
it necessary to clarify our prior decisions concerning
the critical dates for purposes of the FAA’s three-month
limitations period.

                           I.
  A.T. Kearney, Inc. hired Webster as General Counsel
in 1994. The following year, Electronic Data Systems
Corporation acquired A.T. Kearney. After working for the
new entity for a number of years, Webster lost his job
when A.T. Kearney’s legal department was eliminated. He
brought claims against the defendants (collectively “EDS”)
for age discrimination and breach of his 1995 Employ-
ment Agreement. That agreement contained a mandatory
arbitration provision, under which the parties agreed
to arbitrate employment disputes according to the proce-
dures of the American Arbitration Association (“AAA”).
Accordingly, Webster filed a demand for arbitration in
October 2003, and, after nearly two years, a hearing
was held. Ultimately the AAA-appointed arbitrator
found for EDS.
  The arbitrator issued the award on January 4, 2006.
That same day, the award was placed in the mail and
also distributed to both parties’ counsel via e-mail. A
cover letter dated January 4 accompanied both dissemina-
tions. Webster’s attorney, Norman Lerum, first opened
the e-mail on January 5, although he acknowledges that
the message was “received” by his “office computer” on
January 4. Unsatisfied with the arbitrator’s decision,
Webster sought to overturn the award on the ground that
the arbitrator had exceeded his authority, see 9 U.S.C.
No. 06-3094                                                     3

§ 10(a)(4). Toward that end, he filed a motion1 to vacate
the award in federal district court on April 3, 2006, and
served EDS with notice of the motion on April 5. EDS
responded by moving to dismiss Webster’s action as
untimely.
  The FAA provides that when a party moves to vacate,
confirm, or modify an arbitration award, notice “must
be served upon the opposing party or his attorney within
three months after the award is filed or delivered.” 9
U.S.C. § 12. EDS argued that the award was “delivered”
for purposes of the FAA when it was placed in the mail
on January 4, or alternatively when it was e-mailed the
same day. EDS further maintained that it was “served”
when it received notice of the filing of the federal action on
April 5—one day after the three-month anniversary of
the award’s delivery. The district court took the delivery
date to be January 4, when the e-mail was sent and
received (although not opened). The court held that the
statute of limitations expired on April 4, exactly three
months later, rendering Webster’s federal action untimely.

                               II.
  We note at the outset that, although the parties agree
that our review is de novo, they dispute whether this
appeal is from the denial of a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6) or a motion for

1
  As we will discuss further, the motion was erroneously styled
as a “complaint” and the case was treated by both parties and the
district court as a new civil litigation, including the filing and
granting of a “motion to dismiss” under Federal Rule of Civil
Procedure 12(b)(6). This is contrary to § 6 of the FAA, which
provides that actions to challenge or confirm arbitration awards
“shall be made and heard in the manner provided by law for
the making and hearing of motions.”
4                                               No. 06-3094

summary judgment under Rule 56. They are both mis-
taken, and we are puzzled by the way the parties’
attorneys—who purport to be experienced with litigation
under the FAA—proceeded in the district court. Under
the FAA, “[a]ny application to the court hereunder shall
be made and heard in the manner provided by law for
the making and hearing of motions.” 9 U.S.C. § 6. This
provision of the FAA, we have held, removes actions to
confirm or vacate arbitration awards from the realm of
civil cases governed by the Federal Rules of Civil Proce-
dure. See Fed R. Civ. P. 1, 81(a)(3); Health Servs. Mgmt.
Corp. v. Hughes, 975 F.2d 1253, 1257-58 (7th Cir. 1992). In
Hughes, the filer of a motion to vacate protested the
district court’s denial of the motion and the entry of
judgment in favor of the opposing party on the ground
that the district court had not afforded the movant the
process required by Federal Rule of Civil Procedure 16,
including scheduling conferences and briefing. We held
that § 6 of the FAA “preempts the applicability of
the Federal Rules” in favor of the rules governing mo-
tions practice. Similarly, other courts have concluded
that actions under the FAA to challenge or confirm
awards proceed outside the Federal Rules, except
insofar as the FAA is silent. See Productos Mercantiles e
Industriales, S.A. v. Faberge USA, Inc., 23 F.3d 41, 46 (2d
Cir. 1994); O.R. Sec., Inc. v. Prof ’l Planning Assocs., Inc.,
857 F.2d 742, 748 (11th Cir. 1988).
  Accordingly, the procedures used in this case diverged
from those required by the FAA. No “complaint” or “motion
to dismiss” or any other filing conceived by the Federal
Rules of Civil Procedure need have been filed. Webster, as
the party challenging the award, should have filed a
motion to vacate and “provid[ed] the Court with all
matters that it desires the Court to consider in support” of
that motion. Hughes, 975 F.2d at 1258 n.3. EDS, in turn,
could have contested the motion by seeking confirmation
No. 06-3094                                              5

