UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA PORT OF VANCOUVER USA, CASE NO. 3:24-cv-06033-DGE Plaintiff, ORDER GRANTING MOTION TO v. CONFIRM ARBITRATION AWARD (DKT. NO. 24) AND BNSF RAILWAY COMPANY, DENYING MOTION TO VACATE (DKT. NO. 21) Defendant.
Before the Court are cross-motions to confirm an arbitration award (Dkt. No. 24) or to vacate the same (Dkt. No. 21.) This case concerns a dispute between the Port of Vancouver USA (“POV”) and BNSF Railway Company (“BNSF”), regarding the rates BNSF charges to other railways that use POV facilities, and related issues. In a previous iteration of this case, this Court dismissed an action seeking to enforce an arbitral award, finding that the Panel’s decision was too ambiguous for judicial enforcement. Port of Vancouver USA v. BNSF Ry. Co., 717 F. Supp. 3d 1016 (W.D. Wash. 2024). On remand, the Parties agreed on questions to be answered by the Panel in response to the Court’s order, and the Panel issued a new opinion, over a dissent. (See Dkt. No. 27 at 7–8.) BNSF now argues that the Panel exceeded the scope of this Court’s leave to remand, while POV argues that the Panel appropriately addressed the issues raised in the Court’s prior order. The Court agrees with POV that the Panel acted within the scope of this
Court’s remand order, and accordingly GRANTS the motion to confirm and DENIES the motion to vacate. In 2008, POV and BNSF entered into a contract, the West Vancouver Freight Access and Industrial Track Agreement (“WVFAA”) that designates BNSF as the “Exclusive Rail Operator” at POV. (Dkt. No. 21 at 7.) The contract contains a mandatory arbitration clause, and since 2020, the Parties have been arbitrating a series of disputes. (Id.) There are three discreet issues in dispute here: 1) the rates that BNSF charges to competitor railways, namely Union Pacific (“UP”), for access to POV, 2) the geographic areas in which those rates apply, and 3) BNSF’s placement of “alien cars”—meaning “BNSF rail cars not destined for, or originating from, Port
tenants”—on POV property. (Id.) An arbitration Panel issued a Partial Final Award on May 9, 2022 and a Final Award on December 19, 2022, which were confirmed by stipulation. Port of Vancouver USA v. BNSF Ry. Co, Case No. 3:23-cv-05109-JNW, Dkt. Nos. 19-1, 19-2, 20 (W.D. Wash. June 7, 2023) (“Port of Vancouver I”). Two weeks later, POV brought suit seeking enforcement of the judgment based on BNSF’s alleged noncompliance. Port of Vancouver USA, 717 F. Supp. 3d at 1020. This Court dismissed the enforcement action, holding that the arbitration Panel’s decision was ambiguous as to each of the disputed issues. As to rates, the Panel stated it was “‘not prepared to act as a rate-setting board’ and imposed only a ‘requirement that BNSF offer to UP
customers switching rates no greater than rates BNSF offers to its own linehaul customers bringing comparable quantities and characteristics of freight under similar conditions.’” Id. at 1024. The Panel “expected the Port and BNSF to develop a mutually satisfactory schedule of rates.” Id. (alteration omitted). But the Court noted that “[t]he Panel's comments of what it
‘expects’ and what BNSF ‘could’ do provide little to work with in terms of concrete instructions.” Id. Because “[t]his commentary contains no standard or calculation capable of application with amount of certainty” the Court could not enforce it. Id. at 1025. As to the second issue, the Panel noted that the WVFAA “appears to contemplate competitive access to the entire Port (with the exceptions noted in Article III § 3 A (iii))” but it failed to address whether areas other than Terminals 4 and 5 were included within this access, did not interpret the exceptions in the agreement, and “fail[ed] to define ‘access’ in any measurable way.” See id. (emphasis omitted). As to the final issue, the Panel ordered BNSF to pay a rate of $7 per car for storage of alien cars on POV property, but failed to specify whether the rate applied prospectively, and “did not say whether the presence of any alien car violates the
