Matter of Interview, Inc. v Fuller 2014 NY Slip Op 32469(U) September 18, 2014 Supreme Court, New York County Docket Number: /2013 Judge:

Transcription

1 Matter of ntervew, nc. v Fuller 2014 NY Slp Op 32469(U) September 18, 2014 Supreme Court, New York County Docket Number: /2013 Judge: Mchael D. Stallman Cases posted wth a "30000" dentfer,.e., 2013 NY Slp Op 30001(U), are republshed from varous state and local government webstes. These nclude the New York State Unfed Court System's E-Courts Servce, and the Bronx County Clerk's offce. Ths opnon s uncorrected and not selected for offcal publcaton.

2 [* 1] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: AS PART 21.: >< ' n the Matter of the Arbtraton between NTERVEW, NC. and BRANT PUBLCATONS, NC., ndex No.: /2013 VCTORA FULLER, Pettoners, Decson Respondent. ; ~---.>< HON. MCHAEL D. STALLMAN, J.: Pettoners ntervew, nc. (ntervew) and Brant Publcatons, nc. (BP) seek to confrm the fnal arbtraton award of Arbtrator Ralph S. Berger, dated September 20, 2013, aganst respondent Vctora Fuller. Pursuant to CPLR 7511, Fuller cross-moves for an order vacatng the award and remandng the matter to the Amercan Arbtraton Assocaton for reassgnment to a new arbtrator. - and- -1-

3 [* 2]. 1 Accordng to the petton, BP owns ntervew, whch publshes the popular culture magazne, ntervew. (Petton 1J 12.) Fuller was the Vce '.1 Presdent and Assocate Publsher of lntervel(v. n December 2006, Fuller allegedly went on medcal leave, and allegedly!receved short-term dsablty benefts. On February 16, 2007, Fuller demanded arbtraton aganst ntervew 1. and BP before the Amercan Arbtraton Assocaton, allegng that she had not ' been pad commssons, n volaton of an employment agreement, made as of August 15, 2002, between Fuller and ntervew (Employment Agreement). (Delarco Affrm., Ex 1 [Demand for Arbtratonf) The arbtraton demand also! J clamed that ntervew and BP antcpator\y breached ther short-term dsablty polcy. :1 1, Fuller returned to the offce on March 2, 2007, and ntervew termnated ;j j Fuller's employment on March 27, On June 15, 2007, Fuller commenced an rcton n federal court, allegng volatons of the Famly Medcal Leave Act of 1993 (FMLA) (the FMLA acton). n the FMLA acton, Fuller also alleges dscr,mnaton based on dsablty, '!' ncludng the falure to provde reasonable accommodatons and retalaton -2-

4 [* 3] n volaton of New York State and New York Cty Human Rghts laws. The FMLA acton seeks damages for, among other thngs, lost past and future earnngs. (Delarco Opp. Affrm., Ex 2 [complant].) On November 6, 2009, Fuller amended 1 her arbtraton clam aganst t ntervew and BP. (See DeLarco Affrm., Ex 3 [Proposed Amended Clam].) Frst, Fuller asserted that she was enttled to commssons from January 1, 2007 untl March 27, 2007, n the amount of $30,307 (the Commssons, Clam). Fuller mantaned that her short-term dsablty benefts should have :1 ncluded "100 /o of normal earnngs" whle she was out on medcal leave. However, Fuller mantaned that she was not pad any commssons whle she was out on medcal leave. Second, Fuller alleged that she was wrongfully termnated n volaton of the Employment Agreement (the Breach of ErrploymentAgreement Clam). :j Accordng to the amended clam for arbtraton, ntervew termnated Fuller for submttng allegedly fraudulent expense reports from 2005 and 2006, "seekng company rembursement n the hundreds of ~ollars for personal charges, consstng prmarly of recepts for taxs and 1 meals." (d. ~ 38.) Fuller! mantaned that the people who submtted thy allegedly fraudulent reports were provded hgher salares for provdng tts nformaton, and that they -3-

