Boldischar v. Reliastar Life Insurance Company et al
Filing
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MEMORANDUM Opinion and Order Signed by the Honorable Rebecca R. Pallmeyer on 7/26/2016. Civil case terminated. Mailed notice. (etv, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JAMES BOLDISCHAR,
Plaintiff,
v.
RELIASTAR LIFE INSURANCE CO., and
VOYA AMERICA EQUITIES, INC.,
Defendants.
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No. 14 C 6844
Judge Rebecca R. Pallmeyer
MEMORANDUM OPINION AND ORDER
Plaintiff James Boldischar brought this suit against his former employer, Defendant
ReliaStar Insurance Company (“ReliaStar”) and its parent company, Defendant Voya America
Equities, Inc., f/k/a ING America Equities, Inc. (“ING”), seeking a declaratory judgment that he
has no obligation to repay Defendants for alleged excess compensation he received as a
ReliaStar employee. 1 The court stayed the proceedings and ordered arbitration of the parties’
dispute.
The arbitrator’s award favors Defendants, who now move for confirmation of the
award. That motion, and Plaintiff’s cross-motion to vacate the award, are before the court. For
the reasons stated below, the court grants Defendants’ motion [14], denies Plaintiff’s motion
[17], and confirms the arbitration award.
The court denies without prejudice Defendants’
request for sanctions against Plaintiff under Rule 11.
BACKGROUND
Plaintiff was hired by ReliaStar as an “internal wholesaler,” a position located in
Minneapolis, Minnesota. (Compl. ¶ 4; Uniform Application for Securities Industry Registration or
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The court has jurisdiction over this case pursuant to 28 U.S.C. § 1332. Plaintiff is
domiciled in, and is a citizen of, the state of Illinois. (Notice of Removal [1] ¶ 6; Compl. ¶ 1.)
ReliaStar is a corporation incorporated in Minnesota, with its principal place of business in
Minnesota. (Notice of Removal ¶ 7.) VAE is a corporation incorporated in the state of Colorado
with its principal place of business in Colorado. (Id. ¶ 8.) The amount in controversy exceeds
$75,000. (Id. ¶ 10.)
Transfer (“Form U-4”) [9-1] at 1.) In April 2008, ReliaStar promoted Plaintiff to the position of
Sales Vice President (“SVP”) in Chicago, Illinois. (Compl. ¶ 7, Ex. A at 1.) As SVP, Plaintiff
received a base salary of $24,000, a one-time signing bonus of $20,000, and reimbursement of
his relocation expenses. (Id. ¶ 9.) During his first two years as SVP, Plaintiff also received a
yearly salary of $111,000. (Id. ¶¶ 14, 26-27, Ex. A at 1.) Beginning in 2010, Plaintiff’s annual
compensation was determined by a document called the Policies and Sales Incentive Plan
(“SIP” or “Plan”), which described certain policies applicable to sales employees of ReliaStar.
(Compl. Ex. B at 3.)
Although the terms of the SIP varied from year to year, the Plan provided for the same
general compensation structure: SVPs received a monthly pre-determined salary advance,
called a “draw,” and were also eligible to receive a commission on life insurance policy sales
within their territories. (Id. ¶¶ 11-13.) If the SVP’s sales resulted in a monthly commission that
was greater than the draw amount he had received that month, the SVP would receive the
excess amount as compensation. (Id. ¶ 23.) On the other hand, if the SVP’s draw amount
exceeded his monthly sales commission, the overpayment would accrue as a debt to the
company. (Compl. Ex. B at 7.) The cover page of each SIP provided that the document “should
not be construed as creating any contractual rights or obligations or restricting in any way
[ReliaStar’s] right to terminate [an individual’s] employment.” (Id. at 1.)
In 2010, Plaintiff’s draw amounts exceeded his commissions by approximately $12,000.
(Compl. ¶ 30.) ReliaStar informed Plaintiff that, because of this overpayment, Plaintiff would be
eligible for monthly commissions in 2011 only if his actual sales resulted in monthly
commissions that exceeded his monthly draws by more than $12,000. (Id. ¶¶ 31-32.) Plaintiff’s
commission earnings for 2011 did exceed the total of his monthly draw plus $12,000, and he
received the excess amount as compensation. (Id. ¶¶ 33-34.) In 2012, Plaintiff’s actual sales
were $20,936,858, and he received 3.25% of that amount—$680,447.88—as a commission.
