Murillo v. A Better Way Wholesale Autos, Inc. et al

Filing 58

ORDER granting 40 Motion to Affirm the Arbitration Award; denying 43 Motion to Vacate Arbitration Award; denying 51 Motion to Exclude Documents and Arguments; and denying 56 Motion to Strike Defendants' Reply to Plaintiff's Objection. Signed by Judge Vanessa L. Bryant on 7/15/2019. (Shafer, J.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

REBECCA M. MURILLO,
Plaintiff,
v.
A BETTER WAY WHOLESALE
AUTOS, INC and WESTLAKE
SERVICES, LLC,
Defendants.

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No. 3:17-CV-1883 (VLB)

July 15, 2019

MEMORANDUM OF DECISION GRANTING MOTION TO CONFIRM ARBITRATION
AWARD [DKT. 40], DENYING MOTION TO VACATE ARBITRATION AWARD [DKT.
43], DENYING MOTION TO EXCLUDE [DKT. 51], AND DENYING MOTION TO
STRIKE [DKT. 56]
On November 9, 2017, Plaintiff Rebecca Murillo filed a Complaint against
Defendants A Better Way Wholesale Autos, Inc. (“ABW”) and Westlake Services,
LLC (“Westlake”) alleging violations of the Truth in Lending Act, 15 U.S.C. § 1601
et seq. (“TILA”), the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42110a et seq. (“CUTPA”), the Connecticut Retail Installment Sales Financing Act,
Conn. Gen. Stat. § 36a-785 et seq. (“RISFA”), and the Uniform Commercial Code
(“UCC”). See generally [Dkt. 1 (Compl.)]. Plaintiff’s allegations stem from her
purchase and finance agreement through ABW and with Westlake for a 2008 Lexus
IS250 (the “Vehicle”) in February 2017. Id. The Retail Purchase Order, governing
Plaintiff’s dispute with ABW, and the Retail Installment Contract, relating to
Plaintiff’s dispute with Westlake, each included arbitration provisions. Defendants
sought to compel arbitration pursuant to those provisions and Plaintiff agreed. See
[Dkt. 33 (ABW Stay & Compel Arbitration Mot.); Dkt. 34 (Plf. Resp. ABW Arbitration

1

Mot.); Dkt. 37 (Westlake Stay Mot.); Dkt. 38 (Plf. Resp. Westlake Stay Mot.)]. On
May 15, 2018, the Court granted ABW’s motion to stay and arbitrate, [Dkt. 35
(5/15/18 Order)], and on August 30, 2018 the Court granted Westlake’s motion to
stay and arbitrate and closed the case without prejudice to any party moving to
reopen after the conclusion of the arbitration process, [Dkt. 39 (8/30/18 Order)].
The parties agreed to arbitrate their disputes before the American Dispute
Resolution Center (“ADR”) as a desk arbitration and under the American
Arbitration Association (“AAA”) rules. See [Dkt. 44 at 1-2]. Both sides made
submissions to the arbitrator, following multiple missed deadlines by Defendants,
and the arbitrator considered the claims on the merits. See id. at 1-2.
Before the Court now are Plaintiff’s Motion to Confirm the Arbitration Award
pursuant to § 9 of the Federal Arbitration Act, 9 U.S.C. § 9 (“FAA”), [Dkt. 40], and
Defendants’ Motion to Vacate the Arbitration Award pursuant to § 10(a)(4) of the
FAA, [Dkt. 43]. The Court also considers in this decision Defendants’ Motion to
Exclude [Dkt. 51] and Plaintiff’s Motion to Strike [Dkt. 56], which arise out of the
motions to confirm and vacate the arbitration award.
I.

Discussion
A. ABW’s Motion to Exclude & Plaintiff’s Motion to Strike
1. Motion to Exclude
Defendant ABW moved to exclude from the Court’s consideration certain

facts asserted by Plaintiff in her submissions to the arbitrator and her filings with
the Court because they are inaccurate. [Dkt. 51 (Mot. to Exclude)]. Specifically,
ABW seeks to exclude Plaintiff’s assertions that she provided ABW her W-2 on

2

February 7, 2018; that the second deal offered to Plaintiff was not as good as the
first deal; that any of the financing was conditional; and that Plaintiff was unaware
that she was purchasing an oil change contract, a tire and wheel contract, or a
service contract. Id. at 1-2. ABW contends that Plaintiff included these assertions
in her September 27, 2018 Statement and October 1, 2019 Supplemental Statement
provided to the arbitrator and now in her submissions to this Court and that they
formed the basis of the arbitrator’s decision.

Id. at 2.