5 [* 4] themselves commtted fraud.. lj She contended, n her amended clam for 11 arbtraton, that her recepts were approprate ard routne, and that ntervew volated ts own practce by not allowng her to correct or resubmt her expense reports. n addton to the two man clams, Fuller also alleged addtonal ' breaches of the Employment Agreement, "ncludng but not lmted to nterferng wth Fuller's ablty to perform her job, by refusng to allow Fuller to carry out any of her job related tasks whle on leave, contrary to the! customary practce at ntervew." (Proposed Am~nded Clam1J1J ) Fuller was allegedly forbdden from contactng ntervew employees or clents whle on leave, was undermned n her job respons~ltes and authorty, and was locked out of her offce upon her return, whch: Fuller clamed were materal breaches of the Employment Agreement. Ralph S. Berger, Esq., (Arbtrator Berger) was apponted as the arbtrator. By a letter dated September 18, 2012, Kenneth Krschner, Esq. entered an appearance as co-counsel for ntervew and BP. (Rch Affrm., Ex 515.) By a letter dated September 19, 2012, Arbtrator Berger dsclosed: (1) that he knew Krschner, from when they were students n college; (2) that Krschner appeared before Berger n employm'ent and arbtraton cases; (3) -4-

6 [* 5] that n 2001, Berger and Krschner served on a panel of arbtrators n an employment case; and (4) that he and Krschner occasonally saw each other at alumn functons and had socalzed together. (Rch Opp. Affrm., Ex 515.) Berger wrote, "These dsclosures do not affect my mpartalty n the nstant matter n any way." (d.) By letter dated September 24, 2012, Fuller's attorney objected to Krschner's partcpaton n the arbtraton. (d.) The letter states, n pertnent part, "Should he not wthdraw or be removed as counsel for Respondents, most regretfully vew that must ask you, Mr. Berger, to recuse yourself." (d.) Followng an exchange of letters, Krschner wthdrew as co-counsel n the arbtraton by letter dated October 17, (d.) By a letter of the same date, Fuller's attorney stated, " am wthdrawng my objecton to th~ partcpaton of the arbtrator, Mr. Berger, based on Mr. Krschner's agreement to wthdraw as counsel. t s my understandng that hs assocate, Mr. Delarco, who t has been represented has no assocaton wth Mr. Berger, wll substtute for hm." (Delarco Affrm., Ex 5.) Sx days of hearngs were held n Aprl 2013 and on May 2, Among the wtness who testfed were Fuller's former assstants, Nada Uddn, Joshua Homer, Mare LaFrance, and Adren Bellezza; ntervew's Chef -5-

7 [* 6] r Executve Offcer, Sandra Brant; ntervew's Chef Fnancal Offcer, Deborah Blasucc; and Fuller herself. (See Rch Opp. Affrm., Ex 502 [hearng transcrpts].) The hearngs generated approxmately 2,000 pages of transcrpt. n ther post-hearng bref, ntervew and BP requested attorneys' fees. Fuller's post-hearng bref dd not nclude such a request; nether dd Fuller's counsel object to ntervew and BPl's fee request. On September 20, 2013, Arbtrator Berger ssued a twenty-two page opnon and award. (Verfed Petton, Ex A [Opnon & Award].) The Award states, n relevant part: "1) The Respondents, ntervew, nc. and Brant Publcatons, nc., had 'cause' to termnate the employment of the Clamant, Vctora Fuller. 2) The Respondents are the prevalng party n ths proceedng and are awarded the sum of $318, n attorneys' fees and $11, n related costs. 3) The Respondents are also awarded $ n fees of the Amercan Arbtraton Assocaton and $29,500 n fees of the Arbtrator. The admnstratve flng and case servce fees of the Amercan Arbtraton Assocaton, totalng $6,000.00, shall be borne as ncurred. 4) The amounts awarded to the Respondents n paragraphs 2 and 3 above are to be pad by the Clamant to the Respondents wthn 30 days of the date of ths Award. 5) The Clamants' clam for commssons for the months of February and March 2007 s dened wthout prejudce.

8 [* 7] (/d.) 6) Ths Award s n full settlement of all clams submtted to ths arbtraton. All clams not expressly granted are hereby dened." 1! :; :11 Regardng Fuller's Commssons Clam (whch was dened wthout :! prejudce), the Opnon states, "The Respondents assert that, because the ssue s pendng n an acton n the Unted States Dstrct Court for the Southern Dstrct of New York arsng under the Famly Medcal Leave Act ('FMLA'), the New York State Human Rghts Law,. and the New York Cty Human Rghts Law, the undersgned should not decde ths ssue. The Respondents reason that there s a rsk of nconsstent judgments f the commsson ssue s de,cded n ths case. The Clamant does not address the deferral ssue n her bref.. ' n that the ssue regardng the payment of commssons to the Clamant s nextrcably ntertwned wth the FMLA clam fled by the Clamant currently pendng n Dstr!ct Court, and because there s a rsk of an nconsstent judgment, the undersgned wll not make an award concernng the lost commssons ssue. Ths determnaton s wthout prejudce to any; related proceedng." (Opnon, at 20.) '. ' J.1. On September 25, 2013, ntervew and;bp commenced ths specal j ' proceedng to confrm the Award. Fuller oppose,s the petton and cross-moves ; to vacate the Award.. "t s well settled that judcal revew 9f arbtraton awards s extremely lmted. An arbtraton award must be upheld when the arbtrator offers even a barely colorable justfcaton for the -7-.1,, ' : =~1 ::' :! '

