Hoolahan v. IBC Advanced Alloys Corp. ( 2020 )

United States Court of Appeals
For the First Circuit
No. 19-1444
GERALD R. HOOLAHAN,
Petitioner, Appellee,
v.
IBC ADVANCED ALLOYS CORP.,
Respondent, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
Before
Howard, Chief Judge,
Torruella and Thompson, Circuit Judges.
Ryan S. Lean, with whom Keesal, Young & Logan, Douglas B.
Rosner, Matthew P. Horvitz, and Goulston & Storrs, PC were on
brief, for appellant.
Stephen F. Gordon, with whom Todd B. Gordon and The Gordon
Law Firm LLP, were on brief, for appellee.
January 17, 2020
Thompson, Circuit Judge. In 2010, Appellant IBC
Advanced Alloys Corp. ("IBC") purchased Beralcast Corporation
("Beralcast") from Appellee Gerald R. Hoolahan and Gary Mattheson
in exchange for cash and shares in IBC. Over a year later, Hoolahan
went to sell his IBC Shares, but he was blocked. He did not know
why at the time. A few years later in 2015, Hoolahan discovered
that Mattheson hadn't been similarly blocked when he placed his
shares on the market in 2011. Upset by this disparate treatment
and believing that he had been conned out of large sums of money,
Hoolahan initiated an arbitration against IBC. During a one-day
hearing it came to light that IBC had harbored "ill-will" against
Hoolahan due to a claim tangentially related to the IBC-Beralcast
deal, causing it to block Hoolahan's 2011 attempt to sell. In the
end the arbitrator awarded Hoolahan damages in the amount he would
have received if he could have sold his shares at the same rate
Mattheson got in 2011; Hoolahan also received attorneys' fees and
costs.
Finding this all woefully unfair, IBC embarked on its
Mt. Everest climb: it decried the arbitrator's calculations and
first requested that the arbitrator modify the award. Denied
there, it kept trekking, and asked the district court to vacate
the award. Denied again, but still seeking the mountaintop, IBC
appealed to this court. And here we are.
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IBC asks us now to vacate, or at the very least remand
for reconsideration, the arbitrator's award. IBC's slog continues
to be nothing but uphill. That is because our review of arbitral
awards is extremely narrow, and we afford great deference to the
arbitrator's decision-making process. To be sure, there are
certain exceptions where we will vacate an award, but IBC has
failed to convince us that any of them apply here. And so we
affirm.
I. BACKGROUND
The Parties
Appellant IBC is a "beryllium and copper advanced alloys
company . . . [that] serves a variety of industries such as
defense, aerospace, automotive, [and] telecommunications . . . ."1
Appellee Hoolahan owned two companies, Advanced Specialty Metals
and Composite Material Solutions ("CMS"); certain assets from both
those companies were combined to form a new company: Beralcast,
that uses beryllium in its manufacturing operations. Hoolahan and
Mattheson were the only two shareholders of Beralcast.
The United States has classified beryllium as a
strategic material, as "[i]t has extensive use in the Defense
Industry, and users are required to keep strict control of the
usage and location of their beryllium inventory." For companies
1 https://ibcadvancedalloys.com/home/about-us/
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like Beralcast, there are only two commercial sources of beryllium:
(1) the Materion Corporation and (2) ULBA, a Kazakhstan Government-
owned corporation. Because Materion is a direct competitor of
Beralcast, Beralcast relies on ULBA for its beryllium. Hoolahan
also owned a separate company, Applied Materials Science, Inc.
("AMS"), a sister company to CMS, who would also purchase beryllium
from ULBA (we'll get to why that's important in a bit).
The Agreement
On February 17, 2010, IBC (and its subsidiary) purchased
Beralcast for its beryllium manufacturing operations from Hoolahan
and Mattheson. In exchange, Hoolahan and Mattheson received $2.25
million in cash consideration (the full amount deposited into the
bank account for AMS), and shares of capital stock in IBC ("IBC
Shares") equivalent in value to $2 million. Hoolahan received
7,303,271 IBC Shares; Mattheson, 5,957,905. The purchase and its
terms are set forth in a Share Purchase and Sale Agreement (the
"Agreement").
The Agreement's articles most relevant to this appeal
are:
 Two sub-articles of article 2.3, "Payment of Purchase
Consideration":
o Article 2.3(e)(i)(A) (prohibiting the sale,
transfer, or trade of IBC Shares on the TSX
Venture Exchange, a stock exchange in Canada,
for four months and one day after the closing
of the Agreement).
o Article 2.3(e)(ii) (relieving IBC of any
obligation "to register the IBC Shares or to
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take any other actions to facilitate or permit
any resale or transfer thereof in the United
States or otherwise by or to a US
Person . . . .").
 Article 3.2(p), "Judgments and Claims" (Hoolahan and
Mattheson representing and warranting that there were
no unsatisfied judgments, claims, or potential claims
against Beralcast at the time of the Agreement).
 Article 13.3, "Further Assurances" (obligating the
Parties to "execute, acknowledge and deliver such
other instruments and take such other action as may
be reasonably necessary to carry out their obligations
under this Agreement").
 Article 13.6, "Governing Law" (agreeing that the
Agreement be "interpreted and construed in accordance
with the laws of the State of Delaware").
 Article 13.6.2, "Arbitration" (obligating the parties
to arbitrate any disputes arising out of the Agreement
in accordance with the Commercial Rules of the
American Arbitration Association ("AAA Commercial
Rules")).
 Article 13.9, "Time of the Essence" ("Time shall be
of the essence in this Agreement and of all matters
contemplated in this Agreement.").
Hoolahan's Attempts to Sell his IBC Shares
Over a year after the Agreement's execution, and well
past the "four months and one day" time constraint from article
2.3(e)(i)(A), in late April or early May of 2011, Hoolahan
attempted to sell his IBC Shares through his brokerage firm, Edward
Jones.2 At that time, IBC Shares were valued at $0.27 per share,
so Hoolahan's total shares would have been worth approximately
$1,971,883.10. On July 25, 2011, IBC's Toronto (Canada) transfer
agent informed Hoolahan's brokerage firm that Hoolahan's request
2 It is unclear from the record where or to whom Hoolahan
attempted to sell his shares in 2011.
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for sale had been denied because the agent had been "unsuccessful
in obtaining approval [for the sale] from the issuer" — IBC. That
same letter advised Hoolahan's brokerage firm to "contact the
issuer" about the denial. Hoolahan then handed the issue over to
his legal counsel, Bruce Schoenberger, to investigate.
