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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-11513
Non-Argument Calendar
________________________
D.C. Docket No. 1:14-cv-02861-ELR
ORIGINAL APPALACHIAN ARTWORKS, INC.,
Plaintiff-Appellee,
versus
JAKKS PACIFIC, INC.,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(November 17, 2017)
Before MARTIN, JULIE CARNES, and ANDERSON, Circuit Judges.
PER CURIAM:
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Defendant JAKKS Pacific, Inc. (“Defendant”) appeals the district court’s
confirmation of an arbitration award and denial of Defendant’s motion to partially
vacate that award. After careful review, we affirm.
I. BACKGROUND
A. Factual and Procedural History
Plaintiff Original Appalachian Artworks, Inc. (“Plaintiff”) owns the
Cabbage Patch Kids brand and related intellectual property. It licenses those assets
to others who manufacture and sell Cabbage Patch Kids dolls and accessories.
Relevant to this appeal, Plaintiff licensed the Cabbage Patch Kids brand to
Defendant pursuant to two license agreements: an international agreement
effective January 1, 2012, and a domestic agreement effective January 1, 2013.
Both agreements expired by their terms on December 31, 2014.
Under those agreements, Defendant had an exclusive license to use the
Cabbage Patch Kids brand and related intellectual property in connection with “the
manufacture (including the right to have manufactured), importation, sale,
advertising, promotion, shipment and distribution” of Cabbage Patch Kids dolls.
That license extended to the packaging, labels, catalogs, displays, and advertising
and promotional signage created for use in connection with the manufacturing or
distribution of Cabbage Patch Kids dolls. Defendant also had an exclusive license
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“to prepare, or commission the preparation of, derivative works based on” the
Cabbage Patch Kids brand.
In May 2014, before Defendant’s license expired, Plaintiff selected a new
licensee, Wicked Cool Toys, to manufacture and sell Cabbage Patch Kids dolls and
products beginning in 2015, after Defendant’s license expired. To that end,
Plaintiff and Wicked Cool Toys entered into a deal memorandum on May 30,
2014. Plaintiff then permitted Wicked Cool Toys to immediately begin the process
of creating a new line of Cabbage Patch Kids dolls to be manufactured and
launched in 2015, and to promote that new line at industry trade shows and in
discussions with retailers.
In a series of August 2014 letters between Plaintiff and Defendant,
Defendant asserted that Plaintiff had breached its exclusive license. In support of
that assertion, Defendant pointed to a provision in the license agreements reserving
to Plaintiff the right to “engage, during the 365-day period prior to the termination
or expiration of th[e agreements], in the negotiation, with potential licensees
(including competitors of Licensee), of one or more license agreements granting
licenses with respect to” the products covered by Defendant’s exclusive license,
“to become effective upon the expiration or earlier termination of th[e
agreements].” Defendant argued that, under that provision, Plaintiff could only
“negotiate” with potential licensees in 2014, and was prohibited from actually
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reaching an agreement with a new licensee or doing anything else to make it
possible for a new licensee to actually launch a new line of Cabbage Patch Kids
products in 2015.
In response, Plaintiff contended that the license agreements did not purport
to grant Defendant exclusivity with respect to the types of activities that Wicked
Cool Toys engaged in, which Plaintiff characterized as design and development
activities preliminary to the manufacturing and launch of a new line of Cabbage
Patch Kids dolls in 2015. Plaintiff also pointed to another provision in the license
agreements, which provided that, for 120 days after expiration of the agreements,
Defendant had a non-exclusive right to sell Cabbage Patch Kids products that it
either had on hand or was in the process of manufacturing. Plaintiff noted that,
given the nature of the toy industry, a successor licensee could never introduce a
new line of Cabbage Patch Kids dolls within 120 days after expiration of the
license agreements unless it were permitted to engage in some preliminary or
preparatory activities in 2014.
The license agreements also contained an arbitration clause. In September
2014, Plaintiff filed a complaint in the district court seeking an order compelling
arbitration and confirmation of any arbitration award. 1 In an attached notice of
1
The district court had diversity jurisdiction under 28 U.S.C. § 1332. Cf. Cat Charter, LLC v.
