Dialysis Access Center, LLC v. RMS Lifeline, Inc. , 932 F.3d 1 ( 2019 )

United States Court of Appeals
For the First Circuit
No. 17-2014
DIALYSIS ACCESS CENTER, LLC; JUSTO GONZÁLEZ-TRÁPAGA, M.D.;
NANCY ROIG-FLORES,
Plaintiffs, Appellants,
v.
RMS LIFELINE, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Pedro A. Delgado-Hernández, U.S. District Judge]
Before
Howard, Chief Judge,
Torruella and Thompson, Circuit Judges.
Bámily López-Ortiz, with whom López Toro and Lizabel M.
Negrón-Vargas were on brief, for appellants.
José Luis González-Castañer, with whom Roberto Ariel
Fernández-Quiles and González Castañer, PSC were on brief, for
appellee.
August 1, 2019
THOMPSON, Circuit Judge. Before us once again are
Dialysis Access Center (a Puerto Rico LLC) ("DAC"),1 and RMS
Lifeline, Inc. (a Delaware corporation) ("RMS"), the central
players in a years-long and much-papered dispute.2 Having
previously been sent by this court to arbitrate their disputes,
Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 371
(1st Cir. 2011) (Dialysis I), DAC and RMS are back -- this time
with DAC contesting soup-to-nuts the arbitrator's decision in
RMS's favor and the district court's refusal to vacate it. Finding
no error, we conclude that the district court was correct in
rebuffing DAC's challenge, so we affirm.
BACKGROUND
We lay out the basics pertinent to the latest installment
of this arbitration-fueled litigation. DAC is a Puerto Rico-based
company that focuses on providing vascular intervention and access
services to dialysis and kidney failure patients, and RMS
specializes in managing and operating centers like DAC. In 2007,
DAC and RMS entered into a management services agreement (the
1 DAC's members are: Dr. Justo González-Trápaga; his wife,
Nancy Roig-Flores; and two other doctors/minority shareholders who
need not be listed because they settled during arbitration. For
the sake of clarity and simplicity, and because the parties advance
the same appellate contentions, we refer to them collectively as
DAC.
2 By way of background, diversity is the basis for
jurisdiction here.
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"MSA") for the development, building, management, and operation of
a vascular access center in Mayagüez, Puerto Rico.
The MSA's provisions most relevant to this appeal are
these: section 12.1, "Termination by Either Party for Cause"
(laying out the procedure for terminating the MSA, specifically,
notice of a breach, an opportunity to cure the breach, and,
ultimately, termination of the MSA by the non-breaching party if
cure could not be effected within sixty days of notice given);
section 13.3, "Governing Law" (the choice-of-law provision
instructing that the Commonwealth of Puerto Rico's substantive
laws would apply to the MSA); and section 13.9, "Dispute
Resolution/Arbitration" (requiring the parties' exhibition of good
faith in the resolution of any dispute arising under the agreement,
and, if no agreed upon resolution could be reached, submission to
binding arbitration under the rules of the American Health Lawyers
Association (the "AHLA")).
During the term of the MSA, the relationship between the
parties apparently soured, and numerous imbroglios arose between
DAC and RMS about their respective obligations under the agreement.
Those disputes set into motion this multi-year litigation about,
among other things, the parameters of the arbitration requirement.
Indeed, that question brought these parties before this
court nearly a decade ago (in 2010). Dialysis I, 638 F.3d at 373-
74. In that first go-round, we, like the district court, found
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the disputes arbitrable and directed the parties to arbitrate their
beef before the AHLA. Id. at 383-84.
Once there, claims, counterclaims, and crossclaims
abounded. Everything from fraud in the inducement to fraud in the
performance to the ultimate breach of the MSA was put before the
arbitrator.3 After months of intermittent arbitration sessions,
in July of 2013, the arbitrator issued a final decision in favor
of RMS awarding it a grand total of $1,969,068.68, which covered
damages, extra liability for dolo exhibited by DAC,4 prejudgment
interest, costs, attorneys' fees (from the arbitration and the
pre-arbitration litigation), as well as credits for the
settlements by the other two doctors. We'll discuss the award
more in due course as its many contested aspects come up in the
course of the parties' appellate contentions.
