Folse v. Richard Wolf Med

• Court: Court of Appeals for the Fifth Circuit
• Decided: January 20, 1998
• Docket: 97-30726
• Status: Unpublished

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 97-30726

Summary Calendar ____________________

RON FOLSE,

Plaintiff-Appellant,

v.

RICHARD WOLF MEDICAL INSTRUMENTS CORPORATION; ET AL,

Defendants,

RICHARD WOLF MEDICAL INSTRUMENTS CORPORATION,

Defendant-Appellee.

_________________________________________________________________

Appeal from the United States District Court for the Eastern District of Louisiana (94-CV-1903-R) _________________________________________________________________ January 14, 1998 Before KING, HIGGINBOTHAM, and DAVIS, Circuit Judges.

PER CURIAM:*

Plaintiff-appellant Ron Folse appeals the district court’s

judgment confirming an arbitrator’s award. He contends that the

arbitrator committed misconduct and that he erred in his

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. application of the law and in his contract interpretation. We

affirm the judgment of the district court.

I. FACTUAL & PROCEDURAL BACKGROUND

From June 1976 until September 1991, plaintiff-appellant Ron

Folse worked for defendant-appellee Richard Wolf Medical

Instruments Corporation (“Wolf”) as a Manufacturer’s

Representative. Pursuant to a Sales Representative Agreement

(“Sales Agreement”), Folse solicited orders for medical equipment

in several Southern states. Wolf compensated Folse on a

commission and bonus basis. The Sales Agreement allowed either

party to terminate the contract without cause on ninety days’

written notice. It limited post-termination compensation to

commissions on orders that were received by Wolf prior to the

termination date, and it also provided that the outstanding

commissions would be paid only after Wolf received payment from

the customer. In addition, the Sales Agreement required

arbitration of all claims arising out of it.

On September 3, 1991, Folse informed Wolf in writing of his

immediate resignation and requested payment of the commissions

and bonuses that he believed Wolf owed him. In a letter dated

September 5, 1991, Wolf accepted Folse’s resignation and demanded

the return of its sample inventory. Thereafter, Wolf did not pay

Folse the money that he claimed was owed to him, and Folse did

not return the sample inventory to Wolf.

2 After one unsuccessful arbitration proceeding from which no

final award was issued, Folse filed suit against Wolf, the

American Arbitration Association, and the original arbitrator.

Wolf moved to compel a return to arbitration, and the district

court denied the motion. However, a panel of this circuit

reversed and remanded the matter with instructions to return to

arbitration.

On October 1, 1996, the parties participated in a second

arbitration before Arbitrator Terrell Harris. Harris issued an

award on October 30, 1996 that ordered Folse to return the sample

inventory to Wolf within thirty days or pay Wolf its value and

ordered Wolf to pay Folse $19,752 in commissions if Folse

returned the inventory on time. Folse filed a motion to stay

execution of and to vacate the arbitration award in the United

States District Court for the Eastern District of Louisiana. On

June 13, 1997, the district court denied Folse’s motion and

confirmed the arbitration award. Folse now appeals.

II. STANDARD OF REVIEW

We review a district court’s confirmation of an arbitration

award de novo. Gateway Techs., Inc. v. MCI Telecomms. Corp., 64

F.3d 993, 996 (5th Cir. 1995); Forsythe Int’l, S.A. v. Gibbs Oil

Co., 915 F.2d 1017, 1020 (5th Cir. 1990). However, the “district

court’s ‘review of an arbitration award is extraordinarily

narrow.’” Gateway, 64 F.3d at 996 (quoting Antwine v. Prudential

3 Bache Sec., Inc., 899 F.2d 410, 413 (5th Cir. 1990)). As a

result, the scope of our review is also highly circumscribed;

indeed, this circuit has held that reviewing courts must “defer

to the arbitrator[’s] resolution of the dispute whenever

possible.” Anderman/Smith Operating Co. v. Tennessee Gas

Pipeline Co., 918 F.2d 1215, 1218 (5th Cir. 1990). Pursuant to

the Federal Arbitration Act, 9 U.S.C. § 10, an arbitration award

shall not be vacated unless

(1) the award was procured by corruption, fraud, or undue means; (2) there is evidence of partiality or corruption among the arbitrators; (3) the arbitrators were guilty of misconduct which prejudiced the rights of one of the parties; or (4) the arbitrators exceeded their powers.

Gateway, 64 F.3d at 996 (citing Forsythe, 915 F.2d at 1020).

This circuit has consistently confirmed that “section 10 of the

Arbitration Act describes the only grounds upon which a reviewing

court may vacate an arbitration award.” McIlroy v. Painewebber,

Inc., 989 F.2d 817, 820 (5th Cir. 1993).

III. DISCUSSION

On appeal, Folse contends that the arbitration award should

be vacated because the arbitrator committed misconduct in not

explaining the basis for his award and in failing to await the

court reporter’s delivery of the transcript and documentary

evidence before issuing an award. Folse also claims that the

district court erred in finding that the award was rationally

inferable from the contract language and from the facts of the

4 case. We address each of these contentions in turn.

A. Arbitrator Misconduct

Folse contends that the award should be vacated because the

arbitrator did not fully explain the award. As the district

court explained, this circuit has consistently held that

arbitrators are generally not “‘required to disclose or explain

the reasons that underlie their decision.’” Houston Lighting &

Power Co. v. International Bhd. of Elec. Workers, Local Union No.

66, 71 F.3d 179, 186 (5th Cir. 1995) (quoting Anderman/Smith, 918

F.2d 1219 n.3), cert. denied, 117 S. Ct. 52 (1996); see also

Valentine Sugars, Inc. v. Donau Corp., 981 F.2d 210, 214 (5th

Cir. 1993) (“Arbitrators need not provide reasons for their

awards.”); Antwine, 899 F.2d at 412 (holding that arbitrators

need not “disclose or explain the reasons underlying an award”).

