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Owa v. Fred Meyer Stores

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

May 29, 2018



          The Honorable Richard A. Jones United States District Judge

         This matter comes before the court on Defendant Advanced Fresh Concepts Franchise Corporation's motion to confirm an arbitration award. Dkt. # 151. For the reasons that follow, the Court GRANTS the motion.


         Plaintiff Pilrang Bae Owa was the sole member and operator of Sakura Foods Everett, L.L.C., a limited liability company engaged in the production and sale of sushi and other raw fish products. See Dkt. # 92-1 at 17-20. On December 20, 2012, Plaintiff, in her individual capacity, entered into a franchise agreement with Defendant. Dkt. # 34-2 at 2. The franchise agreement permitted Plaintiff to operate a full-time food service counter selling sushi inside of a Fred Meyer grocery store in Everett, Washington. Id. at 34. The franchise agreement also included an agreement between Plaintiff and Defendant to arbitrate “any dispute that arises out of or relates directly or indirectly to this Agreement or the relationship of the parties hereto.” Id. at 28. On January 23, 2013-a month after signing the franchise agreement in her personal capacity-Plaintiff created “Sakura Foods Everett, L.L.C.” to execute the provisions of the franchise agreement. Dkt. # 34-3 at 8-11. On February 13, 2013, Plaintiff obtained a business license for her operation under the name “Sakura Foods Everett LLC.” Id. at 13. The Washington Secretary of State administratively dissolved Plaintiff's limited liability company on May 1, 2014, but Plaintiff continued operating the business until Defendant terminated the franchise agreement on April 26, 2016. See Dkt. ## 170 at 1, 81-1 at 9.

         On April 25, 2016-the day before Defendant terminated the franchise agreement-Plaintiff filed a lawsuit in the Superior Court for King County, Washington, alleging that Defendant and Fred Meyer violated state and federal anti-discrimination laws and committed common-law torts. Dkt. ## 1, 1-2 at 1-26. Plaintiff first amended her lawsuit on May 5, 2016, and again on July, 29, 2016. Dkt. # 1 at 2. On July 19, 2016, Defendant responded to Plaintiff's first amended complaint by filing an arbitration demand with the American Arbitration Association (AAA). Dkt. # 32 at 5. Defendant sought an arbitral declaration that Plaintiff was an independent business owner, and not an employee, to negate Plaintiff's ability to make a prima facie case for employment discrimination. See id. On August 5, 2016, Fred Meyer removed the case to federal court in accordance with 28 U.S.C. §§ 1332 and 1441. Id. On August 23, 2016, AAA agreed to arbitrate the dispute between Plaintiff and Defendant, noting that the relief sought by Defendant was within the scope of franchise agreement's arbitration provision. See id.

         On September 1, 2016, with arbitration pending and the case removed to federal court, Defendant notified the Court of the anticipated arbitration. Dkt. # 22. On September 22, 2016, Defendant petitioned the Court to either 1) compel arbitration and stay Defendant's participation in the case until completion of arbitration or 2) dismiss Plaintiff's complaint against Defendant outright. Dkt. # 32 at 5. On December 15, 2016, the Court granted Defendant's motion to compel arbitration, agreeing to stay Defendant's involvement in the case until the completion of arbitration. Dkt. # 66.

         On June 29, 2017, Arbitrator Mary S. Jones issued a partial final award in favor of Defendant, finding that Plaintiff was not employed by Defendant. Dkt. # 81-1 at 22. Accordingly, the arbitrator dismissed Plaintiff's state and federal employment discrimination claims against Defendant. Id. at 23. The arbitrator did not rule on Plaintiff's tort claim in the partial final award; instead, the arbitrator reserved the disposition of the tort claim and assignment of liability for attorney's fees until the comprehensive final award. Id.