Schoenberger started by contacting Hoolahan's brokerage
firm. On May 16, 2012, an administrator from the firm emailed
Schoenberger's colleague that Schoenberger needed to contact IBC's
Chief Financial Officer, Simon Anderson, regarding Hoolahan's
inability to sell his shares. That same day, Schoenberger spoke
with Anderson over the phone for about five to ten minutes (the
"Phone Call"). Anderson told Schoenberger during the call that
IBC had blocked the sale of Hoolahan's IBC Shares because Hoolahan
had failed to disclose an outstanding $208,000 claim by ULBA (the
Kazakhstan corporation) against AMS3 (sister company to CMS, which
was the forerunner to Beralcast) existing at the time of the
Agreement's execution ("the ULBA/AMS claim").4 In response,
Schoenberger told Anderson that he believed the sale restriction
on Hoolahan's IBC Shares violated the terms of the Agreement, and
that the damages for this breach would be based upon the change in
3
AMS never responded to ULBA's claim for $208,000 and ULBA
was therefore awarded a default judgment against AMS in 2008.
4
Schoenberger testified about the Phone Call during the
arbitration hearing which we'll get to in short order.
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value of Hoolahan's shares from the day Hoolahan had tried to sell
them to their value at the time of the Phone Call. At the end of
the call, Anderson told Schoenberger that he would send a follow-
up email introducing Schoenberger to IBC's corporate counsel.
Anderson did so; Schoenberger responded to the email with a CC to
IBC's counsel, memorializing the Phone Call ("the Email").
In May 2013, Hoolahan (whose IBC Shares had undergone a
series of "reverse stock splits"5) was able to sell 250,000 of his
IBC Shares for $25,000, at $0.10 per share. Had Hoolahan sold all
of his shares at that time (1,217,212 due to the first reverse
split), he would have received a total of $121,721.
5 To track the number of shares Hoolahan possessed over the
course of this saga, we need to explain how IBC's shares underwent
"reverse stock splits" in 2012 and 2016. "When a company completes
a reverse stock split, each outstanding share of the company is
converted into a fraction of a share. . . . A company may declare
a reverse stock split in an effort to increase the trading price
of its shares – for example, when it believes the trading price is
too low to attract investors to purchase shares, or in an attempt
to regain compliance with minimum bid price requirements of an
exchange on which its shares trade." See Securities & Exchange
Commission, Reverse Stock Splits, Investor.gov (Jan. 16, 2020),
https://www.investor.gov/additional-resources/general-
resources/glossary/reverse-stock-splits.
In December 2012, IBC completed a six-for-one reverse stock
split, decreasing the number of Hoolahan's IBC Shares from
7,303,271 to 1,217,212. On May 23, 2016, IBC completed another
reverse stock-split, this time ten-for-one, lowering Hoolahan's
967,212 shares (remaining after his May 2013 sale of 250,000
shares) to 96,721.
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Discovery of the IBC-Mattheson Pooling Agreement
In 2015, Hoolahan and Mattheson were engaged in
litigation unrelated to the issues in this case. Discovery during
that litigation, however, uncovered a Voluntary Pooling Agreement
(to be explained in a moment) between IBC and Mattheson entered
into on May 5, 2011 (the "IBC-Mattheson Pooling Agreement") —
around the same time that Hoolahan had made his first unsuccessful
attempt to sell his IBC Shares. The IBC-Mattheson Pooling
Agreement permitted Mattheson to sell his IBC Shares at certain
increments on an agreed-upon schedule, including between 2011 and
2012, when Mattheson made six sales for some of his IBC Shares for
a total of $421,176.14.
The Arbitration
Upset by Mattheson's special treatment and profit,
Hoolahan filed a Demand for Arbitration with the American
Arbitration Association ("AAA") asserting claims against IBC for
willful and knowing breach of the Agreement and breach of the
implied covenant of good faith and fair dealing for deliberately
blocking Hoolahan's sale of IBC Shares.6 Hoolahan's initial claim
for damages, $1,850,162 (plus attorneys' fees, costs, and
6Hoolahan had also brought a claim under Massachusetts
General Law ("M.G.L.") Ch. 93A for unfair and deceptive trade
practice or fraud. The arbitrator found that the facts of the
case substantiated a violation of neither M.G.L. Ch. 93A, nor the
equivalent Delaware law. This issue is not on appeal.
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expenses), was based on the drop in market value in Hoolahan's
total IBC Shares from approximately $1,971,883.10 in 2011 to
$121,721 in 2013 when he was able to make his first sale.
On April 28, 2017, a one-day arbitration was held in
Boston, Massachusetts, before AAA arbitrator Robert T. Ferguson.
At the hearing, Hoolahan claimed IBC deliberately blocked his sale
of IBC Shares in breach of the Agreement because of the ill-will
IBC harbored against Hoolahan in connection with the outstanding
ULBA/AMS claim. Citing to article 2.3 of the Agreement, IBC
responded that it could not breach the Agreement for failing to
assist in the sale of IBC Shares because the Agreement explicitly
released IBC from any such obligation. IBC also argued that it
did not impermissibly block Hoolahan's sale because it was legally
entitled to restrict the sale of IBC Shares in the U.S., and that
Hoolahan was free to sell on the Canadian TSX Exchange four months
and one day after the Agreement was executed.
During the hearing, attorney Schoenberger (appearing
only as a witness; Hoolahan was represented by other counsel during
the hearing) walked the arbitrator through his 2012 Phone Call and
Email with Anderson. Anderson was originally scheduled to testify
by videoconference, but was unavailable due to a death in the
family. As IBC's counsel attempted to make a proffer of what would
have been provided by Anderson, Hoolahan's counsel objected. Then
the following exchange ensued:
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IBC COUNSEL: I will if, in fact, we have -- we
don't have Mr. Anderson here due to the death
of his father, so it's -- and he wouldn't have
been here anyway. It would have been by video
conference due to his physical condition, but,
that said, I would be more than happy to
solicit from him an affidavit.
HOOLAHAN COUNSEL: Oh, no, no.
ARBITRATOR FERGUSON: I'd prefer to see him.
HOOLAHAN COUNSEL: There will be no
affidavits. He's got to be . . . here and
examined and cross-examined.
ARBITRATOR FERGUSON: We can schedule a
deposition if you'd like.
HOOLAHAN COUNSEL: Today is the hearing.
ARBITRATOR FERGUSON: If there's an objection
to that, today's the hearing.
IBC COUNSEL: If he's objecting, I can
petition.
HOOLAHAN COUNSEL: Today's the hearing date.
HOOLAHAN: This is insane.
ARBITRATOR FERGUSON: Continue.
IBC COUNSEL: If I could continue, so the fact
of the matter is that this7 is Mr. Anderson's
testimony and what has been set forth by Mr.
Schoenberger here, I think, is really at the
crux of this dispute.