DAC next turned to the federal district court in Puerto
Rico, where it filed a complaint (treated by the lower court as a
3 Since the particulars of those arguments aren't central to
our analysis of the issues on appeal, we need not dive into them
here. Instead, we direct the interested reader to the magistrate
judge's report and recommendation, which provides more information
regarding the parties' arbitral contentions. See Dialysis Access
Ctr., PLLC v. RMS Lifeline, Inc., No. CV 13-1796 (PAD), 2017 WL
3579706, at *1 (D.P.R. May 31, 2017), report and recommendation
adopted sub nom. Dialysis Access Ctr., LLC v. RMS Lifeline, Inc.,
No. CV 13-1796 (PAD), 2017 WL 3602012 (D.P.R. Aug. 22, 2017).
4 Puerto Rico law explains that "dolo" occurs "when by words
or insidious machinations on the part of one of the contracting
parties the other is induced to execute a contract which without
them he would not have made." P.R. Laws Ann. tit. 31, § 3408.
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motion -- "[DAC] now move[s] the Court") seeking to vacate or
modify the arbitration award, primarily arguing that the
arbitrator exceeded his powers, misapplied the law on parol
evidence, engaged in misconduct in evaluating the evidence (with
respect to dolo in contract formation, novation, and breach), and
disregarded Puerto Rico's law regarding damages. RMS opposed what
it deemed a "groundless" contestation of the arbitrator's award in
a motion and supporting brief requesting enforcement of the award.
The magistrate judge who handled the matter analyzed the
parties' claims under the Federal Arbitration Act (the "FAA"), and
found that not only did DAC fail to demonstrate why the award
should be vacated, but also, that the arbitrator's thorough
decision was both supportable and well-reasoned. Therefore, with
DAC not having evinced any misconduct or manifest disregard of the
law by the arbitrator, or that his handling of the case exceeded
his powers, the magistrate judge recommended that DAC's complaint
be denied.
DAC filed timely objections to the magistrate judge's
report and recommendation, taking a three-pronged aim at what DAC
says was error: her failure to hold a hearing as required by the
Puerto Rico Arbitration Act (the "PRAA"), her use of the wrong
standard of review, and her failure to consider all of DAC's
evidence and arguments. RMS, unsurprisingly, opposed those
objections. After reviewing the written submissions, the district
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court sided with the magistrate judge and rejected DAC's arguments
-- no hearing was required; the FAA applied to the controversy;
and the magistrate judge did, in fact, examine and evaluate each
of DAC's contentions. Therefore, concluding that the magistrate
judge's findings and conclusion were well supported, the district
court adopted the magistrate judge's report and recommendation in
full, dismissed the complaint to vacate and/or modify the
arbitration award, and confirmed the award.
The saga now continues as DAC asks us to upend the
district court's refusal to vacate the arbitrator's award.
DISCUSSION
Before us, DAC advances a variety of arguments to support
its position that the arbitrator's award should be vacated.5
Regrettably, DAC's briefing is -- shall we say -- not exactly a
beacon of clarity. But, as best we can distill, its arguments, as
we understand them, fall chiefly into two main baskets: (1) the
5
Quick note: although DAC's assorted paper submissions both
to the court below and to us have packaged its challenge to the
arbitrator's award as a request for the award to be vacated or
modified, in actuality, DAC's analysis focuses entirely on vacatur
-- document titles and brief heading lines aside, the sole mention
of modification in its briefing before this court is a throwaway
line at the end of its opening brief contending that the lower
court should have "at the very least" modified the arbitrator's
award. But because there is no legal support offered for this
assertion and not even a slight effort at developed argumentation,
any argument with respect to modification of the arbitration award
is deemed waived. See United States v. Zannino, 895 F.2d 1, 17
(1st Cir. 1990) (treating arguments not developed on appeal as
waived).
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PRAA, not the FAA alone, should have governed the district court's
standard of review of the arbitration decision; and (2) three
errors compel the vacating of the award, specifically (a) the
arbitrator engaged in misconduct when he refused to consider, or
even allow certain evidence; (b) the arbitrator exceeded his powers
in his awards of attorneys' fees and prejudgment interest, as well
as in how he calculated damages; and (c) the arbitrator manifestly
disregarded the law on dolo.6 RMS disagrees and we will lay out
RMS's responses to DAC's arguments section by section as necessary.