Schurtenberger, 646 F.3d 836, 841 n.7 (11th Cir. 2011) (“While the [Federal Arbitration Act]
4
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arbitration, Plaintiff sought an award from the arbitrator declaring that it had not
breached the license agreements. Shortly thereafter, the parties voluntarily
proceeded to arbitration and the district court stayed the case. Believing Plaintiff
to be in breach of the license agreements, Defendant stopped paying royalties for
its continued use of the Cabbage Patch Kids brand.
In January 2016, the arbitrator concluded that Plaintiff had not breached the
license agreements. The arbitrator further concluded, in the alternative, that even if
Plaintiff had breached the agreements, its breaches were not material. The
arbitrator ordered Defendant to pay $1,117,559 in unpaid royalties. The parties
then returned to the district court, where Defendant filed a motion to partially
vacate the award, and Plaintiff filed a motion to confirm the award. The district
court denied Defendant’s motion, granted Plaintiff’s motion, and confirmed the
award.
B. The Arbitrator’s Award
In analyzing whether Plaintiff had breached its license agreements with
Defendant, the arbitrator determined that the “key term” relating to what conduct
Plaintiff could engage in before the agreements expired was the provision
provides the grounds for vacatur of an arbitration award, it does not serve as an independent
ground for jurisdiction in federal courts.”).
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reserving to Plaintiff the right to engage, in 2014, in the negotiation of a new
license agreement to become effective in 2015. That provision stated as follows:
The Doll License granted pursuant to this Section I shall be
exclusive for the Licensed Doll Products in the Licensed Territories
through the Licensed Distribution Channels. Notwithstanding the
foregoing, [Plaintiff] reserves for itself the right[] to . . . engage,
during the 365-day period prior to the termination or expiration of this
Agreement, in the negotiation, with potential licensees (including
competitors of Licensee), of one or more license agreements granting
licenses with respect to the Licensed Doll Products covering the
Licensed Territories and the Licensed Distribution Channels to
become effective upon the expiration or earlier termination of this
Agreement.
The arbitrator acknowledged that, “[r]ead literally, without examination of
context, that provision appears to provide what [Defendant] says it provides:
[Plaintiff could] only negotiate a new license in 2014 and not do one thing more to
obtain a new licensee until the onset of the new year.” However, the arbitrator
concluded that the provision was ambiguous in light of the circumstances,
particularly the undisputed commercial reality that, without some preparatory
activities in 2014, a successor licensee would not be able to sell any Cabbage Patch
Kids dolls in 2015.2 Finding no evidence to support Defendant’s contention that
the parties had intended such a result when they executed the agreements, the
arbitrator turned to Georgia’s rules of contract construction to give meaning to the
2
This is because retailers often make arrangements for the utilization of their shelf and display
space more than a year in advance.
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provisions at issue, particularly the scope of Plaintiff’s right to engage in the
negotiation of a new license agreement to become effective in 2015.
The arbitrator ultimately concluded that “it was the intention of the parties”
that Plaintiff and Wicked Cool Toys, as successor licensee, “could do what they
did in order to transition into the manufacture and launch in 2015 of a new
seasonal line of [Cabbage Patch Kids] products, without the de facto creation of a
‘gap’ of about one year.” He reasoned that “[i]t was fair to assume [both] that a
successor license could be concluded in 2014, during the pendency of”
Defendant’s license agreements, and “that the successor licensee would need to
build trade awareness of its accession to the role of licensee and of the products it
intended to offer.”
In the alternative, the arbitrator also concluded that, even if Plaintiff had
breached the license agreements, its breaches were not material “in the context of
the totality of operations under the” license agreements and “relative to the
financial and branding effects and results of the parties’ long-term performance.”
II. DISCUSSION
A. Standard of Review
“We review confirmations of arbitration awards and denials of motions to
vacate arbitration awards under the same standard, reviewing the district court’s
findings of fact for clear error and its legal conclusions de novo.” Frazier v.
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CitiFinancial Corp., LLC, 604 F.3d 1313, 1321 (11th Cir. 2010). “Because
arbitration is an alternative to litigation, judicial review of arbitration decisions is
among the narrowest known to the law.” AIG Baker Sterling Heights, LLC v. Am.
Multi–Cinema, Inc., 508 F.3d 995, 1001 (11th Cir. 2007) (quotation omitted).
