Regnery Publishing, Inc. v. Miniter

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
REGNERY PUBLISHING, INC., )
)
Petitioner, )
) Civil Action No. 08-709 (EGS)
v. )
)
RICHARD MINITER, )
)
Respondent. )
)
MEMORANDUM OPINION
Before the Court is a Petition to Confirm an Arbitration
Award by Regnery Publishing, Inc. (“Regnery”) against the
Respondent, Richard Miniter (“Miniter”), and a Motion to Vacate
the Arbitration Award by Miniter. Miniter and Regnery arbitrated
a dispute over Miniter's alleged breach of a two-book publishing
contract. After careful consideration of Regnery’s Petition,
Miniter’s Motion to Vacate, Regnery’s opposition, Miniter’s
reply, and applicable case law, this Court GRANTS Regnery’s
Petition to Confirm the Arbitration Award and DENIES Miniter’s
Motion to Vacate the Arbitration Award.
I. BACKGROUND
On February 14, 2005, Regnery and Miniter entered into a
contract whereby Regnery agreed to publish Miniter's book,
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Disinformation, the first of a two-book contract between the
parties. Miniter received $238,333.00 in advance royalties prior
to the publication of Disinformation. Regnery was to pay Miniter
an additional $116,667.00 in advanced royalties once Regnery
accepted a manuscript for the second book. The parties did not
consider the subject matter of the second book or write
requirements for it when they entered the two-book contract.
Miniter proposed a second book with the working title of
Hunting Zarqawi, about the terrorist Abu Musab al-Zarqawi. The
book would have been based on interviews with Zarqawi's family
and friends in the Middle East. Miniter alleges that he would
have needed $96,206.99 to finance the research and to write the
second book. Regnery refused to advance the amount against the
$116,667.00 advance. Miniter then proposed an alternate book,
Where Have All the Heroes Gone?, which Regnery rejected. Regnery
insisted that Miniter proceed with Hunting Zarqawi.
In April 2007, Regnery filed a demand for arbitration
against Miniter with the American Arbitration Association
(“AAA”). During the arbitration, Miniter alleged that an AAA
administrator informed the arbitrator in the case that Miniter
had not paid certain arbitration fees and expenses. Miniter
filed a Motion to Recuse on October 26, 2007. Regnery filed a
response on October 29, 2007. The AAA issued its ruling on
November 1, 2007, rejecting Miniter's claims. On March 10, 2008,
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the arbitrator ruled that Regnery was entitled to recover
$146,899.96 in unearned royalties from Miniter, plus lost profits
of $20,155.04. On April 25, 2008, Regnery filed a petition with
this Court to confirm the arbitration award. On May 21, 2008,
Miniter moved to vacate the arbitration award.
II. DISCUSSION
Miniter argues that the arbitration award should be vacated
under § 10(a)(1) and (4) of the Federal Arbitration Act (“FAA”)
and on common law grounds.1 Specifically, Miniter alleges that
the arbitration terminated upon entry of an award without a
ruling by the arbitrator on his Motion to Recuse. Miniter argues
that the arbitrator's failure to rule on his motion "tainted the
arbitration with more than a mere appearance of partiality."
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Section 10(a) of the FAA reads in relevant part:
In any of the following cases the United States court
in and for the district wherein the award was made may
make an order vacating the award upon the application
of any party to the arbitration--
(1) where the award was procured by corruption, fraud,
or undue means;
. . . 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.
9 U.S.C. § 10(a).
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Mot. to Vacate at 4. On common law grounds, Miniter argues that
the Award should be vacated because it is a manifest disregard of
the law. Regnery argues that Miniter had a full and fair
opportunity to present his case before the arbitrator.
The Supreme Court has said that the FAA "substantia[tes] a
national policy favoring arbitration with just and limited review
needed to maintain arbitration's essential virtue of resolving
disputes straightway." Hall St. Assocs. L.L.C. v. Mattel, Inc.,
128 S. Ct. 1396, 1405 (2008). "Any other reading opens the door
to the full-bore legal and evidentiary appeals that 'can rende[r]
informal arbitration merely a prelude to a more cumbersome and
time-consuming judicial review process.’" Id. (quoting Kyocera
Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 998
(9th Cir. 2003)). Grounds for vacatur of an arbitration award
set forth in § 10 of the FAA are exclusive. See id. at 1404.
"[J]udicial review of an arbitration award is extremely limited."
Int'l Thunderbird Gaming Corp. v. United Mex. States, 473 F.
Supp. 2d 80, 83 (D.D.C. 2007) (citing United Paperworkers Int’l
Union v. Misco, Inc., 484 U.S. 29, 37-38 (1987)); see also
LaPrade v. Kidder, Peabody, & Co., Inc., 246 F.3d 702, 706 (D.C.
Cir. 2001).
Miniter's claim for vacatur under § 10(a)(1) and (4) relates
solely to a request for recusal of the arbitrator that was denied
by the AAA. Miniter's claim is not that the arbitrator was
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biased but simply that his motion for recusal was not addressed
and resolved by the arbitrator, leaving "a question of conflict
of interest unresolved." Mot. to Vacate at 4. His claim,
however, does not meet the heavy burden of establishing that the
arbitration award was inappropriate because he has not shown that
there was evident partiality or corruption in the arbitrator, see
§ 10(a)(1), or that the arbitrator exceeded his powers or
imperfectly executed them, see § 10(a)(4).