agreement.” Id. at 1026. On these grounds, the Court dismissed POV’s enforcement action, for the parties to resolve the outstanding issues through further arbitration. See id. After this Court’s order, the Parties designated three questions to be answered by the arbitration Panel on remand: 1.1 How to determine what constitutes a reasonable and customary rate for … Commercial Access; 1.2 What did the Panel mean by “access to the entire Port (with the exceptions noted in Article III § 3 A (iii),” and whether that included “shippers located at Terminals 2 and 3;” and 1.3 Whether, under what circumstances, and to what extent BNSF is permitted to bring [alien] rail cars on to Port property,” and if so “was the $7 per car damages established by the Panel intended to apply prospectively.” (Dkt. No. 27 at 7–8.) The Panel consisted of three members, two of whom were party arbitrators selected by each of the Parties, respectively, and the third jointly selected as Panel chair. (Dkt. No. 25 at 1.) The same Panel issued both the initial opinion and the new decision on remand. (See Dkt. No. 21 at 27.) On December 12, 2024, the Panel issued a Statement of Reasons for Award Upon Remand (“2024 Remand Award”), addressing the issues designated by the Parties and the Court’s order. (See Dkt. No. 24-1.) As to rates, the Panel found that “BNSF has imposed notably higher rates for the Port compared to its competing Pacific coast ports. . . . The notably higher rates BNSF charges at the Port demonstrates that notwithstanding the Panel’s award, BNSF has continued the course that gave rise to the POV’s claims and which the final Award was intended to correct.” (Id. at 10.) The best measure of “reasonable and customary rates” is the rate schedule that BNSF charges at other Pacific coast ports, which is Switching Book 8005- E. (Id.) The Panel further noted that “BNSF’s imposition of substantially higher rates at the Port as opposed to those charged at competing ports removes any doubt that POV’s contentions about BNSF’s discriminatory conduct are well taken.” (Id. at 13.) Therefore, the Panel held: [T]he terms of the WVFAA require BNSF to offer switching rates to UP shippers at the Port consistent with such rates charged to UP shippers at other nearby Pacific Coast ports. For this purpose, the Switching Book 8005-E rates for those ports shall be presumed reasonable and customary and applied by BNSF for commercial access to the Port from the date of confirmation of this Remand Award pending agreement by the Parties that adjustments are necessary to account for switching cost differences or competitive considerations relevant to the purposes of this award[.] (Id.) Anticipating that there would be further disputes as to rates requiring resolution, the Panel provided a mechanism to resolve those disputes: If the Parties, after good faith negotiations, cannot agree whether any adjustments to the Switching Book 8005-E rates are necessary to account for switching cost differences or competitive considerations relevant to the purposes of this award, the dispute, upon notice by either Party to the other, shall be finally settled by final offer arbitration. (Id., see also id. at 13–14 (specifying final offer arbitration process)). As to access, the Panel “clarifie[d] that the Final Award granted Commercial Access to all customers in the Port except those excluded by Section 3.A.(iii) (a), (b), or (c), when Exhibit F is read to apply only to Terminals 4 & 5.” (Id. at 15.) And as to alien cars, the Panel held that [T]he WVFAA does not permit BNSF to intentionally bring alien cars onto Port property or to store them there. The Panel’s statement in its Final Award that “some rail cars not destined for POV tenants may from time to time be included in switching cars” merely acknowledged that it was likely that alien cars would occasionally and inadvertently end up on Port property. The Panel did not intend the $7 per car rate established in the Final Award to apply after the date of the Final Award. Whatever remedy is available to the Port for BNSF’s advertent conveyance or storage of alien cars on Port Property after December 19, 2022 (the effective date of the final order) was not addressed by the Final Order.