“[C]onvincing a court of an arbitrator’s error—even his grave error—is not
enough” to justify vacatur. Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064,
2070 (2013). Rather, a party seeking to vacate an arbitrator’s award has the burden
of establishing the existence of a specific statutory ground for vacatur. Frazier,
604 F.3d at 1324; Greene v. Hundley, 468 S.E.2d 350, 353 n.24 (Ga. 1996).
The district court analyzed Defendant’s motion to partially vacate the
arbitrator’s award under both the Georgia Arbitration Code, O.C.G.A. § 9-9-13,
and the Federal Arbitration Act, 9 U.S.C. § 10. We do the same. 3
3
Because the outcome in this case does not depend upon whether we utilize the Federal
Arbitration Act’s standard for vacating an arbitration award or the Georgia Arbitration Code’s
standard, we do not decide whether the choice-of-law provisions in Defendant’s license
agreements are sufficient to invoke review under the Georgia Arbitration Code, assuming that
the parties could contract for such review in federal court. Cf. Hall St. Assocs., L.L.C. v. Mattel,
Inc., 552 U.S. 576, 584–91 (2008) (holding that the parties to an arbitration agreement could not
contract for broader review than that provided in 9 U.S.C. §§ 10 and 11 where the Federal
Arbitration Act had provided the basis for the district court’s review of the arbitration award, but
indicating that courts might engage in broader review if the parties contemplated enforcement of
the award under state statutory or common law); Action Indus., Inc. v. U.S. Fid. & Guar. Co.,
358 F.3d 337, 340–43 (5th Cir. 2004) (holding that a general choice-of-law provision did not
express the parties’ clear intent to depart from the Federal Arbitration Act’s vacatur standard).
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B. Vacatur under the Georgia Arbitration Code
The Georgia Arbitration Code provides several bases for vacating an
arbitrator’s award. O.C.G.A. § 9-9-13(b). The only grounds raised by Defendant
on appeal are that the arbitrator manifestly disregarded the law and overstepped his
authority. See O.C.G.A. § 9-9-13(b)(3), (5). 4
1. Manifest Disregard of the Law under O.C.G.A. § 9-9-13(b)(5)
Defendant argues that the arbitrator manifestly disregarded Georgia’s parol
evidence rule when he considered extrinsic evidence of the commercial context in
which the license agreements were executed in determining whether the provision
allowing Plaintiff to engage in the negotiation of a new license agreement in 2014
was ambiguous.5 Defendant contends that, once the arbitrator determined that the
literal language of the license agreements “appear[ed] to provide” that Plaintiff
could “only negotiate a new license in 2014 and not do one thing more to obtain a
new licensee until the onset of the new year,” he was required to end his inquiry
into the intentions of the parties and enforce the contract as written.
4
Under the Georgia Arbitration Code, a court must vacate an arbitrator’s award if it finds that
the moving party’s rights were prejudiced by (1) “[a]n overstepping by the arbitrators of their
authority or such imperfect execution of it that a final and definite award upon the subject matter
submitted was not made”; or (2) “[t]he arbitrator’s manifest disregard of the law.” O.C.G.A.
§ 9-9-13(b)(3), (5).
5
The license agreements contained a choice-of-law provision providing that the agreements
were governed by and should be construed in accordance with Georgia law. Under Georgia law,
the general rules of contract construction apply in arbitration proceedings. Sweatt v. Int’l Dev.
Corp., 531 S.E.2d 192, 194 (Ga. Ct. App. 2000).
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To prevail on this claim of error, Defendant must point to “concrete
evidence” of the arbitrator’s intent to purposefully disregard the law. ABCO
Builders, Inc. v. Progressive Plumbing, Inc., 647 S.E.2d 574, 576 (Ga. 2007).
