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Johnson v. RCO Legal, P.S.

United States District Court, W.D. Washington, Seattle

November 20, 2017

LARRY W JOHNSON, Plaintiff,
v.
RCO LEGAL, P.S., Defendant.

          ORDER

          Hon. Richard A. Jones, United States District Judge

         This matter comes before the Court on Plaintiff Larry Johnson's application to confirm arbitration award. Dkt. # 1. Defendant RCO Legal, P.S. (“RCO” or “Defendant”) opposes the application and moves the Court to vacate the arbitration award. Dkt. # 9. Plaintiff further moves the Court for an order directing the Clerk to issue a prejudgment writ of attachment and prejudgment writ of garnishment. Dkt. # 20. The Court GRANTS Plaintiff's application and DENIES Defendant's motion to vacate the arbitration award. The motion for prejudgment remedies is MOOT.

         I. BACKGROUND

         The parties in this action dispute Defendant's actions in terminating Plaintiff. The parties participated in arbitration, and the arbitrator found that Defendant violated the employment agreement (“Agreement”) when it terminated Plaintiff “for cause.” Dkt. # 4 at 7-16 (Ruling). The arbitrator then issued an award in favor of Plaintiff. Dkt. # 4 at 27 (Award). Plaintiff now moves the Court to confirm this award. Dkt. # 1. Defendant objects to the award and requests that the Court vacate the arbitrator's ruling and award. Dkt. # 9.

         II. LEGAL STANDARD

         A party may petition a court for an order vacating an arbitration award “where the arbitrators exceeded their powers[.]” 9 U.S.C. § 10(a)(4). However, the moving party faces a “high hurdle”; “[i]t is not enough for petitioners to show that the panel committed an error-or even a serious error.” Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 671 (2010); see also Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013) (“Under the FAA, courts may vacate an arbitrator's decision ‘only in very unusual circumstances.'”) (citations omitted). “It is only when [an] arbitrator strays from interpretation and application of the agreement and effectively ‘dispense[s] his own brand of industrial justice' that his decision may be unenforceable.” Stolt-Nielsen, 559 U.S. at 671 (citing Major League Baseball Players Assn. v. Garvey, 532 U.S. 504, 509 (2001)); see also Cross Link, Inc. v. Salt River Constr. Corp., No. 16-CV-05412-JSW, 2017 WL 4351729, at *3 (N.D. Cal. May 8, 2017) (finding that “a court must uphold an arbitrator's decision unless it is ‘completely irrational ... or exhibits a manifest disregard of law[.]'”) (quoting Kyocera Corp. v. Prudential Bache Trade Servs., 341 F.3d 987, 997 (9th Cir. 2003)). The question for the court is “whether the arbitrator (even arguably) interpreted the parties' contract, not whether he got its meaning right or wrong.” Oxford Health Plans, 569 U.S. at 564. If an award is not vacated, modified, or corrected under § 10, then the court must grant a motion confirming the arbitration award. 9 U.S.C. § 9.

         III. DISCUSSION

         A. Petition to Confirm Arbitration Award and Motion to Vacate the Same

         Defendant claims that the arbitrator exceeded his powers in four ways: (1) by disregarding Section 237 of the Restatement (Second) of Contracts (“Section 237”); (2) by overlooking the after-acquired evidence of Plaintiff's alleged unethical conduct; (3) by focusing on one section of Agreement rather than other sections; and (4) by finding in a way that is repugnant to public policy. See generally Dkt. # 9.

         Defendant claims that the arbitrator made no mention of Section 237. Dkt. # 9 at 8. Section 237 states,

Except as stated in § 240, it is a condition of each party's remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time.

         Restatement (Second) of Contracts § 237 (1981). The drafters of the Restatement provided various illustrations in connection with this Section. Defendant cites Illustration 8 as being directly related to the situation at issue in this matter. Dkt. # 9 at 9; see also Restatement (Second) of Contracts § 237. That illustration describes the following:

A and B make an employment contract. After the service has begun, A, the employee, commits a material breach of his duty to give efficient service that would justify B in discharging him. B is not aware of this but discharges A for an inadequate reason. A has no claim against B for discharging him. B has a claim against A for damages for total breach (ยง 243) based on B's loss due to A's failure to give efficient service up to the time of discharge, but not for damages based on the loss of A's ...

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