We review the district court's decision to confirm or
vacate an arbitration award de novo, Ortiz-Espinosa v. BBVA Sec.
of P.R., Inc., 852 F.3d 36, 47 (1st Cir. 2017) (citing Cytyc Corp.
v. DEKA Prods. Ltd. P'ship, 439 F.3d 27, 32 (1st Cir. 2006)), but
in undertaking that review, we are cognizant that "[a] federal
court's authority to defenestrate an arbitration award is
extremely limited," Mt. Valley Prop., Inc. v. Applied Risk Servs.,
Inc., 863 F.3d 90, 93 (1st Cir. 2017) (quoting First State Ins.
Co. v. Nat'l Cas. Co., 781 F.3d 7, 11 (1st Cir. 2015)).
1. The PRAA and the FAA
We begin with the first issue DAC presents: whether the
6 In addition to what we've organized into the aforementioned
baskets, DAC makes a number of arguments founded in and on
substantive Puerto Rico law. We are not ignoring those arguments,
but based on our analysis and limited review, we have no reason to
tackle them.
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lower court erred in applying only the FAA's more limited standard
of judicial review to this dispute. We note that the FAA applies
to "a contract evidencing a transaction involving [interstate]
commerce," Ortiz-Espinosa, 852 F.3d at 42 (quoting 9 U.S.C. § 2),
and neither DAC nor RMS dispute that theirs was such a transaction.
That said, parties are free to contract around the application of
the FAA in favor of state arbitration law, Hall St. Assocs. v.
Mattel, Inc., 552 U.S. 576, 590 (2008), such as the PRAA, which
we've described as providing a "more searching" standard of review,
see P.R. Tel. Co. v. U.S. Phone Mfg. Corp., 427 F.3d 21, 29 (1st
Cir. 2005), abrogated on other grounds by Hall St., 552 U.S. at
583 n.5, 584. Indeed, the Hall Street Court explained that "[t]he
FAA is not the only way into court for parties wanting review of
arbitration awards: they may contemplate enforcement under state
statutory or common law, for example, where judicial review of
different scope is arguable." 552 U.S. at 590. "Parties are
generally free to structure their arbitration agreements as they
see fit," and "[j]ust as they may limit by contract the issues
which they will arbitrate, so too may they specify by contract the
rules under which that arbitration will be conducted." Volt Info.
Scis., Inc. v. Bd. of Tr., 489 U.S. 468, 479 (1989) (citing
Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S.
614, 626 (1985)); see also Mastrobuono v. Shearson Lehman Hutton,
Inc., 514 U.S. 52, 57-58 (1995). However, in order to effectuate
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FAA displacement, our circuit has been clear that such can occur
"only if the parties have so agreed explicitly." Ortiz-Espinosa,
852 F.3d at 42 (citing Hall St., 552 U.S. at 590).
Before this court, DAC says that's precisely what
happened here. As DAC sees things, "the parties expressly agreed"
in the MSA that Puerto Rico law would control by including a
choice-of-law provision (section 13.3) which specifies the MSA is
to "be construed in accordance with the internal substantive laws
of the Commonwealth of Puerto Rico." Therefore, according to DAC,
this provision makes applicable the PRAA's enforcement standards.
DAC insists, then, that the district court should have conducted
its review of the arbitrator's decision in the same way the Puerto
Rico Supreme Court allegedly would have done. Specifically, and
citing to Constructora Estelar v. Autoridad de Edificios Publicos,
183 D.P.R. 1 (2011), DAC says the district court should have
undertaken a review more akin to a judicial review of an
administrative agency decision, which permits some greater
scrutiny of the merits of the award. Because that did not happen,
DAC contends that the district court committed legal error.
RMS sees things differently. For one thing, because DAC
advanced this argument for the first time only after the magistrate
judge issued her report and recommendation, RMS says the argument
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is waived.7 Even if waiver could be surmounted, RMS posits that
DAC should be judicially estopped from making this PRAA argument
because DAC previously argued before this court in Dialysis I that
the FAA governed the case. And, in any event, RMS contends that
the parties never explicitly agreed to have the PRAA apply to the
proceedings.