Neither party raised the option of postponing the hearing, nor did
IBC raise the Anderson affidavit again.8
The Phone Call and Email between Schoenberger and
Anderson were central to Hoolahan's claims in arbitration because
7 It appears from the record that IBC's counsel here was
referring to the theoretical testimony of Mr. Anderson, and not
any actual affidavit he had on hand.
8 Hoolahan tells us that IBC knew of Anderson's unavailability
before the hearing and wrote in an email dated three days before
the hearing that it would not be requesting a postponement. But
because IBC first raised the issue of postponement on appeal, we
need not delve into the significance — or, lack thereof — of this
email.
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it was the only evidence of IBC admitting that it had blocked
Hoolahan's 2011 sale, and why. During arbitration, IBC objected
to the admission of the Email and to Schoenberger's testimony about
the Phone Call as violative of Rule 4.2 of the Ohio Rules of
Professional Conduct (Schoenberger is licensed to practice in
Ohio), which prohibits an attorney from directly communicating
with a represented party.9 Schoenberger maintained that he was
unaware that IBC or Anderson was represented by counsel in this
dispute until the end of the Phone Call. At the end of the hearing,
the arbitrator again acknowledged IBC's objection to
Schoenberger's testimony and asked the parties to "justify their
positions" in post-hearing briefing as to the inclusion or
exclusion of the Phone Call and Email.
9"In representing a client, a lawyer shall not communicate
with a person the lawyer knows to be represented by another lawyer
in the matter . . . ." Ohio R. Prof'l Conduct (Prof. Cond. Rule
4.2). "In the case of a represented organization, this rule
prohibits communications with a constituent of the organization
who . . . has authority to obligate the organization with respect
to the matter or whose act or omission in connection with the
matter may be imputed to the organization for purposes of civil or
criminal liability." Id. at cmt. 7. "The prohibition on
communications with a represented person applies only in
circumstances where the lawyer knows that the person is in fact
represented in the matter to be discussed. This means that the
lawyer has actual knowledge of the fact of the representation; but
such actual knowledge may be inferred from the circumstances. See
Rule 1.0(g). Thus, the lawyer cannot evade the requirement of
obtaining the consent of counsel by closing eyes to the obvious."
Id. at cmt. 8 (emphasis added).
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During his closing statement, IBC's counsel speculated
about the reason Hoolahan was unable to complete his 2011 sale of
IBC Shares, guessing that Hoolahan's broker was "not a registered
broker-dealer on the Toronto broker exchange" or that "a U.S.
person" had been "identified [as] a buyer." Hoolahan's counsel
leaped to point out that there was no evidence to back up these
speculations. Then IBC's counsel said, seemingly off-the-cuff,
"we would freely admit there was ill will between Mr. Hoolahan and
IBC[.]"
After the arbitration hearing Hoolahan submitted via
email10 a revised damages calculation "based upon the '[IBC-
Mattheson] Pooling Agreement,'" lowering his ask from
$1,850,162.00 to $1,239,737.56, plus attorneys' fees, costs, and
expenses.11
The Award and Ensuing Litigation
On September 8, 2017, the arbitrator entered a final
arbitration award (the "Award") and found that IBC had: (1) denied
Hoolahan the benefit of his contractual bargain by blocking his
sale and deliberately breaching articles 13.3 and 13.9 of the
Agreement, and (2) breached the implied covenant of good faith and
10 The email making this request is not in the record.
11 Hoolahan refers to "two damages-only submissions to the
Arbitrator" in his brief, but does not cite to those documents in
the record; nor could we locate them.
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fair dealing. The arbitrator explained that IBC's admission of
ill-will towards Hoolahan and the disparity in treatment between
Hoolahan and Mattheson, as evinced by the IBC-Mattheson Pooling
Agreement, "amount[ed] to a per-se [sic] violation [of the
Agreement] and leaves no doubt that [IBC] acted in bad faith and
deliberately denied [Hoolahan] the benefit of the bargain [he] was
entitled to under the Agreement." The arbitrator further explained
that "the timing of the grievance, the facts of the case, the
evidence as offered and the live testimony at the Hearing
concern[ing] [IBC]'s admitted 'ill-will' towards [Hoolahan]" all
supported a finding of breach of the implied covenant of good faith
and fair dealing. He accepted Schoenberger's testimony as
"credible, stand-alone evidence" and noted that IBC did not offer
any "[w]itness, deposition or other evidence to contradict
Attorney Schoenberger's live testimony." He excluded the Email as
"technically irrelevant" and cumulative of Schoenberger's
testimony.
The arbitrator awarded Hoolahan damages in the amount
requested, $1,239,737.56, plus attorneys' fees, costs, and
expenses in the amount of $135,786.76. The damages figure was
calculated by applying Hoolahan's original, total 2011 shares
(7,303,271) to the stock value Mattheson had received on his sales
made in accordance with the IBC-Mattheson Pooling Agreement. The
arbitrator did not explicitly offset the Award by the profit
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Hoolahan had made from his 2013 sale of 250,000 IBC Shares, nor by
the value of the 96,721 IBC Shares Hoolahan still held at the time
of the Award.
Within twenty days of the Award's issuance, IBC filed a
Request to Modify the Award, pursuant to AAA Commercial Rule
R-50. IBC for the first time contended that the Award should be
discounted by the 96,721 IBC Shares Hoolahan retained at the time
of the Award, and that because Mattheson had been able to sell
only 32.7% of his shares under the IBC-Mattheson Pooling Agreement,
the damages portion of the Award should have been 32.7% of
$1,239,737.56.12 IBC also raised the fact that "IBC's essential
witness Simon Anderson was denied the opportunity to be heard,"
but did not explain why what Anderson had to say might alter the
Award.13 Finally, IBC appended to its Request an affidavit from
Mattheson describing the IBC-Mattheson Pooling Agreement. The
arbitrator denied the Request.
On October 11, 2017, Hoolahan filed a Petition to Confirm
the Award in U.S. District Court for the District of Massachusetts.
Conversely, IBC filed a Petition to Vacate the Award. District
12
Oddly enough, IBC did not ask in its Request to Modify that
the Award also be discounted by Hoolahan's proceeds from his 2013
sale of 250,000 IBC shares.
13
IBC also requested that the arbitrator account for the cash
consideration Hoolahan had received under the Agreement when
adjusting the Award. IBC does not raise this issue on appeal.
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Judge O'Toole entered an order confirming the Award on March 27,
2019. IBC now appeals to this court asking us to vacate the
district court's order confirming the award, or, at a minimum,
remand this case so that the district court can return the matter
to arbitration for a rehearing on damages.
