CM South East Texas Houston, LLC v. Careminders Home Care, Inc.

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 16-11054
Non-Argument Calendar
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D.C. Docket No. 1:15-cv-01847-SCJ
CM SOUTH EAST TEXAS HOUSTON, LLC,
SOUTH EAST TEXAS KCH CO., LLC,
Plaintiffs-Counter Defendants-
Appellees,
versus
CAREMINDERS HOME CARE, INC.,
Defendant-Counter Claimant-
Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(October 7, 2016)
Before ED CARNES, Chief Judge, MARTIN and ANDERSON, Circuit Judges.
PER CURIAM:
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CareMinders Home Care, Inc. appeals the district court’s confirmation of an
arbitration award in favor of plaintiffs CM South East Texas Houston, LLC and
South East Texas KCH Co., LLC. CareMinders contends that the district court
should have vacated the award under the Federal Arbitration Act (FAA), 9 U.S.C.
§ 10(a)(3), because the arbitrator engaged in misconduct by failing to postpone a
hearing when both sides had agreed to postpone it. The plaintiffs contend that
CareMinders’ appeal is not only wrong, but also frivolous, and they have moved
for sanctions on that ground.
I.
This case arose out of a contract dispute. The plaintiffs asserted claims
against CareMinders for breach of contract, and they demanded to arbitrate those
claims as required by their contracts. After months of initial proceedings, the
arbitrator scheduled a final five-day evidentiary hearing for December 8–12, 2014,
in Atlanta. When a scheduling conflict arose, both sides requested a new date, and
the arbitrator rescheduled the hearing for February 9–13, 2015. When yet another
scheduling conflict arose, both sides again requested a new date, and the arbitrator
again rescheduled the hearing, this time for March 9–13, 2015. What happened
next is the main source of the parties’ dispute on appeal.
On Friday, February 27, 2015, CareMinders’ attorney sent an email to the
arbitrator, advising him that one of the company’s key witnesses, Gary Kneller,
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was in the midst of a family emergency. The attorney explained that Kneller’s
mother, who lived in Chicago, “had been battling serious health issues the past few
weeks,” and that Kneller had “been flying between Chicago and Atlanta to split
time caring for his mother” while also preparing for the hearing. That morning,
Kneller’s mother had suffered a second stroke that would require surgery and her
doctors had scheduled the surgery for the same week as the final hearing in March.
CareMinders’ attorney explained that because “there are no other family members
who can be with his mother that week,” Kneller “must be in Chicago to care for
her during that time.” As a result, CareMinders asked the arbitrator to immediately
postpone the hearing and to inform the parties of his availability during the period
of May to September so that they could reschedule. CareMinders also noted that
the plaintiffs had “agreed this hearing should be rescheduled so that Mr. Kneller
can attend to his mother.”
The arbitrator responded to CareMinders’ email on the same day and set a
conference call for Monday, March 2, 2015, to discuss rescheduling the hearing.
The arbitrator also stated that he was “not yet agreeing to reschedule,” and that he
wanted to discuss “whether there is a way not to postpone, notwithstanding Mr.
Kneller’s family situation.” He explained that while he was “certainly sympathetic
to Mr. Kneller’s situation,” he was “also concerned that this case has already been
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rescheduled twice before, and now may not be heard for 6 months beyond the
originally scheduled hearing dates.”
The conference call took place as scheduled on March 2. During the call,
Kneller “explained the grave and ongoing nature of his mother’s condition, that
there were no other friends or family available in Chicago to care for his mother,
and that he was a critical witness for CareMinders and needed to attend the hearing
in person.” CareMinders’ attorney also advised the arbitrator “that postponing the
hearing only a few days would be insufficient, since it was likely that Mr. Kneller
and his mother would be in the same circumstances for at least the next several
days.” The arbitrator asked whether it would be possible for Kneller to attend the
hearing remotely, by telephone or video conference, but CareMinders’ attorney
claimed that option was not feasible. According to CareMinders’ attorney, the
arbitrator “remained firm that the hearing must take place in the month of March”
and “directed the parties to agree on alternative dates in March or to otherwise be
prepared to attend the hearing as scheduled on March 9.”
The parties conferred by email and sent proposed dates to the arbitrator.
