Thursday, October 18, 2007

The Word's The Thing

Arbitration is typically looked upon as a cost-effective and expeditious alternative to the judicial resolution of disputes. Generally, an arbitrator’s award is final and cannot be appealed or vacated except upon certain limited, specific grounds. In New York, once an arbitration award is issued, judicial confirmation of the award must be sought; arbitration awards generally lack any legal effect of their own. During the confirmation process, the party against whom the award was issued may move to vacate the award, inter alia, on grounds that it lacked a rational basis or was in excess of the arbitrator’s authority. That’s what happened in Goldberg v. Thelen Reid Brown Raysman & Steiner LLP, NYS Supreme Court (N.Y. Co., Index No. 650164/07, Decided: October 10, 2007).

In Goldberg, the Petitioner, a former employee of Respondent, moved to confirm an arbitration award issued in his favor which found that Respondent had breached his employment contract. The Respondent cross-moved to vacate the award, arguing that the termination was for good cause since the Petitioner failed to bill or originate sufficient business as required by the employment agreement. During the arbitration, the Petitioner claimed that he had no contractual obligation to bill a minimum number of hours. Respondent maintained that the Petitioner was hired based upon his representations that he was billing $2 million that year for his then current employer. Apparently, the Petitioner was ready, willing and able to work, and actively sought out billable work, but Respondent failed to offer him the opportunity to bill those hours.

The arbitrator found that the contract was silent with respect to any requirement that Petitioner meet certain billing or origination goals. The arbitrator also found that the Petitioner would have been able to work more hours but for Respondent’s failure to offer same. The fact that the contract was silent as to whether Petitioner could be terminated for “good cause” based on his failure to meet certain, unstated billing or business origination goals was critical to the arbitrator’s decision.

In granting the Motion to confirm and denying the Cross-Motion to vacate, the court held that the Respondent failed to show either that the arbitrator's award was violative of public policy, totally irrational, or exceeded a specifically enumerated limitation of power (citations omitted). The court further held that the award was carefully reasoned, considered the plain meaning of the language contained in the employment contract, and also considered that the Petitioner’s efforts at performing billable work were frustrated by Respondent.

Words mean things, but the lack of words may mean even more. That’s the moral of the story in Goldberg.

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