(Id.) One member of the Panel, BNSF’s party appointee, dissented, arguing that the Panel impermissibly modified the prior Final Award, violating the doctrine of functus officio. (Id. at 17–18.) The majority reached its conclusions without citation to evidence, the dissent charged, and impermissibly fashioned a new remedy not agreed to by the parties. (Id. at 19–21.) In sum, “[t]he majority has not clarified the Panel’s prior Award, it has reversed it.” (Id. at 22.) Following the 2024 Remand Award, POV petitioned this Court for confirmation, while BNSF moved to vacate, and argues that the Court should remand to a new Panel. (See Dkt. Nos. 21, 24.) Under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 9, “at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.” Among those grounds for vacatur, BNSF invokes §10(a)(4), under which a district court should vacate the award “where the arbitrators exceeded their powers.” 9 U.S.C. §§ 10; (See Dkt. No. 21 at 14– 15.) However, the Court does not review an arbitral award de novo. Rather, “judicial review of
an arbitrator's decision ‘is both limited and highly deferential.’” Barnes v. Logan, 122 F.3d 820, 821 (9th Cir. 1997). “An award will not be set aside unless it manifests a complete disregard of the law. Thus, an award must be confirmed if the arbitrators even arguably construed or applied the contract and acted within the scope of their authority.” Id. (internal citation omitted). Likewise, the Court’s review of whether an arbitrator exceeded their authority is highly deferential. An arbitrator exceeds its authority “not when they merely interpret or apply the governing law incorrectly, but when the award is ‘completely irrational,’ or exhibits a ‘manifest disregard of law.’” Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 997 (9th Cir. 2003) (internal citations omitted). “An award is completely irrational ‘only where the arbitration decision fails to draw its essence from the agreement.’” Aspic Eng'g & Constr. Co. v.
ECC Centcom Constructors LLC, 913 F.3d 1162, 1166 (9th Cir. 2019) (quoting Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1288 (9th Cir. 2009)). “An arbitration award ‘draws its essence from the agreement’ if the award is derived from the agreement, viewed ‘in light of the agreement's language and context, as well as other indications of the parties’ intentions.’” Id. (quoting Bosack v. Soward, 586 F.3d 1096, 1106 (9th Cir. 2009)). In its motion for vacatur, BNSF further invokes a common law doctrine known as functus officio. (Dkt. No. 21 at 14.) Under this doctrine, “an arbitrator may not redetermine an arbitration award.” Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., AFL-
CIO, Loc. 631 v. Silver State Disposal Serv., Inc., 109 F.3d 1409, 1411 (9th Cir. 1997) (“Teamsters”). The rationale for this doctrine is that It is (a) fundamental common law principle that once an arbitrator has made and published a final award his authority is exhausted and he is functus officio and can do nothing more in regard to the subject matter of the arbitration. The policy which lies behind this is an unwillingness to permit one who is not a judicial officer and who acts informally and sporadically, to re-examine a final decision which he has already rendered, because of the potential evil of outside communication and unilateral influence which might affect a new conclusion. The continuity of judicial office and the tradition which surrounds judicial conduct is lacking in the isolated activity of an arbitrator[.] McClatchy Newspapers v. Cent. Valley Typographical Union No. 46, Int'l Typographical Union, 686 F.2d 731, 734 (9th Cir. 1982), amended sub nom. McCLATCHY NEWSPAPER v. LOCAL 46 (9th Cir. Sept. 22, 1982) (quoting La Vale Plaza, Inc. v. R. S. Noonan, Inc., 378 F.2d 569, 572 (3d Cir. 1967)). But the Ninth Circuit recognizes three exceptions to functus officio: “It has been recognized in common law arbitration that an arbitrator can correct a mistake which is apparent on the face of his award, complete an arbitration if the award is not complete, and clarify an ambiguity in the award.” Teamsters, 109 F.3d at 1411 (quoting McClatchy, 686 F.2d at 734 n.1). The second exception, completion, “applies when an arbitration award fails to resolve an issue or ‘specify the remedy in definite terms.’” Id. The third exception, ambiguity, “applies when ‘the award, although seemingly complete, leaves doubt whether the submission has been fully executed.’” Id. (quoting La Vale Plaza, 378 F.2d at 573.) Some courts have “comingled” these two exceptions. Id. IV ANALYSIS A. The Ambiguity Exception to the Functus Officio Doctrine Applies BNSF advances a global argument, that the Panel violated the doctrine of functus officio by redetermining matters that had already been determined in the 2022 Final Award. (Dkt. No. 21 at 14, 16–17.) The Court disagrees. First, the ambiguity exception to functus officio applies here. As noted supra, the Ninth Circuit recognizes such an exception. Teamsters, 109 F.3d at 1411. In a case strikingly similar to this matter, the Second Circuit recently held that the ambiguity exception applies. Smarter Tools Inc. v. Chongqing SENCI Imp. & Exp. Trade Co.,