ABW argues that the

statements are inaccurate and that the Court should not rely on them. Id.
As the discussion infra regarding review of an arbitration decision makes
clear, a court may not question the factual findings of an arbitrator or otherwise
weigh the evidence the arbitrator evaluated in coming to his/her conclusions.
Westerbeke, 304 F.3d at 214. Despite this, ABW now, and in its Motion to Vacate,
makes arguments regarding interpretation of the facts and weighing of the
evidence in the hope that this Court might find differently than the arbitrator.
ABW’s motion to exclude is essentially another attempt by ABW to present factual
arguments and contest those made by Plaintiff in her submissions to the arbitrator.
This is not the role of a court in reviewing an arbitration award, as discussed below.
ABW’s motion does not provide a standard governing a “motion to exclude.”
Motions to exclude or suppress evidence are pre-trial motions requesting the court
exclude a piece of evidence from an upcoming trial on admissibility or other
evidentiary grounds. Alternatively, Federal Rule of Civil Procedure 12(f) provides
for motions to strike “from a pleading an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter.”

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Here, ABW asks not that the Court withhold information from a jury or a
pleading but that the Court exclude from its consideration information submitted
by Plaintiff with her briefing on her motion to affirm and Defendants’ motion to
vacate the arbitration award. Such a motion is not proper. If a party wishes to
argue that an asserted fact is not supported by the evidence, that party may do so
in its briefing on the motion. Cf. O’Brien v. Wisniewski, No. 3:1 CV 120 (CSH), 2012
WL 1118076, at *3-4 (D. Conn. Apr. 3, 2012) (explaining that motions to strike are
inappropriate in the summary judgment context because the court reviews and
relies upon only admissible evidence); Ricci v. Destefano, No. 3:04 CV 1109 (JBA),
2006 WL 2666081, at *2 (D. Conn. Sep. 15, 2006) (explaining that a party should
make any arguments that a fact is not supported by evidence or that evidence is
not admissible in its summary judgment filings, not in a separate motion). ABW
could have done just that in its briefing on Defendants’ motion to vacate and
Plaintiff’s motion to affirm the arbitration award. It does not get another chance to
do so via unnecessary additional motions practice. Accordingly, ABW’s motion to
exclude is DENIED.
2. Motion to Strike
In its reply in support of its motion to exclude, ABW suggests, for the first
time, that Plaintiff’s inaccurate statements “rise to the level of such significance as
to warrant vacating the Arbitrator’s Award in its entirety on the basis of fraud.”
[Dkt. 55 at 2].

Plaintiff moves to strike ABW’s reply because it raises new

arguments not included in ABW’s motion to exclude, not to mention its motion to

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vacate the arbitration award, or responsive to arguments made by Plaintiff in her
opposition to the motion to exclude. [Dkt. 56 (Mot. to Strike) at 1-2].
As noted above, Rule 12(f) allows a court to strike only pleadings. See Fed.
R. Civ. P. 12(f). “[A] reply memorandum is not a pleading.” O’Brien, 2012 WL
1118076, at *3 (quoting Marshall v. Webster Bank, N.A., No. 3:10-cv-908 (JCH), 2011
WL 219693, at *12 (D. Conn. Jan. 12, 2011). Thus, the Court cannot properly strike
ABW’s reply brief or arguments within it and Plaintiff’s motion to strike is DENIED.
However, it is well established that “[a]rguments may not be made for the
first time in a reply brief.” Knipe v. Skinner, 999 F.2d 708, 711 (2d Cir. 1993). “New
arguments first raised in reply papers in support of a motion will not be
considered.” Domino Media, Inc. v. Kranis, 9 F. Supp. 2d 374, 387 (S.D.N.Y. 1998).
Accordingly, the Court did not consider arguments made by ABW for the first time
in its reply in support of its motion to exclude which are not made in response to
Plaintiff’s opposition to the motion to exclude.
B. Motion to Affirm & Motion to Vacate Arbitration Award
Review of the arbitration award in this case is governed by the FAA. See 9
U.S.C. § I et seq. “It is well-settled that judicial review of an arbitration award is
narrowly limited,” Barbier v. Shearson Lehman Hutton Inc., 948 F.2d 117, 120 (2d
Cir. 1991), and a district court “must grant” a motion to confirm an award “unless
the award is vacated, modified, or corrected as prescribed in sections 10 and 11,”
9 U.S.C. § 9; accord D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir.
2006). Section 10 of the FAA sets limited grounds on which a court may vacate an
award, including “(1) where the award was procured by corruption, fraud, or undue

