Conway v. CLC Bio, LLC , 87 Mass. App. Ct. 503 ( 2015 )

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14-P-350 Appeals Court
DANIEL CONWAY vs. CLC BIO, LLC.
No. 14-P-350.
Middlesex. December 10, 2014. - June 12, 2015.
Present: Kantrowitz, Green, & Sullivan, JJ.
Arbitration, Judicial review, Award, Authority of
arbitrator. Massachusetts Wage Act.
Civil action commenced in the Superior Court Department on
February 17, 2012.
A motion to vacate an arbitration award was heard
by Douglas H. Wilkins, J., and judgment was entered by him.
David B. Summer for the plaintiff.
Michelle Y. Bush for the defendant.
SULLIVAN, J. The plaintiff, Daniel Conway (Conway),
appeals from the denial of his motion to vacate an arbitration
award, see G. L. c. 251, § 12, concerning a claim for unpaid
wages under The Wage Act. See G. L. c. 149, §§ 148, 150 as
amended by St. 2009. We affirm, and in so doing, reiterate the
2
standard of review applicable to complaints to vacate a
commercial arbitration award.
Background. To place our discussion in context, we set
forth the facts found by and rationale of the arbitrator.
Conway was employed by the defendant, CLC Bio, LLC (CLC), a
bioinformatics company, from October, 2007, until his
termination in January, 2012. Conway's employment at CLC was
governed by an employment contract that provided for his base
salary and potential bonus payments or commissions. 1 The
contract also contained an arbitration clause that mandated
arbitration of "any dispute or controversy arising out of or
relating in any way to [Conway's] employment with and/ or
termination from [CLC]." 2
1
The commissions clause provided that "[CLC] shall pay
[Conway] a commission as set forth in Appendix A, which is
attached hereto and hereby incorporated by reference.
[Conway's] commission shall be deemed to have been earned by
[him] and owing by [CLC] when the invoice applicable to the
specific products and services sold has been paid in full by the
customer."
2
The arbitration clause of Conway's contract provided in
part:
"The Employee agrees that any dispute or controversy
arising out of or relating in any way to the Employee's
employment with and/ or termination from the Company
(including, but not limited to, all claims, demands or
actions under any federal, state or local statute or
regulation regarding employment discrimination, and/or all
claims, demands or actions concerning the interpretation,
construction, performance or breach of this Agreement)
shall be settled by arbitration held in Boston,
3
Conway's employment at CLC was terminated on January 12,
2012. On January 18, 2012, CLC sent Conway a letter offering to
pay severance and outstanding bonus payments to Conway in
exchange for a release of claims. Conway failed to respond, but
CLC tendered $30,325 in bonus payments to Conway on March 1,
2012, payments which included a $10,990 Individual Sales Bonus
(ISB). In the interim, on February 17, 2012, Conway filed a
complaint against CLC in a Superior Court, alleging breach of
contract, breach of the covenant of good faith and fair dealing,
and violations of the Wage Act stemming from claims for
severance pay, unpaid vacation time, and future and late-paid
commissions. CLC moved to stay the proceedings and compel
arbitration pursuant to the arbitration provision in Conway's
employment contract. See G. L. c. 251, § 1, as appearing in St.
1991, c. 398, § 96. The motion judge granted CLC's motion and
the parties proceeded to arbitration.
In arbitration Conway claimed, among other things, that CLC
violated the Wage Act by failing to effectuate payment of the
ISB on the date of his termination. See G. L. c. 149, § 148.
The arbitrator found that the ISB, despite being called a
Massachusetts, in accordance with the Rules of the American
Arbitration Association, before an arbitrator who shall
have experience in the area of the matter in dispute. Each
party shall bear its own costs and attorneys' fees in
connection with any arbitration pursuant to this
paragraph."