“[T]here must be something beyond and different from mere error in law or failure
on the part of the arbitrator[] to understand or apply the law; it must be
demonstrated that the [arbitrator] deliberately disregarded the law in order to reach
the result [he] did.” Id. (first alteration in original) (quotation omitted). It is not
enough to show that the correct law was communicated to the arbitrator. Id. at
575. Rather, the party seeking to vacate the award must show that “the arbitrator
appreciated the existence of a clearly controlling legal principle and deliberately
chose to ignore it.” Patterson v. Long, 741 S.E.2d 242, 246 (Ga. Ct. App. 2013);
see also ABCO Builders, 647 S.E.2d at 575 (explaining that a party moving to
vacate an arbitration award on account of the arbitrator’s manifest disregard of the
law must provide evidence that the arbitrator was both “conscious of the law” and
“intentionally and knowingly chose to ignore” it (quotation omitted)).6
6
To illustrate just how difficult it is to make a showing that an arbitrator has manifestly
disregarded the law, the Georgia Supreme Court in ABCO Builders pointed to this Court’s
opinion in Montes v. Shearson Lehman Bros., 128 F.3d 1456 (11th Cir. 1997). ABCO Builders,
647 S.E.2d at 575. In that case, this Court concluded that an arbitration panel manifestly
disregarded the law where (1) the winning party had explicitly urged the arbitrators to disregard
the law; (2) the arbitration award recited the winning party’s argument that the law should be
disregarded; (3) the record reflected that the arbitrators knew the law and recognized that they
were told to disregard it; (4) nothing in the record refuted the inference that the arbitrators did as
the winning party had urged them to do; and (5) the evidence in support of the award was
marginal. Montes, 128 F.3d at 1459, 1461–62. Under Georgia law, “similarly clear evidence of
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Defendant has not met this burden. The record reveals that Defendant
communicated the correct rule to the arbitrator, but that is not enough. ABCO
Builders, 647 S.E.2d at 575–76; Patterson, 741 S.E.2d at 246. Defendant must
also show that the arbitrator had the “specific intent to disregard” it. ABCO
Builders, 647 S.E.2d at 576.
Although one iteration of the parol evidence rule is contained within one of
the block quotations of Georgia contract law included in the arbitrator’s award, the
arbitrator never discussed the rule either in the award or at the hearing. It is
evident from both the award and the transcript of the arbitration hearing that the
arbitrator was primarily concerned with ascertaining the extent to which the parties
had intended the various provisions of the license agreements to limit Plaintiff’s
ability to effectively transition to a new licensee when the agreements expired.
Consistent with that approach, the arbitrator’s award quotes extensively from
Georgia cases indicating that the overarching purpose of contract construction is to
ascertain the intent of the parties and to give the contract that meaning which will
best carry into effect their intent.
From this record, and assuming that the arbitrator incorrectly applied the
parol evidence rule, it is just as plausible that the arbitrator simply made a mistake
the arbitrator’s intent to purposefully disregard the law is required.” ABCO Builders, 647 S.E.2d
at 575–76.
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in interpreting, understanding, or applying that rule as it is that he manifestly
disregarded it. Because an arbitrator’s mere failure to apply the law is insufficient
to show manifest disregard, Defendant has not met its burden to show that the
award should be vacated on account of the arbitrator’s manifest disregard of
Georgia’s parol evidence rule. See ABCO Builders, 647 S.E.2d at 575–76;
Patterson, 741 S.E.2d at 246–50.
Defendant also argues that the arbitrator manifestly disregarded the rule that
ambiguous contracts are to be interpreted against the drafter. However, in refusing
to strictly adhere to that rule, the arbitrator, quoting a Georgia Court of Appeals
opinion, reasoned that the rule should not be applied piecemeal to each provision
in the contract, and that the contract should instead be considered in its entirety and
in such a way as to “ascertain the true intention of the parties.” It is evident,
therefore, that the arbitrator did not simply and deliberately ignore a rule that he
knew to be controlling. Rather, the arbitrator analyzed Georgia law and concluded
that the rule was not controlling in this case. Accordingly, Defendant has shown,
at most, that the arbitrator may have made a legal error. Again, such a showing is
insufficient to establish that the award should be vacated on the ground that the
arbitrator manifestly disregarded the law. See ABCO Builders, 647 S.E.2d at 575–
76; Patterson, 741 S.E.2d at 246–50.
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2. Overstepping Authority under O.C.G.A. § 9-9-13(b)(3)
“A court will vacate an arbitrator’s award on the basis that the arbitrator
overstepped his or her authority only where the arbitrator determines matters
beyond the scope of the case and addresses issues not properly before him or her.”