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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.” 9 U.S.C. § 10.
The Second Circuit has emphasized the “extremely limited” role of courts in
reviewing arbitration awards, Wall Street Assoc. L.P. v. Becker Paribas, Inc., 27
F.3d 845, 849 (2d Cir. 1994). A court may not supplant its judgment for that of, or
second-guess an arbitrator. “[A]n arbitration award should be enforced, despite a
court’s disagreement with it on the merits, if there is a barely colorable justification
for the outcome reached.” Banco de Seguros del Estado v. Mut. Marine Office, Inc.,
344 F.3d 255, 260 (2d Cir. 2003) (quoting Landy Michaels Realty Corp. v. Local 32B32J, Serv. Emps. Int’l Union, AFL-CIO, 954 F.2d 794, 797 (2d Cir. 1992)) (internal
brackets and quotation marks omitted). “A party moving to vacate an arbitration
award has the burden of proof, and the showing required to avoid confirmation is
very high.” Gottdiener, 462 F.3d at 110.
Defendants move for vacatur arguing that the arbitrator exceeded his powers
in that the award is completely irrational, see § 10(a)(4), and that the arbitrator’s
award is in manifest disregard of the law. [Dkt. 44 at 6]. The Second Circuit has
laid out separate standards for assessing vacatur under § 10(a)(4) for exceeding
powers versus manifest disregard of the law. In 2008, the Supreme Court “placed

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the proper scope of the manifest disregard doctrine into some doubt” with its
decision in Hall Street Associates, LLC v. Mattel, Inc., 552 U.S. 576 (2008). In Hall
Street, the Supreme Court held that the FAA provided the sole statutory grounds
for review of arbitration decision. 552 U.S. at 588. The Second Circuit read Hall
Street as “reconceptualiz[ing]” manifest disregard “as a judicial gloss on the
specific grounds for vacatur” of arbitration awards under 9 U.S.C. § 10. See StoltNielsen SA v. AnimalFeeds Int’l Corp., 548 F.3d 85, 91 (2d Cir. 2008), rev’d and
remanded on different grounds, 559 U.S. 662 (2010); see also Schwartz v. Merrill
Lynch & Co., 665 F.3d 444, 451-52 (2d Cir. 2011). “So interpreted, [the Second
Circuit] concluded that manifest disregard remains a valid ground for vacating
arbitration awards.” T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d
329, 340 (2d Cir. 2010) (internal quotation marks and citations omitted). Thus, the
Court will consider Defendants’ arguments under each of the two standards
enunciated by the Second Circuit for vacatur under § 10(4) and manifest disregard
of the law.
1. Section 10(a)(4) Exceeded or Imperfectly Executed Powers
Section 10(a)(4) of the FAA provides for vacatur “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)(4). The Second Circuit has “consistently accorded the narrowest of readings
to the Arbitration Act’s authorization to vacate awards pursuant to § 10(a)(4),
especially where that language has been invoked in the context of arbitrators’
alleged failure to correctly decide a question which all concede to have been

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properly submitted in the first instance.” Westerbeke, 304 F.3d at 220 (quoting In
re Andros Compania Maritima, S.A., 579 F.2d 691, 703 (2d Cir. 1978)) (internal
brackets omitted). Thus, the court’s inquiry “focuses on whether the arbitrators
had the power, based on the parties’ submissions or the arbitration agreement, to
reach a certain issue, not whether the arbitrators correctly decided that issue.” Id.
(quoting DiRussa v. Dean Witter Reynolds Inc., 121 F.3d 818, 824 (2d Cir. 1997). In
other words, the court will ask whether the arbitrators acted within the scope of
their authority or whether the award is merely the arbitrators’ own brand of justice.
Banco de Seguros, 344 F.3d at 262.
For example, in Fahnestock & Co., Inc. v. Waltman, the Second Circuit
considered whether New York’s Garity rule categorically prohibiting the imposition
of punitive damages by an arbitrator, precluded an award of punitive damages
under an arbitration agreement that was silent on the punitive damages issue. 935
F.2d 512, 519 (2d Cir. 1991). The Second Circuit held that arbitrators lack the
authority to award punitive damages under New York law and accordingly vacated
the judgment. Id.
In Westerbeke, the Second Circuit distinguished the award of punitive
damages at issue in Fahnestock from the award of expectancy damages at issue
in Westerbeke, an award which is “within the broad power given to arbitrators.”
304 F.3d at 220. The Westerbeke Court observed that “what is contested here is
not whether the CSA allowed the arbitrator to award expectancy damages
generally, but whether the arbitrator properly awarded these damages in the case
at bar.” Id. The Westerbeke Court concluded that “[s]ection 10(a)(4) does not

