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Eurochem Trading USA Corp. v. Ganske

United States District Court, W.D. Wisconsin

July 8, 2019

W. KENT GANSKE, individually and d/b/a and sole proprietor of AG CONSULTANTS, and JULIE L. GANSKE, Defendants. W. KENT GANSKE, individually and d/b/a AG CONSULTANTS, and JULIE GANSKE, Counter-Plaintiffs and Third-Party Plaintiffs, and WS AG CENTER, INC., Third-Party Plaintiffs,


          Stephen L. Crocker Magistrate Judge.

         In this lawsuit brought under the court's diversity jurisdiction, plaintiff EuroChem Trading USA Corporation (“ECTUS”) seeks to collect more than $14 million in unpaid invoices for agricultural product that it delivered to WSAG Center, Inc. (“WSAG”), an agri-business controlled by defendant W. Kent Ganske. All of the purchase contracts contained a provision specifying that, in the event the parties failed to settle their disputes under the contract, any dispute would be referred to arbitration-

in accordance with the rules of the Society of Marine Arbitrators (hereinafter referred to as “the SMA”) and the procedures set forth below. The jurisdiction of the regular courts shall be excluded . . . The dispute shall be settled by a sole arbitrator appointed by the SMA on the basis of the provisions of the present Contract as well as the laws of the State of Florida. The award shall be rendered in accordance with the Arbitration Rules of the SMA and be final and binding upon both parties. The award shall contain the amount and the apportionment of the Arbitration costs.

         On July 13, 2017, ECTUS served an arbitration demand on WSAG pursuant to the terms of the contracts. On September 6-7, 2018, an evidentiary hearing was held before arbitrator Michael Young. Young heard testimony from five witnesses and accepted 175 exhibits into the record. On January 2, 2019, Young issued a Partial Final Award, awarding ECTUS compensatory damages of $14, 283.519.42, plus pre-judgment interest. At Young's request, the parties submitted briefs regarding ECTUS's entitlement to an award of attorneys' fees and costs and the calculation of pre-judgment interest on the amount awarded.

         After receiving and considering the parties' submissions, on March 6, 2019, Young issued his Final Award, awarding ECTUS the following: (1) $14, 283, 519.42 in compensatory damages; (2) $1, 124, 040.03 in prejudgment interest (which continues to accrue at the rate of$2, 477.12 per day during the year 2019 and adjusted by Florida statute thereafter); (3) $182, 498.96 in attorneys' fees; and (4) $34, 000 in costs, for a total final award of $15, 624, 058.41.

         ECTUS now asks this court to confirm the arbitration award and enter judgment against WSAG accordingly.[1] Dkt. 80. WSAG opposes confirmation of the Final Award and has filed its own motion to vacate or modify it on various grounds, but none of WSAG's arguments has any traction. Dkts. 82, 105. Accordingly, ECTUS's motion for confirmation of the Final Award will be granted.


         ECTUS petitions the court to confirm the arbitration award under Section 9 of the Federal Arbitration Act, which provides:

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made.

9 U.S.C.A. § 9. WSAG objects to confirmation, and instead asks the court to either vacate the award under § 10 or modify it under § 11.[2]

         Apart from the specific grounds articulated in Sections 10 and 11, a federal court has no authority to set aside an arbitration award even if the arbitrator “committed serious error” or issued a decision that is “incorrect or even whacky.” Johnson Controls, Inc. v. Edman Controls, Inc., 712 F.3d 1021, 1025 (7th Cir. 2013) (internal citation omitted). See also Chicago Typographical Union No. 16 v. Chicago Sun-Times, Inc., 935 F.2d 1501, 1504-05 (7th Cir. 1991) (federal courts do not review the soundness of arbitration awards, but only look to make sure the arbitrator upheld the parties' agreement to arbitrate). If none of the grounds set forth in Sections 10 or 11 applies, then the court “must grant” an order confirming the award. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 587 (2008).

         WSAG argues that the court should refuse to confirm the award for lack of jurisdiction. In the alternative, it argues that vacatur or remand is warranted because: (1) the arbitrator applied the rules of the Society of Maritime Arbitrators, not the rules of the Society of Marine Arbitrators, as called for by the Contracts, and therefore the award should be vacated under 9 U.S.C. § 10(a)(4) or modified under § 11(a); (2) the arbitrator “refused to hear evidence pertinent and material to the controversy” when he failed to hold an evidentiary hearing on WSAG's objection to ECTUS's proposed attorney's fees, justifying vacatur under § 10(a)(3); (3) the arbitrator made a “material miscalculation of figures” warranting modification under § 11(a); and (4) the arbitrator imperfectly executed his powers when he refused to consider parol evidence about the parties' course of dealing, warranting vacatur under § 10(a)(4).[3] I address each argument in turn.

         I. Jurisdiction

         WSAG argues that this court has no authority to confirm the Final Award because the parties did not explicitly consent to judicial confirmation in the Contracts. This argument is foreclosed by Seventh Circuit precedent. In Milwaukee Typographical Union No. 23 v. Newspapers, Inc., 639 F.2d 386, 389-90 (7th Cir.), cert. denied, 454 U.S. 838 (1981), the court held that the parties need not explicitly agree to judicial confirmation of an award in order to confer such consent, so long as they agree that any arbitration decision will be “final and binding” upon both parties. See also Daihatsu Motor Co. v. Terrain Vehicles, Inc., 13 F.3d 196, 202 (7th Cir. 1993) (finding consent-to-confirmation under § 9 where parties agreed that disputes would be “finally settled” by arbitration). Other circuits, although not all, agree that the parties' agreement to submit their disputes to “final and binding” arbitration strongly implies consent to judicial confirmation. See, e.g. Booth v. Hume Pub., Inc., 902 F.2d 925, 930 (11th Cir. 1990) (provision in employment agreement that arbitrator's determination would be final and binding, along with Hume's full participation in the arbitration process, was sufficient under the FAA to confer authority on the district court to confirm the award); Kallen v. District 1199, National Union of Hospital and Health Care Employees, 574 F.2d 723, 726 (2d Cir. 1978) (where language of agreement provided that arbitration would be final and binding, appellant participated fully in arbitration process, and federal law would apply to interpretation of underlying agreement, the district court had authority under § 9 of the Act to enter judgment on the award); but see Higgins v. U.S. Postal Service, 655 F.Supp. 739, 744 (D. Maine 1987) (refusing to find that the “final and binding” language standing alone, without conduct from which an agreement could be inferred, was sufficient for relief under § 9 of the Act).

         There is no dispute that the parties' Contracts in this case specified that the arbitrator's award shall be “final and binding” upon the parties. Moreover, WSAG participated fully in the arbitration process. Under the law of this circuit, this is enough to confer jurisdiction on this court to confirm the arbitration award.[4]

         II. The ...

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