United States Court of Appeals
For the First Circuit
Nos. 01-1849, 01-1911
WONDERLAND GREYHOUND PARK, INC.; WESTWOOD GROUP, INC.,
Plaintiffs, Appellees/Cross-Appellants,
v.
AUTOTOTE SYSTEMS, INC., f/k/a AUTOTOTE LTD.,
Defendant, Appellant/Cross-Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Joseph L. Tauro, U.S. District Judge]
Before
Selya, Circuit Judge,
Stahl, Senior Circuit Judge,
and Lynch, Circuit Judge.
David M. Olasov with whom Baer Marks & Upham LLP, Scott A.
Roberts, A. Lauren Carpenter, and Sullivan, Weinstein & McQuay, P.C.
were on brief for appellant/cross-appellee.
Kevin M. Considine with whom James W. Stetson was on brief
for appellees/cross-appellants.
December 19, 2001
LYNCH, Circuit Judge. This case comes to us on cross
appeals from the district court opinion vacating an arbitral
award as manifestly in disregard of the law. On August 28,
2000, Wonderland Greyhound Park, Inc. and Westwood Group, Inc.
(collectively, "Wonderland") had been ordered by the arbitrator
to pay Autotote Systems, Inc. $456,043.84 due on a million
dollars advanced by Autotote to Wonderland in 1992. The
arbitrator had, however, also found that Autotote was in
violation of a divisible contractual obligation to provide
Wonderland with some additional equipment, which thereby
permitted Wonderland to terminate the contract. The district
court found these two conclusions to be internally inconsistent
and so vacated the award and remanded to the arbitrator for
proceedings consistent with its opinion. Wonderland Greyhound
Park, Inc. v. Autotote Sys., Inc., 144 F. Supp. 2d 25, 29 (D.
Mass. 2001). Autotote appeals from that decision. Wonderland
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appeals the district court's decision to remand the case to the
arbitrator.1
Our review of the district court's ruling on an
arbitration award is de novo. Bull HN Info. Sys., Inc. v.
Hutson, 229 F.3d 321, 330 (1st Cir. 2000). Judicial review of
the arbitrator's decision is "extremely narrow and exceedingly
deferential." Id. (quoting Wheelabrator Envirotech Operating
Servs. v. Mass. Laborers Dist. Council Local 1144, 88 F.3d 40,
43 (1st Cir. 1996)). An arbitrator's award must be enforced "if
it is in any way plausible, even if we think [he] committed
serious error." Gupta v. Cisco Sys., Inc., No. 01-1122, 2001 WL
1504671, at *2 (1st Cir. Dec. 3, 2001). A court may only vacate
an arbitrator's award in very rare circumstances, such as where
there was misconduct by the arbitrator, where the arbitrator
exceeded the scope of his arbitral authority, or when the award
was made in manifest disregard of the law. Bull HN Info. Sys.
Inc., 229 F.3d at 330-31; see 9 U.S.C. § 10 (2000). Although
the district court articulated the appropriate standard of
review, we believe it misunderstood the arbitrator’s opinion and
1 Our disposition of this case makes this cross-appeal
irrelevant.
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accordingly did not properly apply the principles. The
arbitrator’s opinion was far from being in manifest disregard of
the law and the district court was required to affirm it.
We start with a preliminary argument made by
Wonderland. Wonderland says that the arbitral award exceeded
the arbitrator’s authority as to remedy, even if the arbitrator
was correct that the contract was divisible. However, the
arbitral clause in the agreement contains no limitations
whatsoever on the arbitrator's power, but simply requires the
parties to arbitrate all grievances between them:
Any controversy or claim not settled by the parties
arising out of or relating to this contract, or the
breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration
Association, and judgement upon the award rendered by
the Arbitrator(s) may be entered in any Court having
jurisdiction thereof.
Wonderland’s argument is based entirely on clauses within the
contract as to remedies for breach of contract. One clause
states:
In the event that [Wonderland] shall default in the
performance of any provisions of this Agreement on its
part to be performed . . . and such default shall not
be cured within a period of ten (10) days after notice
shall have been given by AUTOTOTE to [Wonderland]
specifying such default, then AUTOTOTE may terminate
this Agreement by delivering to [Wonderland] written
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notice of such termination prior to the expiration of
thirty (30) days after the expiration of said ten (10)
day period; and in the event of any such termination
AUTOTOTE shall remove its personnel, materials and
equipment from the RACETRACK, and the cost of such
removal shall be paid for by [Wonderland].
There is an identical clause for when Autotote defaults in the
performance of the contract. There is also a clause in the
contract that states:
The remedies expressly provided in this Agreement for
breach thereof by AUTOTOTE or [Wonderland] shall
constitute the sole and exclusive remedies to the
aggrieved party, and all other remedies which might be
otherwise available under the law of any jurisdiction
are hereby waived by both AUTOTOTE and [Wonderland].