         On November 28, 2017, the arbitrator issued the comprehensive final award. Dkt. # 92-1. The comprehensive final award denied Plaintiff relief for her intentional infliction of emotional distress (IIED) claim. Id. at 8-9. The final award also awarded fees to Defendant, as the prevailing party, in accordance with the franchise agreement and California law. Id. at 9-10; see also Cal. Civ. Code § 1717(a) (fees shall be awarded to the prevailing party where a contract provides for attorney's fees). Plaintiff claimed $71, 000 of attorney fees for the arbitration, and Defendant claimed legal fees totaling $439, 787. Id. at 10. Because of the disparity in expenditures, the arbitrator indicated that she gave “careful and serious consideration . . . [evaluating] the reasonableness of the attorney's fees and costs incurred by” Defendant. Id. When deciding how much to award Defendant, the arbitrator cited consideration of

1) the numerous causes of action and contrary positions taken by . . . [Plaintiff] at various times over the course of this dispute, 2) . . . [Defendant's] need for local Washington State counsel, and 3) the very different practice, presentation, preparation and organizational styles of each party's counsel.

Id. The arbitrator also noted that Defendant faced a claim of $6.8 million in punitive damages, and that Defendant could not take that potential liability “lightly.” Id. Ultimately, the arbitrator awarded Defendant $373, 126.98 in fees, basing her decision on “the totality of the circumstances in this case, the reasonableness of the fees . . . and the clear and unambiguous requirement in the Agreement mandating a fee [award] . . . to the prevailing party[.]” Id. at 10-11.

         On November 29, 2017, AAA transmitted the signed comprehensive final award by e-mail to Plaintiff and Defendant. Dkt. # 152-1 at 86. On December 1, 2017, Defendant filed an arbitration status report informing the Court of the final arbitration award. Dkt. #92. On the same day, Plaintiff filed her own status report, informing the Court of her intention to move to vacate the arbitration award due to the arbitrator's partiality, corruption, and manifest disregard for the law. Dkt. # 94 at 1-2. On December 4, 2017, Plaintiff filed an additional status report reasserting her intention to move to vacate the award, claiming the arbitrator failed to give sufficient weight to Plaintiff's emotional state when deciding the IIED claim. Dkt. # 95. In addition to filing status reports with the Court, Plaintiff also petitioned AAA for a modification of the final arbitration award. See Dkt. # 152-1 at 80. On December 12, 2017, the arbitrator declined to modify the award, noting that “the merits on all the claims presented in this matter have already been decided.” Id. AAA transmitted this decision to the parties on December 13, 2017. Id. at 88.

         On March 15, 2018, Defendant filed the current motion to confirm the arbitration award. Dkt. # 151. Defendant argues that the comprehensive final arbitration award is conclusive on all issues between Plaintiff and Defendant, and that confirmation of the award is proper and in accordance with the Federal Arbitration Act (FAA). Id. at 7-9. Importantly, Defendant argues that any argument against confirmation of the award is moot because Plaintiff failed to move to vacate, modify, or correct the award within statutory guidelines. Id. at 8.

         Plaintiff's reply challenges the current motion, arguing that confirmation of the arbitration award is improper because 1) judgment against Sakura Foods, L.L.C. cannot be supported because the corporate entity no longer exists; and 2) the arbitrator exceeded her powers by granting attorney's fees on the IIED claim. Dkt. # 160 at 1-2. Plaintiff's reply also renews the allegations made in her post-arbitration status report that the arbitrator was partial, corrupt, and exhibited a manifest disregard for the law. Id. at 2-6; see also Dkt. # 94 at 1-2. Plaintiff supports those claims with a detailed declaration outlining numerous objections to the arbitration proceedings. See Dkt. # 159-2. Despite these allegations, Plaintiff notes that she “does not seek award vacatur” and only asks the Court “to use its inherent equity powers and on ground of public policy to vacate an award representing an extreme miscarriage of justice.” Dkt. # 160 at 2.

         Defendant's response simply asserts that Plaintiff's disagreement with the arbitrator's findings of facts or conclusions of law does not prohibit confirmation of the arbitration award. Dkt. # 162 at 3-5. Defendant also moves to strike several of Plaintiff's filings as irrelevant, arguing that Plaintiff waived these arguments because they were not filed in accordance within the temporal limitations of 9 U.S.C. § 12. Id. at 5-6. Plaintiff's surreply restates her grievances with the arbitration process, argues that judgment against Plaintiff's LLC is ...

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