4
"bonus," was in fact a commission subject to the protections of
the Wage Act. She concluded, however, that the ISB did not
become "definitely determined" and "due and payable", see G. L.
c. 149, § 149, until the end of February, 2012, rather than the
date of Conway's termination, because the employment contract
provided that ISB commissions were to be paid to employees only
when the corresponding sales were paid in full by the customers. 3
The arbitrator found that CLC would have tendered the ISB
payment well before the end of February, 2012, if Conway had not
failed to respond to CLC's January 18, 2012, offer letter before
initiating formal litigation. The arbitrator concluded that the
delay in payment of the ISB until March 1, 2012, was not wholly
attributable to CLC and was, therefore, not a violation of the
Wage Act.
Conway subsequently filed a motion to vacate the
arbitrator's award in the Superior Court, disputing only the
arbitrator's determination regarding the ISB. Conway contended
that the arbitrator exceeded her authority in failing to find a
violation of the Wage Act, and that the arbitrator's conclusion
to the contrary was not in accordance with the law. A judge of
3
The statute provides in relevant part: "[t]his section
shall apply . . . to the payment of commissions when the amount
of such commission less allowable or authorized deductions, has
become definitely determined and has become due and payable to
said employee, and commissions so determined and due such
employees shall be subject to the provisions of Section one
hundred and fifty." G. L. c. 149, § 148.
5
the Superior Court confirmed the arbitration award, and
dismissed Conway's complaint with prejudice.
Discussion. There is a "strong public policy" favoring
arbitration of commercial disputes. Connecticut Valley Sanitary
Waste Disposal, Inc. v. Zielinski, 436 Mass. 263, 267 (2002)
(citation omitted). Commercial arbitration awards, such as the
one at issue here, are subject to a narrow scope of judicial
review. See G. L. c. 251, § 12; Superadio L.P. v. Winstar Radio
Prods., LLC, 446 Mass. 330, 333 (2006).
Absent fraud, corruption, or other undue means in the
procurement of the agreement to arbitrate or a showing that the
award is otherwise void or voidable, an arbitrator's award is
binding. Id. at 336-337. McInnes v. LPL Financial, LLC, 466
Mass. 256, 262-263 (2013). An arbitrator's findings of fact and
conclusions of law are binding even if erroneous. Boston Water
Power Co. v. Gray, 6 Met. 131, 181 (1843). Jones v. Boston Mill
Corp., 6 Pick. 148, 156 (1828). Trustees of the Boston & Me.
Corp. v. Massachusetts Bay Transp. Authy., 363 Mass. 386, 390
(1973). Dane v. Aetna Cas. & Sur. Co., 369 Mass. 966, 967
(1976) (Dane). However, an arbitrator's award may be vacated if
the arbitrator exceeded her authority. See G. L. c. 251,
§ 12(a)(3); Superadio L.P., supra at 334.
Conway's assertion that the arbitrator exceeded her
authority is misdirected. An arbitrator exceeds her authority
6
if she awards relief beyond the scope of the arbitration
agreement, beyond that to which the parties bound themselves, or
enters an award prohibited by law. Superadio, supra. "The fact
that an arbitrator [may have] committed an error of law does not
alone mean that [s]he has exceeded [her] authority." City of
Boston v. Professional Staff Assn., 61 Mass. App. Ct. 105, 112
(2004) (quotation omitted). Conway's employment contract
expressly provided the arbitrator with the authority to
arbitrate any "dispute or controversy arising out of or relating
in any way to the Employee's employment with and/ or termination
from the Company." See n.2. This arbitration clause, which
expressly referenced statutory claims, is sufficiently broad to
encompass both contractual and statutory claims. See Joulé,
Inc. v. Simmons, 459 Mass. 88 (2011); Dixon v. Perry & Slesnick,
P.C., 75 Mass. App. Ct. 271, 278 (2009); Gilmer
v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (Gilmer). 4,5
4
Gilmer was decided under the provisions of the Federal
Arbitration Act, (FAA) 9 U.S.C. § 1, et seq. (2006) (FAA), which
governs agreements to arbitrate in interstate commerce, and
supersedes State law to the contrary. See infra.