II. DISCUSSION
Against this factual backdrop, IBC asks this court to
find that the arbitrator misinterpreted the Agreement, ignored
essential evidence, and considered impermissible evidence, all to
lead us to the conclusion that the Award should be vacated, or at
the very least modified. The burden rests upon IBC "to establish
that the arbitrator's award should be set aside." Dialysis Access
Ctr., LLC v. RMS Lifeline, Inc., 932 F.3d 1, 7 (1st Cir. 2019)
(citing Ortiz-Espinosa v. BBVA Sec. of Puerto Rico, Inc., 852 F.3d
36, 48 (1st Cir. 2017)).
Standard of Review
Generally, we review the district court's decision to
confirm or vacate an arbitration award de novo, Dialysis Access
Ctr., 932 F.3d at 7 (citing Ortiz-Espinosa, 852 F.3d at 47); see
also Cytyc Corp. v. DEKA Prods. Ltd. P'ship, 439 F.3d 27, 32 (1st
Cir. 2006), but we do so with great circumspection: "[a] federal
court's authority to defenestrate an arbitration award is
extremely limited." Mt. Valley Prop., Inc. v. Applied Risk Servs.,
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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)).
Though we have a robust record before us, including the
full transcript from the one-day arbitration hearing, the
Agreement, and the Award, we remain mindful that in reviewing an
arbitration award, "[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
Automóviles, 559 F.3d 44, 47 (1st Cir. 2009) (quoting Challenger
Caribbean Corp. v. Unión 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)).
In reviewing the arbitrator's interpretation of the
Agreement, for example, as long as the Award "draw[s] its essence"
from the Agreement that underlies the arbitration proceeding,
Cytyc Corp., 439 F.3d at 32 (quoting United Paperworkers Int'l
Union, 484 U.S. at 38), and the arbitrator "arguably constru[ed]
or appl[ied] . . . the [Agreement] within the scope of [his]
authority," id., we will not disturb the Award. "That a reviewing
court is convinced that the arbitrator[] committed error — even
serious error — does not justify setting aside the arbitral
decision." Id. "This remains true whether the arbitrators'
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apparent error concerns a matter of law or a matter of fact." Id.(quoting Advest, Inc., 914 F.2d at 8); see also Dialysis Access
Ctr., 932 F.3d at 9 (adding that "our limited review applies
'[e]ven where such error is painfully clear, [because] courts are
not authorized to reconsider the merits of arbitration awards'"
(quoting Advest, 914 F.2d at 8)).
All that said, arbitration awards are not invincible,
and there are "a few exceptions to the general rule that
arbitrators have the last word." Cytyc Corp., 439 F.3d at 32–33.
"One set of exceptions is codified in the Federal Arbitration Act
(FAA). The operative provision, section 10(a) of the FAA,
authorizes vacatur only in cases of 'specified misconduct or
misbehavior on the arbitrators' part, actions in excess of arbitral
powers, or failures to consummate the award.'" Id. (citing Advest,
914 F.2d at 8). "A second set of exceptions flows from the federal
courts' inherent power to vacate arbitral awards," id. (citing
Advest, 914 F.2d at 8), in the event of a "manifest disregard of
the law." Advest, 914 F.2d at 8-10 & nn.5, 6. This power outside
of section 10(a) of the FAA is nonetheless very limited and narrow.
Cytyc Corp., 439 F.3d at 33; Advest, 914 F.2d at 7–8.14
14The availability of non-statutory grounds to vacate an
arbitration award is in question in light of the Supreme Court's
decision Hall Street Assoc.'s, L.L.C. v. Mattel, Inc., 552 U.S.
576, 584-590 (2008) (stating "the text compels a reading of the §§
10 and 11 categories [of the FAA] as exclusive"). But "this court
has avoided answering the question and instead has assumed its
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We begin our analysis with IBC's statutory arguments and
conclude with the common law.
The Merits
i. Section 10(a) of the Federal Arbitration Act
The FAA's central purpose is to ensure that "private
agreements to arbitrate are enforced according to their terms."
Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 682
(2010) (citations omitted). Congress passed the FAA to make
written arbitration provisions or agreements "valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract." 9 U.S.C. § 2; Stolt-
Nielsen S.A., 559 U.S. at 682. There are four circumstances where
a court may vacate an arbitration award under the FAA:
(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
continued application when no manifest disregard of the law [has]
occurred," Dialysis Access Ctr., 932 F.3d at 13 n.13 (citing Mt.
Valley Prop., Inc., 863 F.3d at 94). Therefore, like in Dialysis
Access Ctr., since we find no manifest disregard of the law, we
"continue to leave that question for another day." Id.
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mutual, final, and definite award upon the
subject matter submitted was not made.
9 U.S.C. § 10(a)(1)-(4). IBC argues that three of these
circumstances (a couple debuted for the first time on appeal) exist
here, asserting that vacatur is warranted because: the Award was
procured by undue means due to reliance on Schoenberger's
testimony, see id. at § 10(a)(1); the arbitrator was guilty of
misconduct in refusing to postpone the hearing and accept an
affidavit from IBC's Anderson to rebut Schoenberger's testimony,
see id. at § 10(a)(3); and the arbitrator exceeded his powers in
awarding attorneys' fees and imposing a nonexistent contractual
obligation on IBC, see id. at § 10(a)(4).
a. 9 U.S.C. § 10(a)(1)
IBC argues that the Award should be vacated because it
was "procured by . . . undue means." 9 U.S.C. § 10(a)(1). So let
us first explore that concept. This court examined a claim for
vacatur on the basis of undue means for the first time in Nat'l
Cas. Co. v. First State Ins. Grp., 430 F.3d 492, 499 (1st Cir.
2005). In doing so, it took out-of-circuit guidance15 and found
15
See PaineWebber Group, Inc. v. Zinsmeyer Trusts P'ship, 187
F.3d 988, 991 (8th Cir. 1999) (reversing finding of undue means
where petitioner failed to prove that respondent's alleged
misconduct in the discovery process was intentional or that it
procured the award); Am. Postal Workers Union, AFL–CIO v. U.S.
Postal Serv., 52 F.3d 359, 362 (D.C. Cir. 1995) (declining to find
undue means where respondent introduced arrest record contrary to
state law because undue means requires action equivalent in gravity
to fraud or corruption). After our decision in Nat'l Cas. Co.,
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that "[t]he best reading of the term 'undue means' . . . is
that it describes underhanded or conniving ways of procuring an
award that are similar to corruption or fraud, but do not precisely
constitute either." See id. (explaining that there must be
"intentional malfeasance" to justify vacating an arbitral award).
Ultimately, this court affirmed the award in Nat'l Cas. Co. in
favor of appellee, finding that appellee's refusal to produce
documents, in light of which the arbitrator had drawn a negative
inference against appellee, did not amount to "undue means" where
such conduct did not "amount[] to the kind of intentional
malfeasance that justifies vacatur under the statute." Id.IBC's "procured by undue means" contention is predicated
on the alleged ethically-improper testimony of Schoenberger,
Hoolahan's attorney, who, you'll remember, directly called IBC's
CFO Anderson to inquire about Hoolahan's inability to sell his
shares, and testified during the arbitration that he learned only
at the end of the Phone Call that IBC was represented by counsel.
