McCarthy v. Citigroup Global

Filing 920060919

Opinion

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var WPFootnote1 = ' Of the District of Massachusetts, sitting by designation\
'

var WPFootnote2 = ' The NASD is the primary self-regulatory organization\
responsible for the regulation of persons and companies involved in\
the securities industry in the United States, with delegated\
authority from the U.S. Securities and Exchange Commission. See\
"About NASD", http://www.nasd.com/AboutNASD/index.htm (last visited\
August 15, 2006).\
'

var WPFootnote3 = ' In the context of arbitration, an "award" can denote both\
the decision an arbitration panel reaches and the authenticated\
document containing the decision. See 2 Martin Domke, Domke on\
Commercial Arbitration, Appx. B-1 § 19(a) (3d. ed. 2003)("An\
arbitrator shall make a record of an award. The record must be\
signed or otherwise authenticated by any arbitrator who concurs\
with the award. The arbitrator or the arbitration organization\
shall give notice of the award, including a copy of the award, to\
each party to the arbitration proceeding.").\
'

var WPFootnote4 = ' CGMI asserted that "McCarthy is not entitled to any damages\
because, if he held all his vested shares, McCarthy netted over one\
million dollars from voluntarily participating in the CAP Plan, and\
CGMI is entitled to recover those shares or their market value in\
excess of McCarthy\'s cost of any unvested stock."\
'

var WPFootnote5 = ' In the Second Remand Order, the district court rejected\
McCarthy\'s "polling" argument, stating that McCarthy had "cited no\
case or any other legal authority supporting his request for a\
poll." McCarthy did not renew this argument on appeal and we do\
not address it.\
'

var WPFootnote6 = ' In relevant part, 9 U.S.C. § 10 states:\
\
(a) 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;\
(2) where there was evident partiality or corruption in\
the arbitrators, or either of them;\
(3) where the arbitrators were guilty of misconduct in\
refusing to postpone the hearing, upon sufficient cause\
shown, or in refusing to hear evidence pertinent and\
material to the controversy; or of any other misbehavior\
by which the rights of any party have been prejudiced; 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.\
'

var WPFootnote7 = ' In P.R. Tel. Co., Inc. v. U.S. Phone Mfg. Corp., 427 F.3d 21\
(1st Cir. 2005), we stated that "[u]nder the FAA, an award may be\
vacated for legal error only when in \'manifest disregard of the\
law.\'" Id. at 25. Insofar as this statement means that the FAA\
does not foreclose extra-statutory judicial review of arbitration\
awards on a limited basis, e.g. the "manifest disregard of the law"\
standard, this statement is correct. However, insofar as this\
statement means that the "manifest disregard of the law standard"\
is a part of the FAA itself, it would be mistaken. Nowhere in 9\
U.S.C. § 10 does the phrase "manifest disregard of the law" appear. \
See Advest, 914 F.2d at 9 n.5 ("The lane of review that has opened\
out of this language is a judicially created one, not to be found\
in 9 U.S.C. § 10.").\
'

var WPFootnote8 = ' See also Domke, § 38:9 ("Although subject to slight\
variations in wording, courts generally apply the following two\
part test in determining if the award should be vacated for\
manifest disregard of the law: (1) Did the arbitrator know of the\
governing legal principal yet refused to apply it or ignored it all\
together? and (2) Was the law ignored by the arbitrators well\
defined, explicit and clearly applicable to the case? Only if the\
court determines that both prongs of this test are satisfied will\
it overturn an award for manifest disregard of the law.").\
'

var WPFootnote9 = 'We disagree with the district court that the Modified Award\
of the Second Panel can be read as a possible statement that the\
New Hampshire wage law is irrelevant, particularly in light of the\
explicit statement by the Second Panel that it "fully considered\
all claims and defenses, including the applicability of the New\
Hampshire Wage Laws, which were heavily argued by both sides." If\
the court had vacated the award of the Second Panel on this basis\
alone, we would have simply vacated its judgment on this misreading\
of the Modified Award. However, as we explain below, the district\
court also identified a second possibility in the Modified Award –\
namely, that the Second Panel had applied the New Hampshire wage\
law and still found the CAP lawful. In looking behind the award of\
the Second Panel to determine its basis, the court explained in its\
decision why this second possibility would also be a manifest\
disregard of the law. Focusing on that explanation in the balance\
of our opinion, we explain its incompatibility with the narrow\
scope of review that a court must observe in reviewing the decision\
of an arbitration panel.\
'

var WPFootnote10 = ' Relying on Montes v. Shearson Lehman Bros., Inc., 128 F.3d\
1456 (11th Cir. 1997), where the court found an award in manifest\
disregard of the law, McCarthy also asserts that CGMI "undermined\
the integrity of the Second Hearing" by "repeatedly urg[ing] the\
Second Panel during oral argument to disregard the law," and that\
this conduct constitutes an independent basis for vacating the\
Modified Award. The district court rejected that argument: "the\
circumstances in this case are not sufficiently similar to those in\
Montes to permit application here of that narrowly limited\
decision." We see no reason to disturb this ruling. \
'

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