9 [* 8] outcome reached. ndeed, we have stated tme and agan that an arbtrator's award should not be vacated for errors of law and fact commtted by the arbtrator and the courts should not assume the role of overseers to mold the award to cqnform to ther sense of justce." 1 ;j :1! (Wen & Malkn LLP v Helmsley-Spear, nc.,? NY3d 471, [2006] ' [nternal ctatons, quotaton marks, and emendaton omtted].) "Courts may vacate an arbtrator's award only on the grounds stated n ~1 CPLR 7511(b)." (Matter of New York Cty T~. Auth. v Transport Workers' Unon of Am., Local 100, AFL-CO, 6 NY3d 332, 336 [2005].) Here, Fuller.. ;j contends that the Award should be vacated on the grounds that the arbtrator :1 commtted msconduct; that the arbtrator was partal; that the Award s :1. ndefnte; and that the arbtrator exceed hs power, n that the Award was ' totally rratonal and volates publc polcy. (GP.LR 7511 [b] [1] [], [], [].) A. "Pursuant to CPLR 7511(b)(1)(), an arbtraton award may be vacated f the court fnds that the rghts of a party were prejudced by 'corrupton, fraud or msconduct n procurng the award.' A refusal by an arbtrator to hear pertnent materal evdence may consttute msconduct under CPLR 7~11 (b){1 ){). The party seekng to vacate the arbtraton award has the burden of provng by clear and convncng evdence that the arbtrator commtted msconduct." ' (Matter of Allstate ns. Co. v GECO [Govt. Empls. ns. Co.], 100 AD3d 878,,, 879 [2d Dept 2012] [nternal ctatons omtted]; 1 see e.g. Matter of Dsston Co. -8- :1 ;!, w 11

10 [* 9] 'Jl ; [Aktebolag], 176 AD2d 679, 679 [1st Dept 1991].) "Arbtrators need only receve evdence that s 'pertnent and materal,,' and such determnaton wll only be set asde f t deprves a party of a: fundamentally far hearng." '.1 (Kamnsky v Segura, 26 AD3d 188, 189 [1st Dept 2006].) 1:1. Fuller clams that she was not permtted!jto offer proof that ntervew's : " allegatons of Fuller's fraud were pretextual, and that Fuller's rembursements ' :l ;r were consstent wth company polcy. Fuller mantans that Arbtrator Berger ' ;!. '' excluded deposton testmony and documents 9btaned from a federal lawsut ; ' 11: brought by another employee, Alfred Mayor, a!legng that he was wrongfully termnated. Fuller contends that what was o:btaned from Mayor's lawsut,j., : would show that "Blasucc led about the reason for Mayor's termnaton and fabrcated a clam that two people wtnessed Mayor's alleged wrongdong." ' (Rch Reply Affrm. ~ 24.) n addton, Fuller,;clams that Arbtrator Berger! j excluded evdence regardng the expense ;:reports of ntervew's Chef, Fnancal Offcer, Deborah Blasucc. She also contends that Arbtrator Berger 1 : mproperly refused to consder her evdence that would show that the wtnesses lacked credblty. ' At the arbtraton hearng, Fuller argued that her attorney should be jl ' permtted to queston Blasucc about materal?btaned from Mayor's lawsut,! ~ ",, ' ' ',, j1-9-

11 [* 10] whch Fuller's attorney argued establshed a~ "dentcal modus operand." (Rch Opp. Affrm., Ex 502 [Tr.], at 1672.) The hearng transcrpt states, n relevant part: : "THE ARBTRATOR: Mr. Rch, get to th~ part that any of ths s relevant n ths matter. MR. RCH: t's relevant that t goes to mo1us operand. t goes to motve, that the motve s fnancal. And t also goes to mpeachment... : MR. DeLARCO: My response s t's not relevant. t muddes the waters. He's bascally tryng to try another case outsde of ths case.the Maher [sc] case s a completely separate case, an age dscrmnaton case. t has absolutely no probatve value whatsoever. 1 THE ARBTRATOR: Ths doesn't come n. None of t comes n. We're not usng ths forum to reltgate! and debate what took place n another matter. None of ths comes n. Call the wtness [Blasucc] back n." (Tr. at ) As to Blasucc's expense reports, Fuller argued that he should be enttled to probe nto whether Blasucc herself adhered to company polcy: "MR. RCH: Frst of all, the relevance ofms. Blasucc's expense reports are, we haven't gotten a polcy. We've gotten lots of statements of what polcy s and procedure s and what's proper and not proper. And Ms. Blasucc, n her deposton testmony, states that she followed the proper procedure. And t turns out that her expenses 1 are, f one would call - her expenses are egregously lackng!n documentaton. And ' -10- :. 1.

