Craddock v. LeClairRyan

MICHELE BURKE CRADDOCK, Plaintiff, v. LECLAIRRYAN, A PROFESSIONAL CORPORATION Defendant.

Civil Action No. 3:16-cv-11

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division

June 11, 2019

MEMORANDUM OPINION

This matter is before the Court is PLAINTIFF'S AMENDED MOTION TO CONFIRM ARBITRATION AWARD (ECF No. 25), LECLAIRRYAN'S MOTION TO CORRECT AND VACATE PORTION OF ARBITRATION AWARD (ECF No. 27), and LECLAIRRYAN'S MOTION TO SEAL ARBITRATION AWARDS (ECF No. 29).¹ For the following reasons, the arbitration panel's Revised Final Award (ECF No. 26-1) will be vacated, the case will be remanded to the arbitration panel to properly apply the Supreme Court's clear precedent on fee enhancements, and the Initial Final Award (ECF No. 22-1) and the Revised Final Award (ECF No. 26-1) (collectively, the "Awards") will be unsealed.

BACKGROUND

Michele Burke Craddock ("Craddock") was a shareholder at LeClairRyan, P.C. ("LeClairRyan"). She brought the current action against LeClairRyan for sex-based employment discrimination and retaliation in response to reporting that discrimination, in violation of Title VII of the Civil Rights Act of 1964, of the Lilly Ledbetter Fair Pay Act, and of the Equal Pay Act. She alleged that LeClairRyan systemically discriminates against women by failing to give them equal compensation or the same promotion opportunities as men and that LeClairRyan discriminated against her specifically by not equally compensating or promoting her. See generally Complaint (ECF No. 1).

In a previous MEMORANDUM OPINION and ORDER (ECF Nos. 14 and 15), the Court denied Craddock's MOTION TO STAY ARBITRATION (ECF No. 3) and granted LeClairRyan's MOTION TO DISMISS AND TO COMPEL ARBITRATION (ECF No. 7). Afterward, the United States Court of Appeals for the Fourth Circuit dismissed an appeal of that decision for lack of appellate jurisdiction. Per Curiam Opinion (ECF No. 18).

The parties proceeded to arbitration on Craddock's claims. The arbitration hearing occurred from January 15, 2018 to January 26, 2018, and the panel issued its interim award on June 15, 2018. Following briefing on the issues of attorney's fees and costs, thearbitration panel issued the Initial Pinal Award (ECF No. 22-1) on September 28, 2018.

In the Initial Final Award, the arbitration panel held that Craddock had not shown a violation of the Equal Pay Act; that LeClairRyan intentionally discriminated against Craddock based on her sex in her 2014 compensation, in violation of Title VII; and that LeClairRyan did not intentionally discriminate against Craddock in her 2015 compensation. The panel awarded Craddock $274,748.00 for LeClairRyan's Title VII violation. Further, it held that Craddock suffered emotional distress as a result of the intentional sex discrimination in the amount of $20,000. The panel also awarded Craddock's attorney's fees in the amount of $701,076.41 plus interest at a rate of 6% from the date of the Initial Final Award until the amount was paid in full. To come to that amount, the arbitration panel said that: (1) the lodestar analysis—which is determined by multiplying the number of reasonable hours expended by the attorneys times a reasonable rate-dictated an amount of $769,050.50 in attorneys' fees; (2) Craddock's attorneys' fees should be reduced to $678,899.50 because Craddock unnecessarily pursued a deposition of a witness and unsuccessfully tried to have her dispute determined in federal court; (3) the attorneys' fees should be reduced by a further 20% to $543,099.60 due to their lack of success on Craddock's Equal Pay Act claims and her Title VII retaliation claim; and (4) anincrease to the attorneys' fee award of 25% to $701,076.41 was appropriate due to Craddock's attorneys' success.

Craddock filed PLAINTIFF'S MOTION TO CONFIRM ARBITRATION AWARD (ECF No. 21). Afterward, the parties discovered certain calculation errors in the final award that needed correction, so Craddock filed a motion to correct the final award before the arbitration panel and PLAINTIFF'S NOTICE OF PANEL MOTION TO CORRECT FINAL AWARD (ECF No. 23) in this Court to advise the Court of the potential change to the final award. LeClairRyan joined Craddock's motion before the arbitration panel, and it filed a motion with the arbitration panel to modify the form of the final award so that some of the factual and legal analysis of the arbitration panel remained confidential. See generally LECLAIRRYAN'S CONFIDENTIAL MOTION TO MODIFY FORM OF FINAL AWARD (ECF No. 26-8).