5
Agreements to arbitrate implicate a number of State and
Federal statutes in addition to the FAA. Enforcement of
arbitration awards arising under private sector collective
bargaining agreements involving companies in interstate commerce
are governed by § 301 of the National Labor Relations Act, as
amended, 29 U.S.C. § 185 (1952) (NLRA). The State court has
concurrent jurisdiction to enforce awards governed by § 301 of
the NLRA. Morceau v. Gould-National Batteries, Inc., 344 Mass.
120, 123-124 (1962), citing Charles Dowd Box Co., Inc. v.
7
Contrast Warfield v. Beth Israel Deaconess Med. Ctr., Inc., 454
Mass. 390 (2009). Conway's "only contention that the arbitrator
exceeded his power is in substance a claim that the arbitrator
committed an error of law," and is not subject to judicial
review. Dane, supra. 6
Conway relies on cases decided under the statutory
arbitration provisions of the Education Reform Act of 1993,
G. L. c. 71, § 42 (Reform Act), in support of his contention
that the court is nonetheless authorized to review the award for
errors of law based on a violation of statute. Arbitration
cases arising under § 42 of the Reform Act involving terminated
teachers with professional teacher status are inapposite in this
respect. Arbitration of these cases under § 42 of the Reform
Act is a creature of statute. In these cases, both the scope of
Courtney, 368 U.S. 502 (1962) (affirming Courtney v. Charles
Dowd Box Co., Inc., 341 Mass. 337 [1960]). G. L. c. 150C is the
State statute which also governs the enforceability of both
public and private sector collectively bargained agreements to
arbitrate, except as otherwise provided by the Education Reform
Act of 1993, G. L. c. 71, § 42. The statute at issue here,
G. L. c. 251, § 1, as appearing in St. 1991, c. 398, § 96,
governs other agreements to arbitrate in the Commonwealth.
6
The same rule applies to review of arbitration awards
under public sector collective bargaining agreements (other than
those governed by the statutory arbitration provisions Education
Reform Act of 1993, G. L. c. 71, § 42, see infra,) and private
sector collective bargaining agreements. See Lynn v. Thompson,
435 Mass. 54, 61-62 (2001), cert. denied, 534 U.S. 1131 (2002)
(interpreting G. L. c. 150C, § 11); United States of America v.
Enterprise Wheel and Car Corp., 363 U.S. 593 (1960); Greene v.
Mari & Sons Flooring Co., Inc., 362 Mass. 560, 563 (1972)
(interpreting 29 U.S.C. § 301, and G. L. c. 150C, respectively).
8
statutory arbitration and the arbitrator's authority are
delimited by the Reform Act. As the Supreme Judicial Court has
recently explained, "judicial review of an arbitrator's
interpretation of [an] authorizing statute . . . is 'broader and
less deferential' than in cases of judicial review of an
arbitrator's decision arising from an interpretation of a
private agreement." School Comm. of Lexington v. Zagaeski, 469
Mass. 104, 112 (2014), quoting from Atwater v. Commissioner of
Educ., 460 Mass. 844, 856-857 (2011). In the case of statutory
arbitration under § 42 of the Reform Act, where the source and
scope of an arbitrator's authority is defined by statute, a
court is "better position[ed]" to interpret the scope of the
arbitrator's authority granted by the authorizing statute and is
thus empowered to vacate an arbitration award if the arbitrator
has exceeded his statutory authority. School Dist. of Beverly
v. Geller, 435 Mass. 223, 229-230 (2001) (Cordy, J., concurring)
(Geller). 7
By contrast, in cases where the source and scope of the
arbitrator's authority emanate from a commercial agreement to
7
In other respects, the standard of review of arbitration
awards under the Reform Act is the same. That is, absent a
showing that the arbitrator exceeded her authority, "a reviewing
court is 'strictly bound by the arbitrator's factual findings
and conclusions of law, even if they are in error.'" School
Comm. of Marshfield v. Marshfield Educ. Assoc., 84 Mass. App.