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permit vacatur for legal errors” and “[a]s the parties in this case properly submitted
the question of whether expectancy damages could be awarded for a violation of
Article 3.2, the award cannot be vacated under § 10(a)(4).” Id.
The arbitration provision in the Retail Purchase Order governing the sale of
the Vehicle establishes that the arbitrator “shall be empowered to enter equitable
as well as legal relief, to provide all temporary and/or provisional remedies, and to
enter equitable orders that will be binding upon the parties.” [Dkt. 49-2, Ex. 2 at 2
(Retail Purchase Order)]. The Retail Installment Contract similarly provides that
the arbitrator shall apply governing substantive law and that the arbitrator’s award
will be final and binding subject to any right to appeal under the FAA. [Dkt. 49-2,
Ex. 3 at 4 (Retail Installment Contract)]. The contracts do not include any limitation
on the arbitrator’s powers to impose an award of punitive damages, or otherwise.
Connecticut law authorizes an award of punitive damages for violations of
CUTPA at the court’s discretion. See Conn. Gen. Stat. § 42-110g; Gargano v.
Heyman, 525 A.2d 1343, 1347 (Conn. 1987).

“In order to award punitive or

exemplary damages, evidence must reveal a reckless indifference to the rights of
others or an intentional and wanton violation of those rights.” Gargano, 525 A.2d
at 1347 (quoting Collens v. New Canaan Water Co., 134 A.2d 825, 832 (Conn. 1967)).
Plaintiff’s submission to the arbitrator includes her claim for punitive
damages under CUTPA. See [Dkt. 49-2 (Claimant’s Submission to Arbitrator) at
19]. Plaintiff cited Gargano v. Heyman, 203 Conn. 616, 622 (1987), in reciting the
law governing an award of punitive damages under CUTPA—they are appropriately
awarded when the evidence reveals a reckless indifference to the rights of others.

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Id. Plaintiff also cited a Connecticut Superior Court case in which the arbitrator
awarded punitive damages of $35,000—seven times the amount of actual
damages—where the arbitrator found that the defendant car dealership had acted
with reckless indifference to the rights of the plaintiff.

Id. (citing Benham v.

Wallingford Auto Park, Inc., No. CV020459418S, 2003 Conn. Super Lexis 3250
(Conn. Super. Ct. Nov. 26, 2003)). Plaintiff went on to argue that a substantial award
of punitive damages is warranted in this case because of Defendants’ reckless
violation of CUTPA and in light of the multiple previous cases in which courts have
entered smaller punitive damages awards against ABW1 after finding its practices
to be unfair and deceptive which have failed to deter ABW from continued
violations. Id. at 21-22.
Defendants’ submission to the arbitrator does not address punitive damages
but does argue that Defendants’ conduct did not constitute a CUTPA violation. See
[Dkt. 49-4 (Defs.’ Submission to Arbitrator)]. In their motion, Defendants do not
argue that the arbitrator lacked the power under the contracts or under the law to
award punitive damages. Indeed, the contracts and the law allow for such an
award. Thus, this case is akin to the facts in Westerbeke—the award at issue was
within the broad powers of the arbitrator to impose, but defendants take issue with
its imposition. See Westerbeke, 304 F.3d at 220. As the court found in Westerbeke,
§ 10(a)(4) does not allow the court to vacate an award based on legal error. See id.
In other words, § 10(a)(4) does not provide this Court with the authority to evaluate

1

Plaintiff’s submission cited two appellate decisions involving similar conduct by
ABW and attached four arbitral awards involving similar conduct by ABW. See
[Dkt. 49-2 (Ex. 2 Plf’s Submission) at 19-22, n.60].
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the basis for the arbitrator’s award of punitive damages on the facts of this case.
As a result, Defendants’ motion for vacatur under § 10(a)(4) is denied.
2. Manifest Disregard of Law
Defendants also invoke a doctrine which provides that “a decision may be
vacated when an arbitrator has exhibited manifest disregard of law.’” Jock v.
Sterling Jewelers Inc., 646 F.3d 113, 121-22 (2d Cir. 2011) (quoting Westerbeke
Corp. v. Daihatsu Motor Co., 304 F.3d 200, 208 (2d Cir. 2002) (footnote omitted)).
The standard of review under this doctrine is “severely limited.” Westerbeke, 304
F.3d at 208 (quoting Gov’t of India v. Cargill Inc., 867 F.2d 130, 133 (2d Cir. 1989)).
To justify vacatur, the court must find “something beyond and different from
a mere error in the law or failure on the part of the arbitrators to understand or
apply the law.” Id. (quoting Saxis S.S. Co. v. Multifacs Int’l Traders, Inc., 375 F.2d
577, 582 (2d Cir. 1967)); see also Folkways Music Publishers, Inc. v. Weiss, 989 F.2d
108, 111 (2d Cir. 1993) (“In order to advance the goals of arbitration, courts may
vacate awards only for an overt disregard of the law and not merely for an
erroneous interpretation.”). Indeed, the Second Circuit has described it as “a
doctrine of last resort—its use is limited only to those exceedingly rare instances
where some egregious impropriety on the part of the arbitrators is apparent[.]”
DiRussa, 121 F.3d at 821.
The court considers both an objective and a subjective component in
determining whether an arbitrator manifestly disregarded the law. Id. at 209. First,
the court considers whether the “governing law alleged to have been ignored by
the arbitrators was well defined, explicit, and clearly applicable.” Id. (quoting

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Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933 (2d Cir.
1996)).