On October 18, 2018, the arbitration panel issued a unanimous Revised Final Award (ECF No. 26-1), which awarded Craddock: (1) damages in the sum of $274,746.00 for backpay plus interest at a rate of 6% from January 1, 2015 until payment; (2) compensatory damages in the amount of $20,000 plus interest at a rate of 6% from January 1, 2015 until payment; (3) attorneys' fees in the sum of $678,151.50 plus interest at a rate of 6% from the date of the Revised Final Award until payment; and (4) costs in the amount of $48,492.64 plus interest at a rate of 6% from the date of the Revised Final Award until payment. The panel also deniedLECLAIRRYAN'S CONFIDENTIAL MOTION TO MODIFY FORM OF FINAL AWARD (ECF No. 26-8), thereby holding that the final award would not be redacted or otherwise deemed confidential.

DISCUSSION

A. The Revised Final Award Shall Be Modified to Reflect the Correct Calculations.

LeClairRyan's first argument is that the arbitration panel's revised award should be modified to correct certain calculations. LeClairRyan alleges that, although the arbitration panel came to the correct final mathematical calculation for attorneys' fees ($678,151.50) based on the approach used (which LeClairRyan says was wrong), the arbitration panel's calculations leading up to that final award were incorrect. Specifically, the arbitration panel miscalculated by stating: (1) $769,050.50 minus $90,899.00 equaled a lodestar amount of $678,899.50, rather than the correct amount of $678,151.50 (a difference of $748); (2) a 20% reduction of the lodestar amount equaled $543,099.60 instead of $542,521.20; and (3) a 25% increase of that reduced lodestar amount equaled $701,076.31.

Craddock argues that the parties have already addressed the issue with the arbitration panel, that the parties have agreed to the revised calculations and total award amounts, and that the panel clearly adopted the parties revised calculations and total award amounts in the Revised Final Award. LECLAIRRYAN'S MEMORANDUMIN SUPPORT OF MOTION TO SEAL ARBITRATION AWARDS (ECF No. 30) at 3. LeClairRyan joined in Craddock's previous motion to correct computational errors. Id. at 4. But, Craddock acknowledges that the panel did not correctly calculate the various equations based on the arbitration panel's adjustments even though it changed the backpay and attorney's fee awards. Id.

Under 9 U.S.C. § 11, a court "may make an order modifying or correcting the award upon the application of any party to the arbitration . . . [w]here there was an evident material miscalculation of figures." Here, although the final amount is correct, the arbitration panel's award contains multiple miscalculations. The Court will order that the above-stated calculations will be modified to the correct amounts listed above, as to which there is no dispute.

B. The Arbitration Panel's Enhancement Manifestly Disregarded Clear Supreme Court Precedent.

LeClairRyan's next argument is that the Revised Final Award (ECF No. 26-1) should be vacated because the arbitration panel manifestly disregarded the applicable law that controls an award of attorney's fees. The Court holds that the Revised Final Award must be vacated because the arbitration panel disregarded clear Supreme Court precedent.

To vacate a panel award for manifest disregard of the law, a reviewing court must find "(1) the applicable legal principle isclearly defined and not subject to reasonable debate; and (2) the arbitrator[] refused to heed that legal principle." Wachovia Sec., LLC v. Brand, 671 F.3d 472, 481 (4th Cir. 2012) (alteration in original) (quoting Long John Silver's Rests., Inc. v. Cole, 514 F.3d 345, 349-50 (4th Cir. 2008)). Because, "[t]he scope of judicial review of an arbitration award 'is among the narrowest known at law,'" UBS Fin. Servs., Inc. v. Padussis, 842 F.3d 336, 339 (4th Cir. 2016) (quoting Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d 188, 193 (4th Cir. 1998)), proving manifest disregard requires something more than "showing that the arbitrators misconstrued the law, especially given that arbitrators are not required to explain their reasoning." Brand, 671 F.3d at 481. "[I]t is not an invitation to review the merits of the underlying arbitration." Id. at 483. Nor is it used to establish that an arbitrator either misconstrued or misapplied the applicable law. Jones v. Dancel, 792 F.3d 3 95, 402 (4th Cir. 2015). The scope of review means that a court "is limited to determine whether the arbitrators did the job they were told to do-not whether they did it well, or correctly, or reasonably, but simply whether they did it." Three S Del., Inc. v. DataQuick Info. Sys., Inc., 492 F.3d 520, 527 (4th Cir. 2007) (quoting Remmey v. PaineWebber, Inc., 32 F.3d 143, 146 (4th Cir. 1994)).

LeClairRyan argues that this case presents an arbitration panel that has manifestly disregarded the law because the panelenhanced Craddock's attorney's fee by 25% when she lost on multiple claims. The panel said,

In its analysis, the Panel looks to the [Johnson v. Georgia Highway Express Inc., 488 F.2d 714 (5th Cir. 1974)] factors that relate to the skill required of the attorneys who prosecuted this case, their opportunity costs in pressing the instant litigation, and the undesirability of this case within the legal community. Craddock chose to prosecute gender discrimination claims against the law firm where she was a female partner. Her case was unique, presenting difficult

...