(Id. ¶¶ 35-36.)
Within the next year, however, $6,456,000 of Plaintiff’s 2012 sales were
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cancelled before the policies’ first anniversary dates. (Id. ¶¶ 38-39.) ReliaStar’s SIPs for 2012
and 2013 provided that if a policy is cancelled before its first anniversary date, the commission
payment for the policy sale will be deducted, or “charged back,” against the SVP’s monthly draw
amounts. (Id. ¶¶ 40-41.) Accordingly, the 2013 cancellations caused a charge-back against
Plaintiff’s monthly draws of approximately $210,000 (3.25% of $6,456,000). (Id. ¶ 45.) In
September 2013, Plaintiff and his supervisor discussed the $210,000 charge-back on Plaintiff’s
commissions, and they agreed that Plaintiff’s future draw amounts would be reduced until
ReliaStar had recouped these funds. (Id. ¶¶ 63-64.) Plaintiff received reduced monthly draws
from October 2013 to May 2014: from October 2013 through December 2013, Plaintiff’s monthly
draw was reduced from $8,800 to $6,500, and from January 2014 through May 2014, Plaintiff’s
monthly draw was reduced from $10,500 to $6,500. (Id. ¶¶ 66-67, 70-71.) On May 13, 2014,
Plaintiff informed ReliaStar of his resignation, effective May 16, 2014. (Id. ¶ 75.) That same
day, ReliaStar informed Plaintiff that he still owed the company $218,300 for the charge back on
his commissions.2
(Id. ¶ 79.)
The 2014 SIP contained the following provision regarding
ReliaStar’s right to recover charge backs from terminated employees:
If the SVP terminates employment either voluntarily or involuntarily with an
overpayment-debt due and owing, the Company shall deduct such amounts from
any amounts that are owed to the SVP by the Company, including, but not limited
to the SVP’s paycheck, PTO payout, bonus payment, or any expense
reimbursements that are due to the SVP.
(Compl. Ex. C at 7.)
Plaintiff did not pay Defendants any money after his resignation. Instead, on July 31,
2014, Plaintiff filed a complaint against Defendants in the Circuit Court of Lake County, Illinois,
seeking a declaratory judgment that the SIPs were not contracts, and thus did not impose any
contractual obligation on Plaintiff to pay the $218,300 charge back on his commissions. (Notice
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The record does not explain why ReliaStar believed that Plaintiff owed a chargeback of $218,300, as opposed to $183,100 ($210,000 less the $26,900 in reductions from
Plaintiff’s monthly draws from October 2013 to May 2014). Plaintiff’s complaint merely alleges
that ReliaStar arrived at this amount after “deducting withholdings that [ReliaStar] would
otherwise owe to” Plaintiff. (Id. ¶ 79.)
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of Removal ¶ 1; Compl. ¶ 57.) Even if the SIPs were contracts, Plaintiff’s complaint alleges,
Defendants’ contractual rights are limited to withholding compensation from Plaintiff at the time
of his resignation. (Compl. ¶¶ 52-57, 78, 86-87.) After removing the case to federal court,
Defendants moved to dismiss Plaintiff’s complaint and compel arbitration based on a Form U-4
completed by Plaintiff as part of his employment with ReliaStar, pursuant to which Plaintiff
agreed to arbitration by the Financial Industry Regulatory Authority (“FINRA”) of any
employment-related disputes between Plaintiff and Defendants. (Def. Mot. to Dismiss [7] at 1.)
The court granted that motion on November 5, 2014, and stayed the federal court proceedings
pending arbitration before FINRA. [13]
On July 8, 2015, the parties participated in an arbitration hearing before a panel of
FINRA arbitrators (the “Arbitrators”) in Chicago, Illinois. (Def. Mot. to Lift Stay and Confirm
Arbitration Award [14] (hereinafter “Def Mot.”) at 2.) Defendants alleged that the SIPs were
contracts and that Plaintiff had breached these contracts by failing pay the $218,300 charge
back to Defendants as required by the SIPs. (FINRA Award [14-1] at 1.) Defendants also
asserted claims of quantum meruit and unjust enrichment. (Id.) On August 12, 2015, the
Arbitrators issued their Award in favor of Defendants and ordered Plaintiff to pay ReliaStar
damages in the amount of $218,318.39, plus 5% interest per year from the date of the Award
until the award is paid in full. (Id. at 2.) The Arbitrators found that the SIPs were contracts
between Plaintiff and ReliaStar, and that pursuant to these contracts, cancelled life insurance
policies sold by Plaintiff would result in charge-backs against his previously paid commissions.