Brookfield Country Club, Inc. v. St. James-Brookfield, LLC, 683 S.E.2d 40, 45
(Ga. Ct. App. 2009), aff’d, 696 S.E.2d 663 (Ga. 2010); see also Progressive Data
Sys., Inc. v. Jefferson Randolph Corp., 568 S.E.2d 474, 475 (Ga. 2002) (declaring
that an arbitrator oversteps his authority only when he “determines matters beyond
the scope of the case”). Nevertheless, “the arbitrator may not ignore the plain
language of the parties’ contract.” Southwire Co. v. Am. Arbitration Ass’n, 545
S.E.2d 681, 684 (Ga. Ct. App. 2001). In reviewing the arbitrator’s decision,
however, “courts must not decide the rightness or wrongness” of the arbitrator’s
contract interpretation, only whether his decision “draws its essence from the
contract.” Id. (quotations omitted). So long as the contract provides “arguable
support” for the arbitrator’s decision, the arbitrator did not overstep his authority.
See id.
Two Georgia Court of Appeals opinions illustrate the difference between an
arbitrator’s overstepping of his authority by ignoring the plain language of the
contract and mere contract interpretation. First, in Sweatt v. International
Development Corp., the Georgia Court of Appeals held that an arbitrator
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overstepped his authority when he awarded a party actual damages despite a
liquidated damages clause in the relevant contract. 531 S.E.2d 192, 195–96
(2000). Indeed, because the contract specifically provided for only liquidated
damages, the Georgia Court of Appeals concluded that “the calculation of actual
damages was a matter not properly submitted” to the arbitrator. Id. at 196.
By contrast, in Brookfield Country Club, Inc. v. St. James-Brookfield, LLC,
the Georgia Court of Appeals held that an arbitrator did not overstep her authority
when she concluded that, because the owner of a golf course had not obtained a
permit to draw water from a lake on the course, it had breached a lease agreement
in which it warranted that it owned all “water rights and powers” appurtenant to
the course. 683 S.E.2d at 41–43, 45. In seeking to vacate the arbitrator’s award,
the owner argued that “the effect of the arbitrator’s ruling was to add a term to the
warranties of title.” Id. at 45. The owner further argued that, because the lease
agreement limited the arbitrator to applying “the strict terms” of the agreement, the
arbitrator had overstepped her authority in reading an additional term into the
lease. Id. The Georgia Court of Appeals rejected these arguments, reasoning that,
because the subject of the arbitration proceeding was the parties’ dispute about
“the construction, meaning or enforceability of the terms of the lease, and the
arbitrator resolved that dispute in her award, [the owner had] not shown that the
arbitrator addressed an issue not properly before her.” Id.
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This case is more similar to Brookfield than it is to Sweatt. Here, the subject
of the arbitration proceeding was the parties’ dispute about the construction,
meaning, or enforceability of certain terms in Defendant’s license agreements. The
arbitrator concluded that the provision allowing Plaintiff to engage in the
negotiation of a new license agreement to become effective upon the expiration of
Defendant’s license agreements provided Plaintiff with more than the right to
engage in mere “commercial discussions” with a potential licensee. Instead, the
arbitrator concluded, that provision allowed Plaintiff to actually reach an
agreement in 2014 for a new license to become effective in 2015, and to engage in
certain limited activities in 2014 that would ensure that it was possible for the new
licensee to launch a new line of Cabbage Patch Kids dolls in 2015. It was the
arbitrator’s job to decide what that provision meant, and it is not our job to “decide
the rightness or wrongness” of the arbitrator’s interpretation. See Southwire, 545
S.E.2d at 684 (quotation omitted). This is not a case like Sweatt, where the
arbitrator decided a matter that was not properly before him. See Sweatt, 531
S.E.2d at 195–96. Accordingly, Defendant has not shown that the arbitrator
overstepped his authority for purposes of O.C.G.A. § 9-9-13(b)(3).
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C. Vacatur under the Federal Arbitration Act
The Federal Arbitration Act provides several bases for vacating an
arbitrator’s award. 9 U.S.C. § 10(a). The only ground raised by Defendant on
appeal is that the arbitrator exceeded his powers under § 10(a)(4). 7
In determining whether an arbitrator has exceeded his powers, two principles
guide us. Wiregrass Metal Trades Council v. Shaw Envtl. & Infrastructure, Inc.,
837 F.3d 1083, 1087 (11th Cir. 2016). First, “we must defer entirely to the
arbitrator’s interpretation of the underlying contract no matter how wrong we think
that interpretation is.” Id. The Supreme Court has instructed that “an arbitral
decision even arguably construing or applying the contract must stand, regardless
of a court’s view of its (de)merits.” Sutter, 133 S. Ct. at 2068 (quotation omitted).