Next, the court “looks to the knowledge actually possessed by the

arbitrator”—he/she “must appreciate the existence of a clearly governing legal
principle but decide to ignore or pay no attention to it.” Id. (quoting Bobker, 808
F.2d at 933) (brackets omitted). A court must find both elements to warrant vacatur
of an award. Banco de Seguros, 344 F.3d at 263. Further, the court “cannot vacate
an arbitral award merely because it is convinced that the arbitration panel made
the wrong call on the law” and should enforce the award despite a disagreement
on the merits “if there is a barely colorable justification for the outcome reached.”
Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir. 2004) (quoting Banco de Seguros del
Estado, 344 F.3d at 260). In keeping with this standard, the Second Circuit has
“used the manifest disregard of law doctrine to vacate arbitral awards only in the
most egregious instances of misapplication of legal principles.” Id. (collecting
cases).
Defendants argue that the arbitrator’s award of punitive damages was
contrary to law and further that, even if the imposition of punitive damages was not
improper in and of itself, the amount exceeded rationality. [Dkt. 44 at 8-9]. Both
arguments fail for the reasons set forth below.
i. Award of Punitive Damages
As already established supra, awarding punitive damages and attorneys’
fees under CUTPA is discretionary. Gargano v. Heyman, 525 A.2d 1343, 1347
(Conn. 1987). Such an award is appropriate under Connecticut law where evidence
reveals “reckless indifference to the rights of others or an intentional and wanton

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violation of those rights.” Id. (quoting Collens v. New Canaan Water Co., 134 A.2d
825, 832 (Conn. 1967)).

This standard is clearly established and Plaintiff’s

submission clearly provided this law to the arbitrator. In order for this Court to
vacate the award for manifest disregard, the arbitrator must have chosen to ignore
the clear law and impose his own brand of justice. On the other hand, if there is a
barely colorable justification for the arbitrator’s decision, the Court must uphold it.
Defendants contend that the arbitrator irrationally applied the law to his
award of punitive damages.

Specifically, Defendants take issue with the

arbitrator’s finding of willful, wanton, reckless indifference to rights of others
justifying the award of punitive damages. [Dkt. 44 at 8-9 (“The facts of the case do
not support a finding of deceptive business practices reckless behavior [sic] on
the part of the Claimant and the award should be vacated as patently irrational.”)].
Defendants contend that the evidence supports no such finding, but evinces, at
worst, negligence. Id. Defendants lay out facts regarding the financial documents
provided by Plaintiff and why they contend it was reasonable for Defendants to
make assumptions about Plaintiff’s income based on Plaintiff’s paystubs. See id.
Thus, Defendants challenge the arbitrator’s factual finding, calling it patently
irrational.
It is not this Court’s role to second guess the arbitrator’s findings of fact.
The Second Circuit has established that “[t]he arbitrator’s factual findings and
contractual interpretation are not subject to judicial challenge, particularly on our
limited review of whether the arbitrator manifestly disregarded the law.”
Westerbeke, 304 F.3d at 214 (“Under the manifest disregard standard, . . . the

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governing law must clearly apply to the facts of the case, as those facts have been
determined by the arbitrator.” (emphasis in original)). Thus, this Court is without
authority to question the factual findings of the arbitrator leading to the punitive
damages award.
The arbitrator found that Defendants’ conduct was in reckless or intentional
disregard of Plaintiff’s rights, justifying imposition of an award of punitive
damages. As the arbitrator’s decision lays out, the evidence presented to the
arbitrator supports a finding that Defendants’ conduct justifies an award of punitive
damages under Connecticut law. See [Dkt. 49-8 at 3-4]. Specifically, the arbitrator
calls

on

Defendants’

incredible

claim

that

Plaintiff

made

material

misrepresentations on her initial loan application while the evidence—pay stubs in
ABW’s possession establishing her true income and handwriting different from
Plaintiff’s responsible for the inaccurate income information on the application—
indicates that Defendants, not Plaintiff, wrote in the false information. Id. at 3.
Based on this and similar evidence, the arbitrator concluded that “[t]he
salesperson purposely wrote [a higher income] in that document when that person
knew it was false to ensure the application would be denied” and to allow ABW to
“pressure [Plaintiff] into a substantially more expensive credit deal.” Id. at 3-4. In
addition to the intentional violations of Plaintiff’s rights, the arbitrator noted the
existence of several prior arbitration awards against ABW for similar conduct, the
policy behind punitive damages to discourage further violations, and the failure of
previous awards to deter ABW’s continued misconduct. Id. at 4.