(Id. at 3.) With respect to the unjust enrichment claim, the Arbitrators noted the following:
[Plaintiff] argues that there was no unjust enrichment because there was a
contract. Yet, as stated above, he also argues that there was no contract. In any
event, it would indeed be unjust to allow [Plaintiff] to retain commissions in the
circumstances discussed in this ruling.
(Id.) Following the issuance of this Award, Defendants moved to lift the stay, confirm the FINRA
Award, and enter judgment against Plaintiff and in favor of Defendants in the amount of
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$218,318.39, with 5% interest per year until paid in full. (Def. Mot. at 2.) In response, Plaintiff
moved to vacate, or in the alternative, modify the Award.
(Pl. Mot. to Vacate [20] at 1.)
Defendants seek sanctions against Plaintiff under Rule 11 in the amount of reasonable
expenses, including attorneys’ fees, incurred by Defendants in connection with Plaintiff’s motion.
(Def. Mem. [24] at 14.)
DISCUSSION
Under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., federal court review of
arbitral awards is extremely limited, and perhaps “ought not to be called ‘review’ at all.”
Baravati v. Josephthal, Lyon & Ross, Inc., 28 F.3d 704, 706 (7th Cir. 1994); see Nat'l Wrecking
Co. v. Local 731, Int'l Bhd. of Teamsters, 990 F.2d 957, 960 (7th Cir. 1993) (“Arbitrators do not
act as junior varsity trial courts where subsequent appellate review is readily available to the
losing party.”). When parties agree to arbitrate their disputes, they opt out of the court system,
Wise v. Wachovia Securities, LLC, 450 F.3d 265, 269 (7th Cir. 2006), and “factual or legal error,
no matter how gross, is insufficient to support overturning [the] award,” Halim v. Great Gatsby's
Auction Gallery, Inc., 516 F.3d 557, 563 (7th Cir. 2008).
The sole bases for vacating an
arbitration award are identified in 9 U.S.C. § 10(a). Affymax, Inc. v. Ortho–McNeil–Janssen
Pharmaceuticals, Inc., 660 F.3d 281, 284 (7th Cir. 2011). That section allows a district court to
vacate an arbitration award only if: (1) the award was “procured by corruption, fraud, or undue
means”; (2) “there was evident partiality or corruption in the arbitrators”; (3) the arbitrators were
guilty of misconduct “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) 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).
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I.
Plaintiff’s Motion to Vacate or Modify The Award
In his motion, Plaintiff contends that the court should vacate the Award under the fourth
statutory ground: that the Arbitrators “exceeded their powers, or so imperfectly executed them
that a mutual, final, and definite award upon the subject matter was not made.” (Pl. Mot. at 2
(citing 9 U.S.C. § 10(a)(4)).) Plaintiff argues this test is met in that the Arbitrators ignored the
plain meaning of the SIPs, failed to allow Plaintiff to present alternative defenses, misconstrued
Plaintiff’s arguments, incorrectly calculated damages, and included interest as part of the Award
without adequate consideration of the Arbitrators’ FINRA-prescribed duties. (Pl. Mem. at 1-2.)
None of these alleged failures can fairly be characterized as exceeding the Arbitrators’ powers
under 9 U.S.C. § 10(a)(4), however, and they are insufficient reasons to support vacating or
modifying the Award.
During arbitration, Plaintiff asserted that the SIPs were not contracts and thus imposed
no duty on him to repay Defendants for the $218,318.39 in overcompensation he had received.
(Pl. Mem. at 3.) In support, Plaintiff emphasized that the SIPs provided that they “should not be
construed as creating any contractual rights or obligations or restricting in any way your
employer’s right to terminate your employment.” (Id.) Defendants argued that the language
cited by Plaintiff did not mean that the SIPs were not contracts, but rather, was intended to be “a
disclaimer to Illinois’ traditional at-will employment.”
Defendants.
(Id.)