That means “the sole question for us is whether the arbitrator (even arguably)
interpreted the parties’ contract, not whether he got its meaning right or wrong.”
Id. If we determine that the arbitrator even arguably interpreted the parties’
contract, we must end our inquiry and deny a motion for vacatur. Wiregrass
Metal, 837 F.3d at 1088.
The second principle guiding our decision is that “an arbitrator may not
ignore the plain language of the contract.” Id. (quotations omitted). “That means
7
Under the Federal Arbitration Act, we may vacate an arbitration award if 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)(4).
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an arbitrator may not issue[ ] an award that contradicts the express language of the
agreement.” Id. (alteration in original) (quotation omitted). “It also means that an
arbitrator may not modify clear and unambiguous contract terms.” Id.
Applying these two principles, an arbitrator acts within his authority when
he even arguably interprets a contract, and he exceeds his authority when he
modifies the contract’s clear and unambiguous terms. Id. “To determine whether
the arbitrator engaged in interpretation, as opposed to modification, we begin by
looking at the relevant language in the [contract] and asking, as a threshold matter,
whether that language is open to interpretation.” Id. at 1088. If the language is
open to interpretation, we must then determine whether the arbitrator engaged in
interpretation or modification of that language. See id. at 1090. If it is not
apparent from the arbitrator’s stated reasoning whether he permissibly interpreted a
contract or impermissibly modified it, and one can plausibly read the award either
way, we must resolve the ambiguity by finding that the award is an interpretation
of the contract and enforcing it. Id. at 1091–92.
1. The negotiation provision is open to interpretation because it is
ambiguous on its face
We conclude that the provision reserving to Plaintiff the right to “engage,”
in 2014, “in the negotiation . . . of one or more license agreements . . . to become
effective” in 2015 is “sufficiently ambiguous” on its face as to allow for
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interpretation by the arbitrator.8 See Wiregrass Metal, 837 F.3d at 1088
(explaining that contract language is susceptible to an arbitrator’s interpretation
“when it is sufficiently ambiguous on its face or [w]hen there are two plausible
interpretations of an agreement.” (alteration in original) (quotations and citations
omitted)); Mariner Healthcare, Inc. v. Foster, 634 S.E.2d 162, 168 (Ga. Ct. App.
2006) (concluding that a promise that the terms and conditions of a previous lease
would continue so long as the parties “continued to negotiate” the terms of a new
lease was vague because “the parties did not attempt to define what would
constitute continuing to negotiate”). That provision could plausibly be read to
reserve only the right to engage in preliminary discussions about a contemplated
agreement—as Defendant contends—or to reserve the right to both (1) engage in
preliminary discussions, and (2) actually reach the agreement contemplated by the
provision. See, e.g., Negotiation, Black’s Law Dictionary (10th ed. 2014)
(defining “negotiation” as, among other things “[d]ealings conducted between two
or more parties for the purpose of reaching an understanding”); Webster’s Third
New International Dictionary, Unabridged 1514 (1993) (defining “negotiation” as
8
Because we conclude that the negotiation provision is ambiguous on its face, we do not
address the level of deference to be afforded to an arbitrator’s determination that a particular
provision is ambiguous when a court is assessing ambiguity for purposes of determining whether
the arbitrator exceeded his powers under 9 U.S.C. § 10(a)(4). Cf. Boise Cascade Corp. v. United
Steelworkers Local 7001, 588 F.2d 127, 129 (5th Cir. 1979) (concluding that a district court
erred in vacating an arbitrator’s award on the ground that the arbitrator had exceeded his
authority based on language that the district court believed was unambiguous because the
arbitrator’s determination that the language was ambiguous could not “be said to have no
foundation in reason or fact”).
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“the action or process of negotiating or of being negotiated,” and defining
“negotiate” as, among other things, “to arrange for or bring about through
conference and discussion” or to “work out or arrive at or settle upon by meetings
and agreements or compromises”); see also Negotiate, Black’s Law Dictionary
(10th ed. 2014) (defining “negotiate” as, among other things, “[t]o bring about by
discussion or bargaining”).