Ct. 743, 752 (2014), quoting from School Comm. of Lowell v.
Robishaw, 456 Mass. 653, 660 (2010) (citations omitted).
9
arbitrate claims, including statutory claims, the arbitrator is
fully "empowered to interpret the underlying contract and the
extent of [her] powers thereunder." Geller, supra at 229
(Cordy, J., concurring). Judicial review is therefore highly
limited. Review for error of law or fact is precluded, unless
the arbitrator has otherwise exceeded her authority by exceeding
the scope of the agreement to arbitrate, or issuing an award
which violates public policy. See Superadio, 446 Mass. at 330,
334; School Comm. of Lexington v. Zagaeski, supra at 112.
Conway contends that this result is contrary to public
policy to the extent that it consigns the enforcement of
statutes (like the Wage Act) which are meant to benefit the
public as a whole, to private, unreported, unreviewable,
standardless adjudication. We are foreclosed from considering
this contention, which has been rejected in a series of cases
beginning with Gilmer, supra, and culminating most recently
in American Exp. Co. v. Italian Colors Rest., 133 S. Ct. 2304
(2013) (Amex), enforcing private agreements to arbitrate.
See Feeney v. Dell, Inc., 466 Mass. 1001 (2013); McInnes v. LPL
Financial, LLC, 466 Mass. 256, 261-263 (2013). A private
agreement to arbitrate in a contract in interstate commerce is
governed by the Federal Arbitration Act, (FAA) 9 U.S.C. § 1 et
seq. (2006) (FAA), which supersedes State law that conflicts
with its terms. McInnes, supra at 264. Preston v. Ferrer, 552
10
U.S. 346 (2008). "In all relevant respects, the language of the
FAA and [G. L. c. 251. § § 2 & 12] providing for enforcement of
arbitration provisions are similar, and we have interpreted the
cognate provisions in the same manner." Warfield, supra at 394.
Under the FAA, absent a question of arbitrability,
countervailing Congressional command, or cognizable challenge to
the validity of the agreement to arbitrate, an agreement to
arbitrate statutory claims must be enforced. 9 U.S.C. §§ 2, 10
& 11. Amex, supra. Gilmer, supra. Any attempt to refashion
our State law to permit de novo review of commercial arbitration
awards involving statutory claims would run afoul of the FAA,
which also prohibits review of an arbitrator's findings of fact
and rulings of law, so long the arbitrator does not otherwise
exceed her authority. 8 See 9 U.S.C. § 10(a)(4); Hall St. Assocs.
LLC v. Mattel, Inc., 552 U.S. 576 (2008); Oxford Health Plans
LLC v. Sutter, 133 S. Ct. 2064, 2070 (2013). See also Wilko
v. Swan, 346 U.S. 427 (1953), abrogated on other grounds
8
Other grounds for vacating an award under the FAA include
corruption, fraud, undue means, or misconduct. 9 U.S.C.
§ 10(a). Similar grounds are set forth in G. L. c. 251, § 12.
We need not address whether "manifest disregard" for the law
remains a non-statutory grounds for vacatur under the FAA, see
Citigroup Global Mkts., Inc. v. Bacon, 562 F.3d 349 (5th Cir.
2009) (and cases cited), discussing Hall St. Assocs., LLC v.
Mattel, Inc., 128 S. Ct. 1396 (2008), since the claims made here
do not rise to the level of "manifest disregard," however that
term has been defined.
11
by Rodriguez de Quijas v. Shearson/Am. Exp., Inc., 490 U.S. 477
(1989).
The judgment confirming the arbitration award and
dismissing the complaint is affirmed.
So ordered.