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DISH Network L.L.C. v. Ray

United States District Court, D. Colorado

December 28, 2016

DISH NETWORK, L.L.C. and ECHOSPHERE, L.L.C., Plaintiffs,
v.
MATTHEW RAY, on behalf of himself and similarly situated persons, Defendant.

          MEMORANDUM OPINION AND ORDER

          LEWIS T. BABCOCK, JUDGE.

         This case is before me on Plaintiffs DISH Network, L.L.C. and Echosphere, L.L.C.'s (collectively “DISH”) Petition to Vacate Clause Construction Arbitration Award [Doc # 1]. After consideration of the Petition and all related pleadings, I deny the Petition.

         I. Background

         Defendant Matthew Ray (“Ray”) worked as an inside sales associate for DISH until his employment was terminated in 2015. Following his termination, Ray sued DISH in this Court and asserted claims under the Fair Labor Standards Act (the “FLSA”), Colorado's Wage Claim Act, and the Colorado Minimum Wage Act, as well as a common law claim for breach of contract. After DISH demanded that he arbitrate his claims under the arbitration agreement (the Agreement”) that he signed, Ray dismissed his case in this Court and filed a case with the American Arbitration Association (“AAA”) asserting the same four claims for relief. Ray then also sought to pursue his claims as a class action under Fed.R.Civ.P. 23 and a collective action under § 216(b) of the FLSA, 29 U.S.C. § 201, et seq.

         The first issue before the arbitrator selected by the parties was whether the Agreement permitted collective or class arbitration. On December 29, 20115, the arbitrator issued his Clause Construction Award (the “Award”) wherein he concluded (1) that he had jurisdiction to determine whether the Agreement permitted collective or class arbitration and (2) that the Agreement did permit such arbitrations. By the Petition, DISH challenges both of these conclusions and seeks to vacate the Award.

         II. Standard of Review

         Judicial review of an arbitration award under the Federal Arbitration Act (the “FAA”) is “strictly limited, ” and the applicable standard of review is “among the narrowest known to law.” Bowen v. Amoco Pipeline Co., 254 F.3d 925, 931 (10th Cir. 2001) (citation omitted). Thus, a court may only vacate an arbitration award in the limited circumstances set forth in § 10 of the FAA, 9 U.S.C. § 10, or in accordance with a few judicially created reasons. Denver & Rio Grande W. R.R. Co. v. Union Pac. R.R. Co., 119 F.3d 847, 849 (10th Cir. 1997).

         Under § 10 of the FAA, an arbitration award may be vacated if (1) the award was procured by fraud, corruption, or undue means; (2) there was evident partiality or corruption in the arbitrator; (3) the arbitrator was guilty of misconduct in refusing to postpone the hearing, in refusing to hear evidence, or of any other misbehavior resulting in prejudice to a party; or (4) the arbitrator exceeded his powers or imperfectly executed them. 9 U.S.C. § 10(a)(1) - (4). In addition, an arbitration award may be vacated for the judicially created reasons of violation of public policy, manifest disregard of the law, and denial of a fundamentally fair hearing. Sheldon v. Vermonty, 269 F.3d 1202, 1206 (10th Cir. 2001). But see Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 672 n. 3 (2010) (noting uncertainty as to whether “manifest disregard” constitutes an independent basis for vacating arbitration award or is merely a gloss on enumerated grounds set forth in § 10 of the FAA).

         The burden is on the party seeking to vacate an arbitration award to show that one of the limited grounds for doing so exists. Youngs v. Am. Nutrition, Inc., 537 F.3d 1135, 1141 (10th Cir. 2008). “That burden is very great.” Id. (citation omitted). Errors in an arbitrator's findings of fact, interpretation of the law, or application of the law do not justify vacating an arbitration award. Hollern v. Wachovia Sec., Inc., 458 F.3d 1169, 1172 (10th Cir. 2006) (citation omitted). See also Stolt-Nielsen, 559 U.S. at 671 (petitioners seeking to vacate arbitration award must “clear a high hurdle” and “[i]t is not enough for petitioners to show that the [arbitrator] committed an error - or even a serious error”). Furthermore, errors in an arbitrator's interpretation or application of the law are generally not reversible unless record shows willful inattentiveless to governing law or that arbitrator knew the law and explicitly disregarded it. Hollern, 458 F.3d at 1176.

         III. Analysis

         A. The Arbitrator's Conclusion that He Had Jurisdiction to Decide Whether the Agreement Permits Collective or Class Arbitration

         In analyzing his jurisdiction to determine the arbitrability of a class and collective proceeding under the Agreement, the arbitrator first correctly noted that while courts generally decide certain “gateway issues, ” the parties may agree to allow arbitrators to decide these issues if their arbitration agreement clearly and unmistakably indicates their intent to do so. See Award attached as Ex. 1 to Petition, p. 5. The arbitrator then determined that he had jurisdiction to decide whether the Agreement permits collective or class arbitrations because this question was not a “gateway issue” of whether the parties agreed to arbitrate a matter, i.e., a “question of arbitrability, ” but rather a question of what kind of arbitration proceeding the parties agreed to. Id. Alternatively, the arbitrator determined that he had jurisdiction to decide this issue because the parties clearly and unmistakably indicated their intent that he do so both in the language of the Agreement itself and by their incorporation of the AAA's National Rules for the Resolution of Employment Disputes (“Rules”). Id. at p. 6.

         I disagree with the arbitrator's conclusions that the question of whether the Agreement permits collective or class arbitration is not a question of arbitrability and that the parties clearly and unmistakably indicated their intent that the arbitrator decide this question in the language of the Agreement itself. Nonetheless, because I agree with the arbitrator's conclusion that the parties clearly and unmistakably indicated their intent that he decide whether the Agreement permits collective or class arbitration through their incorporation of the AAA's Rules into the Agreement, I conclude that he did not exceed his powers in deciding this question.

         1. Questions ...


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