ARBITRATION BETWEEN WINKELMAN v. Kraft Foods, Inc.

2005 WI App 25, 693 N.W.2d 756, 279 Wis. 2d 335, 2005 Wisc. App. LEXIS 76
CourtCourt of Appeals of Wisconsin
DecidedJanuary 27, 2005
Docket03-2355
StatusPublished
Cited by7 cases

This text of 2005 WI App 25 (ARBITRATION BETWEEN WINKELMAN v. Kraft Foods, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
ARBITRATION BETWEEN WINKELMAN v. Kraft Foods, Inc., 2005 WI App 25, 693 N.W.2d 756, 279 Wis. 2d 335, 2005 Wisc. App. LEXIS 76 (Wis. Ct. App. 2005).

Opinions

DEININGER, EJ.

¶ 1. John Winkelman appeals a judgment that confirmed his right to recover compensatory damages awarded him by an arbitrator but denied his recovery of punitive damages and attorney fees that the arbitrator also awarded. Kraft Foods, Inc., cross-appeals, claiming that the circuit court should have set aside the arbitrator's award in its entirety. We conclude that the arbitrator did not exceed her powers or perversely misconstrue the law in awarding Winkel-man the amounts that she did. Accordingly, all aspects of the arbitration award should have been confirmed. We therefore affirm in part, reverse in part and direct that, on remand, judgment be entered in Winkelman's favor for compensatory and punitive damages, and for attorney fees, all as awarded by the arbitrator. We deny, however, Winkelman's request for an order requiring Kraft to pay his reasonable attorney fees for the post-arbitration litigation.

BACKGROUND

¶ 2. The dispute in this case arose out of a forward pricing contract whereby Winkelman agreed to sell "the entire output of milk" produced on his farm to Kraft, at a price determined under the contract, for a period of one year. The contract provided, among other things, that disputes arising under the parties' contract were to be arbitrated. The arbitration provision read as follows:

Any disputes arising under this agreement will be resolved by binding arbitration pursuant to the rules of [341]*341the American Arbitration Association, before a single arbitrator, in a mutually convenient location in the State of Wisconsin.

¶ 3. Early in the contract year, milk prices rose substantially, and Winkelman sought to be released from the contract. Kraft refused to cancel the contract, threatening to sue him for damages if he breached the contract and to sue any milk purchasers who bought his milk during the balance of the contract year. Winkel-man continued to provide all of his milk to Kraft for the remainder of the contract year, but he demanded arbitration of his claim that Kraft should have allowed him to terminate the contract for a minimal penalty when he requested it. Specifically, he alleged the following:

The Nature of the Dispute: We were told by [Kraft's agent] that if price of milk dropped [sic] we could quit shipping milk to Kraft. We would lose 1 months [sic] premiums & that would be that. He lied to get us to sign.
The Claim for Relief Sought: $45,237.37 plus Nov & Dec milk.

¶ 4. In a preliminary ruling, the arbitrator allowed Winkelman to amend his claim to add requests for punitive damages and reasonable attorney fees in addition to compensatory damages. The arbitrator permitted the amendment after concluding that Winkelman's additional claims were permitted under "the language of the parties' Contract, the provisions of the AAA [American Arbitration Association] Commercial Arbitration Rules . .. and ... Wisconsin Statutory law which permit the awarding of attorneys fees and costs where the making of fraudulent representations has been proven and an award of punitive damages in certain cases." The parties stipulated to compensatory [342]*342damages in the amount of $44,056.68 should Winkel-man prevail on his claim that Kraft fraudulently induced him to enter into the forward pricing contract.

¶ 5. The arbitrator found that Kraft's agent had in fact misrepresented to Winkelman and other farmers that "they could get out of the contract with one month's penalty." She concluded:

The evidence and testimony in this case supports a conclusion that. .. [an] agent and employee of Kraft Foods, Inc., misrepresented the Kraft forward pricing contract for 2001 to the Claimant. Mr. Winkelman relied upon [the agent]'s representations to his detriment and is, therefore, entitled to be made whole for his loss. He is entitled to an award for his attorney's fees and all costs of this arbitration. There is also support for a conclusion that various Kraft employees, on behalf of the Corporation, acted in reckless disregard of Mr. Winkelman's rights under his contract with Kraft, supporting an award of punitive damages in this case. The Contract between the parties, the Rules which apply to the conduct of this matter together with Wisconsin statutory and case law provide the Arbitrator with authority to make these awards.

As to her authority to award attorney fees, the arbitrator cited the AAA Rules agreed to by the parties, which provide for "an award of attorneys' fees if. .. it is authorized by law," and Wis. Stat. § 100.18(ll)(b) (2003-04),1 which permits "reasonable attorney fees" to be awarded to someone who incurs pecuniary loss because of a violation of that statute. Regarding punitive damages, the arbitrator relied on the arbitration rule authorizing her to "grant any remedy or relief that [343]*343the arbitrator deems just and equitable and within the scope of the agreement of the parties," and the absence of any Wisconsin law prohibiting an award of punitive damages in arbitration proceedings.

¶ 6. The arbitrator granted Winkelman the stipulated sum ($44,056.68) as compensatory damages, double that amount ($89,313.36 [sic]) as punitive damages, his costs ($5,750), and attorney fees in the amount of $27,333.95. Winkelman commenced an action in Dane County Circuit Court to confirm the arbitrator's award. The circuit court confirmed the compensatory damage award but concluded that the arbitrator "exceeded her authority in awarding attorneys' fees. .. pursuant to Wis. Stat. § 100.18" and "in awarding punitive damages." The court entered judgment in Winkelman's favor for the compensatory damages and costs the arbitrator had awarded, together with interest "at the legal rate of 5 percent" from the date of the arbitrator's awards. Winkelman appeals the circuit court's failure to confirm the punitive damages and attorney fees awards, and Kraft cross-appeals the court's confirmation of the compensatory damage award.

ANALYSIS

¶ 7. We review the arbitrator's award de novo and decide independently whether the arbitrator's award should be confirmed in whole or in part, owing no deference to the circuit court's conclusions. See City of Madison v. Local 311, Int'l Ass'n of Firefighters, AFL-CIO, 133 Wis. 2d 186, 190, 394 N.W.2d 766 (Ct. App. 1986). Our review of an arbitration award is highly deferential; we may disturb the award only if we conclude the arbitrator committed one of a limited [344]*344number of transgressions. See City of Madison v. Madison Prof'l Police Officers Ass'n, 144 Wis. 2d 576, 586, 425 N.W.2d 8 (1988) ("[T]he court will not overturn the arbitrator's decision for mere errors of law or fact, but only when 'perverse misconstruction or positive misconduct [is] plainly established, or if there is a manifest disregard of the law, or if the award itself is illegal or violates strong public policy.'") (citation omitted).

¶ 8. Thus, we are not to substitute our judgment for that of the arbitrator,

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ARBITRATION BETWEEN WINKELMAN v. Kraft Foods, Inc.
2005 WI App 25 (Court of Appeals of Wisconsin, 2005)

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2005 WI App 25, 693 N.W.2d 756, 279 Wis. 2d 335, 2005 Wisc. App. LEXIS 76, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arbitration-between-winkelman-v-kraft-foods-inc-wisctapp-2005.