The Arbitrators agreed with
They concluded that the SIPs “constituted contracts between ReliaStar and
[Plaintiff]” and that the limiting language cited by Plaintiff “was intended to clarify the fact that
these contracts did not constitute contracts of employment, as opposed to the at-will
employment relationship that is usual under Illinois law.” (Award at 3.) Plaintiff further argued
that, even if the SIPs were contracts, the following 2014 SIP provision limited Defendants’
recovery to the amounts due to Plaintiff at the time of his termination:
If the SVP terminates employment either voluntarily or involuntarily with an
overpayment-debt due and owing, the Company shall deduct such amounts from
any amounts that are owed to the SVP by the Company, including, but not limited
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to the SVP’s paycheck, PTO payout, bonus payment, or any expense
reimbursements that are due to the SVP.
(Pl. Mem. at 4.) The Arbitrators rejected Plaintiff’s interpretation, finding instead that “[t]his
language . . . said that [the] payments [owed to Plaintiff by ReliaStar] would be cancelled,” as
opposed to “limiting [Plaintiff’s payment] obligation only to those amounts.” (Award at 3.)
In a dispute over contractual interpretation, in order for the court to find that the
arbitrators exceeded their powers, the party seeking to vacate the award must show that the
arbitrators “failed to interpret the contract at all.” Wise, 450 F.3d at 269. In other words, the
question for the court is “not whether the arbitrator or arbitrators erred in interpreting the
contract; it is not whether they clearly erred in interpreting the contract; it is not whether they
grossly erred in interpreting the contract; it is whether they interpreted the contract.” Affymax,
660 F.3d at 286 (quoting Hill v. Norfolk & Western Ry., 814 F.2d 1192, 1194-95 (7th Cir. 1987)).
Alternatively, a party can show that arbitrators exceeded their powers by engaging in a
“manifest disregard of the law”; but such an argument requires the challenger to show the
arbitrators deliberately disregarded what they knew to be the law in order to achieve a particular
result. Renard v. Ameriprise Fin. Servs., Inc., 778 F.3d 563, 567-68 (7th Cir. 2015) (citing Eljer
Mfg., Inc. v. Kowin Dev. Corp., 14 F.3d 1250, 1254 (7th Cir. 1994)); see George Watts & Son,
Inc. v. Tiffany and Co., 248 F.3d 577, 579-81 (7th Cir. 2001) (explaining that “manifest disregard
of the law” exists only if the arbitrator directs the parties to violate the law).
Plaintiff Boldischar concedes that the Arbitrators interpreted the language of the SIPs.
He nonetheless argues that the court should vacate the Award because the Arbitrators erred in
their interpretation of these documents. (Pl. Mem. at 7, 9.) But an arbitral award cannot be
vacated simply because there is another possible construction of the contract, even if that other
construction is the correct one. See Prostyakov v. Masco Corp., 513 F.3d 716, 723 (7th Cir.
2008) (the court will uphold an award unless the court infers a non-contractual basis for it
because there is no other possible interpretive route). Nor can an arbitral award be vacated
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because the arbitrators applied incorrect legal principles in their interpretation of the contract.
See, e.g., Renard, 778 F.3d at 567-68 (“[E]ven if these arbitrators erred in their application of
Minnesota law . . . such an error falls short of a manifest disregard of the law.”) As explained
above, the arbitrators in this case interpreted the language of the SIPs and determined that they
were contracts between Plaintiff and Defendants that imposed an obligation on Plaintiff to repay
the charge-back on his previously paid commissions, regardless of the current status of
Plaintiff’s employment.
Plaintiff believes that the Arbitrators erred in their interpretation by
ignoring what Plaintiff deems plain language or by misinterpreting unambiguous contractual
language. But that belief is an insufficient basis for overturning the Award. Similarly, the fact
that the Arbitrators interpreted the SIPs defeats Plaintiff’s claim that the Arbitrators exceeded
their powers by manifestly disregarding the law or basing the Award on their “own sense of
equity.” (Pl. Mem. at 12 (citing Archer-Daniels-Midland Co. v. Paillardon, 944 F. Supp. 636, 644
(C.D. Ill. 2013))); see Arch of Illinois, Div. of Apogee Coal Corp. v. Dist. 12, United Mine
Workers of Am., 85 F.3d 1289, 1292 (7th Cir. 1996) (An arbitrator applies his “own sense of
equity” when the arbitrator “fail[s] to interpret the agreement.”).
Plaintiff further asserts that the Arbitrators exceeded their powers by failing to consider
Plaintiff’s arguments that were made “in the alternative.”
(Pl. Mem. at 11.)