Based on the dates the parties provided, the arbitrator rescheduled the hearing for
March 18–21, 2015, reducing it from five days to four days. In his revised
scheduling order, the arbitrator explained that he had changed the dates of the
hearing “due to a family health emergency for Mr. Kneller.”
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The final hearing took place as re-re-rescheduled. Kneller attended all four
days of the hearing and testified at length. Five days after the hearing ended,
Kneller’s mother passed away.
The arbitrator issued a standard award, without a written explanation,
finding in favor of the plaintiffs and awarding damages. After that, the plaintiffs
filed a motion to confirm the award in federal court. CareMinders responded by
filing a motion to vacate the award under the FAA, contending that the arbitrator
engaged in misconduct by refusing to postpone the hearing when both parties had
agreed to it. In support of its motion, CareMinders submitted an affidavit by
Kneller in which he stated that “[d]uring the arbitration, [he] was making and
receiving phone calls from the hospital in Chicago, getting updates on [his]
mother’s condition and making decisions about life support.” He maintained that
those circumstances rendered him “ill-prepared for the arbitration” and that, as a
result, he did not present “[s]ome evidence and material information” at the
hearing and that the evidence he did present “was not presented in the same way or
in the same order that it would have been, had [he] been able to mentally and
physically present and focused in the days leading up to the arbitration.”
The district court denied the motion to vacate, finding that CareMinders had
failed to show that the arbitrator’s refusal to postpone the hearing amounted to
misconduct or that it sufficiently prejudiced the company’s ability to mount a
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defense. The court later issued an order confirming the award, which CareMinders
appeals here. We review the district court’s factual findings for clear error and its
legal conclusions de novo. Gianelli Money Purchase Plan & Trust v. ADM
Investor Servs., Inc., 146 F.3d 1309, 1311 (11th Cir. 1998).
II.
The FAA permits a court to vacate an arbitration award “where the
arbitrators were guilty of misconduct in refusing to postpone the hearing, upon
sufficient cause shown.” 9 U.S.C. § 10(a)(3). To establish misconduct, the party
moving for vacatur must show that there was no reasonable basis for the
arbitrator’s refusal to postpone the hearing. See Johnson v. Directory Assistants,
Inc., 797 F.3d 1294, 1301 (11th Cir. 2015). In deciding whether there was any
reasonable basis for an arbitrator’s decision to refuse a request for a postponement,
we are mindful of federal policy favoring the “expeditious handling” of arbitration
cases, and also that a rescheduled hearing would have to not only “meet the
convenience of both parties and their witnesses,” but the convenience of the
arbitrator as well. Schmidt v. Finberg, 942 F.2d 1571, 1574 (11th Cir. 1991).
We may vacate an award on these grounds only if the arbitrator’s choice
“prejudice[d] the rights of the parties and denie[d] them a fair hearing.” Robbins
v. Day, 954 F.2d 679, 685 (11th Cir. 1992), disapproved on other grounds by First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920 (1995).
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Prejudice might occur when, for example, the arbitrator’s choice not to postpone a
hearing entirely prevents a party from presenting a key witness’ material, non-
cumulative testimony. See Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16, 20–21
(2d Cir. 1997).
CareMinders contends that the arbitrator’s decision about postponing the
final hearing warrants vacatur under the FAA. The arbitrator did grant a
postponement, but not the one CareMinders wanted. CareMinders requested that
the arbitrator postpone the hearing until sometime between May and September
2015. He instead postponed the hearing to March 18–21, 2015, to avoid the
conflict with the scheduled surgery. So CareMinders’ actual argument is that the
arbitrator engaged in misconduct by granting a postponement that was shorter than
the one it had requested.
CareMinders’ argument fails. To begin with, it cannot show that there was
no reasonable basis for the arbitrator’s choice. See Johnson, 797 F.3d at 1301. As
the district court aptly noted, the arbitrator was faced with “the unenviable
predicament of trying to accommodate Kneller’s unfortunate situation while also
trying to ensure the expeditious resolution of the case.” The arbitrator attempted to
serve both of those competing interests by granting a nine-day postponement,
which allowed Kneller to be in Chicago for his mother’s surgery, while also
ensuring that the arbitration would proceed expeditiously. CareMinders challenges
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the accuracy of the arbitrator’s statement that, if he had chosen to further postpone
the hearing, the matter “now may not be heard for 6 months beyond the originally
scheduled dates.” But that statement is accurate enough. CareMinders itself
suggested to the arbitrator that the hearing could be rescheduled to dates as late as
August or September 2015, which would be well over six months past the
originally scheduled dates in December 2014. We cannot say that, under those
circumstances, the arbitrator’s decision to grant the shorter postponement lacked
any reasonable basis.