of the award, again submitting whatever supporting
documentation was necessary for a decision. If necessary,
and in keeping with its motions practice, the district
court could have scheduled a hearing or other additional
steps. We do not suggest that the procedural foibles
amounted to reversible error; this was a case of mislabel-
ing rather than mishandling. The district court did not
rule on the merits of Webster’s motion, and the parties
had the opportunity to submit documentary evidence on
the issue of timeliness, the only matter now before us. See
Productos Mercantiles e Industriales, S.A., 23 F.3d at 46
(explaining that district court properly decided motion
based solely on papers submitted by parties). We simply
note the procedural irregularities by way of considering
whether the parties properly identify the standard of
review as de novo. They are correct, but not because we
are reviewing an appeal from a motion to dismiss or a
motion for summary judgment, but because a district
court’s decision on a motion to vacate or confirm an
arbitration award under the FAA is reviewed de novo.
Cytyc Corp. v. DEKA Prods. Ltd. P’ship, 439 F.3d 27, 32
(1st Cir. 2006); Patten v. Signator Ins. Agency, Inc., 441
F.3d 230, 234 (4th Cir. 2006); Sarofim v. Trust Co. of the
W., 440 F.3d 213, 216 (5th Cir. 2006). We turn now to the
issue of timeliness.
  On appeal, Webster argues that his motion was timely
for a number of reasons. We begin with the more straight-
forward issue of when the three-month statute of limita-
tions ceases to run. Webster contends that the filing of a
motion to vacate is the relevant benchmark because filing
signals the commencement of a federal action. EDS
contends that the phrase “service of notice” in § 12 of the
FAA should be construed literally to mean that the
limitations period stops only when notice is served.
  The rule that Webster suggests has no grounding in the
plain language of the relevant statute, and that is where
6                                               No. 06-3094

our inquiry begins and ends, absent some ambiguity. See
Greenfield Mills, Inc. v. Macklin, 361 F.3d 934, 954 (7th
Cir. 2004); O’Kane v. Apfel, 224 F.3d 686, 688-89 (7th Cir
2000). We find nothing ambiguous about § 12’s provision
that the statute of limitations is tolled when notice of a
motion to vacate is “served upon the opposing party or his
attorney.” Despite this plain language, Webster insists
that the “clear intent of 9 U.S.C. § 12 was to toll the
three month limitation with the commencement of an
action to vacate the challenged arbitration award,” i.e., the
filing of the motion. He maintains that § 12 of the FAA
was superseded by Federal Rule of Civil Procedure 3,
which provides: “A civil action is commenced by filing
a complaint with the court.” But our preceding analysis
should make clear that the Federal Rules do not preempt
the FAA, and that a “complaint” is not needed at all in an
action to vacate or confirm an award. See Hughes, 975
F.2d at 1257-58. Indeed, the Federal Rules themselves
provide that they apply to federal civil suits “with the
exceptions stated in Rule 81,” Fed. R. Civ. P. 1, and Rule
81(a)(3) provides that in proceedings under the FAA (title
nine of the United States Code), “these rules apply only
to the extent that matters of procedure are not provided
for in those statutes.” Webster’s argument that the Fed-
eral Rules supercede FAA § 12 by implication therefore
is unavailing. Accordingly, the statute of limitations
did not terminate until Webster gave the defendants
notice of his intent to challenge the arbitration award on
April 5.
  Before moving on, we wish to clarify some of our previ-
ous statements about the tolling date. The parties point
out, correctly, that at least two of our past decisions could
be read to provide some support for Webster’s position that
the statute of limitations stops upon the filing of a motion
to vacate or otherwise alter an award. See Olson v.
Wexford Clearing Servs. Corp., 397 F.3d 488, 492 (7th Cir.
No. 06-3094                                                 7