Essentially, IBC argues that but for the arbitrator's reliance on
the communication between Schoenberger and Anderson that IBC
contends violated the Ohio Rules of Professional Conduct, the
the Fourth Circuit in MCI Constructors, LLC v. City of Greensboro
also declined to find that the respondent procured an award by
undue means by referencing evidence outside of the record because
the petitioner did not show the references influenced the
arbitrator's decision. 610 F.3d 849, 858-59 (4th Cir. 2010).
- 20 -
arbitrator would have no evidence of "'ill-will' as the basis for
his finding that IBC breached the implied covenant of good faith
and fair dealing." Hoolahan responds that Schoenberger's
testimony was admissible, as the arbitrator so found, because
Schoenberger did not know that IBC had legal representation when
he initiated the call and thus violated no ethical rules.
Our take: IBC is unable to show that Schoenberger's
testimony constituted conduct amounting to "intentional
malfeasance." See id. The arbitrator determined that
Schoenberger's conduct did not violate the Ohio Rules of
Professional Conduct,16 as he found to be truthful and credible
Schoenberger's testimony that he was unaware IBC was represented
by counsel until the end of the Phone Call with Anderson. As we
have no basis to discredit this finding, IBC's argument cannot
stand.
And even if the arbitrator's reliance on Schoenberger's
testimony did constitute reliance on undue means (which we do not
believe it does), IBC also fails to show that Schoenberger's
testimony procured the award. The arbitrator explained in his
Award that his finding of "ill-will" rested on "the timing of the
grievance, the facts of the case, the evidence as offered" — not
16And we need not address here what we would do if
Schoenberger's conduct was determined to have violated the Ohio
Rules of Professional Conduct, and how such a violation would
interact with the other rules and law governing the Agreement.
- 21 -
solely on Schoenberger's testimony.17 See PaineWebber, 187 F.3d
at 994–95 (finding no undue means, even assuming that the
respondent intentionally and incorrectly asserted privilege over
documents in discovery, because there was no proof that the error
"procured" the award).
Taking this all in, we find that IBC has failed to show
that the award was procured by a reliance on undue means and should
be vacated under 9 U.S.C. § 10(a)(1).
b. 9 U.S.C. § 10(a)(3)
IBC also argues that the arbitrator's refusal to
postpone the hearing or permit the submittal of an affidavit from
IBC's Anderson amounts to misconduct warranting vacatur under
9 U.S.C. § 10(a)(3). Section 10(a)(3) of the FAA lists three
separate grounds for vacatur: "[w]here the arbitrators were guilty
of misconduct in [1] refusing to postpone the hearing, upon
sufficient cause shown, or [2] in refusing to hear evidence
pertinent and material to the controversy; or [3] of any other
misbehavior by which the rights of any party have been prejudiced."
17And let's not forget that counsel for IBC himself stated
during the hearing: "we would freely admit there was ill will
between Mr. Hoolahan and IBC" — a statement that the arbitrator
relied upon in the Award to find IBC's "admission of 'ill-will'
towards" Hoolahan. See Lima v. Holder, 758 F.3d 72, 79 (1st Cir.
2014) ("'[A]n admission of counsel during trial is binding on the
client' if, in context, it is 'clear and unambiguous.'") (quoting
Levinsky's, Inc. v. Wal–Mart Stores, Inc., 127 F.3d 122, 134 (1st
Cir. 1997)).
- 22 -
9 U.S.C. § 10(a)(3). IBC advances arguments based on the first
and second grounds.
IBC's first gripe is that the arbitrator did not postpone
the hearing to allow for later testimony from Anderson, and its
second that the arbitrator's refusal to admit into evidence an
affidavit from Anderson amounted to a "refus[al] to hear evidence
pertinent and material to the controversy." 9 U.S.C. § 10(a)(3).
IBC concedes that it raised neither of these arguments during the
hearing. IBC never even asked for a postponement, and after the
arbitrator denied the admission of an affidavit, IBC did not object
to the denial, and it did not offer any reason or argument as to
why the affidavit was admissible or how IBC was prejudiced. Nor
did IBC raise these arguments before the district court. It raises
them for the first time in its opening appeal brief.
Hat in hand and acknowledging its failure to preserve
its section 10(a)(3) arguments, IBC assumes that this court "will
not consider issues not raised below" and therefore urges this
court to review these arguments de novo as "exceptional" ones.
But that is not how we handle arguments raised for the first time
on appeal. Arguments "debuted on appeal" are deemed "forfeited"
and therefore engender plain error review. Nat'l Fed'n of the
Blind v. The Container Store, Inc., 904 F.3d 70, 85 (1st Cir. 2018)
(citing McCoy v. Mass. Inst. of Tech., 950 F.2d 13, 22 (1st Cir.
- 23 -
1991) and Dávila v. Corporación De P.R. Para La Difusión Pública,
498 F.3d 9, 14 (1st Cir. 2007)).
"Plain error requires appellants to demonstrate: '(1)
an error occurred (2) which was clear or obvious . . . (3) affected
[his] substantial rights [and] (4) seriously impaired the
fairness, integrity, or public reputation of the judicial
proceedings.'" Nat'l Fed'n of the Blind, 904 F.3d at 85 (quoting
Dávila, 498 F.3d at 14–15). IBC's first argument, that the
arbitrator's failure to postpone the hearing (without being asked)
warrants vacatur of the Award, fails under this standard as IBC
"cites no authority that mandates such a sua sponte [i.e., of the
arbitrator's own accord] continuance [another word for
"postponement"]." See United States v. Scott, 877 F.3d 42, 51
(1st Cir. 2017), cert. denied, 139 S. Ct. 65 (2018). Therefore,
"[w]ith no authority suggesting such a continuance was required,
there was no 'clear or obvious' error, and thus [IBC] cannot
succeed on plain error review." Id.Next, we apply plain error review to IBC's contention
that the arbitrator's refusal to admit into evidence an affidavit
from Anderson amounted to a "refus[al] to hear evidence pertinent
and material to the controversy." 9 U.S.C. § 10(a)(3); cf. Correia
v. Feeney, 620 F.3d 9, 15 (1st Cir. 2010) (applying plain error
review to the district court's admission of evidence where the
specific objection to the admission was not raised with the
- 24 -
district court and finding none). IBC essentially complains that
the arbitrator's reliance on Schoenberger's testimony without
hearing testimony from Anderson to rebut it was error warranting
vacatur of the Award: "[i]n view of the importance of
Schoenberger’s unrebutted testimony to the arbitrator’s final
decision on the merits, the arbitrator’s refusal to either permit
an affidavit from Anderson or hold the record open so that
Anderson’s testimony could be taken via deposition or
videoconference at a later date deprived IBC of a fair hearing.
