First Fed. Fin. Corp. v. Carrion-Concepcion

FIRST FEDERAL FINANCE CORP. D/B/A MONEY EXPRESS;

FIRSBANK PUERTO RICO, Petitioner, v. HIRAM CARRION-CONCEPCION, Respondent.

HIRAM CARRION-CONCEPCION, Petitioner, v. FIRST FEDERAL FINANCE CORP. D/B/A MONEY EXPRESS;

FIRSBANK PUERTO RICO, Respondent.

Civil No. 14-1019 (SEC)

Civil No. 14-1522 (SEC)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

March 31, 2016

OPINION AND ORDER

The Court reiterates that "[t]his labor-arbitration action has 'destroyed the prospect of speedy resolution that arbitration in general and bilateral arbitration in particular was meant to secure.'" First Fed. Fin. Corp. v. Carrión-Concepción, 87 F. Supp. 3d 332, 333 (D.P.R. 2015) (quoting Am. Exp. Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2312 (2013)). The parties' procedural and legal strategies have unduly complicated what should have otherwise been a straightforward confirmation of an arbitral award. Indeed, three actions have been filed in federal court concerning this labor dispute.¹

Acknowledging, yet ignoring, the highly deferential standard applicable to judicial review of arbitral awards under the Federal Arbitration Act (FAA), the parties have cluttered the docket with oversized briefs, in a futile attempt to get this Court "to hear claims of factual or legal error by an arbitrator as an appellate court does reviewing decisions of lower courts." N. New England Tel. Operations LLC v. Local 2327, Int'l Bhd. of Elec. Workers, 735 F.3d 15, 20 (1st Cir. 2013). With the sole purpose of providing context, a brief summary of the facts, "as the arbitrator found them," follows. Boston Med. Ctr. v. Serv. Employees Int'l Union, Local 285, 260 F.3d 16, 18 (1st Cir. 2001).

I. Factual Background

Hiram Carrión started working as a debt collector for First Federal Finance Corp. d/b/a Money Express (FirstBank) on July 2007. The employment contract included a clause requiring arbitration on "any claim for alleged discrimination, breach of contract, damages or retaliation related with the termination" of Carrión's employment. Carrión-Concepción v. First Fed. Fin. Corp., Civil No. 10-1617, 2011 WL 5059192 at 2 (D.P.R. Aug. 3, 2011).

In late May 2009, Carrión complained that he was being sexually harassed by his supervisor, Elia Díaz. A week later, the branch manager, Marilda Poventud, ordered him to take a two-week vacation, pending an internal investigation. The officer in charge of the investigation, Javier López, concluded that while Díaz's conduct was unnecessary and reprehensible, it did not amount to sexual harassment.

Immediately after he returned from the forced vacation, López informed Carrión that, due to reasons unrelated to his sexual harassment complaint, he wasreassigned to another branch. He was given five days to accept the reassignment or else he would be fired. Unwillingly, he accepted.

At the new branch, Carrión's relationship with his supervisors Carmen Vega and Edgardo Alicea started off on the wrong foot. He resigned five months later following a series of incidents with his supervisors and other health issues, some of which, the Arbitrator found, were related to a hostile work environment. See generally, Docket # 1-9.

Pending before the Court are FirstBank's petition to vacate the award under FAA § 10, and Carrión's petition to modify the award pursuant FAA § 11, to include the doubling of damages under Puerto Rico law.² Both parties moved to dismiss the other's petition. Because FirstBank was unable shoulder its heavy burden to demonstrate that the arbitrator exceed her powers or otherwise acted in manifest disregard of the law and because Carrión filed its petition to modify the award after the three-month limitations period provided in FAA § 12, both petitions are DENIED. Moreover, because a motion to dismiss "a complaint to vacate or modify an award is functionally equivalent to a motion to confirm an award," the award is CONFIRMED in its entirety. Universal Ins. Co., Inc. v. Warrantech Consumer Prod. Servs., Inc., 849 F. Supp. 2d 227, 240 n. 9 (D.P.R. 2012) (citing General Elec. Co. v. Anson Stamping Co. Inc., 426 F.Supp.2d 579, 591-92 (W.D.Ky. 2006)); accord Sanluis Developments, L.L.C. v. CCP Sanluis, L.L.C., 556 F. Supp. 2d 329, 332 (S.D.N.Y. 2008) ("When a party moves to dismiss a motion to vacate an arbitration award, the court may, sua sponte, treat the motion to dismiss as a motion to confirm the award." (Collecting cases on this point)).