Thus, we find no error in the arbitrator’s failure to detail the

reasons underlying his award.

Folse also contends that the award should be vacated because

the arbitrator issued it without waiting for the court reporter

to deliver the hearing transcript or the documentary evidence

presented at the hearing. It is well-settled that “[a]bsent

agreement of the parties, a written transcript of the

[arbitration] proceedings is unnecessary.” Bernhardt v.

Polygraphic Co. of Am., 350 U.S. 198, 204 n.4 (1955); see also

Glass v. Kidder Peabody & Co., 114 F.3d 446, 454 (4th Cir. 1997)

5 (citing the same language from Bernhardt, 350 U.S. at 204 n.4).

The Sales Agreement’s arbitration clause makes no mention of the

production of a written transcript of the arbitration

proceedings, and Folse has pointed to no evidence indicating that

such an agreement was ever made. The arbitrator was present

throughout the hearing, and he heard all of the testimony. As

there is no requirement that a transcript even be made, we cannot

say that it constitutes misconduct for the arbitrator to issue an

award prior to the production of the written transcript of the

hearing.

Finally, Folse claims that the award must be vacated because

the court reporter took the documentary exhibits and did not

return them. He therefore argues that the award was “arbitrary

and capricious,” and was, on its face, “issued without benefit

and consideration of the documentary evidence and of the hearing

record.”2 Folse failed to raise this argument before the

district court, and “‘[i]t is an unwavering rule in this Circuit

that issues raised for the first time on appeal are reviewed only

for plain error.’” Riley Stoker Corp. v. Fidelity & Guar. Ins.

Underwriters, Inc., 26 F.3d 581, 589 (5th Cir. 1994) (quoting

McCann v. Texas City Ref., Inc., 984 F.2d 667, 673 (5th Cir.

2 We note that Wolf disputes Folse’s claim that the court reporter took the exhibits, and it is not possible to determine what happened from the record before this court. Nevertheless, for purposes of this appeal, we assume that the arbitrator did not have the exhibits when he issued his award.

6 1993)). In order for an appellant to prevail under this level of

scrutiny, he must show the following: “(1) that an error

occurred; (2) that the error was plain, which means clear or

obvious; (3) the plain error must affect substantial rights; and

(4) not correcting the error would ‘seriously affect the

fairness, integrity, or public reputation of judicial

proceedings.’” Highlands Ins. Co. v. National Union Fire Ins.

Co., 27 F.3d 1027, 1032 (5th Cir. 1994) (quoting United States v.

Olano, 507 U.S. 725, 736 (1993), and holding that “‘[t]he

principles and decision enunciated in Olano apply a fortiori in

the civil context’” (quoting Smith v. Gulf Oil Co., 995 F.2d 638,

646 (6th Cir. 1993))).

It is undisputed that the arbitrator was present throughout

the hearing at which the documentary evidence was introduced. As

he had the opportunity to consider the relevance of each piece of

evidence at the hearing, we cannot say that his decision to issue

an award without further review of the evidence constituted plain

error.

B. Substantive Claims

Folse raised four substantive claims before the district

court, each of which he reiterates before this court. First,

Folse argues that the arbitrator misinterpreted the Illinois

Sales Representative Act (“Sales Act”), 820 ILL. COMP. STAT. 120/3

(West 1990), which he claims “provides for mandatory penalties

7 under these circumstances.”3 However, Illinois courts have held

that in order to recover such damages under the Sales Act, a

complainant must show “culpability that exceeds bad faith.”

Maher & Assocs., Inc. v. Quality Cabinets, 640 N.E.2d 1000, 1008

(Ill. App. Ct. 1994). As the district court correctly

determined, the arbitrator reasonably could have found, from the

evidence presented at the arbitration hearing, that the Sales Act

was not applicable because Wolf’s conduct was not sufficiently

culpable to trigger it.

Folse’s second, third, and fourth arguments about the

substance of the award all relate to the arbitrator’s

interpretation of the Sales Agreement. It is well settled that

courts may not vacate arbitration awards based on alleged errors

in contract interpretation. See, e.g., United Paperworkers Int’l

Union v. Misco, Inc., 484 U.S. 29, 38 (1987) (“The arbitrator may

not ignore the plain language of the contract; but the parties

3 The statute reads as follows:

A principal who fails to comply with the provisions of Section 2 concerning timely payment or with any contractual provision concerning timely payment of commissions due upon the termination of the contract with the sales representative, shall be liable in a civil action for exemplary damages in an amount which does not exceed 3 times the amount of the commissions owed to the sales representative. Additionally, such principal shall pay the sales representative’s reasonable attorney’s fees and court costs.

820 ILL. COMP. STAT. 120/3 (West 1990).

8 having authorized the arbitrator to give meaning to the language

of the agreement, a court should not reject an award on the

ground that the arbitrator misread the contract.”); United Food &

Commercial Workers v. National Tea Co., 899 F.2d 386, 389 (5th

Cir. 1990) (“It is not for the courts to agree or disagree with

[the arbitrator’s] interpretation. That it was a contract

interpretation is clear, and we have no authority to disturb

it.”). In addition, where the basis for the award can be

inferred from the underlying contract, the reviewing court must

affirm the award “even if it does not agree with the

arbitrator[’s] interpretation of the contract.” Anderman/Smith,

918 F.2d at 1218. We agree with the district court that the

testimony and evidence introduced at the hearing was sufficient

to render the arbitrator’s award rationally inferable from the

contract language and the facts of the case.

IV. CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the

district court.