Because we can dispose of DAC's challenge based on our
case law, we need not get into RMS's waiver and judicial estoppel
arguments, instead assuming favorably to DAC that its
asseverations are properly before us. We find that the FAA
correctly was applied here. To prevail, DAC needed to show that
the parties explicitly agreed to have the PRAA displace the FAA.
See Ortiz-Espinosa, 852 F.3d at 42 (applying the FAA when claimants
failed to demonstrate that the parties had explicitly contemplated
enforcement under the PRAA). But as was the case in Ortiz-
7 Our review of the record reveals that DAC mentions the PRAA
once in its complaint to vacate (listing the PRAA grounds for
vacatur before also providing the FAA grounds for vacatur). The
magistrate judge denied the complaint to vacate, making no mention
of the PRAA -- meaning she must not have interpreted DAC's single
mention of the PRAA as grounds for its application. In its
objection to the report and recommendation, DAC upped the ante on
its PRAA stance, arguing that the magistrate erred in "limit[ing]
the inquiry only to the Federal Arbitration Act," and also erred
by failing to hold a hearing, as the PRAA supposedly requires. In
adopting the magistrate judge's report and recommendation, though,
the district court rejected those arguments. It first noted that
contrary to DAC's assertions the PRAA does not require a hearing.
Then it declined to specifically indicate whether the PRAA
displaced the FAA because DAC never bothered to explain why it
would win under a PRAA standard of review.
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Espinosa, that showing has not been made. Although DAC tries to
win this argument by pointing to the MSA's choice-of-law provision,
we have clearly instructed that such a general, contractual
provision is not enough. In Puerto Rico Telephone Co., we framed
the question before the court like this: "At issue is whether and
how parties can contract for standards of judicial review of
arbitration awards other than those set forth in the Federal
Arbitration Act . . . ." 427 F.3d at 23. And our answer:
[T]he mere inclusion of a generic choice-of-law clause
within the arbitration agreement is not sufficient to
require the application of state law concerning the
scope of review, since there is a strong federal policy
requiring limited review . . . [A] generic choice-of-
law clause, standing alone, is insufficient to support
a finding that contracting parties intended to opt out
of the FAA's default regime for vacatur of arbitral
awards.
Id. at 29 (internal quotations and citations omitted).
Given our case law, we reiterate -- a general choice-
of-law contract provision is not enough to displace the FAA's
standard of review; having failed to show an explicit agreement to
have the MSA enforced under the PRAA and not the FAA, DAC's
argument fails.
2. Vacatur
Turning to the laundry list of reasons why DAC believes
the arbitral award should be vacated, we spy no error in the
district court's decision declining to vacate (and instead
confirming) the arbitrator's award. Before we get into the
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specifics of these arguments, though, we set out some additional
parameters for our review, which, as we've already said, "is
extremely narrow and exceedingly deferential." Ortiz-Espinosa,
852 F.3d at 47-48 (quoting Raymond James Fin. Servs., Inc. v.
Fenyk, 780 F.3d 59, 63 (1st Cir. 2015)); see also Teamsters Local
Union No. 42 v. Supervalu, Inc., 212 F.3d 59, 61 (1st Cir. 2000)
("Arbitral awards are nearly impervious to judicial oversight.").
First, we note that the FAA offers very limited reasons
to vacate an arbitration award. The grounds include only the
following:
(1) where the award was procured by corruption, fraud,
or undue means;
(2) where there was evident partiality or corruption in
the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient cause
shown, or in refusing to hear evidence pertinent and
material to the controversy; or of any other misbehavior
by which the rights of any party have been prejudiced;
or
(4) where the arbitrators exceeded their powers, or so
imperfectly executed them that a mutual, final, and
definite award upon the subject matter submitted was not
made.
See 9 U.S.C. § 10(a).
And we are mindful that, in reviewing an arbitration
award under the FAA, "[w]e do not sit as a court of appeal to hear
claims of factual or legal error by an arbitrator or to consider
the merits of the award." Asociación de Empleados del E.L.A. v.