It was within the province of the arbitrator to
construe the contract, including these remedial provisions, in
the first instance. Id. at 330 ("[I]t is the arbitrator's view
. . . of the meaning of the contract that [the parties] have
agreed to accept.") (quoting United Paperworkers Int'l Union v.
Misco, Inc., 484 U.S. 29, 37-38 (1987)). Accordingly, it was
within the power of the arbitrator to conclude that the
contractual remedial clause here did not limit the remedy for
Wonderland's failure to meet its installment repayment
obligation. The arbitrator did not exceed the scope of his
arbitral authority and the award can therefore only be
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challenged for manifest disregard of the law. An award is in
manifest disregard of the law if either "the award is contrary
to the plain language of the contract," or "it is clear from the
record that the arbitrator recognized the applicable law, but
ignored it." Gupta, 2001 WL 1504671, at *2.
To understand why the arbitral award, which the
district court found to be internally inconsistent, is neither
inconsistent nor in manifest disregard of the law, it is
necessary to review some of the factual determinations made by
the arbitrator. An arbitrator's factual findings are generally
"not open to judicial challenge," El Dorado Technical Servs.,
Inc. v. Union General De Trabajadores De Puerto Rico, 961 F.2d
317, 320 (1st Cir. 1992), and "[w]e accept the facts as the
arbitrator found them." Boston Med. Ctr. v. Serv. Employees
Int'l Union, Local 285, 260 F.3d 16, 18 (1st Cir. 2001).
Autotote is a provider of pari-mutuel wagering
totalizer machines and services.2 In 1991 it entered into a
contract with Wonderland, a greyhound race track. In 1992
2 A totalizer machine, also known as a totalisator
machine or tote machine, is a machine that registers bets and
divides the total amount bet among those who won.
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Wonderland asked Autotote for a one million dollar loan. As
part of the consideration for this loan, the 1991 contract was
extended to 1997, and Wonderland agreed that it would repay the
million dollar loan at the rate of $4,944.08 weekly, totaling
$257,092.16 annually. Autotote in fact forwarded Wonderland the
million dollars as agreed. In addition, Autotote provided
totalizer services to Wonderland and was entitled to fees for
these services. In 1993, Autotote made another advance of
$325,000 to Wonderland.
In 1995 the parties executed an extension of the 1991
contract, which further extended the contract to 1998, and
Wonderland reaffirmed its burden to pay weekly installments of
$4,944, above and beyond the weekly payment of fees for
totalizer services. Wonderland did not in fact pay for all of
the totalizer services and there is a stipulation that the sum
owed on that account was $21,747.
In 1999, the parties again extended their contract.
This extended the contract retroactively from 1998 for a seven-
year term. This amendment reduced the installment payments due
to Autotote from weekly payments of $4,944.08 to weekly payments
of $1,373.63 for a seven-year period, for a total sum of
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$500,000. The 1999 amendment also required Autotote to supply
Wonderland with a specified array of new equipment, including
hardware and software. The arbitrator found that Autotote had
failed to supply the new equipment and that this failure was a
material breach of that portion of the 1991 contract as extended
and amended in 1999. That breach, according to the arbitrator,
justified Wonderland in terminating the contract. The question
then became whether the termination of the contract excused
Wonderland from repaying the monies advanced to it earlier by
Autotote.
The arbitrator found that while Autotote’s failure to
provide the new equipment justified Wonderland’s termination of
the contract, that did not absolve Wonderland from liability to
Autotote for the weekly fee of $1,373.63 for the seven-year
term, for a total payment of $500,000. The arbitrator found
that Autotote had fulfilled its obligation in 1992 to provide a
million dollars and that it was entitled to the benefit of the
bargain as renegotiated in 1999 with respect to the installment
payment contract. The arbitrator found that the contract was
divisible and that the effect of the termination was to mature
Autotote’s executory rights for a total payment of $500,000,
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less the installments paid. The arbitrator found that only 32
payments of $1,373.63 had been made, thus entitling Autotote to
an award of $456,043.84 for that portion of the contract.
On those facts, the arbitrator’s award cannot be said
to be in manifest disregard of the law. While the arbitrator
did not use the specific magic words that Wonderland was "in
breach" of the divisible obligation with respect to the
installment payment stream, he did find that Wonderland failed
to make installment payments and he rejected the reasons given
by Wonderland to excuse its non-payment. This is sufficient to
establish breach of contract.
As to the acceleration of payments, we have already
disposed of the argument that the arbitrator was limited in his
remedies. In fact, Autotote had loaned Wonderland a million
dollars in 1992. There was an agreement to repay the loan on an
installment basis, but very few payments had been made over the
years. The arbitrator’s decision that the payments long overdue
should now be paid in full cannot be said to be in manifest
disregard of the law.
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Accordingly, we vacate the judgment and remand to the
district court with instructions to enter an order enforcing the
arbitral award in full.3 Costs are awarded to Autotote.
3 This includes the award to Autotote of the stipulated
sum of $21,747 for totalizer services fee arrearages due from
Wonderland, which was inexplicably omitted from the district
court's order.
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