This misconduct fits squarely within the FAA’s grounds for
vacatur." This argument borders on the absurd. Knowing full well
in advance that Anderson would be unavailable to testify, IBC never
asked for a continuance (nor did it think to prepare an affidavit
ahead of the hearing to at least offer as evidence). On the other
hand, Hoolahan's witness, attorney Schoenberger, was available and
subject to cross, such that the arbitrator could hear from him,
make a credibility determination, and render a decision based on
all the evidence he deemed admissible. Under these circumstances,
we see no error, plain or otherwise, in the arbitrator's decision
to forgo an affidavit from Anderson. Cf. Long v. Fairbank
Reconstruction Corp., 701 F.3d 1, 5 (1st Cir. 2012) (rejecting
appellant's argument raised for the first time on appeal that the
district court erred in admitting an expert's video deposition
where the court subsequently discredited a report the expert had
- 25 -
relied upon, finding that because the expert had "relied on many
sources" outside that report, "the district court did not err —
let alone plainly err — in admitting the video").
And so we stop there. We find that IBC has failed to
convince us that vacatur of the Award under 9 U.S.C. § 10(a)(3) is
warranted.
c. 9 U.S.C. § 10(a)(4)
IBC's last statutory argument is that the arbitrator
misinterpreted the Agreement, leading him to "exceed[] [his]
powers" under 9 U.S.C. § 10(a)(4) in two ways,18 by: (1) awarding
Hoolahan attorneys' fees, and (2) disregarding a provision in the
Agreement that disclaimed IBC's obligation to assist Hoolahan in
reselling his IBC Shares. IBC did not raise the first argument
before the district court,19 and while it did raise the second one
below, thus preserving its challenge, the district court did not
18 In the summary of its argument, IBC contends that
"award[ing] a windfall to Hoolahan" by not discounting the Award
by Hoolahan's 2013 sale and remaining IBC Shares was also an
instance of the arbitrator exceeding his authority under 9 U.S.C.
§ 10(a)(4). However, IBC develops this specific point no further
in its brief, and therefore we find this angle of IBC's section
10(a)(4) argument waived. United States v. Zannino, 895 F.2d 1,
17 (1st Cir. 1990).
19Attorneys' fees came up only tangentially, at best, during
arbitration.
- 26 -
rule on it. For his part, Hoolahan does not address either argument
in his brief.20
IBC's failure to raise the issue of attorneys' fees below
(during arbitration or in front of the district court) would
ordinarily trigger plain error review as just discussed. Nat'l
Fed'n of the Blind, 904 F.3d at 85. But because Hoolahan does not
advocate for plain error review and the highly-deferential de novo
review of an arbitration award is nearly as demanding as plain
error review, see, e.g., Díaz-Fonseca v. Puerto Rico, 451 F.3d 13,
36 (1st Cir. 2006) ("The [plain error] standard is high, and 'it
is rare indeed for a panel to find plain error in a civil case.'")
(quoting Chestnut v. City of Lowell, 305 F.3d 18, 20 (1st Cir.
2002)), such that the outcome will in this case be the same under
either standard, we will review this issue de novo as well, see
United States v. Tapia-Escalera, 356 F.3d 181, 183 (1st Cir. 2004)
(reviewing de novo where the appellee did not argue for a plain
error standard), albeit with the deference required.
20 Hoolahan's failure to rebut IBC's section 10(a)(4)
arguments raises the issue of appellee waiver, which we have not
confronted head-on in this circuit before. See, e.g., W. Virginia
Coal Workers' Pneumoconiosis Fund v. Bell, 781 F. App'x 214, 226
(4th Cir. 2019). But we exercise our discretion, see Guillemard-
Ginorio v. Contreras-Gomez, 585 F.3d 508, 517-18 (1st Cir. 2009),
to bypass the issue of appellee waiver and leave the ramifications
for another day, particularly because we will analyze IBC's
arguments under a de novo standard (we'll explain in a minute) and
therefore discern no unfairness towards IBC here.
- 27 -
Like IBC's other theories for vacatur, its section
10(a)(4) one faces a precipitous incline: "[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." Dialysis Access Ctr., 932 F.3d at 11 (quoting Labor
Relations Div. of Constr. Indus. v. Int'l Bhd. of Teamsters, Local
#379, 29 F.3d 742, 747 (1st Cir. 1994)). Once again, we remember
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. Under section 10, we "do not sit to hear
claims of factual or legal error by an arbitrator as an appellate
court does in reviewing decisions of lower courts," and "[e]ven
where such error is painfully clear, courts are not authorized to
reconsider the merits of arbitration awards." Advest, 914 F.2d at
8 (internal quotation marks omitted).
1. Attorneys' Fees
IBC argues that the arbitrator exceeded his authority by
awarding attorneys' fees to Hoolahan in contravention of the rules
and law governing the Agreement: the AAA Commercial Rules and
Delaware state law. IBC notes that the AAA Commercial Rules do
not permit an award of attorneys' fees unless requested by all
parties or otherwise authorized by law or the arbitration
- 28 -
agreement. And IBC argues that because Delaware follows the
"'American Rule,' whereby a prevailing party is generally expected
to pay its own attorneys' fees and costs," Hoolahan was not
entitled to attorneys' fees.21
Our task here is to follow the "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." Mastrobuono v. Shearson Lehman Hutton, Inc., 514
U.S. 52, 63 (1995). See also Dialysis Access Ctr., 932 F.3d at
11-12.
Rule 47 of the AAA Commercial Rules permits an arbitrator
to award attorneys' fees under three circumstances: "if [1] all
parties have requested such an award or [2] it is authorized by
law or [3] their arbitration agreement."22 Here, there is no
indication on the record that circumstance one (that both parties
requested attorneys' fees) or three (that the Agreement itself
explicitly allows for an award of attorneys' fees) is present. So
we therefore turn to the law governing the Agreement: Delaware.
21 In its opening appeal brief, IBC explains that
Massachusetts law also follows the "American Rule," but provides
no argument as to why Massachusetts, and not Delaware, law should
apply here.
22 American Arbitration Association, Commercial Arbitration
Rules and Mediation Procedures (2013), available at
https://adr.org/sites/default/files/CommercialRules_Web_FINAL_2.
pdf.
- 29 -
While IBC is correct that under Delaware law the winning
party is "generally expected to pay its own attorney's fees and
costs," that expectation is subject to certain "limited equitable
exceptions," such as "bad faith." Montgomery Cellular Holding Co.
v. Dobler, 880 A.2d 206, 227 (Del. 2005).