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The arbitrator’s analysis and finding of reckless indifference to the rights of
others or an intentional and wanton violation of those rights is consistent with both
the law and the facts. Thus, Defendants fail to show that the arbitrator manifestly
disregarded the law governing imposition of an award of punitive damages for a
violation of CUTPA.
ii. Amount of the Award
Defendants also argue that there is “no legal support” for the amount of the
arbitrator’s punitive damages award of twenty-five times the contractual damages
and that the amount of the award violates due process. [Dkt. 44 at 9-11]. Both of
these arguments fail as well.
a. No Legal Support
Defendants’ argument that there is no legal support for the amount of the
award fails for multiple reasons. First, it fails because any law Defendants would
argue the arbitrator ignored in granting the amount is not “well defined, explicit,
and clearly applicable.”

Bobker, 808 F.2d at 933.

Second, it fails because

Defendants have failed to establish that the arbitrator was aware of any such
governing legal principle and chose to ignore it in making the award. See id.
Finally, the argument fails because there is a colorable justification for the outcome
reached by the arbitrator. See Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir. 2004).
There is no precise formula for determining the amount of a punitive
damages award in a CUTPA case, though “courts generally award punitive
damages in amounts equal to actual damages or multiples of the actual damages.”
Advanced Fin. Servs., Inc. v. Associated Appraisal Servs. Inc., 830 A.2d 240, 250

15

(Conn. App. Ct. 2003) (quoting Perkins v. Colonial Cemeteries, Inc., 53 Conn. App.
646, 649, 734 A.2d 1010 (1999)). Defendants invoke Bridgeport Harbor Place I, LLC
v. Ganim, 131 Conn. App. 99, 147 (Conn. App. Ct. 2011), in which the Connecticut
Appellate Court explained that when an award of punitive damages is more than
twice the amount of compensatory damages, it should be premised on identifiable
and articulable aggravating factors. See [Dkt. 44 at 10].
In Ulbrich v. Groth, the Connecticut Supreme Court endorsed consideration
of certain factors in determining whether a punitive damages award is so excessive
as to constitute an abuse of discretion. See Ulbrich v. Groth, 78 A.3d 76, 126 (Conn.
2013).

The factors include: the degree of blameworthiness (i.e., whether the

defendant’s conduct was reckless, intentional, or malicious); whether the
defendant’s action was taken or omitted in order to augment profit; whether the
wrongdoing was hard to detect; whether the injury and compensatory damages
were small, providing low incentive to bring the action; and whether the award will
deter the defendant and others from similar conduct, without financially destroying
them. Id.
At the same time, the Ulbrich Court explicitly rejected the imposition of a cap
on the amount of punitive damages in CUTPA cases.

Id.

In Ulbrich, the

Connecticut Supreme Court was “called upon to determine whether the legislature
intended to place limits on punitive damages awards pursuant to § 42-110g(a).” Id.
The Ulbrich Court concluded that the statute “clearly imposes no specific limit on
the ratio of punitive damages to compensatory damages” and declined to “read

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into clearly expressed legislation provisions which do not find expression in its
words.” Id.
Connecticut law clearly establishes that there is no set cap on the
permissible amount of a punitive damages award for CUTPA violations. While
Connecticut law provides factors to weigh in analyzing whether an award is
excessively large, it does not provide explicit guidance on how to determine how
much is too much. The law provides no set calculation or well-defined process for
determining such a number. Thus, the objective component required for vacatur
under the manifest disregard doctrine is not satisfied.
Even if Connecticut law clearly indicated when a CUTPA punitive damages
award is too high, the parties made no effort to provide such law to the arbitrator
such that the subjective component of the doctrine is satisfied.

Plaintiff’s

submission to the arbitrator indicates that punitive damages are meant to punish
the violator and that the punishment should fit the crime.

[Dkt. 49-2 at 19].

Plaintiff’s submission also notes the deterrent purpose behind punitive damages
in requesting an award five times the actual damages. Id. at 21-23. As previously
noted, Defendants did not bother to raise or respond to the issue of punitive
damages in their submission to the arbitrator. Thus, while Plaintiff’s submission
and the arbitrator’s decision indicate that the arbitrator had knowledge regarding
the requirements for and purpose behind a punitive damages award, Defendants
provide nothing to suggest that the arbitrator knew of any limit on the amount of
allowable punitive damages which he manifestly disregarded.

