Denver & Rio Grande Western Railroad v. Union Pacific Railroad

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUL 17 1997
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

THE DENVER & RIO GRANDE
WESTERN RAILROAD COMPANY,

Plaintiff-Counter-Defendant - No. 96-3050
Appellant,
vs.

UNION PACIFIC RAILROAD
COMPANY,

Defendant-Counter-Claimant -
Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
(D.C. No. 93-CV-1011)

Phillip R. Fields, Wichita, Kansas, for Plaintiff-Counter-Defendant - Appellant.

Kenton E. Knickmeyer (Michael D. O’Keefe, with him on the brief), Thompson
Coburn, St. Louis, Missouri, for Defendant-Counter-Claimant - Appellee.

Before KELLY, McWILLIAMS, * and HENRY, Circuit Judges.

*
Judge McWilliams participated in the oral argument of this case.
However, since oral argument, he has determined that he must be recused from
consideration of the matter. Therefore, he has not participated in the present
disposition. The remaining panel judges, if in agreement, may act as quorum in
resolving the appeal. See 28 U.S.C. § 46(d); Edwards v. Basel Pharm., No. 95-
6176, 1997 WL 342861, *5 n.* (10th Cir. June 20, 1997).
KELLY, Circuit Judge.

This lawsuit is part of the aftermath of a March 28, 1991, train collision

near Cody, Kansas, on trackage controlled by Union Pacific Railroad Company.

Both trains were owned by the Denver & Rio Grande Western Railroad Company,

but pursuant to an agreement between the two railroads, were operated by crews

employed by Union Pacific. The Denver & Rio Grande Western sought a

declaratory judgment that Union Pacific was liable for the property damage and

personal injury awards resulting from the accident. Proceedings in the district

court were stayed pending arbitration. The arbitrator ruled in favor of Union

Pacific, concluding that at the time the conductor improperly diverted his train

into the path of the other he was, by virtue of the parties’ agreement, the sole

employee of the Denver & Rio Grande Western.

The Denver & Rio Grande Western moved to vacate the arbitrator’s award,

arguing that it violated Kansas’s public policy prohibiting indemnification for

acts of gross negligence. The district court denied the motion and confirmed the

arbitrator’s award, and the Denver & Rio Grande Western brought this appeal.

Union Pacific cross-appeals, arguing that we have no jurisdiction in this matter

because the Denver & Rio Grande Western’s notice of appeal was defective.

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 Union Pacific’s argument is based upon the Denver & Rio Grande

Western’s failure to designate the orders from which it appeals in its notice of

appeal. See Fed. R. App. P. 3(c). Union Pacific further argues that a docketing

statement cannot be used to cure a defective notice of appeal; regardless, they

argue, the Denver & Rio Grande Western’s docketing statement was filed late and

with the incorrect court. The issues argued on appeal by the Denver & Rio

Grande Western were resolved by the district court’s orders of November 4, 1994

and January 25, 1995. While it is true that the Denver & Rio Grande Western

failed to designate these orders in its notice of appeal, Union Pacific’s arguments

are unavailing. Although practitioners are expected to carefully comply with

procedural rules, case law interpreting those rules is founded upon a policy which

favors deciding cases on the merits as opposed to dismissing them because of

minor technical defects. E.g., Foman v. Davis, 371 U.S. 178, 181-82 (1962)

(“The Federal Rules reject the approach that pleading is a game of skill in which

one misstep by counsel may be decisive to the outcome . . . .”) (citation omitted).

When a notice of appeal fails to designate the order from which the appeal

is taken, our jurisdiction will not be defeated if other papers filed within the time

period for filing the notice of appeal provide the “functional equivalent” of what

Rule 3 requires. Torres v. Oakland Scavenger Co., 487 U.S. 312, 317 (1988);

Hubbert v. City of Moore, 923 F.2d 769, 772 (10th Cir. 1991). The Denver & Rio

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Grande Western filed its docketing statement within this time limit, see Fed. R.

App. P. 4(a)(1) and 26(a), and with the proper court, see 10th Cir. R. 3.4.

