Reinsurance & Arbitration Focus

The U.S. District Court for the Southern District of New York recently refused to vacate an arbitration award stemming from a workplace personal injury after the arbitrator concluded that the employee was primarily responsible for his own injuries.

Daniel Pacelli was working for Vane Line Bunkering Inc. (known as “Vane Brothers”), as a tankerman on one of Vane Brothers’ barges in New York Harbor when he slipped, fell, and was injured on ice while attempting to salt the deck of the barge. He initiated an arbitration action against Vane Brothers. A JAMS arbitrator heard the case and concluded that Pacelli had sustained $986,750 in damages and that both Pacelli and Vane Brothers were negligent. More specifically, the arbitrator concluded that Pacelli was 70% at fault while Vane Brothers was 30% at fault. The arbitrator therefore reduced Pacelli’s damages accordingly. Pacelli moved to vacate the award.

The district court declined to vacate the award. It rejected Pacelli’s arguments that the arbitrator had (1) manifestly disregarded the law; (2) been partial to Vane Brothers; (3) engaged in “misbehavior” by repeatedly delaying his decision; and (4) improperly failed to award interest.

With respect to manifest disregard, the court concluded that the arbitrator had applied the law regarding contributory negligence to the facts of the case and had supported his decision regarding comparative fault with evidence from the record, including evidence that Pacelli had acted carelessly by attempting to salt a narrow part of the deck at night and in freezing temperatures without seeking assistance. The court noted that the Second Circuit does not recognize manifest disregard of the evidence as a ground for vacating an award and refused to reweigh the evidence.

The court also rejected Pacelli’s argument that the arbitrator had been partial to Vane Brothers. After the arbitration hearing but months before the arbitrator issued his decision, the arbitrator disclosed that he had a small ownership interest in JAMS and JAMS disclosed that it had a small number of other arbitrations with Vane Brothers, its counsel, and/or its counsel’s law firm. The court noted that Pacelli had waived this argument by not raising it before the arbitrator. The court nevertheless also explained that the facts did not show improper partiality and rejected Pacelli’s argument that the arbitrator’s small ownership interest was material in any event.

Turning to Pacelli’s next argument — that the arbitrator’s delays warranted vacatur — the court noted that Pacelli had not pointed to any “authority to support his position that the arbitrator’s extension requests amounted to ‘misbehavior’ by the arbitrator such that Pacelli’s rights were prejudiced.” That was especially true because Pacelli had consented to the extensions.

Finally, the court rejected Pacelli’s contention that it should vacate the award because the arbitrator had not awarded prejudgment interest. Although the court acknowledged that it would have been proper for the arbitrator to award prejudgment interest, the court noted that Pacelli had failed “to point the Court to any case in which a district court vacated an arbitration award for failure to award prejudgment interest” and noted that courts had declined to do any such thing.

The court then went on to confirm the arbitration award.

Pacelli v. Vane Line Bunkering, Inc., No. 1:20-cv-09431 (S.D.N.Y. July 16, 2021).