Although there is no single, comprehensive
definition of 'bad faith' that will justify a
fee-shifting award, Delaware courts have
previously awarded attorneys' fees where (for
example) 'parties have unnecessarily
prolonged or delayed litigation, falsified
records or knowingly asserted frivolous
claims.' The bad faith exception is applied
in 'extraordinary circumstances' as a tool to
deter abusive litigation and to protect the
integrity of the judicial process.
Id. Delaware law "departs from the American Rule and may shift
fees where the 'underlying (prelitigation) conduct of the losing
party was so egregious as to justify an award of attorneys' fees
as an element of damages,'" Auriga Capital Corp. v. Gatz
Properties, 40 A.3d 839, 881 n.183 (Del. Ch. 2012) (listing
numerous instances where Delaware courts have awarded attorneys'
fees), aff'd, 59 A.3d 1206 (Del. 2012), and IBC points to no
authority — nor could we find any — that Delaware law forbids
arbitrators from awarding attorneys' fees. See, e.g., Roncone v.
Phoenix Payment Sys., Inc., No. C.A. No. 8895-VCN, 2014 WL 6735210,
at *5 (Del. Ch. Nov. 26, 2014) (finding that "the arbitrator acted
within his authority also to award Roncone his attorneys' fees and
costs").
- 30 -
Here, the arbitrator's finding of IBC's "bad faith"
cleared the way for an award of attorneys' fees. The arbitrator
stated in his Award that "[IBC's] admission of 'ill-will' towards
[Hoolahan], coupled with the disparity of treatment afforded to
[Hoolahan] when compared to the treatment afforded to Mr.
Mattheson, in my view amounts to a per-se [sic] violation and
leaves no doubt that [IBC] acted in bad faith and deliberately
denied [Hoolahan] the benefit of the bargain [he] was entitled to
under the Agreement." (Emphasis added.) He therefore found and
noted in the Award that "due to the willful nature of the contract
breaches and the subsequent admission of same by [IBC],
[Hoolahan]'s request for attorney's fees, costs and expenses are
also granted . . . ." That the arbitrator decided to take the
evidence in front of him that amounted to the existence of "ill-
will" to impute "bad faith" onto IBC, and as a result award
attorneys' fees, cannot be reasonably viewed as in excess of his
power. See, e.g., Prudential-Bache Sec., Inc. v. Tanner, 72 F.3d
234, 242–43 (1st Cir. 1995) (declining to find that the arbitrator
had exceeded his authority under section 10(a)(4) in awarding
attorneys' fees where Puerto Rico law permitted the award of such
fees "against a party which raises and obstinately pursues
meritless claims or otherwise vexatiously engages in unnecessary
litigation," and "the [arbitration] panel had evidence in front of
it as to obstinate or frivolous conduct"); see also Asociación de
- 31 -
Empleados del E.L.A., 559 F.3d at 47. IBC has therefore failed to
show that the arbitrator violated 9 U.S.C. § 10(a)(4) when he
awarded Hoolahan attorneys' fees in accordance with Delaware law.
2. IBC's Obligation to Help Hoolahan
Resell
Next, IBC argues that the arbitrator exceeded his
authority by misinterpreting the Agreement when he found that
article 13.323 governed the obligation that IBC had breached,
rather than the more specific article 2.3(e)(ii),24 which disclaims
any obligations IBC has to help Hoolahan resell his shares. IBC
contends that under basic principles of contract interpretation,
specific language in a contract controls over general language
where they conflict, the arbitrator should not have disregarded
article 2.3(e)(ii), and, in doing so, the arbitrator's
interpretation ran afoul of the contract's plain language.
Now remember, "[a]s 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
23Article 13.3: "From and after the date of this Agreement,
as may be necessary, the Parties shall execute, acknowledge and
deliver such other instruments and take such other action as may
be reasonably necessary to carry out their obligations under this
Agreement."
24 Article 2.3(e)(ii): "IBC has no obligation under any
circumstances to register the IBC shares or to take any other
actions to facilitate or permit any resale or transfer thereof in
the United States or otherwise by or to a U.S. Person and will
certify same to the Vendors."
- 32 -
serious error does not suffice to overturn his decision." United
Paperworkers Int'l Union, 484 U.S. at 38. A showing that the
arbitrator made a serious error is not sufficient. Oxford Health
Plans LLC v. Sutter, 569 U.S. 564, 569 (2013) (citing Stolt-Nielsen
S.A., 559 U.S. at 674-675). Rather, a court may overturn a
decision "only if 'the arbitrator acts outside the scope of his
contractually delegated authority' — issuing an award that 'simply
reflects his own notions of economic justice' rather than 'drawing
its essence from the contract.'" Id. (quoting Eastern Associated
Coal Corp. v. United Mine Workers of Am., 531 U.S. 57, 62
(2000)(cleaned up)).
Even if IBC is right that the arbitrator did not
correctly interpret the Agreement, he nonetheless interpreted it.
And that is enough. Compare Oxford Health, 569 U.S. at 569–70
(explaining that arbitrators do not exceed their authority as long
as they interpret, even arguably, relevant contractual
provisions), with Stolt-Nielsen S.A., 559 U.S. at 674-75 (finding
panel exceeded authority in concluding agreements allowed for
class arbitration where the clauses were silent on the issue and
the panel failed to examine whether the FAA or state law provided
a default rule). The specific article that IBC seeks to advance
and argues that the arbitrator ignored (article 2.3(e)(ii)) was
raised multiple times in front of the arbitrator during the
arbitration hearing, so much so that the article was even read
- 33 -
aloud in full by a live witness. And the Award itself cites to
articles from the Agreement. Taken together, this is more than
enough for this court to conclude that the arbitrator construed
the Agreement, and as such did not exceed his authority when he
concluded that IBC had breached the Agreement. See, e.g., First
State Ins. Co. v. Nat'l Cas. Co., 781 F.3d at 11 (finding the
arbitrator to have construed the underlying contracts where the
text of the arbitral award referred to the contracts themselves);
Cytyc Corp., 439 F.3d at 33 (affirming the arbitrators' decision
where the "panel's decision . . . ma[de] manifest that the
arbitrators pondered the pertinent language of the Agreement and
construed that language in accordance with the parties'
discernible intent" (internal citations omitted)).
IBC has therefore also failed to show that the arbitrator
exceeded his authority under 9 U.S.C. § 10(a)(4) when he found
article 13.3, not article 2.3(e)(ii), to be breached.
ii. Manifest Disregard of the Law
In addition to its statutory arguments, IBC also claims
that the arbitrator acted with "manifest disregard of the law"
when he failed to offset Hoolahan's Award with 1) the proceeds
from Hoolahan's 2013 sale of 250,000 IBC Shares25 and 2) the value
25
It appears that IBC is raising this specific miscalculation
for the first time on appeal. But it is of no matter here, since
we find that the argument regarding this miscalculation is already
waived for other reasons. Stay tuned.