12 [* 11] when t goes to the queston as to whether or not there was a breach, what are the standards that consttute a breach. And one of the ways we can establsh what the standard s, s seeng someone else. And certanly, the CFO s a vald person to look to a standard... * * * MR. DeLARCO: Number one, ths case s not about volatng procedure. Ths case s about theft. Ths case s about materal dshonesty. We have not taken the poston that Ms. Fuller was termnated because she volated procedure, number one. Number two, ths case s not about Ms. Blasucc and whether or not she allegedly volated procedure. Ths s not her contract. She was not termnated. t has absolutely nothng to do wth t. So once agan, you are askng to have a mn tral wthn a tral, to try to prove somethng that's completely not relevant to the ssues at hand. * * * THE ARBTRATOR: All rght, thnk t's tme for a rulng. Frst of all, ths stpulaton regardng evdence from one forum beng utlzed n another forum, refers to evdence. t does not refer to document requests. Ths document request does not n [sc] come n ths proceedng. am not gong to be put n a poston where we need to decde whether ths was compled wth, ths document request, fully or partally or anythng of the sort. Ths s not an argument to be put before me, frst. Second, 've spent a lot of tme studyng the partes' submssons. There s no allegaton of dsparate treatment n the Amended Clam, whch granted you leave to fle, Mr. Rch... You dd not allege that your clent was beng treated dfferently than other executves. 11-

13 [* 12] We are not here to fnd out what the terms and condtons of Ms. Blasucc's employment were. We are not gong nto ths lne of questonng. Move on." (Tr. at ) / ' Fuller has not demonstrated, by clear and convncng evdence, that Arbtrator Berger commtted msconduct. "[A]bJent provson n the arbtraton clause tself, an arbtrator s not bound by prn~ples of substantve law or by rules of evdence." (Matter of Slverman [BenrJor Coats], 61 NY2d 299, 308 [1984].) Arbtrator Berger's evdentary rulngs, were "at most unrevewable error of law and dd not consttute msconduct.... "(Matter of Merrll Lynch, ; Perce Fenner & Smth [Dougherty & Co.-Lazard & Ladlaw-Matthews & Wrght], 198 AD2d 181 [1st Dept 1993].) B. "A party seekng to set asde an arbtraton award for alleged bas of an arbtrator must establsh hs clam by 'clear a 1 nd convncng proof [nternal ctaton omtted]."' (Matter of lnfosafe Sys. [nternatonal Dev. Partners], 228 AD2d 272, [1st Dept 1996].) Partalty may be n the form of actual bas, or the appearance of bas "from whch la conflct of nterest may be nferred." (New York Rests. Exch. v Chase Manhattan Bank, 226 AD2d 312, :! 315 [1st Dept 1996].),

14 [* 13] Fuller alleges that Arbtrator Berger's b1am that he s mpartal s "subject to serous queston," gven the result ot the award and some actons '1 whch took place durng the proceedngs. For example, Fuller argues that,1 '1'. Arbtrator Berger was based because he found that Fuller was evasve n her ;! testmony and that he gave ntervew more "leeway" durng the proceedngs. ' J And, although Krschner wthdrew from the hea'rng, she beleves that he was 11 stll connected to the proceedngs n some j way, and able to nfluence Arbtrator Berger's award. t ; :r Nothng n the record ndcates that Arbtrator Berger was n any way ;1: prejudced or that there was "evdent partalty"?n Arbtrator Berger's part due : to hs relatonshp wth Krschner. (See e:~g. Mllken & Co. v Tffany Loungewear, 99 AD2d 993, 995 [1st Dept 1984] ["Nothng n the record of ths proceedng demonstrates that Tffany was n any way prejudced or that there,! was 'evdent partalty' on the part of the arb~rator merely because of the 1 ; '! exstence of some past nsubstantal busness c;jealngs between Mllken and J Shasha's company"].) Fuller merely speculates about Arbtrator Berger's bas, :!: ' based on her dssatsfacton wth hs actons durng the proceedng and ultmate determnaton.!!1 j j) 11: Arbtrator Berger's : assessment of the partes'!: 11' credblty s not bas. Therefore, Fuller does pot "meet the hgh burden of -13