We also reject the CareMinders’ contention that an arbitrator’s refusal to
grant a postponement when the parties have mutually agreed to one is per se
unreasonable and mandates vacatur. An arbitrator is entitled to consider not only
“the convenience of both parties and their witnesses,” but his convenience as well.
Schmidt, 942 F.2d at 1574. And he is entitled to take into consideration the need
to ensure the expeditious resolution of the case. See id. A per se rule would
undermine those considerations.
CareMinders has also failed to show that the arbitrator’s refusal to postpone
the hearing prejudiced its rights or deprived it of a fair hearing. See Robbins, 954
F.2d at 685. The arbitrator’s decision did not prevent Kneller from testifying at the
hearing altogether. To the contrary, he provided hours of testimony. While
CareMinders baldly asserts that Kneller “could have done a much better job” had
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he been given more time to prepare, it fails to explain how he would have done so.
CareMinders contends that “[i]t is not reasonable to expect, as there is no realistic
way for Mr. Kneller to prove, what he would have done differently.” But
CareMinders could have told us what material testimony Kneller would have
provided that he did not, or what he would have said differently. It has not done
so, leaving nothing but speculation that things might — just might — have been
different. That simply is not enough to establish prejudice.
We have stated in other contexts that litigants generally are entitled to fair
proceedings, not perfect ones. See United States v. Espinosa-Orlando, 704 F.2d
507, 514 (11th Cir. 1983) (“The Constitution mandates fair, not perfect, trials.”).
The same holds true for arbitration. CareMinders was entitled to a fair arbitration
proceeding, not a perfect one. See Rosensweig v. Morgan Stanley & Co., Inc., 494
F.3d 1328, 1333 (11th Cir. 2007) (explaining that while parties are entitled to a
“fundamentally fair hearing” in arbitration, “arbitrators are not required to follow
all the niceties observed by the federal courts”) (quotation marks omitted).
Because CareMinders got a fair proceeding, we will not vacate the arbitrator’s
award.
III.
The plaintiffs move for sanctions on the ground that CareMinders’ appeal is
frivolous. See Fed. R. App. P. 38 (authorizing a court of appeals to impose
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sanctions when it “determines that an appeal is frivolous”). We have expressed
our exasperation with “those who attempt to salvage arbitration losses through
litigation that has no sound basis in the law applicable to arbitration awards.” B.L.
Harbert Int’l, LLC v. Hercules Steel Co., 441 F.3d 905, 914 (11th Cir. 2006),
abrogated on other grounds by Frazier v. CitiFinancial Corp., 604 F.3d 1313 (11th
Cir. 2010). We have also warned that “it may be that we can and should insist that
if a party on the short end of an arbitration award attacks that award in court
without any real legal basis for doing so, that party should pay sanctions.” Id. at
913. “A realistic threat of sanctions may discourage baseless litigation over
arbitration awards and help fulfill the purposes of the pro-arbitration policy
contained in the FAA.” Id. at 913–14.
In this case, however, we believe sanctions are not called for. This is not a
case where the arbitration loser is simply quarreling with the merits of the
arbitrator’s decision. See, e.g., id. at 911–13. Our review of our precedents reveals
few decisions that discuss in any detail motions to vacate an award under the FAA
based on an arbitrator’s failure to postpone a hearing. See, e.g., Johnson, 797 F.3d
at 1301; Scott v. Prudential Sec., Inc., 141 F.3d 1007, 1016–17 (11th Cir. 1998),
overruled in part by Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 128
S. Ct. 1396 (2008); Robbins, 954 F.3d at 684–85. None of those decisions clearly
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establishes that CareMinders’ appeal was destined to fail. Accordingly, we cannot
say that the appeal was entirely baseless.
IV.
The district court’s order confirming the arbitration award is AFFIRMED.
The plaintiffs’ motion for sanctions is DENIED.
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