During the
arbitration proceedings, Plaintiff responded to Defendants’ breach of contract claim by arguing
that the SIPs were not contracts. (Id.) Plaintiff responded to Defendants’ unjust enrichment
claim by arguing that the existence of a contract precluded quasi-contractual recovery. (Id.) In
addressing Plaintiff’s argument that Defendants were precluded from recovering under an unjust
enrichment theory, the Arbitrators noted that Plaintiff “argues that there was no unjust
enrichment because there was a contract. Yet, . . . he also argues that there was no contract.”
(Id.; Award at 3.) “In any event,” the Arbitrators continued, “it would indeed be unjust to allow
[Plaintiff] to retain commissions in the circumstances discussed in this ruling.” (Award at 3.)
This aspect of the Arbitrators’ decision, Plaintiff asserts, “obscured [Plaintiff’s] ability to present
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alternative theories and defenses and deprived the Plaintiff of the ability to present an adequate
defense.” (Pl. Mem. at 11.) Again, the court disagrees. As the court reads the Award, the
Arbitrators did not prevent Plaintiff from presenting an alternative defense; indeed, Plaintiff’s
main grievance is that he did in fact present alternative defenses, and the Arbitrators erred in
rejecting them. This is not a basis for overturning an arbitration award. See, e.g., Eljer Mfg.,
Inc., 14 F.3d at 1255 (refusing to vacate arbitration award based on party’s claim that the
arbitrators erroneously rejected various legal defenses raised by the party).
Plaintiff next cites certain alleged factual and legal errors made by the Arbitrators and
claims that these errors support vacating the Award.
According to Plaintiff, the Arbitrators
incorrectly found that Plaintiff was arguing that the SIPs were contracts that precluded
Defendants from recovering under an unjust enrichment theory. In fact, Plaintiff insists, he was
arguing that his employment offer letter was a contract that precluded Defendants from
recovering under an unjust enrichment theory. (Pl. Mem. at 10-11.)
Plaintiff also claims that
the Arbitrators erred in awarding Defendants the pre-tax value of Plaintiff’s compensation
($218,318.19). (Id. at 12.) Because damages in an unjust enrichment claim are the retained
benefit, Plaintiff contends, the Award should have reflected the amount of overcompensation
that Plaintiff had received after taxes. (Id.)
But Plaintiff’s arguments fall outside the scope of the court’s review. Plaintiff does not
contend that, because of the allegedly incorrect damages award, he did not get a full and fair
hearing or that there was any dishonesty on the part of the Arbitrators. Rather, he essentially
asks the court to vacate the Award on the theory that the Arbitrators made an error of law
because, under an unjust enrichment theory, a plaintiff may only obtain damages equal to the
benefit actually retained. As the Seventh Circuit has repeatedly held, a claim of legal or factual
mistake is not a sufficient basis to overturn an arbitrator’s decision. Halim, 516 F.3d at 563.
For similar reasons, Plaintiff’s claim that the Arbitrators misconstrued his arguments,
without any allegation of deliberate misconduct on the part of the Arbitrators, is not a basis for
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overturning the Award. In any event, Plaintiff’s own statements appear to defeat this claim.
Plaintiff acknowledges that during arbitration he argued that, if the Arbitrators found the SIPs to
be contracts, “the Plaintiff did not breach the contractual terms” because the SIPs limited
Defendants’ recovery to amounts owed to Plaintiff at the time of his resignation. (Pl. Mem. at 4.)
Lastly, Plaintiff asserts that the Arbitrators exceeded their powers when they ordered
Plaintiff to pay interest on the $218,318.19 at 5% per year from the date of the Award until
Plaintiff pays the award in full. (Pl. Mem. at 12.) According to Plaintiff, FINRA guidelines
require arbitrators to review the following issues when deciding whether to include interest as
part of an award: statutory or contractual basis that allows interest to be awarded, amounts of or
rate of interest, date interest begins, and date interest ends. (Id.) Although the Arbitrators
considered the rate of interest (5%), the date that the interest begins (date of the Award), and
the date that the interest ends (Plaintiff pays award in full), Plaintiff asserts that the Arbitrators
failed to consider any statutory or contractual basis for including interest as part of the award in
this case. (Id.) Never mind that an award of interest is standard for “any money judgment in a
civil case recovered in a district court,” 28 U.S.C. § 1961, the fact that the Arbitrators did not
mention a statutory or contractual basis for including interest as part of the Award, does not
mean that the Arbitrators failed to review this issue in reaching their decision. “An arbitrator is
simply not required to state the reasons for his decision.” Elijer Mfg., Inc. v. Kowin Dev. Corp.,
14 F.3d 1250, 1255 (7th Cir. 1994). It is not clear from the face of the Award that the Arbitrators
failed to consider these issues, and the court declines to assume that the Arbitrators failed to do
so. See United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, (1960)
(“[W]e see no reason to assume that this arbitrator has . . . not stayed within the areas marked
out for his consideration” simply because the arbitrator did not explain the reasons for his
decision.)