17

Defendants are not satisfied with the analysis by the arbitrator leading to the
award, suggesting that he did not consider the standard factors. See [Dkt. 44 at
11]. Defendants contend that Bridgeport Harbor Place, 131 Conn. App. at 147,
would require a finding of aggravating factors beyond mere reckless conduct to
warrant an award outside a normative 1:1 or 2:1 ratio. [Dkt. 44 at 10-12]. This
argument fails to acknowledge the arbitrator’s findings that ABW purposely and
continually acted in defiance of Connecticut public policy. See [Dkt. 49-8 at 3].
Even under Defendants’ explanation of the law, the arbitrator’s award is
appropriate—he clearly found multiple “aggravating factors.”

Moreover,

consideration of each of the factors adopted by the Connecticut Supreme Court
would encourage a large punitive damages award—defendants’ conduct was
arguably intentional, aimed at increasing their profits, preyed on vulnerable
customers and therefore difficult to detect, and subject to relatively low statutory
damages, and a greater penalty would potentially serve to deter future similar
conduct. See Ulbrich, 78 A.3d at 126. Thus, a full review of the factors supports
rather than contradicts the arbitrator’s award.
Defendants cite no law to support their argument that the arbitrator’s award
of punitive damages is somehow in disregard of the law simply because it is greater
than the amount requested by Plaintiff when the parties’ submissions to the
arbitrator plainly allow for a punitive damages award. Thus, this argument fails as
well.
This Court acknowledges that the arbitrator’s award of punitive damages in
this case at twenty-five times the actual and statutory damages, for a total of

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$234,708.50 in punitive damages, is significant. But even if this Court believed that
such an award would constitute an abuse of discretion if imposed by a court, such
a standard is not applicable on review of an arbitration decision. See Westerbeke,
304 F.3d at 208.

The question here is not whether the arbitrator abused his

discretion or even erred in his application of the law, but whether he knowingly
chose to disregard clearly established law. Defendants have failed to show that
the arbitrator so manifestly disregarded any law in setting the award.
b. Due Process Argument
Defendants also suggest that the punitive damages award exceeds
constitutional limitations on punitive damages established by the United States
Supreme Court. [Dkt. 44 at 17-18].
It is axiomatic that constitutional due process protections “do not extend to
‘private conduct abridging individual rights.’” Nat’l Collegiate Athletic Ass’n v.
Tarkanian, 488 U.S. 179, 191 (1988) (quoting Burton v. Wilmington Parking Auth.,
365 U.S. 715, 722 (1961)). Thus, only state action is subject to due process scrutiny.
Courts in this circuit have held that the state action element of a due process claim
is absent in a private arbitration case. See, e.g., Austern v. Chicago Bd. Options
Exch., Inc., 716 F. Supp. 121, 125 (S.D.N.Y. 1989) (holding the conduct of an
arbitration panel “did not in any way constitute state action”), aff’d, 898 F.2d 882
(2d Cir.), cert. denied, 498 U.S. 850 (1990). The Eleventh Circuit has similarly
rejected the argument that awards of punitive damages in arbitration can violate
due process. Davis v. Prudential Sec., Inc., 59 F.3d 1186, 1190-94 (11th Cir. 1998)

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(holding that an arbitration award cannot constitute a due process violation
because they do not involve any state action). This Court holds the same.
Defendants contend that even if the arbitration involves no state action, the
Court’s confirmation of an arbitration award constitutes state action, implicating
due process concerns, and courts have a duty to review the constitutionality of
awards of punitive damages. [Dkt. 44 at 17-19]. As the majority of other courts to
consider this argument have concluded, this Court is not persuaded that the
limited review of arbitration awards provided for under the FAA is broadened by
the competing interest in supervising punitive damages awards.
Defendants cite BMW of North America, Inc. v. Gore and Cooper Industries,
Inc. v. Leatherman Tool Group, Inc. in arguing for greater judicial oversight of
arbitral punitive damages awards. See [Dkt. 44 at 17-18]. In BMW of North America,
Inc. v. Gore, the Supreme Court established the substantive standard for
determining whether a jury award of punitive damages conforms with due process
and held that the award in that case was grossly excessive and therefore exceeded
the constitutional limit. 517 U.S. 559, 585-86 (1996). The Court explained that it
considered three guideposts in coming to the conclusion: the degree of
reprehensibility of the conduct; the disparity between the harm or potential harm
suffered and the punitive damages award; and the difference between the punitive
damages remedy and the civil penalties authorized or imposed in comparable
cases. Id. at 574-75. In Cooper Industries, Inc. v. Leatherman Tool Group, Inc., the
Supreme Court established that courts of appeals should apply a de novo standard
of review when passing on district courts’ determinations of the constitutionality