Unión Internacional de Trabajadores de la Industria de
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Automóviles, 559 F.3d 44, 47 (1st Cir. 2009) (quoting Challenger
Caribbean Corp. v. Union Gen. de Trabajadores de P.R., 903 F.2d
857, 860 (1st Cir. 1990)); see also Advest, Inc. v. McCarthy, 914
F.2d 6, 8 (1st Cir. 1990) (quoting United Paperworkers Int'l Union
v. Misco, Inc., 484 U.S. 29, 38 (1987)).
Indeed, our limited review applies "[e]ven where such
error is painfully clear, [because] courts are not authorized to
reconsider the merits of arbitration awards." Advest, 914 F.2d at
8 (quoting S.D. Warren Co. v. United Paperworkers' Int'l Union,
Local 1069, 845 F.2d 3, 7 (1st Cir. 1988)). And the burden is on
DAC to establish that the arbitrator's award should be set aside.
See Ortiz-Espinosa, 852 F.3d at 48 (citing JCI Commc'ns, Inc. v.
Int'l Bhd. of Elec. Workers, Local 103, 324 F.3d 42, 51 (1st Cir.
2003)).
As we mentioned, DAC appears to advance a few
subsection (3) and (4) theories and an additional common law theory
as to why vacatur of the arbitrator's award is necessary here:
(a) the arbitrator engaged in misconduct in "impermissibly
eschew[ing]" certain evidence; (b) the arbitrator exceeded his
powers in his awards of attorneys' fees and prejudgment interest
and in his calculation of damages; and (c) the arbitrator
manifestly disregarded the law on dolo. The ins and outs of the
parties' arguments and our take on each follow.
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a. Arbitrator's conduct in evaluating evidence
Drilling down, DAC argues that the arbitrator is guilty
of misconduct because he refused to hear or "simply ignored"
certain evidence DAC presented (or wanted to present) regarding,
inter alia, dolo, breach of the MSA, and novation, which if
considered would have, with certainty, caused the arbitrator to
enter an award for DAC.8 DAC goes on to say that the arbitrator's
refusal to hear its evidence "prejudiced [DAC]'s rights to such an
extent that it could be considered that they were deprived of a
fair hearing."
RMS responds that there was no arbitrator misconduct in
this regard because, even if he did err (RMS says he didn't -- he
heard all the evidence, even explaining why the extrinsic evidence
barred by the parol evidence rule wouldn't have changed his
decision), this supposed evidentiary error would not be a valid
ground to overturn an arbitration award under the FAA.
The FAA "does not require arbitrators to consider every
piece of relevant evidence presented to them." Doral Fin. Corp.
8 DAC's list of evidence it says was ignored: "(a)
Arbitrator's refusal to consider Plaintiffs' evidence in support
of a finding of "dolo" in the consent during the formation of the
contract; (b) Arbitrator's refusal to consider evidence to
establish that RMS was the party that originally breached the
agreement – Exceptio Non Adimpleti Contractus; (c) Arbitrator's
refusal to consider evidence on Novation of the MSA." In addition
to that list, at times throughout its brief, DAC also argues there
were certain undisputed facts or admissions by RMS that the
arbitrator failed to consider.
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v. García-Vélez, 725 F.3d 27, 31 (1st Cir. 2013). And for our
part, we will vacate an award only when the arbitrator's refusal
to consider disputed evidence is "in bad faith or so gross as to
amount to affirmative misconduct." United Paperworkers Int'l
Union, 484 U.S. at 40. "Vacatur is appropriate only when the
exclusion of relevant evidence so affects the rights of a party
that it may be said that he was deprived of a fair hearing."
Ortiz-Espinosa, 852 F.3d at 49 (quoting Hoteles Condado Beach, La
Concha & Convention Ctr. v. Union De Tronquistas Local 901, 763
F.2d 34, 40 (1st Cir. 1985)).