In sum, the Arbitrators resolved the parties’ dispute on the basis of the laws and
arguments presented to them, and Plaintiff has failed to demonstrate that the Arbitrators
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exceeded their powers under 9 U.S.C. § 10(a)(4). Plaintiff’s arguments in support of his motion
to vacate appear to be nothing more than a “thinly veiled attemp[t] to obtain appellate review of
[the Arbitrators’] decision.” Flexible Mfg. Sys. Pty. Ltd. v. Super Prods. Corp., 86 F.3d 96, 100
(7th Cir. 1996). A disappointed party to arbitration is not allowed to “bring his dispute into court
by the back door,” however. Baravati, 28 F.3d at 706. Accordingly, Plaintiff’s motion to vacate
is denied.
Alternatively, Plaintiff seeks to modify the Award. Under the FAA, a court is permitted to
modify or correct an award “where there was an evident material miscalculation of figures or an
evident material mistake in the description of any person, thing, or property referred to in the
award.” 9 U.S.C. § 11(a). The modification provision of the FAA “is present to correct patent
mathematical errors or misidentifications,” and is not “a vehicle through which a dissatisfied
party may make an end run around the limited judicial review of arbitral decisions.” Mical v.
Glick, No. 13 C 6508, 2014 WL 322093, at *3 (N.D. Ill. Jan. 28, 2014), aff'd, 581 F. App’x 568
(7th Cir. 2014).
In this case, Plaintiff’s requested modification amounts to an attempt to
relitigate the arbitration; Plaintiff does not cite any mathematical errors on the part of the
Arbitrators, but claims that the Arbitrators’ decision was erroneous for the various reasons
discussed above. Plaintiff’s motion to modify the Award is denied.
II.
Defendant’s Motion to Confirm of the Award and for Sanctions
Defendants seek confirmation of the Award. Within one year of the entry of an award, a
party may seek to confirm it in the court, and the court must do so unless the award has been
vacated or modified under 9 U.S.C. §§ 10 or 11. 9 U.S.C. § 9. “[I]f the district judge is satisfied
that the arbitrators resolved the entire dispute and can figure out what that resolution is, [she]
must confirm the award.” IDS Life Ins. Co. v. Royal Alliance Assocs., 266 F.3d 645, 650-51 (7th
Cir. 2001). Here, Defendants have sought confirmation of the Award within one year of its entry
on August 12, 2015.
The Award presents the court with no challenges in terms of
comprehending it, and thus the Award is confirmed.
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Defendants also seek sanctions under Rule 11, asserting that Plaintiff’s motion to vacate
is frivolous and relies on incorrect legal standards. (Def. Mem. at 13.) But Defendants offer no
indication that they have complied with the safe-harbor requirements of Rule 11.
The
procedural requirements of the rule are straightforward: “(1) that a request for sanctions be
made in a separate motion rather than as an appendage to another motion or responsive
memorandum, and (2) that the party to be sanctioned be given a twenty-one day safe harbor in
which to withdraw or correct the allegedly offending filing.” Corley v. Rosewood Care Ctr., Inc.,
142 F.3d 1041, 1058 (7th Cir. 1998) (citing FED. R. CIV. P. 11(c)(1)(A)). As the record lacks any
evidence that Plaintiff was given the required safe-harbor period, Defendant’s request for
sanctions is denied without prejudice. Matrix IV, Inc. v. Am. Nat'l Bank & Tr. Co., 649 F.3d 539,
553 (7th Cir. 2011) (“Postjudgment motions for sanctions are permissible so long as the moving
party substantially complies with Rule 11's safe-harbor requirement . . . .”).
CONCLUSION
For the foregoing reasons, Defendants’ motion to lift the court’s stay and confirm the
Award [14] is granted, and Plaintiff’s motion to vacate or modify the Award [17] is denied.
Defendant’s request for sanctions is denied without prejudice.
ENTER:
Dated: July 26, 2016
_________________________________________
REBECCA R. PALLMEYER
United States District Judge
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