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Court Confirms Arbitration Award Against Non-Signatory Intervening Party in Arbitration
September 05, 2023

Paychex Inc. had entered into an agreement to provide a company, Dan-Gulf Shipping Inc., with payroll-related services. The agreement contained an arbitration clause governed by the rules of the American Arbitration Association. In 2020, Dan-Gulf commenced arbitration against Paychex under the AAA’s commercial arbitration rules. During the course of the arbitration, Paychex filed a motion to dismiss, but prior to the ruling of the arbitration panel on the motion, another company affiliated with Dan-Gulf, Caytrans BBC LLC, intervened in the arbitration. Paychex then refiled its motion to dismiss to address Caytrans’ claims, which the panel subsequently granted against Caytrans. The panel then entered a partial final award dismissing all of Caytrans’ claims against Paychex (with one of Dan-Gulf’s claims surviving against Paychex).

In September 2020, Paychex filed a petition to confirm the partial final award, to which Caytrans failed to respond. In February 2023, a default was entered against Caytrans. The court has now determined that it is proper for it to enter an order confirming the award. The court found that Paychex demonstrated that diversity subject matter jurisdiction existed over the case. The court also determined that, by electing to intervene in the AAA arbitration, Caytrans consented to the AAA rules, which authorize “that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof.” The court further found that the arbitration was venued, and the partial final award was made, in Rochester, New York, “which is within this judicial district.” Finally, the court determined that the partial final award was valid, there was no “apparent basis for the court not to confirm it,” and the fact that the partial final award “only disposed of the claims between Caytrans and Paychex and not the claims between Dan-Gulf and Paychex is not a barrier to confirmation.” The court therefore confirmed the partial final award.

Paychex, Inc. v. Caytrans BBC LLC, No. 6:22-cv-06411 (W.D.N.Y. July 31, 2023).
Authored By
Image: Michael N. Wolgin
Michael N. Wolgin
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