Miniter's request for recusal was resolved by the AAA on
November 1, 2007, and the arbitrator properly continued to serve
in his capacity. Even though the arbitrator did not himself rule
on the motion before making the Award, Miniter has not
demonstrated that “the award was procured by corruption, fraud,
or undue means” or that “the arbitrator[] exceeded [his] powers,
or so imperfectly executed them that a mutual, final, and
definite award upon the subject matter submitted was not made.”
9 U.S.C. § 10(a)(1) & (4). Furthermore, Regnery noted in its
Opposition to the Motion for Recusal that it was immaterial that
an AAA administrator mentioned that Miniter had not paid the fees
because if the administrator had not raised the issue, Regnery
would have raised it during the arbitration. Miniter was well
aware of Regnery’s position, which could have contributed to
Miniter’s failure to press the issue after the AAA made its
ruling. Miniter's real complaint is that he did not like the
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result of the arbitration. He has not, however, met his burden
of demonstrating that the arbitrator exceeded his powers under §
10 of the FAA.
The arbitrator provided Miniter with a "fundamentally fair
hearing." Lessin v. Merrill Lynch, Peirce, Fenner & Smith, Inc.,
481 F.3d 813, 816 (D.C. Cir. 2007) (citation and internal
quotation marks omitted). In fact, the arbitrator granted
Miniter discretionary leeway throughout the arbitration. For
example, the arbitrator allowed Miniter to assert counterclaims
even though the claims had previously been dismissed because
Miniter failed to pay the filing fee; he also granted Miniter's
request for postponement of a hearing date.
Miniter asks this Court to vacate the Award based on alleged
“manifest disregard for the law,” on the part of the arbitrator.
LaPrade, 246 F.3d at 706. “Manifest disregard of the law ‘means
more than error or misunderstanding with respect to the law.’”
Id. (quoting Kanuth v. Prescott, Ball & Turben, Inc., 949 F.2d
1175, 1178 (D.C. Cir. 1991). This Court recognizes that some
courts have refused to entertain vacatur based on “manifest
disregard for the law” after Hall Street. See Prime
Therapeutics, L.L.C. v. Omnicare, Inc., 555 F. Supp. 2d. 993, 999
(D. Minn. 2008) (holding that post-Hall Street, "courts can no
longer vacate an arbitration award based on judicially-created
grounds such as 'manifest disregard of the law'"); Ascension
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Orthopedics, Inc. v. Curasan, 2008 WL 2074058, at *2 (S.D. Tex.
May 14, 2008) ("the Supreme Court's decision in Hall Street is
unequivocal that the grounds upon which vacatur may be based as
listed in § 10 are exclusive"). This Court need not decide that
issue because Miniter’s allegations do not rise to the level of a
manifest disregard for the law.
Miniter "bears the burden of demonstrating that the
arbitration panel acted in manifest disregard of the law."
LaPrade, 246 F.3d at 706. Specifically, Miniter claims that the
arbitrator "revised the parties' governing contract based on his
own personal notions of right and wrong and exceeded the scope of
his authority," when he included $25,000 in damages for breach of
an agreement that Regnery did not claim was breached. Mot. To
Vacate at 5. Miniter also claims that the arbitrator found that
under the terms of the Agreement, "Miniter was compelled to
research and write Hunting Zarqawi even though it is uncontested
that it was impossible for him to do so because of the expense
involved." Id. at 5. This is a misreading of the Award. The
Award merely holds Miniter to the terms of the contract between
the parties. The Award reads in relevant part:
Miniter proposed Zarqawi to Regnery,
advocated for it, and got Regnery interested
in the project. He later presented a budget
for the project in the amount of $97,707 and
informed Regnery that he could not do the
book without getting that amount in advance,
an advance not required by the Publishing
Contract. Regnery was under no contractual
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obligation to modify the terms of its
existing agreement to advance more money to
Miniter, nor was it unfair or in bad faith
for it to refuse to do so.
Award at 4. The arbitrator did not substitute his own notions of
right and wrong but rather required Miniter to abide by the terms
of the contract. Furthermore, the $25,000 that Regnery paid
Miniter was recoverable because the parties agreed that the
$25,000 relating to the separate contract was to be part of
Miniter's total advance. There is no provision in the parties’
contract that precluded the arbitrator from finding that Regnery
is entitled to the $25,000. Miniter has not demonstrated that
the arbitrator committed error or had a misunderstanding of the
law, and therefore, Miniter’s common law claims must fail as
well.
“On application for an order confirming the arbitration
award, the court ‘must grant’ the order ‘unless the award is
vacated, modified, or corrected as prescribed in sections 10 and
11 of this title.’” Hall St., 128 S. Ct. at 1405. Courts must
“grant confirmation in all cases, except when one of the
‘prescribed’ exceptions applies.” Id. "[I]n the absence of a
legal basis to vacate, this court has no discretion but to
confirm the award." Int'l Thunderbird, 473 F. Supp. 2d at 83(citations omitted).
III. CONCLUSION
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Regnery’s Petition to Confirm the Arbitration Award is
GRANTED; Miniter’s Motion to Vacate the Arbitration Award is
DENIED. An appropriate Order accompanies this Memorandum
Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
March 7, 2009
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