The docketing statement filed by the Denver & Rio Grande Western clearly

sets forth its intention to appeal from the undesignated orders, and the Union

Pacific had adequate notice of the issue being appealed and will not be

prejudiced. Bohn v. Park City Group, 94 F.3d 1457, 1460 (10th Cir. 1996); see

Smith v. Barry, 502 U.S. 244, 248 (1992). Although it failed to designate the

dates of the orders in its notice of appeal or docketing statement, the docketing

statement clearly described the issues on appeal as those decided by the

undesignated orders. Copies of these two orders of the district court were

attached to the docketing statement, which was served on the defendant. Union

Pacific had notice of the subject of the appeal, had copies of the pertinent orders,

and thus suffered no prejudice from the omission. See Foman, 371 U.S. at 181;

Cooper v. American Auto. Ins. Co., 978 F.2d 602, 607-09 (10th Cir. 1992). Thus,

Union Pacific’s argument that we have no jurisdiction fails.

For its part, the Denver & Rio Grande Western argues that the arbitrator’s

award should be set aside because it violates the public policy of the State of

Kansas against indemnification for acts of gross negligence.

Once a dispute is properly before an arbitrator, the function of the courts in

reviewing the arbitrator’s decision is quite limited. First Options of Chicago v.

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Kaplan, 514 U.S. 938, 942 (1995); Bowles Fin. Group v. Stifel, Nicolaus & Co.,

22 F.3d 1010, 1012 (10th Cir. 1994). A court may only vacate an arbitration

award for reasons enumerated in the Federal Arbitration Act, 9 U.S.C. § 10, or for

a handful of judicially created reasons, W. R. Grace & Co. v. Local Union 759,

461 U.S. 757, 766 (1983) (courts may vacate arbitration awards which violate

public policy); Wilko v. Swan, 346 U.S. 427, 436-37 (1953) (courts may set aside

arbitration awards which are based upon a manifest disregard of the law),

overruled on other grounds, 490 U.S. 477 (1989); see also Bowles, 22 F.3d at

1012-13 (courts may set aside arbitration awards if the arbitrator did not conduct

a fundamentally fair hearing). Outside of these limited circumstances, an

arbitration award must be confirmed. 9 U.S.C. § 9. Errors in either the

arbitrator’s factual findings or his interpretation of the law (unless that

interpretation shows a manifest disregard of controlling law) do not justify review

or reversal on the merits of the controversy. United Paperworkers Int’l Union v.

Misco, Inc., 484 U.S. 29, 36-38 (1987); ARW Exploration Corp. v. Aguirre, 45

F.3d 1455, 1463 (10th Cir. 1995); Bowles, 22 F.3d at 1012. Because of the

courts’ limited ability to review arbitration awards, their powers of review have

been described as “among the narrowest known to the law.” ARW Exploration,

45 F.3d at 1462.

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 Although the factual findings of the arbitrator are insulated from judicial

review, a district court ruling on a motion to vacate may make its own factual

findings regarding the reasons for which the motion should be denied or granted.

We review those findings for clear error, First Options, 514 U.S. at 947-48;

Kelley v. Michaels, 59 F.3d 1050, 1053 (10th Cir. 1995), and decide questions of

law de novo, id.; ARW Exploration, 45 F.3d at 1462; Bowles, 22 F.3d at 1012.

The Denver & Rio Grande Western argues that the district court erred in

denying its motion to vacate the arbitration award because it is based upon an

agreement which violates public policy, and thus invokes one of the judicially

created justifications for vacating an arbitration award. As discussed above, we

review the district court’s decision de novo. Given the arbitrator’s finding that,

pursuant to the agreement of the parties, the conductor responsible for the

collision was the employee of the Denver & Rio Grande Western, the asserted

public policy—prohibiting indemnification of a party for acts of its own gross

negligence—is irrelevant. The Denver & Rio Grande Western has simply been

held responsible for damages caused by the fault of one of its employees. We

therefore need not consider whether the State of Kansas has a well defined and

dominant public policy which prohibits a party from indemnifying itself for its

acts of gross negligence.

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 The Denver & Rio Grande Western also urges us to find that the conductor

responsible for the collision was in fact the employee of Union Pacific, and that

the collision was caused by his gross negligence. Neither this court nor the

district court, however, has the authority to second-guess the arbitrator’s findings

or conclusions. Misco, 484 U.S. at 45 (Fact-finding is a task which “exceeds the

authority of a court asked to overturn an arbitration award”; “inquiring into a

possible violation of public policy” does not authorize a court to exceed its

authority.).

AFFIRMED. Union Pacific’s motion to dismiss for lack of jurisdiction is

DENIED.

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