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of punitive damages awards. 532 U.S. 424, 436 (2001). The Court acknowledges
that these cases call for greater judicial oversight of punitive damages awards in
the jury award context. However, this case arises from a different context—a
contractually agreed to arbitration decision.
In Davis, the Eleventh Circuit explained why due process does not require
more stringent procedures and judicial review for excessiveness of arbitral
punitive damages awards before the court confirms the award. 59 F.3d at 1190-94.
First, the Davis Court emphasized that arbitration itself is a private proceeding that
does not constitute the state action required to implicate due process. Id. at 1191.
Second, and as noted above, the Davis Court rejected the contention, based on
Shelley v. Kraemer, 334 U.S. 1, 19-20 (1948), that the court’s enforcement of a
private contract constitutes state action. Id. at 1192. The Davis Court highlighted
that the holding of Shelley has not been extended beyond the context of race
discrimination and therefore rejected the argument that the limited state action
inherent in the confirmation of private arbitration awards mandates compliance
with the due process clause. Id.
Even if the court’s confirmation of an award were state action, the Davis
Court concluded that the concerns which arise out of a jury award—the potential
for jurors to express their biases against big businesses or those without a
presence in a local community through their verdicts—is absent in the arbitration
context. Id. The Davis Court reasoned that “the due process safeguards required
for the imposition of punitive damages by a jury are not required where the parties
have chosen to submit their dispute to a panel of arbitrators and have empowered

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those arbitrators to consider the issues of punitive damages.” Id. Finally, the Davis
Court emphasized the federal policy favoring arbitration and requiring courts to
rigorously enforce agreements to arbitrate. Id. For those reasons, the Davis Court
held that the defendant’s due process challenge to the arbitration panel’s award
failed.

Id.

The Davis Court explained that, “[t]o decide otherwise would

constitutionalize

private

arbitration

proceedings

and

diminish

both

the

effectiveness and the appeal of the arbitral forum as an alternative means for
resolving disputes.” Id. at 1193-94.
This Court agrees with the analysis in Davis and other cases declining to
apply due process protection to arbitration awards. See Smith v. Am. Arbitration
Assn., Inc., 233 F.3d 502, 507 (7th Cir. 2000) (holding arbitration is a “private selfhelp remedy” and holding no state action in context of equal protection violation
claim on the basis of all male arbitration panel); Davis, 59 F.3d at 1191 (judicial
enforcement of an arbitration award does not convert the award to state action);
MedValUSA Health Programs, Inc. v. MemberWorks, Inc., 872 A.2d 423, 435 (Conn.
2005) (same); United States v. Am. Soc’y of Composers, Authors, & Publishers, 708
F. Supp. 95, 96-97 (S.D.N.Y. 1989) (same).
Defendants contend that “the Supreme Court’s call for more pro-active
judicial involvement in reviewing the constitutionality of punitive damage awards
suggests a rethinking of Davis[.]” [Dkt. 44 at 20]. The Court does not agree.
Defendants received the process they bargained for—arbitration. The FAA limits
vacatur of the results of that arbitration to limited bases. 9 U.S.C. § 10. The
Supreme Court has repeatedly emphasized courts’ limited role in review of

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arbitration decisions. See Hall Street Ass’n, LLC v. Mattel, Inc., 552 U.S. 576, 586
(2008) (concluding that the FAA “substantiat[es] a national policy favoring
arbitration’s essential virtue of resolving disputes straightaway” and explaining
that “[a]ny other reading opens the door to the full-bore legal and evidentiary
appeals that can render informal arbitration merely a prelude to a more
cumbersome and time-consuming judicial review process . . . and bring arbitration
theory to grief in post arbitration process.” (internal quotation marks and citations
omitted)).
This Court has conducted the review Defendants are entitled to under the
FAA and found their arguments lacking. Defendants have failed to demonstrate
any state action which would trigger the applicability of the due process clause
and broadening of judicial review of arbitration decisions.
II.

Conclusion
Based on the foregoing and consistent with § 9 of the FAA, the Court

confirms the arbitrator’s award, [Dkt. 40-1 (Ex. A, Arbitrator’s Final Award)]. The
Court GRANTS Plaintiff’s Motion to Affirm the Arbitration Award, [Dkt. 40], and
DENIES Defendants’ Motion to Vacate the Arbitration Award, [Dkt. 43]. Further, the
Court DENIES ABW’s Motion to Exclude, [Dkt. 51], and Plaintiff’s Motion to Strike,
[Dkt. 56].

IT IS SO ORDERED.

Vanessa Bryant
2019.07.15 12:38:10 -04'00'

______________________
Hon. Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut: July 15, 2019

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