57 F.4th 372, 381 (2d Cir. 2023). In that case, the district court held that the arbitrator “exceeded his authority in issuing an award that does not meet the standard of a reasoned opinion” and thus remanded “to the arbitrator for clarification of his findings.” Id. at 377–378. After remand, the parties filed cross motions to confirm or vacate the award, and the district court confirmed, finding that the amended award provided rationale for its findings. Id. at 378. The Second Circuit affirmed, holding that “remand in such circumstances [does not] undermine the functus officio doctrine's purpose, which is to prevent arbitrators from changing their rulings after issuance due to outside influence by an interested party.” Id. at 381. Rather, “the rationale for a remand under these circumstances is consistent with this Circuit's exception to the functus officio doctrine for remand of an ambiguous award for clarification.” Id. The Court held that the
arbitrator clarified the award “consistent with the parties’ intent that the arbitrator issue a reasoned award,” and rejected arguments for vacatur under FAA § 10(a)(4) and § 11. Id. at 381– 383. So too here, it would strain credulity to say that the arbitrator exceeded its authority by redetermining issues previously decided, and was subject to improper influence, when it was responding to an order of this Court requiring it to add specificity to an order that had been too vague and indefinite. To the contrary, it is unclear how the arbitration Panel on remand could have responded to this Court’s order, and answered the questions posed by the Parties, without revisiting the prior award to some extent. To apply functus officio here would put the arbitrator
into a Catch-22: one decision of this Court would hold that the arbitrator’s award was too indefinite to enforce, another would hold that the arbitrator’s decision cannot be effectively amended. The Court will not impose that result. B. The Arbitrator Did Not Exceed Its Authority By Setting Rates or Providing a
Dispute Resolution Process Next, BNSF attacks the Panel’s 2024 Remand Award as to rate setting, arguing that “by imposing specific presumptive rates, the majority substantively reversed its prior determination rejecting the Port’s request to impose exactly those rates and finding that it was ill equipped to set rates.” (Dkt. No. 21 at 17.) BNSF argues the Panel further “exceeded its powers by mandating a new arbitration process to resolve rate disputes, despite having expressly disclaimed authority to do so in the Final Award, and notwithstanding the existing arbitration clause to which the parties agreed.” (Id.) The Court disagrees. In the 2022 Final Award, the Panel required “BNSF [to] promptly create a schedule of the various applicable reasonable and customary switching rates to be charged,” but it did not set
a schedule of rates. Port of Vancouver USA, 717 F. Supp. 3d at 1021. Rather, the Panel “expected the Port and BNSF to develop a mutually satisfactory schedule of rates,” which would be “no greater than rates BNSF offers to its own linehaul customers.” Id. at 1024. (alteration omitted). But this Court held that “[t]he Panel's comments of what it ‘expects’ and what BNSF ‘could’ do provide little to work with in terms of concrete instructions. While recognizing BNSF's potential to misuse the standard, the Panel did not set forth any remedy for that situation.” Id. (emphasis added). Likewise, the Court held, “[w]hat constitutes a ‘reasonable and customary’ rate under the award is sufficiently ambiguous.” Id. at 1025. In the 2024 Remand Award, the Panel found that despite its prior order requiring BNSF not to price discriminate
against competitors, BNSF was still engaged in “discriminatory conduct.” (Dkt. No. 24-1 at 10, 13.) In response to BNSF’s ongoing conduct and this Court’s order, the Panel did not invent a schedule of rates out of whole cloth, but rather reached for a readily available measure of “reasonable and customary” rates: the same rates BNSF charges UP at its other Pacific coast
ports, as measured in Switching Book 8005-E. (Id. at 13.) In this way, the Panel avoided becoming a “rate setting body” itself, while still providing a definite and enforceable standard in response to this Court’s order. At the same time, the Panel recognized that deviations from Switching Book 8005-E might be necessary for “switching cost differences or competitive considerations relevant to the purposes of this award,” and it provided a mechanism for the Parties to resolve disputes on any such deviation. (Id.) The Court finds that the Panel did not overstep either by designating final offer arbitration as the method by which future disputes under the rate schedule would be resolved. First, the Court finds that the Panel’s selection of final offer arbitration to resolve disputes is consistent both with the Parties’ submissions and with the 2022 Final Award. In 2022, BNSF