Defendant contends that the arbitrator “recognized that the literal language
of the License is not ambiguous” when he stated that, “[r]ead literally, without
examination of context,” the negotiation provision “appears to provide what
[Defendant] says it provides: [Plaintiff could] only negotiate a new license in 2014
and not do one thing more to obtain a new licensee until the onset of the new
year.” We do not read the arbitrator’s statement as a conclusion that the bare
language of the negotiation provision is not ambiguous. Rather, we read that
statement as an acknowledgement by the arbitrator that Defendant’s construction
of that provision had some initial intuitive appeal apart from any careful
consideration of either the language of the provision or its relationship to the other
terms of the agreement.
2. The arbitrator arguably interpreted the negotiation provision
Having determined that the negotiation provision is at least open to
interpretation, the next question is whether the arbitrator did interpret it. See
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Wiregrass Metal, 837 F.3d at 1090. “In many cases, courts determine whether an
arbitrator engaged in interpretation, as opposed to modification, by looking at the
arbitrator’s reasoning.” Id. If the reasoning shows that the arbitrator “engaged in a
textual analysis of the relevant terms” or “attempted to give meaning to express
terms—or discover implied terms—based on extrinsic evidence of the parties’
intent,” that will ordinarily mean the arbitrator engaged in interpretation, not
modification. Id.
Here, the arbitrator’s reasoning reveals that he attempted to give meaning to
the negotiation provision based on extrinsic evidence of the parties’ intent. Noting
that, without some preparatory activities in 2014, a successor licensee would not be
able to sell any Cabbage Patch Kids dolls in 2015, the arbitrator concluded that the
negotiation provision reserved to Plaintiff the right to reach an agreement with a
new licensee in 2014 and to take the limited steps necessary to ensure that it was
possible for the new licensee to launch a new line of Cabbage Patch Kids dolls in
the year that its license became effective.
By attempting to give meaning to the negotiation provision, the arbitrator
arguably interpreted the license agreements. Therefore, the arbitrator did not
exceed his powers under 9 U.S.C. § 10(a)(4). 9 Sutter, 133 S. Ct. at 2068 (“[T]he
9
Even if the arbitrator made an error of law in interpreting the license agreements, such as by
failing to properly apply Georgia’s rules of contract construction, that is not a basis for vacating
the award under the Federal Arbitration Act. See 9 U.S.C. § 10(a); Sutter, 133 S. Ct. at 2068
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sole question for us is whether the arbitrator (even arguably) interpreted the
parties’ contract, not whether he got its meaning right or wrong.”); Wiregrass
Metal, 837 F.3d at 1088 (“If we determine that the arbitrator (even arguably)
interpreted the parties’ contract, we must end [our] inquiry and deny . . . a motion
for vacatur.” (alterations in original) (quotations omitted)).
D. Sufficiency of the Evidence
The arbitrator also concluded, in the alternative, that even if Plaintiff had
breached the license agreements, its breaches were not material “in the context of
the totality of operations under the” license agreements and “relative to the
financial and branding effects and results of the parties’ long-term performance.”
Defendant argues that there was no evidence to support this conclusion. However,
we may not vacate an arbitrator’s award for mere insufficiency of the evidence.
Wiand v. Schneiderman, 778 F.3d 917, 926 (11th Cir. 2015) (declaring that this
Court lacks power to review whether the “weight of the evidence presented”
supported the arbitrator’s decision, and rejecting an appellant’s argument that the
arbitrator’s decision should be vacated because it was “based on no evidence”);
ABCO Builders, 647 S.E.2d at 575 (“An appellate court will not consider the
sufficiency of the evidence underlying an arbitrator’s award.”); Greene, 468 S.E.2d
(“So long as an arbitrator makes a good faith attempt to interpret a contract, even serious errors
of law or fact will not subject his award to vacatur.” (quotations omitted)); Ainsworth v.
Skurnick, 960 F.2d 939, 940 (11th Cir. 1992) (“Courts are generally prohibited from vacating an
arbitration award on the basis of errors of law or interpretation . . . .”).
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at 354 (“[A] reviewing court is prohibited from weighing the evidence submitted
before the arbitrator, regardless of whether the court believes there to be sufficient
evidence, or even any evidence, to support the award.”).
III. CONCLUSION
For the reasons set forth above, we AFFIRM the judgment of the district
court.
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