On appeal, DAC never actually asserts that the
arbitrator's conduct regarding this purportedly slighted evidence
was done "in bad faith or so gross as to amount to affirmative
misconduct," United Paperworkers Int'l Union, 484 U.S. at 40, nor
does it tell us why exactly the arbitrator's conduct amounted to
deprivation of a fair hearing, as required, Ortiz-Espinosa, 852
F.3d at 49. So given its failure to make these arguments, even if
we assume, as DAC asserts, that the arbitrator refused to consider
some of its proffered evidence, as we have already noted, he was
not required to do so. Doral Fin. Corp., 725 F.3d at 31.
But there is more. Contrary to DAC's assertions, it is
clear from the arbitrator's extensive and detailed findings of
fact that much of the evidence DAC claims was ignored was in fact
heard and considered by the arbitrator. What DAC's gripe really
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comes down to is the weight given to that evidence by the
arbitrator. And on that front we have made pellucid that it is
not our place to chime in on the weight allotted to any given piece
of evidence submitted to the arbitrator, see, e.g., Asociación de
Empleados del E.L.A., 559 F.3d at 47 (instructing that "[w]e do
not sit as a court of appeal to hear claims of factual or legal
error by an arbitrator or to consider the merits of the award"),
and DAC has shown us no reason why the arbitrator's weighing of
the evidence here warrants vacatur, Hoteles Condado Beach, 763
F.2d at 39-40 (noting that unless exceptional circumstances are in
play, "a reviewing court may not overturn an arbitration award
based on the arbitrator's determination of the relevancy or
persuasiveness of the evidence submitted by the parties").9 We
see no arbitrator misconduct.
Onward.
b. Attorneys' fees, interest, and damages award
DAC also asserts that the arbitrator exceeded his powers
9
As for the parol evidence argument DAC advances -- that
the arbitrator engaged in misconduct by deploying the parol
evidence rule to exclude certain extrinsic contract formation
evidence -- it suffers from a fatal flaw. In an exercise of "even-
if" thoroughness, the arbitrator did consider that evidence. But
he concluded it wouldn't change his mind, then offered seven
detailed reasons why that was so. Thus, having taken the extra
step of weighing and dismissing the evidence DAC is hung up on,
the arbitrator did not engage in any misconduct -- he instead made
it all the more clear that the evidence being pushed by DAC did
not make for a winning hand.
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in awarding attorneys' fees and prejudgment interest and in his
calculation of damages. RMS responds by stating that the MSA
itself authorizes an award of attorneys' fees and costs, as do the
AHLA rules.
Like DAC's first theory for vacatur, this one too, faces
a high bar: "[a]bsent a strong implication that an arbitrator
exceeded his or her authority, the arbitrator is presumed to have
based his or her award on proper grounds." Labor Relations Div.
of Constr. Indus. v. Int'l Bhd. of Teamsters, Local #379, 29 F.3d
742, 747 (1st Cir. 1994). And we call to mind the maxim that "as
long as the arbitrator is even arguably construing or applying the
contract and acting within the scope of his authority, that a court
is convinced he committed serious error does not suffice to
overturn his decision." United Paperworkers Int'l Union, 484 U.S.
at 38.
i. Attorneys' fees and prejudgment interest
We begin by considering DAC's argument with respect to
attorneys' fees and prejudgment interest. Again pointing to the
MSA choice-of-law provision, DAC says that both of these awards
were in excess of the arbitrator's powers because Puerto Rico law
simply does not allow for them. Even if we presume that DAC is
correct on that front, DAC nevertheless loses. In reaching this
conclusion, Mastrobuono, 514 U.S. 52 (1995), animates our
thinking. There, the Supreme Court addressed a similar issue:
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"The question presented is whether the arbitrators' award [of
punitive damages] is consistent with the central purpose of the
Federal Arbitration Act to ensure 'that private agreements to
arbitrate are enforced according to their terms.'" Id. at 53-54
(quoting Volt, 489 U.S. at 479).
The Mastrobuono litigants had entered into a standard-
form securities client's agreement which contained both a New York
choice-of-law provision and an arbitration provision pursuant to
the National Association of Securities Dealers ("NASD"). Id. at
54-55. The NASD rules allowed for the award of punitive damages,
but New York law did not grant arbitrators (as opposed to judicial
officers) the authority to do so. Id. at 62. Noting a "cardinal
principle of contract construction [--] that a document should be
read to give effect to all its provisions and to render them
consistent with each other" -- the Court upheld the arbitrator's
award of punitive damages, finding them to be within the scope of
the parties' contract. Id. at 63 (collecting cases).