itself proposed to the Panel implementation of an ADR process to “supplement the formal WVFAA procedures . . . in the event disputes arise over the validity of BNSF’s market-based rates.” (Dkt. No. 28 at 43.) The 2022 Final Award declined to adopt BNSF’s proposed remedy, but suggested that something akin to final offer arbitration would be appropriate. The 2022 Final Award stated: While BNSF has proposed what it called “an engagement process,” intended to be more expeditious and less formal than an arbitration, it does not appear that the parties have come to agreement on such a process. It would be beyond the panel’s remit to fashion one out of whole cloth. The parties could achieve an efficient process to resolve rate disputes by submitting competing proposals to a pre-selected monitor who is authorized to select only one of the proposals without altering the terms of the proposal selected. (Port of Vancouver I, Dkt. No. 2-3 at 21) (internal citation omitted.) Ultimately, this Court found that it would be necessary for the Panel to make some choice as to resolving disputes about rate setting. The Court noted that the panel “recogniz[ed] BNSF's potential to misuse the standard” (with respect to setting equitable rates for UP traffic) but it “did not set forth any remedy for that situation[.]” Port of Vancouver USA, 717 F. Supp. 3d at 1024
(emphasis added). Therefore, on remand, the Parties agreed for the Panel to answer the question of “how to determine what constitutes a reasonable and customary rate” (Dkt. No. 27 at 7) (emphasis added), as opposed to “what is the reasonable and customary rate”—contemplating not just a singular answer as to rates, but a decisional rule or process for disputes. (See id. at 10.) In other words, by selecting final offer arbitration as the mechanism for settling ongoing disputes under the Switching Book rates, the Panel a) formally adopted a suggestion it had first made in the 2022 Final Offer, and b) responded to this Court’s remand and the question posed by the Parties. Further, as POV notes, nothing about the final offer arbitration process was directly contrary to the WVFAA either, as Article IX of the agreement prohibited the arbitrator from awarding “indirect, special, consequential, punitive or exemplary damages,” but was silent as to
other remedies. (Dkt. No. 27 at 6); see Advest, Inc. v. McCarthy, 914 F.2d 6, 10–11 (1st Cir. 1990) (Selya, J.) (“arbitrators possess latitude in crafting remedies as wide as that which they possess in deciding cases. That leeway is at its zenith when, as here, the arbitration clause imposes no limitations on choice of remedies”) (internal citations omitted); Kenneth H. Hughes, Inc. v. Aloha Tower Dev., Corp., 654 F. Supp. 2d 1142, 1148 (D. Haw. 2009) (arbitrator could impose pre- and post-award interest as remedy when contract was silent as to that issue). The Panel’s choice of remedy is also consistent with caselaw granting arbitrators broad authority to fashion appropriate remedies. The Ninth Circuit has held that “[t]he remedy ordered in an arbitration does not need to be specifically provided for in the agreements, as long as the
remedy is intended to provide an appropriate remedy to resolve all the disputes between the parties.” Medi-Soft, Inc. v. Royco, Inc., 21 Fed. Appx. 570, 572 (9th Cir. 2001); see also Timegate Studios, Inc. v. Southpeak Interactive, L.L.C., 713 F.3d 797, 807 (5th Cir. 2013) (upholding arbitrator’s choice of remedy not expressly contemplated in the agreement because it
was “necessary to preserve the essence of the Agreement.”) Likewise, “[a]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, we cannot overturn his decision simply because it disagrees with his factual findings, contract interpretation, or choice of remedies.” Van Waters & Rogers Inc. v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., Loc. Union 70, 913 F.2d 736, 739 (9th Cir. 1990) (emphases added); see also United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 41 (1987) (“though the arbitrator's decision must draw its essence from the agreement, he ‘is to bring his informed judgment to bear in order to reach a fair solution of a problem. This is especially true when it comes to formulating remedies.’”); Executone Info. Sys., Inc. v. Davis, 26 F.3d 1314, 1325 (5th Cir. 1994) (“the arbitrator's selection of a particular
remedy is given even more deference than his reading of the underlying contract . . . the remedy lies beyond the arbitrator's jurisdiction only if ‘there is no rational way to explain the remedy handed down by the arbitrator as a logical means of furthering the aims of the contract.’”); Advest, 914 F.2d at 10–11. In providing for final offer arbitration, the Panel intended to provide a mechanism to resolve any remaining disputes that may arise in implementing and adjusting the Switching Book 8005-E rates, and the Panel was at least “arguably” constructing the contract and acting within its authority in choosing that remedy. In sum, the Court finds no error in the Panel’s treatment of rates that would warrant vacatur.
