United States District Court, E.D. Michigan, Southern Division
STEVEN WHALEN MAG. JUDGE.
OPINION AND ORDER DENYING DEFENDANT'S MOTION TO
VACATE THE ARBITRAL AWARD, GRANTING PLAINTIFFS' MOTION TO
CONFIRM THE AWARD AND REQUEST FOR ATTORNEY FEES AND COSTS,
AND DENYING PLAINTIFFS' REQUEST FOR SANCTIONS [19,
E. LEVY United States District Judge.
the Court are defendant Bullseye Telecom, Inc.'s motion
to vacate the arbitral tribunal's award of attorney fees
and costs, and plaintiffs CPR Telecom, Inc. and Kevin
Parkford's motion to confirm the award. (Dkts. 19, 20.)
Plaintiffs' motion also includes a request for attorney
fees and costs associated with this challenge to the arbitral
award and a request that the Court sanction defendant. (Dkt.
19 at 24.)
reasons set forth below, defendant's motion to vacate the
award is denied. Plaintiffs' motion to confirm the award
and request for attorney fees and costs arising from the
challenge to the arbitral award is granted, and their request
for sanctions is denied.
December 6, 2006, plaintiffs and defendant entered into an
Authorized Distributor Agreement (ADA) whereby plaintiffs,
through an entity known as Telecom Worldwide, became
authorized distributors of defendant's telecommunication
products. (Dkt. 20 at 11; Dkt. 20-3 at 3.) On December 1,
2009, the parties entered into Addendum No. 1-A, which
permitted plaintiffs to sell certain voice and internet
services under the terms of the addendum and ADA. (Dkt. 20 at
14.) This addendum also modified the commission fee
provisions of the ADA, providing for reductions in the fees
under certain conditions. (Id.) In January 2010, the
parties entered into another addendum that permitted
plaintiffs to sell specific services to Domino's Pizza
franchises. (Id.) Both of these addenda expressly
incorporated the terms of the ADA. (See Dkt. 20-3 at
2010, Michael Nelson, an agent of plaintiff Parkford,
approached IBM about selling certain services to Domino's
franchises. (Dkt. 20 at 15-16.) Negotiations between Mr.
Parkford, Mr. Nelson, IBM, Domino's, and Bullseye Telecom
ensued, and are recounted in detail in the arbitral
tribunal's award. (See Dkt. 20-5.) In August
2011, IBM and defendant entered into the Non-Development
Solutions Engagement Agreement (NDSEA) for the sale of IBM
products through defendant to Domino's franchises.
(Id. at 18.) In late September 2011, IBM decided not
to work with Mr. Nelson regarding sales to Domino's.
(Id. at 25.) Plaintiffs claimed that although they
were not parties to the NDSEA, because the agreement involved
sales to Domino's, they were entitled to receive
commissions under the Domino's Franchise Agreement.
(Id. at 29.) Defendant disagreed and did not pay the
2013, plaintiffs filed a demand for arbitration. Plaintiffs
claimed they were entitled to over five million dollars in
unpaid commission fees under the ADA, and defendant
counterclaimed that plaintiffs breached the ADA. (Dkt. 20-4
at 5.) The arbitral tribunal found plaintiffs were entitled
to unpaid commissions totaling $480, 000, stating,
“[Bullseye Telecom] knew [CPR Telecom] expected to be
compensated for its services under the ADA and the Addenda
thereto, ” and eventually “confirmed, in writing,
[CPR Telecom's] right to commissions on the contract to
be executed between [Bullseye Telecom]/IBM and
Domino's.” (Id. at 5-6.)
may vacate an arbitration award if, inter alia,
“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)(4). However, “courts should play
only a limited role in reviewing the decisions of
arbitrators, ” and “[t]he Federal Arbitration Act
presumes that arbitration awards will be confirmed.”
Dawahare v. Spencer, 210 F.3d 666, 669 (6th Cir.
2000) (internal citations omitted). Thus, “[t]he burden
of proving that the arbitrators exceeded their authority is
great.” Solvay Pharm., Inc. v. Duramed Pharm.,
Inc., 442 F.3d 471, 476 (6th Cir. 2006) (quoting
Nationwide Mut. Ins. Co. v. Home Ins. Co., 330 F.3d
843, 845 (6th Cir. 2003)). “The terms of the contract
define the powers of the arbitrator, and ‘as long as
the arbitrator is even arguably construing or applying the
contract and action within the scope of his authority, that a
court is convinced he committed a serious error does not
suffice to overturn his decision.'” Id. at
476 (quoting United Paperworkers Int'l Union v.
Misco, Inc., 484 U.S. 29, 38 (1987)). A court,
therefore, may not vacate an award “simply because the
court . . . believes the arbitrator made a serious
legal or factual error.” Id.
“if the arbitrator's award ‘draws its essence
from the . . . agreement, ' . . . the award is
legitimate.” Id. (quoting United
Steelworkers of Am. v. Enter. Wheel & Car Co., 363
U.S. 593, 597 (1960)). An award does not “draw its
essence from the agreement when: (1) it conflicts with
express terms of the agreement; (2) it imposes additional
requirements not expressly provided for in the agreement; (3)
it is not rationally supported by or derived from the
agreement; or (4) it is based on ‘general
considerations of fairness and equity' instead of the
exact terms of the agreement.” Id. (quoting
Beacon Journal Pub. Co. v. Akron Newspaper Guild, Local
No. 7, 114 F.3d 596, 600 (6th Cir. 1997)).
parties have filed competing motions-one to confirm the award
and one to vacate it. The Court will consider the motions
together because under the Federal Arbitration Act,
“the court must confirm the award where it is
not vacated, modified or corrected.” Wachovia Sec.,
Inc. v. Gangale, 125 F. App'x 671, 676 (6th Cir.
challenges only the award of attorney fees and costs, arguing
Article 11.11 of the ADA was not ...