Regnery Publishing, Inc. v. Miniter

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

) REGNERY PUBLISHING, INC., ) ) Petitioner, ) ) Civil Action No. 08-709 (EGS) v. ) ) RICHARD MINITER, ) ) Respondent. ) )

MEMORANDUM OPINION

Before the Court is a Petition to Confirm an Arbitration

Award by Regnery Publishing, Inc. (“Regnery”) against the

Respondent, Richard Miniter (“Miniter”), and a Motion to Vacate

the Arbitration Award by Miniter. Miniter and Regnery arbitrated

a dispute over Miniter's alleged breach of a two-book publishing

contract. After careful consideration of Regnery’s Petition,

Miniter’s Motion to Vacate, Regnery’s opposition, Miniter’s

reply, and applicable case law, this Court GRANTS Regnery’s

Petition to Confirm the Arbitration Award and DENIES Miniter’s

Motion to Vacate the Arbitration Award.

I. BACKGROUND

On February 14, 2005, Regnery and Miniter entered into a

contract whereby Regnery agreed to publish Miniter's book,

1 Disinformation, the first of a two-book contract between the

parties. Miniter received $238,333.00 in advance royalties prior

to the publication of Disinformation. Regnery was to pay Miniter

an additional $116,667.00 in advanced royalties once Regnery

accepted a manuscript for the second book. The parties did not

consider the subject matter of the second book or write

requirements for it when they entered the two-book contract.

Miniter proposed a second book with the working title of

Hunting Zarqawi, about the terrorist Abu Musab al-Zarqawi. The

book would have been based on interviews with Zarqawi's family

and friends in the Middle East. Miniter alleges that he would

have needed $96,206.99 to finance the research and to write the

second book. Regnery refused to advance the amount against the

$116,667.00 advance. Miniter then proposed an alternate book,

Where Have All the Heroes Gone?, which Regnery rejected. Regnery

insisted that Miniter proceed with Hunting Zarqawi.

In April 2007, Regnery filed a demand for arbitration

against Miniter with the American Arbitration Association

(“AAA”). During the arbitration, Miniter alleged that an AAA

administrator informed the arbitrator in the case that Miniter

had not paid certain arbitration fees and expenses. Miniter

filed a Motion to Recuse on October 26, 2007. Regnery filed a

response on October 29, 2007. The AAA issued its ruling on

November 1, 2007, rejecting Miniter's claims. On March 10, 2008,

2 the arbitrator ruled that Regnery was entitled to recover

$146,899.96 in unearned royalties from Miniter, plus lost profits

of $20,155.04. On April 25, 2008, Regnery filed a petition with

this Court to confirm the arbitration award. On May 21, 2008,

Miniter moved to vacate the arbitration award.

II. DISCUSSION

Miniter argues that the arbitration award should be vacated

under § 10(a)(1) and (4) of the Federal Arbitration Act (“FAA”)

and on common law grounds.1 Specifically, Miniter alleges that

the arbitration terminated upon entry of an award without a

ruling by the arbitrator on his Motion to Recuse. Miniter argues

that the arbitrator's failure to rule on his motion "tainted the

arbitration with more than a mere appearance of partiality."

1 Section 10(a) of the FAA reads in relevant part:

In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration--

(1) where the award was procured by corruption, fraud, or undue means;

. . . 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(a).

3 Mot. to Vacate at 4. On common law grounds, Miniter argues that

the Award should be vacated because it is a manifest disregard of

the law. Regnery argues that Miniter had a full and fair

opportunity to present his case before the arbitrator.

The Supreme Court has said that the FAA "substantia[tes] a

national policy favoring arbitration with just and limited review

needed to maintain arbitration's essential virtue of resolving

disputes straightway." Hall St. Assocs. L.L.C. v. Mattel, Inc.,

128 S. Ct. 1396, 1405 (2008). "Any other reading opens the door

to the full-bore legal and evidentiary appeals that 'can rende[r]

informal arbitration merely a prelude to a more cumbersome and

time-consuming judicial review process.’" Id. (quoting Kyocera

Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 998

(9th Cir. 2003)). Grounds for vacatur of an arbitration award

set forth in § 10 of the FAA are exclusive. See id. at 1404.

"[J]udicial review of an arbitration award is extremely limited."

Int'l Thunderbird Gaming Corp. v. United Mex. States, 473 F.

Supp. 2d 80, 83 (D.D.C. 2007) (citing United Paperworkers Int’l

Union v. Misco, Inc., 484 U.S. 29, 37-38 (1987)); see also

LaPrade v. Kidder, Peabody, & Co., Inc., 246 F.3d 702, 706 (D.C.

Cir. 2001).

Miniter's claim for vacatur under § 10(a)(1) and (4) relates

solely to a request for recusal of the arbitrator that was denied

by the AAA. Miniter's claim is not that the arbitrator was

4 biased but simply that his motion for recusal was not addressed

and resolved by the arbitrator, leaving "a question of conflict

of interest unresolved." Mot. to Vacate at 4. His claim,

however, does not meet the heavy burden of establishing that the

arbitration award was inappropriate because he has not shown that

there was evident partiality or corruption in the arbitrator, see

§ 10(a)(1), or that the arbitrator exceeded his powers or

imperfectly executed them, see § 10(a)(4).