C. The Panel Issued a Sufficiently Reasoned Ruling as to Commercial Access BNSF argues that the Panel failed to issue a reasoned award with respect to its holding on the commercial access requirement. (See Dkt. No. 21 at 22.) The WVFAA requires the arbitrator to provide “the reasoning for such decision or award in writing.” (Id., quoting
WVFAA art. IX, § 4, emphasis omitted; see also Dkt. No. 22 at 22.) The Court finds that the Panel’s reasoning is sufficient. Over the course of this dispute, BNSF has argued that its obligation to ensure competitive access to the port is limited by Exhibit F to the WVFAA, which includes rates that apply only to Terminals 4 and 5, and is referenced in Section 3.A.(iii).(b) of the agreement. See Port of Vancouver, 717 F.Supp.3d at 1022. The Panel has repeatedly rejected BNSF’s reading of the agreement on this issue, first in the 2022 Partial Final Award, which stated, “The panel finds BNSF’s arguments unpersuasive. First, the WVFAA read in its entirety appears to contemplate competitive access to the entire port (with the exceptions noted in Article III Section 3 A (iii)).” (Port of Vancouver I, Dkt. No. 2-2 at 4.) The Panel then repeated this statement in the 2022
Final Award. (See Port of Vancouver I, Dkt. No. 2-3 at 18.) But this Court held that more reasoning was needed, as the Panel failed to explain what “access to the entire Port” meant, and failed to interpret “the exception BNSF hangs its hat on.” Port of Vancouver, 717 F.Supp.3d at 1025. On remand, the Parties asked the Panel to clarify “What did the Panel mean by ‘access to the entire Port (with the exceptions noted in Article III § 3 A (iii),’ and whether that included ‘shippers located at Terminals 2 and 3[.]’” (Dkt. No. 27 at 7.)1 BNSF faults the Panel for
1 Under Article III, Section 3.A of the agreement, “BNSF agrees to offer all Rail Customers Commercial Access to UP for so long as the Port is not in default under this Agreement.” (Dkt. No. 24-1 at 14.) The term “rail customer” is defined in Article III, Section 3.A.(iii), as follows: “simply accounc[ing], in a terse six-sentence passage” that it was “rejecting BNSF’s interpretation of the WVFAA.” (Dkt. No. 21 at 24.) But under relevant precedents, the Panel’s reasoning need not have been exhaustive. The Ninth Circuit has held that where the parties have contracted for an arbitrator to provide findings
of fact and conclusions of law, and the arbitrator fails to do so at all, the arbitrator exceeds their authority under 9 U.S.C. § 10(d), warranting vacatur. W. Emps. Ins. Co. v. Jefferies & Co., 958 F.2d 258, 261 (9th Cir. 1992). Short of that, Ninth Circuit precedent does not call for vacatur when an arbitrator’s reasoning is deficient.2 See Rain CII Carbon, LLC v. ConocoPhillips Co., 674 F.3d 469, 474 (5th Cir. 2012) (distinguishing a case where the parties had only bargained for a “reasoned award,” from Jefferies, where the parties bargained for findings of fact and conclusions of law); see also Cat Charter, LLC v. Schurtenberger, 646 F.3d 836, 844 (11th Cir. 2011) (observing that “the varying forms of awards may be considered along a ‘spectrum of increasingly reasoned awards,’ with a ‘standard award’ requiring the least explanation and
“Rail Customers” shall mean rail freight customers owning, controlling and directing in their absolute discretion (i.e., no brokers of rail transportation service, etc.,), the terms of freight service for freight originating or terminating at rail accessible facilities located now or in the future on POV Property, excepting any such customers (a) with the ability to receive rail service from UP pursuant to written agreements in effect between BNSF and UP as of the Effective Date of this Agreement; (b) shipping commodities and/or equipment expressly excluded, with no rates established, or not addressed in the rate schedule attached as Exhibit F: or (c) originating or terminating freight at a new transload facility which may be established on the Property unless BNSF shall, in its reasonable discretion, agree otherwise. (Id.; see also Dkt. No. 22 at 36 (Exhibit F).) 