- 34 -
of the shares Hoolahan retained at the time of the Award.
According to IBC, this miscomputation gave Hoolahan an
impermissible "windfall" in "duplicative damages," and was made in
"manifest disregard of the law." Hoolahan responds that IBC's
challenges to the Award are waived because IBC never raised the
issue of a "windfall" in any submissions to the arbitrator before
the Award. Bypassing Hoolahan's waiver argument, IBC again cannot
succeed on the merits.26
Assuming its ongoing viability, the common law doctrine
of "manifest disregard of the law" "allows courts a very limited
power to review arbitration awards outside of section 10 [of the
FAA]." Dialysis Access Ctr., 932 F.3d at 12-13 (citing Mt. Valley
Prop., Inc., 863 F.3d at 94). Under this doctrine, a court may
vacate an award that is "(1) unfounded in reason and fact;
(2) based on reasoning so palpably faulty that no judge, or group
26
Because we find that IBC has waived its arguments as to the
first two grounds under the manifest disregard of the law doctrine
for reasons other than its failure to raise them before the Award
issued, and because we can address the third ground on the merits
to affirm the Award, we need not decide whether IBC waived its
"windfall" argument by not raising it in front of the arbitrator
until after the Award issued. See United States v. Parker, 872
F.3d 1, 14 (1st Cir. 2017) ("Because we can uphold the judge's
willful-blindness charge on the merits, we need not decide whether
Parker waived the issue because of inadequate briefing."), cert.
denied, 138 S. Ct. 936 (2018); United States v. Parrilla Bonilla,
626 F.2d 177, 179 (1st Cir. 1980) ("We need not decide whether
appellants' not having raised certain issues until after trial
constituted waiver since we resolve the issues on the merits
adversely to appellants.").
- 35 -
of judges, ever could conceivably have made such a ruling; or
(3) mistakenly based on a crucial assumption that is concededly a
non-fact." Mt. Valley Prop., Inc., 863 F.3d at 95 (quoting
McCarthy v. Citigroup Glob. Mkts., Inc., 463 F.3d 87, 91 (1st Cir.
2006)).
IBC dresses its miscomputation grievance as three
separate grounds for vacatur under this doctrine: 1) the
miscomputation makes the Award "unfounded in reason and fact"; 2)
no other judge would have made such a miscomputation; and 3) the
miscomputation results from reliance on a "non-fact" — the
"assumption that Hoolahan no longer owned any shares" at the time
of the Award.
As to grounds one and two, IBC cites no case law to
support its contentions that the Award is "unfounded in reason and
fact" and that "no judge" would have made the purported
miscomputation. For ground one, IBC criticizes the arbitrator's
math for not discounting the Award by the value of the shares
Hoolahan still retained at the time of the Award, and for assuming
that Hoolahan would have been able to sell all his shares when
Mattheson had, rather than the fraction of total shares that
Mattheson actually sold in 2011. And for ground two, IBC simply
states that "no judge would [have made] the above-described
computational error in awarding damages," and the decision was "so
mangled by faulty reasoning that it awards a double-recovery."
- 36 -
But IBC offers no more in the way of argument to persuade us that
either is a ground for vacating the Award. "Ultimately, not having
done the legwork we require to develop this position, [IBC] has
waived those challenges." Dialysis Access Ctr., 932 F.3d at 12
(citing Rodríguez v. Municipality of San Juan, 659 F.3d 168, 176
(1st Cir. 2011); Holloway v. United States, 845 F.3d 487, 491 n.4
(1st Cir. 2017); Zannino, 895 F.2d at 17 (stating that litigants
must develop their own arguments rather than "leaving the court to
do counsel's work")).
As for ground three, IBC relies on only one case in
support of its "non-fact" argument, that the arbitrator
"inaccurately assumed that Hoolahan no longer owned any shares [at
the time of the Award], when in fact he still held 96,721." In
Electronics Corp. of America v. Int'l Union of Elec., Radio and
Mach. Workers, AFL-CIO Local 272, the sole basis of the
arbitrator's award was premised on a mistaken belief (underscored
by claimant's poor presentation of the facts) that an employee had
not been suspended prior to termination and had therefore been
denied "industrial due process" under a progressive discipline
system. 492 F.2d 1255 (1st Cir. 1974). On appeal this court found
that the employee's prior suspension had been presented to the
arbitrator (albeit not so clearly), and so vacated the award. Id.Electronics Corp. is inapposite here because there exists no
equivalent "non-fact." There is no indication from the record
- 37 -
that the arbitrator ever assumed that Hoolahan held no shares at
the time of the Award. Rather, the record shows that the
arbitrator was made aware multiple times during the hearing and
through written submissions that Hoolahan still retained a certain
number of shares at the time of the Award. IBC even concedes as
much in its opening brief.27 Just because the arbitrator did not
specifically call out the IBC Shares still held by Hoolahan in the
Award does not mean that the arbitrator did not consider that
evidence or "erred in his view of the facts." Electronics Corp.,
492 F.2d at 1257. The arbitrator was not required to tell us any
more about how he accounted for the shares Hoolahan still retained.
Cytyc Corp., 439 F.3d at 34 ("Arbitrators are not required to
provide particularized reasons for their decisions. It follows
that an arbitrator's failure to comment upon a specific piece of
evidence cannot support an inference that he failed to consider
it." (internal citations omitted)). We therefore find that IBC
has not made a showing that the arbitrator acted in "manifest
disregard of the law" when deciding the Award.
27"[I]t was clear from the arbitration record that Mr.
Hoolahan had not sold all of his shares. There was testimony and
argument throughout the arbitration hearing that Mr. Hoolahan sold
only 250,000 of his 1,217,212 post-split shares, and this was even
one of the stipulated facts at the hearing. . . . There were
neither any stipulated facts nor any testimony about any other
sales by Mr. Hoolahan."
- 38 -
III. CONCLUSION
All told, IBC's "argument reduces to a frontal attack on
the merits of the arbitral award." Id. at 35. But "[s]uch an
attack is easily repulsed. It was the province of the arbitrator[]
to scrutinize the language of the Agreement, weigh the conflicting
evidence of the parties' intentions, and determine the dimensions
of" the Award. Id. (citing Major League Baseball Players Ass'n v.
Garvey, 532 U.S. 504, 509–10 (2001)). IBC's request to disturb
the Award — either with a vacatur or a remand — faced a steep slope
to begin with, and it has provided no argument strong enough to
get it to the summit. And so, we affirm.
Costs to Appellee.
- 39 -