We think the best way to harmonize the choice-of-law
provision with the arbitration provision is to read "the
laws of the State of New York" to encompass substantive
principles that New York courts would apply, but not to
include special rules limiting the authority of
arbitrators. Thus, the choice-of-law provision covers
the rights and duties of the parties, while the
arbitration clause covers arbitration; neither sentence
intrudes upon the other.
Id. at 63-64.
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Applying that same logic here, it follows that the MSA's
choice-of-law provision covers the substantive rights and duties
of DAC and RMS, but, standing alone, does not limit the
arbitrator's authority under AHLA rules made applicable to the MSA
by section 13.9. Because Provision 6.06 of AHLA rules authorizes
the arbitrator to award attorneys' fees and pre-award and post-
award interest,10 DAC's argument cannot succeed.11
ii. Damages
Lastly, with respect to how the arbitrator calculated
damages, DAC lobs a variety of dissatisfactions at us on the topic,
but offers little legal analysis and only a handful of legal
citations over the course of its pages-long diatribe on all the
ways the arbitrator exceeded his powers in his damages
computations. But DAC does not use the minimal authority provided
to explain why any of it supports the crucially relevant
proposition that vacatur is necessary. This woeful lack of effort
10AHLA Rule 6.06 states in relevant part that "[t]he
arbitrator may assess reasonable attorney's fees . . . in favor of
the prevailing party, as determined by the arbitrator" and "[t]he
arbitrator may award pre-award and post-award interest as allowed
by applicable law or as agreed by the parties."
11
We pause briefly to flag that DAC requested attorneys'
fees from the arbitrator when it thought it would be the prevailing
party, which of course underscores its understanding that the
prevailing party would be entitled to attorneys' fees. See
Prudential-Bache Secs. v. Tanner, 72 F.3d 234, 242-43 (1st Cir.
1995) (explaining that this is "an important factor" in deciding
whether the parties agreed to award attorneys' fees in an
arbitration agreement).
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certainly does not give rise to the necessary "strong implication
that an arbitrator exceeded his or her authority." Labor Relations
Div. of Constr. Indus., 29 F.3d at 747. Ultimately, not having
done the legwork we require to develop this position, DAC has
waived those challenges. See, e.g., Rodríguez v. Municipality of
San Juan, 659 F.3d 168, 176 (1st Cir. 2011); see also Holloway v.
United States, 845 F.3d 487, 491 n.4 (1st Cir. 2017) (considering
an argument waived for lack of development when the party did not
make any legal citations supporting its argument); Zannino, 895
F.2d at 17 (stating that litigants must develop their own arguments
rather than "leaving the court to do counsel's work").12
c. Arbitrator's take on dolo
Finally, DAC argues that the arbitrator's award should
be vacated because he exhibited manifest disregard of the law.
This common law doctrine (i.e., you won't find it in section 10 of
the FAA) "allows courts 'a very limited power to review arbitration
awards outside of section 10 [of the FAA].'" Mt. Valley Prop.,
12 In Rodríguez, we explained
[w]hat [appellant] [did] "is hardly a serious treatment
of . . . complex issue[s]" and is not sufficient to
preserve these points for review, Tayag v. Lahey Clinic
Hosp., Inc., 632 F.3d 788, 792 (1st Cir. 2011) --
certainly not when his "brief presents a passel" of other
issues, United States v. Dunkel, 927 F.2d 955, 956 (7th
Cir. 1991) (per curiam).
659 F.3d at 176. That is precisely what happened here, so we need
say no more.
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Inc., 863 F.3d at 94 (quoting Advest, Inc., 914 F.2d at 8).13
Manifest disregard of the law requires a showing that "it is clear
from the record that the arbitrator recognized the applicable law
-- and then ignored it." Advest, Inc., 914 F.2d at 9.
In support of this claim, DAC says the arbitrator
confused dolo and fraud in regard to the formation of the contract
(or fraudulent inducement) in contravention of what it believes to
be part of this court's Dialysis I holding. DAC claims we
instructed the arbitrator what the law and scope of the arbitration
was to be, says we provided our own "road map" regarding the
"applicable substantive law," and insists we gave "guidance as to
the applicable Puerto Rico law." Yet, in manifest disregard for
the law, the arbitrator ignored our directive. Again, RMS
disagrees.