2 Indeed, the Ninth Circuit has stated that “‘[a]rbitrators have no obligation ... to give their reasons for an award’ at all.” Stead Motors of Walnut Creek v. Auto. Machinists Lodge No. 1173, Int'l Ass'n of Machinists & Aerospace Workers, 886 F.2d 1200, 1206 (9th Cir. 1989). But here, the Parties’ contract does require at least some reasoning. ‘findings of fact and conclusions of law’ requiring the most.”) Other circuits have attempted to define the term “reasoned award.” The Second Circuit stated: A reasoned award includes something short of findings of fact and conclusions of law but more than a simple result. It requires something more than a line or two of unexplained conclusions, but something less than full findings of fact and conclusions of law on each issue raised before the panel. A reasoned award sets forth the basic reasoning of the arbitral panel on the central issue or issues raised before it. It need not delve into every argument made by the parties. Smarter Tools Inc., 57 F.4th at 382–383 (cleaned up). This Court has likewise held that a “reasoned award is something short of findings and conclusions but more than a simple result.” Olson v. Harland Clarke Corp., No. C11-5585 BHS, 2014 WL 2589453, at *1 (W.D. Wash. June 10, 2014), aff'd, 676 F. App'x 635 (9th Cir. 2017) (quoting Sarofim v. Trust Co. of the W., 440 F.3d 213, 215 n. 1 (5th Cir.2006)). Here, the Parties clearly bargained for a reasoned award, and they specifically asked the Panel on remand to explain what it meant by “‘access to the entire Port (with the exceptions noted in Article III § 3 A (iii),’ and whether that included ‘shippers located at Terminals 2 and 3.’” (Dkt. No. 27 at 7.) But they did not ask for findings of fact and conclusions of law. Turning to the text of the 2024 Remand Award, the Court finds that it “sets forth the basic reasoning of the arbitral panel on the central issue or issues raised before it” and is thus a sufficiently “reasoned award.” As to commercial access, the 2024 Remand Award stated: The Panel noted in its Partial Final Award that the “WVFAA read in its entirety appears to contemplate competitive access to the entire port.[”] For several reasons, the Panel does not find that subclause (b) of Section 3.A.(iii) applies only to the terminal areas referenced in Exhibit F. On that basis, the Panel further clarifies that the Final Award granted Commercial Access to all customers in the Port except those excluded by Section 3.A.(iii) (a), (b), or (c), when Exhibit F is read to apply only to Terminals 4 & 5.
(Dkt. No. 24-1 at 15.) The Court finds this passage, while short, adequately addresses the central issues. In this passage, the Panel reaffirmed that the WFVAA when read in its entirety contemplates competitive access to the entire Port. In that vein, it then found subclause (b) of Section 3.A.(iii) applies to all terminal areas, not just the terminal areas referenced in Exhibit F, even assuming Exhibit F applies only to terminals 4 & 5. Based on the finding that subclause (b) applies to all terminals, commercial access was granted to all customers in the Port except those
excluded in subclauses (a), (b), or (c), even when Exhibit F is read to apply only to terminals 4 & 5. The Panel’s brief reasoning addresses the questions posed by the Court and Parties, and it is more than a “simple result.” Though further reasoning could have been helpful, it was not required. As the Eleventh Circuit stated: To be sure, the Panel could have provided more. But again, had the parties wished for a greater explanation, they could have requested that the Panel provide findings of fact and conclusions of law; to this court, the statement quoted above is greater than what is required in a “standard award,” and that is all we need decide. Cat Charter, LLC, 646 F.3d at 845. At a minimum, the Panel’s explanation is not so devoid of reasoning that vacatur is appropriate. D. The Panel Did Not Exceed Its Authority with Respect to Alien Cars The Panel clarified its prior ruling with respect to alien cars. In the 2022 Final Award, the Panel decisively rejected BNSF’s position that the WVFAA allows it to use POV property for non-Port purposes. The Panel stated: [A]t a fundamental level, BNSF’s use of Port property for non-Port purposes is inconsistent with access to the Port by two Class I railroads which plainly emerges as central to both parties’ intent and understanding in agreeing to the WVFAA. BNSF’s use of POV trackage to store rail cars not related to deliveries to or from the Port could displace or disrupt the potential availability of that trackage to accommodate deliveries to or from UP. POV’s interest in avoiding BNSF’s storage of alien rail cars without compensation is obvious. . . . The panel finds that BNSF overreads the language of the WVFAA in asserting that BNSF’s use of POV trackage is essentially divorced from