2005) (“ ‘[H]e had to file suit within three months of the
April 15 award to preserve his arguments about the
arbitrator’s alleged misconduct”); Papapetropoulous v.
Milwaukee Transp. Servs., Inc., 795 F.2d 591, 598 n.8 (7th
Cir. 1986) (stating that motion was time-barred because
plaintiff “failed to file it within the three month statute
of limitation time period contained in 9 U.S.C. § 12”). But
these cases do not affect our present analysis because in
both cases the precise end date was of no import. In Olson,
we decided when the challenged award was “final” and
whether a motion for reconsideration tolls the statute
of limitations. 397 F.3d at 492, 493. And in Papapetrop-
oulous, an action under 42 U.S.C. § 1983, the plaintiff
did not seek relief in federal court until ten months after
the award, and may have lacked standing to challenge
the award. 795 F.2d at 596 & 596 n.8. To the extent
that our use of the term “filing” in those cases is mislead-
ing, we clarify now and for purposes of future cases that
service of a motion to vacate is the act that stops the three-
month statute of limitations. Unless and until Congress
amends § 12 and makes filing the critical date, we will
continue to enforce the plain language of the statute.
  Next we must decide when the statute of limitations
began to run. The candidates are January 4, when the
award was placed in the mail, e-mailed by the AAA, and
received by Lerum (Webster’s counsel) at his “office com-
puter”; January 5, when Webster first opened the e-mail
from the AAA; and January 9, when Lerum received the
arbitrator’s award in the mail. Webster maintains that
the period began to run when he received the mailing, or
at the very earliest when he opened the e-mail attachment.
   Under 9 U.S.C. § 12, the three-month period begins
running when the arbitration award is “filed or delivered.”
Surprisingly, few decisions have directly addressed what
it means for an award to be “delivered.” Moreover, courts
have imprecisely substituted a number of other terms for
8                                                No. 06-3094

“delivery” without explanation.2 We need not dwell long
on statutory interpretation or judicial construction of the
term, however, because the parties in this case agreed to
proceed under the rules of the AAA, and those rules sup-
ply the definition.
  Under the terms of an addendum to Webster’s Em-
ployment Agreement, the parties agreed to arbitration
“pursuant to AAA procedures.” Accordingly, the arbitra-
tion proceeded according to the September 2005 version of
the AAA’s National Rules for the Resolution of Employ-
ment Disputes.3 Two rules are relevant here. First, Rule
33 provides that the parties are deemed to have consented
to service by mail of all “papers, notices, or process”
relating to the arbitration, including “the entry of judg-
ment on an award made under these procedures.” Second,
Rule 34(g) provides in relevant part: “The parties shall
accept as legal delivery of the award the placing of the
award or a true copy thereof in the mail.”
  We conclude that the clear mutual consent to service
by mail, coupled with the definition of “delivery” as place-
ment in the mail, establish that, at least for purposes of
this case, the award was “delivered” on January 4 when
the AAA case manager placed the award in the mail.
Webster’s objections to this position are unconvincing.
He contends that his consent to service by mail under Rule
33 extends only to service of papers “other than the
arbitration award,” but we find no support for this proposi-

2
  For instance, multiple courts, including this one, have im-
plied (in dicta) that the parties have three months from when
the award is “issued” or “entered” to file a motion. See Olson,
397 F.3d at 488; Wallace v. Buttar, 378 F.3d 182, 197 (2d. Cir.
2004); Fradella v. Petricca, 183 F.3d 17, 20 (1st Cir. 1999).
3
  The Rules have since been amended and the ones we discuss
have since been renumbered.
No. 06-3094                                                     9

tion in the language of the rule. And even if Webster is
correct that Rule 34 is the only one that pertains to
awards, that rule establishes that delivery of an award is
“the placing of the award or a true copy thereof in the
mail.” Thus, the date the award was placed in the
mail—January 4—controls.
  We note for the sake of completeness that the only other
federal appellate court to decide what “delivery” means
for purposes of the FAA’s statute of limitations came to
a different conclusion. In Sargent v. Paine Webber Jackson
& Curtis, Inc., 882 F.2d 529 (D.C. Cir. 1989), the court
held that the date of receipt, not of mailing, was the date
of delivery. Id. at 531. The D.C. Circuit’s decision was
premised on its belief that interpreting “delivery” as
“mailing” would “hopelessly twist[ ] the ordinary meaning
of the word ‘delivered.’ ” 4 Id. Although we agree that the
interpretation is not intuitive, the AAA rules equate “legal
delivery” with “placement in the mail,” and given the
parties’ agreement that those rules govern their dispute,
we see no reason to interpret “delivery” in a way that
conflicts with Rule 34(g). After all, under the FAA the
parties are free to agree to any governing rules, and the
courts will enforce whatever system they choose. See Volt
Info. Sci., Inc. v. Bd. of Tr. of Leland Stanford, 489 U.S.
468, 476 (1989) (“There is no federal policy favoring