II. Standard of Review

The FAA "embodies a national policy favoring arbitration." Bangor Gas Co., LLC v. H.Q. Energy Servs. (U.S.) Inc., 695 F.3d 181, 187 (1st Cir. 2012) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, (2006). Accordingly, judicial review of arbitral awards "is extremely narrow and exceedingly deferential." Raymond James Fin. Servs., Inc. v. Fenyk, 780 F.3d 59, 63 (1st Cir. 2015). Indeed, it is "among the narrowest known in the law." Id. (quoting Me. Cent. R.R. Co. v. Bhd. of Maint. of Way Emps., 873 F.2d 425, 428 (1st Cir. 1989)).

This exacting standard makes arbitral awards "nearly impervious to judicial oversight." UMass Mem'l Med. Ctr., Inc. v. United Food And Commercial Workers Union, 527 F.3d 1, 4 (1st Cir. 2008). This is so because courts "do not sit to hear claims of factual or legal error by an arbitrator as an appellate court does reviewing decisions of lower court." N. New England Tel. Operations, 735 F.3d at 20.

For a court to vacate an arbitral award, "[i]t is not enough for [a party] to show that the panel committed an error[,] or even a serious error." Raymond James, 780 F.3d at 63 (quoting Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp., 559 U.S. 662, 671(2010)). "[A]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision." United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38 (1987). An arbitration ruling may be deemed unenforceable "only if it imposes the arbitrator's 'own view of sound policy' instead of adhering to the agreement that governs the parties' relationship." Raymond James, 780 F.3d at 64. (quoting Stolt-Nielsen, 559 U.S. at 672).

That is not to say that the limited scope of review amounts to "granting limitless power to the arbitrator." Doral Fin. Corp. v. García-Veléz, 725 F.3d 27, 31 (1st Cir. 2013). The FAA enumerates several grounds upon which an award may be vacated or modified. Under § 10, a court may vacate an award

(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.

9 U.S.C. § 10. Section 11, allows a federal court to modify or correct an award

(a) 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.

(b) where the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted.

(c) where the award is imperfect in matter of form not affecting the merits of the controversy.

Id., § 11.

Some courts, including the First Circuit, have held that arbitral awards may also be vacated "if they are in 'manifest disregard of the law,' a ground not explicitly included in section 10." Raymond James, 780 F.3d at 64. This standard is applied primarily in cases "where the award contradicted unambiguous contract language or 'the arbitrator recognized the applicable law, but ignored it." Id. (internal citations omitted). Whether the manifest disregard doctrine remains an independent ground for vacatur after the Supreme Court's decision in Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 590, (2008),³ however, is uncertain. Raymond James, 780 F.3d at 64. In that case, the Supreme Court held in no uncertain terms that the regimes of judicial review provided in §§ 10 and 11 of the FAA were exclusive, and may not beexpanded by contract. Hall Street, 552 U.S. at 586; see also Warrantech, 849 F. Supp. 2d 227, 237 n. 7. Still, the First Circuit has yet to determine whether its "manifest disregard case law can be reconciled with Hall Street." Raymond James, 780 F.3d at 64-65 (parenthetically quoting Stolt-Nielsen, 559 U.S. at 672 n. 3, where the Supreme Court refrained "from deciding whether 'manifest disregard' survived Hall Street 'as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10'"); see also Bangor Gas Co., 695 F.3d at 187 n. 3 (noting a circuit split on this issue and listing cases).

The Court need not decide whether the manifest disregard doctrine remains good law because "even assuming the doctrine remains available, it would not invalidate the award in this case." Raymond James, 780 F.3d at 65.

III. Analysis

FirstBank first challenges the Arbitrator's conclusion that Carrión was victim of sexual harassment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq.

Title VII provides two theories under which an employee may prove a claim for sexual harassment. Under the quid pro quo theory, a claimant may recover "where an employee or supervisor uses his or her superior position to extract sexual favors from a subordinate employee, and if denied those favors, retaliates by taking action adversely affecting the subordinate's employment." O'Rourke v. City of Providence, 235 F.3d 713, 728 (1st Cir. ...