traffic related to POV or its tenants. It may well be that in switching rail cars on POV trackage some rail cars not destined for POV tenants may from time to time be included in switching cars. But BNSF’s use of POV trackage appears far more extensive, including rail cars of essentially every description and for other than limited or short periods. (Port of Vancouver I, Dkt. No. 2-3 at 23–24.) However, the Panel rejected POV’s proposed rate of compensation for BNSF’s past use of POV property for alien cars as excessive, instead settling on BNSF’s proposed rate of $7 per day. (Id. at 25.) The Court found that the Panel needed to address several issues that remained unresolved with respect to alien cars. While the Panel clearly “interpreted the contract to foreclose BNSF from storing alien cars on POV property” its language stating that alien cars may “from time to time” exist on the property left open the question of “whether the presence of any alien car violates the agreement.” Port of Vancouver USA, 717 F. Supp. 3d at 1015–1026. Further, the Panel did not specify “how many alien cars BNSF is permitted to keep on the property, whether it incurs storage rates for those cars, and whether the rate is $7 [applicable] in the future.” Id. at 1026. Based on the Court’s remand, the Parties asked the Panel to clarify, “‘[w]hether, under what circumstances, and to what extent BNSF is permitted to bring [alien] rail cars on to Port property,’ and if so ‘was the $7 per car damages established by the Panel intended to apply prospectively.’” (Dkt. No. 27 at 8.) The Panel’s answer to these questions was unambiguous. The 2024 Remand Award held that “the WVFAA does not permit BNSF to intentionally bring alien cars onto Port property or to store them there.” (Dkt. No. 24-1 at 15) (emphasis added). The Panel clarified that its prior statement that “‘some rail cars not destined for POV tenants may from time to time be included in switching cars’ merely acknowledged that it was likely that alien cars would occasionally and inadvertently end up on Port property.” (Id.) The Panel further clarified that it “did not intend the $7 per car rate established in the Final Award to apply after the date of the Final Award”— and that any prospective relief for violations falls outside the scope of the 2022 Final Order. (Id.) BNSF now argues that the Panel impermissibly reversed itself by initially holding that alien cars were allowed for “‘short periods’ when ‘included in switching cars’” but subsequently
holding that alien cars are prohibited “for any reason or any period of time.” (See Dkt. No. 21 at 26.) The Court disagrees that the Panel’s decisions are inconsistent. The 2022 Final Award held that the WVFAA did not allow for alien cars, but acknowledged the possibility of inadvertent lapses. At the direction of the Court and Parties, the 2024 Remand Award clarified that such language should not be read as a grant of permission for BNSF to intentionally bring alien cars onto POV property. In other words, both opinions hold that BNSF cannot intentionally bring alien cars onto POV property for any period of time, and they are consistent on that point. The Panel further answered the Court and Parties’ question regarding prospective application of the $7 per day rate, holding that the rate does not apply prospectively. Nothing more is required.3
The FAA and applicable caselaw set out a highly deferential standard for confirmation of arbitration awards. Nonetheless, in a previous iteration of this case, this Court found that an arbitral award was too vague and indefinite for judicial enforcement. The Parties returned to the same arbitration Panel seeking clarification of its prior award in response to the Court’s order, and the Panel provided the necessary clarifications. Applying the deferential standard of review, the Court finds no basis to vacate the clarified award. To this point, BNSF has apparently
3 BNSF argues that after vacating the award, this Court should remand to a new arbitration panel. (Dkt. No. 21 at 27.) Because the Court denies the motion to vacate, it does not reach this argument. avoided compliance with the Panel’s directive to provide nondiscriminatory rates to its competitor, and its continued objections to enforcement are unpersuasive. For those reasons, the Court GRANTS the Motion to Confirm (Dkt. No. 24) and DENIES the Motion to Vacate (Dkt. No. 21.)
Dated this 26th day of March, 2025. a David G. Estudillo United States District Judge