We start by observing that DAC's take is, at best, a
misunderstanding of our Dialysis I opinion, which focused solely
on the arbitrability of the parties' disputes -- it did not, as
DAC says, provide instruction on the law applicable to the
13 Although the Supreme Court has queried whether manifest
disregard remains a viable route to vacatur, see Mt. Valley Prop.,
Inc., 863 F.3d at 94 (noting that Hall Street, 552 U.S. 576, has
cast some doubt on it but didn't answer the question), this court
has avoided answering the question and instead has assumed its
continued application when no manifest disregard of the law
occurred, see id. (taking that route). Here, for reasons we will
explain, there was no manifest disregard of the law, so the court
can continue to leave that question for another day.
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underlying disputes. Rather, the Dialysis I court ferreted out
what the asserted allegations in the complaint seemed to be, then
it laid out the law of dolo and fraud in its effort to determine
what type of legal claim was likely being raised. 638 F.3d at
378-79. Concluding that the claim appeared to be about the
voidability of the MSA based on a "fraudulent inducement claim,"
we held this type of allegation fell within the scope of the
agreement and sent the parties off to arbitrate, leaving it to the
arbitrator to sort through the vying legal contestations. Id. at
379.
Notwithstanding DAC's misinterpretation of Dialysis I,
even if we assume the arbitrator confused or misapplied the law
(which we doubt), DAC still cannot succeed. DAC bears the burden
of demonstrating that the arbitrator was confronted with the
correct law to apply but proceeded "then [to] ignore[] it."
Advest, Inc., 914 F.2d at 9. DAC has made no such showing. Without
a doubt, DAC presented the arbitrator with a boatload of legal
theories on why it believed RMS engaged in dolo and how its conduct
impacted contract formation. But the arbitrator rejected those
arguments and rejection is not "ignor[ing]." Id. We say no more.
Wrapping up
As we sum up, we remind the reader that "[a]rbitral
awards are nearly impervious to judicial oversight." Teamsters
Local Union No. 42, 212 F.3d at 61. Today's case was no exception.
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All in all, under the FAA, the arbitrator's award was supportable
and the district court did not err in refusing to vacate it. DAC
has not shown any arbitrator misconduct, that the arbitrator
exceeded his powers in calculating the award, or that the
arbitrator manifestly disregarded the law. Indeed, DAC has
demonstrated no grounds upon which we could grant it the relief it
seeks. The bulk of DAC's appeal truly comes down to it wanting to
relitigate the merits of its arbitration claims and to contest the
arbitrator's weighing of the evidence, but we simply "are not
authorized to reconsider the merits of arbitration awards,"
Advest, 914 F.2d at 8, and "[w]e do not sit as a court of appeal
to hear claims of factual or legal error by an arbitrator or to
consider the merits of the award." Asociación de Empleados del
E.L.A., 559 F.3d at 47. The arguments supportably made to advance
DAC's effort to do these things did not carry the day, as we've
explained above.14
Because we affirm the district court's determination
that vacatur of the arbitration award is not warranted, we also
14 As to all the contentions waived along the way in this
appeal, we note that the mere use of "buzzwords" ("arbitrator
misconduct," "exceeded his powers," "manifest disregard," and the
like) does not a proper argument make. See, e.g., Rodríguez, 659
F.3d at 175–76 (deeming waived arguments offered with no citations
or analysis -- "[s]ure, he uses some buzzwords and insists that
the judge stumbled in ruling on these claims[, b]ut he provides
neither the necessary caselaw nor reasoned analysis to show that
he is right about any of this").
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affirm the court's confirmation of the award. See 9 U.S.C. § 9
("[T]he court must grant [an order confirming the award] unless
the award is vacated, modified, or corrected as prescribed in
sections 10 and 11 of this title.").
CONCLUSION
For these reasons, we conclude that the district court
was correct in denying DAC's challenge and confirming the award.
Accordingly, we affirm. Costs to appellee.
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