4
   We would note that this case demonstrates that equating
“delivery” with “receipt” does not solve everything; there can
still be multiple definitions of “receipt” such as those proposed
by Webster. Is the award “received” when an e-mail is sent and
delivered or when it is read? Is “receipt” the arrival of a letter
at the destination address, or the opening of the letter by the
proper party? However, the D.C. Circuit helpfully noted in
Sargent that the case was not one in which a potential distinc-
tion between receipt and delivery “could play a role.” 882 F.3d
at 531.
10                                             No. 06-3094

arbitration under a certain set of procedural rules; the
federal policy is simply to ensure the enforceability,
according to their terms, of private agreements to arbi-
trate.”); Security Ins. Co. of Hartford v. TIG Ins. Co., 360
F.3d 322, 325 (2d Cir. 2004). Because the D.C. Circuit’s
decision is factually distinguishable—that case is silent
about the governing rules—we do not believe our deci-
sion today creates a conflict. Additionally, at least one
other court has assumed that the date of receipt, not the
date of mailing, is when an award is delivered. See
Pfannensteil v. Merrill Lynch, Pierce, Fenner, & Smith, 477
F.3d 1155 (10th Cir. 2007). In Pfannensteil, the court
assumed that the three-month period began to run when
the plaintiff “received” the award (five days after it was
issued). Id. at 1158. It is unclear what “receipt” entailed,
but in any event the meaning of “delivery” was not before
the court, and its opinion does not explain its use of
“receipt” as a benchmark. Moreover, there is no indica-
tion that the parties had agreed to another definition of
“delivery,” as they did in the case before us. We therefore
have little reservation holding that in this case the three-
month period started on January 4, when the AAA repre-
sentative placed the award in the mail.
  Of course, the physical mail was not the only form of
notice in this case. EDS argues, and the district court
concluded, that January 4 is the date of delivery for the
alternative reason that the award and cover letter were
sent to both parties as e-mail attachments on that date.
Webster’s attorney acknowledges that his “office computer
received [the award] by email” on that date, but insists
that the relevant “delivery date”—if e-mail is ever proper
notice, which he disputes—is the date on which he opened
the e-mail, January 5. We are inclined to agree with the
district court that electronic “delivery” occurred when the
e-mail was sent on January 4. Under the AAA rules,
placement in the mail signifies delivery of postal mail,
No. 06-3094                                              11

so we see no reason to apply a different standard to e-
mail. Moreover, Webster’s proffered interpretation—that
delivery occurs when an e-mail is first opened—would
allow a party to postpone the statute of limitations indefi-
nitely simply by ignoring his correspondence. Notably,
Webster does not argue that postal mail is “delivered” only
when the recipient opens the envelope; instead he argued
that January 9, the date he received the written award,
was the operative date.
  All this is academic, if, as Webster contends, e-mail
transmission can never constitute proper delivery of an
award unless the parties explicitly consented to this
form of notification. For support, he turns to the AAA
Rules, under which, as we have seen, the parties are
deemed to have consented to service by mail. Although
under Rule 33 the parties “may” consent to notice through
electronic means, consent to such notice is not implied.
We are skeptical of Webster’s assertion that he never
consented to e-mail transmission because the record
reveals that a great deal of communication between the
parties and the AAA was accomplished through e-mail.
In particular, it appears that a number of scheduling
orders were disseminated to the parties only through
e-mail. Still, we are reluctant to hold, absent evidence
of an express agreement between the parties, that his
use of electronic communication for certain matters
constituted consent to accept delivery of the award by
e-mail. We will leave that decision for another case,
because our conclusions with respect to the mailing of
the written award foreclose Webster’s argument that his
motion was timely.

                           III.
 Because the statute of limitations began to run when the
award was placed in the mail on January 4, 2006, and
12                                            No. 06-3094

expired three months later on April 4, Webster’s motion
to vacate the arbitration award was untimely. Service of
notice on EDS, on April 5, occurred one day too late, and
denial of the motion to vacate was proper. Accordingly, the
judgment of the district court is AFFIRMED.

A true Copy:
      Teste:

                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit

                  USCA-02-C-0072—11-2-07