Miniter's request for recusal was resolved by the AAA on

November 1, 2007, and the arbitrator properly continued to serve

in his capacity. Even though the arbitrator did not himself rule

on the motion before making the Award, Miniter has not

demonstrated that “the award was procured by corruption, fraud,

or undue means” or that “the arbitrator[] exceeded [his] 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(a)(1) & (4). Furthermore, Regnery noted in its

Opposition to the Motion for Recusal that it was immaterial that

an AAA administrator mentioned that Miniter had not paid the fees

because if the administrator had not raised the issue, Regnery

would have raised it during the arbitration. Miniter was well

aware of Regnery’s position, which could have contributed to

Miniter’s failure to press the issue after the AAA made its

ruling. Miniter's real complaint is that he did not like the

5 result of the arbitration. He has not, however, met his burden

of demonstrating that the arbitrator exceeded his powers under §

10 of the FAA.

The arbitrator provided Miniter with a "fundamentally fair

hearing." Lessin v. Merrill Lynch, Peirce, Fenner & Smith, Inc.,

481 F.3d 813, 816 (D.C. Cir. 2007) (citation and internal

quotation marks omitted). In fact, the arbitrator granted

Miniter discretionary leeway throughout the arbitration. For

example, the arbitrator allowed Miniter to assert counterclaims

even though the claims had previously been dismissed because

Miniter failed to pay the filing fee; he also granted Miniter's

request for postponement of a hearing date.

Miniter asks this Court to vacate the Award based on alleged

“manifest disregard for the law,” on the part of the arbitrator.

LaPrade, 246 F.3d at 706. “Manifest disregard of the law ‘means

more than error or misunderstanding with respect to the law.’”

Id. (quoting Kanuth v. Prescott, Ball & Turben, Inc., 949 F.2d

1175, 1178 (D.C. Cir. 1991). This Court recognizes that some

courts have refused to entertain vacatur based on “manifest

disregard for the law” after Hall Street. See Prime

Therapeutics, L.L.C. v. Omnicare, Inc., 555 F. Supp. 2d. 993, 999

(D. Minn. 2008) (holding that post-Hall Street, "courts can no

longer vacate an arbitration award based on judicially-created

grounds such as 'manifest disregard of the law'"); Ascension

6 Orthopedics, Inc. v. Curasan, 2008 WL 2074058, at *2 (S.D. Tex.

May 14, 2008) ("the Supreme Court's decision in Hall Street is

unequivocal that the grounds upon which vacatur may be based as

listed in § 10 are exclusive"). This Court need not decide that

issue because Miniter’s allegations do not rise to the level of a

manifest disregard for the law.

Miniter "bears the burden of demonstrating that the

arbitration panel acted in manifest disregard of the law."

LaPrade, 246 F.3d at 706. Specifically, Miniter claims that the

arbitrator "revised the parties' governing contract based on his

own personal notions of right and wrong and exceeded the scope of

his authority," when he included $25,000 in damages for breach of

an agreement that Regnery did not claim was breached. Mot. To

Vacate at 5. Miniter also claims that the arbitrator found that

under the terms of the Agreement, "Miniter was compelled to

research and write Hunting Zarqawi even though it is uncontested

that it was impossible for him to do so because of the expense

involved." Id. at 5. This is a misreading of the Award. The

Award merely holds Miniter to the terms of the contract between

the parties. The Award reads in relevant part:

Miniter proposed Zarqawi to Regnery, advocated for it, and got Regnery interested in the project. He later presented a budget for the project in the amount of $97,707 and informed Regnery that he could not do the book without getting that amount in advance, an advance not required by the Publishing Contract. Regnery was under no contractual

7 obligation to modify the terms of its existing agreement to advance more money to Miniter, nor was it unfair or in bad faith for it to refuse to do so.

Award at 4. The arbitrator did not substitute his own notions of

right and wrong but rather required Miniter to abide by the terms

of the contract. Furthermore, the $25,000 that Regnery paid

Miniter was recoverable because the parties agreed that the

$25,000 relating to the separate contract was to be part of

Miniter's total advance. There is no provision in the parties’

contract that precluded the arbitrator from finding that Regnery

is entitled to the $25,000. Miniter has not demonstrated that

the arbitrator committed error or had a misunderstanding of the

law, and therefore, Miniter’s common law claims must fail as

well.

“On application for an order confirming the arbitration

award, the court ‘must grant’ the order ‘unless the award is

vacated, modified, or corrected as prescribed in sections 10 and

11 of this title.’” Hall St., 128 S. Ct. at 1405. Courts must

“grant confirmation in all cases, except when one of the

‘prescribed’ exceptions applies.” Id. "[I]n the absence of a

legal basis to vacate, this court has no discretion but to

confirm the award." Int'l Thunderbird, 473 F. Supp. 2d at 83

(citations omitted).

III. CONCLUSION

8 Regnery’s Petition to Confirm the Arbitration Award is

GRANTED; Miniter’s Motion to Vacate the Arbitration Award is

DENIED. An appropriate Order accompanies this Memorandum

Opinion.

SO ORDERED.

Signed: Emmet G. Sullivan United States District Judge March 7, 2009