15 [* 14] showng" alleged bas. (Batyreva v N. Y.C. Dept. of Educ., 95 AD3d 792, 792 [1st Dept 2012].) Because Fuller faled to present any clear and convncng evdence of actual bas or the appearance of bas, she faled to establsh vacatur of the award pursuant to CPLR 7511 (b) (1) () on the grounds of partalty. 1 c. An arbtraton award s ndefnte or nonfnal for purposes of CPLR 7511 "only f t leaves the partes unable to determne ther rghts and oblgatons, f t does not resolve the controversy submtted or f t creates a new controversy." (Matter of Mesels v Uhr, 79 NY2d 526, 536 [1992].) "[A] dstncton must be drawn between an arbtrator's falure, on the one hand, to dspose of the controversy submtted, and hs falure, on the other, to consder all of the ssues of fact and law that a court would have to consder n order to properly dspose of the same controversy. The former renders an award not fnal and defnte, and thus subject to vacatur under CPLR 7511 (b) (1) (); the latter amounts to a mere error of fact or law not judcally revewable [nternal ctatons omtted]." (Matter of Guetta [Raxon Fabrcs Corp.], 123 AD2d 40, 45 [1st Dept 1987].) 1 The Court notes that Arbtrator Berger mmedately dsclosed that he knew Krschner and dsclosed the extent of ther nteracton. The Court also notes that Fuller waved her objectons when Krschner wthdrew as counsel. As the Court held n Matter of Namdar [Mrzoeff] (161 AD2d 348, 349 [1 51 Dept 1990]), "[a] party who proceeds wth an arbtraton wth actual knowledge of bas on the part of an arbtrator or facts that should have prompted further nqury, waves hs objecton to the arbtraton." -14-

16 [* 15] Fuller argues that the Award should be vacated pursuant to CPLR 7511 (b) (1) () because Arbtrator Berger dd not make a determnaton wth respect to the Commssons Clam. The Opnon states, n pertnent part: "C. Clam for Commssons The Respondents take the poston that whle the Clamant was on dsablty leave, the Clamant dd not earn commssons as set forth n her Agreement. The Clamant was dened commssons totalng $29, for the months of February and March, The Clamant argues that commssons formed part of her regular compensaton and should have been pad, both under the Agreement and New York Labor Law Artcle 6. The Respondents assert that, because the ssue s pendng n an acton n the Unted States Dstrct Court for the Southern Dstrct of New York arsng under the Famly Medcal Leave Act ("FMLA"), the New York State Human Rghts Law, and the New York Cty Human Rghts Law, the undersgned should not decde ths ssue. The Respondents reason that there s a rsk of nconsstent judgments f the commsson ssue s decded n ths case. The Clamant does not address the deferral ssue n her bref. n that the ssue regardng the payment of commssons to the Clamant s nextrcably ntertwned wth the FMLA clam fled by the Clamant currently pendng n Dstrct Court, and because there s a rsk of an nconsstent judgment, the undersgned wll not make an award concernng the lost commssons ssue. Ths determnaton s wthout prejudce to any related proceedng." (Opnon, at 19-20). Although Arbtrator Berger stated n the Opnon that he would not make an award on the Commssons Clam, the ffth determnaton of the Award tself states that the Commssons Clam was "dened wthout -15-

17 [* 16] prejudce. 11 (Award, at 23.) As a threshold matter, ntervew and BPl's argument that Fuller waved any rght to object to Arbtrator Berger's denal of her Commssons Clam! because Fuller dd not rase t n her post-hearng bref. (Pettoners' Opp. Mem. at 9 n 5.) The record ndcates that, at the hearng, Fuller's counsel dsagreed wth ntervew and BPl's poston that Arbtrator Berger should not decde the Commssons Clam due to the rsk of nconsstency wth the ' federal acton. (Tr )' ntervew and BP cted no cases for the proposton that Fuller may not rase lack of fnalty or ndefnteness of ths. determnaton of the Award under these crcum'stances. Fuller states that the Commssons Clam was "clearly one arsng under the Employment Agreement, and, therefor~ subject to the arbtraton provson." (Fuller Mem., at 5.) Fuller further] argues that, whle all of her contractual clams had some degree of overlap wth her statutory clams, "none of these areas of overlap, however, were unque to [her] clam for unpad commssons." (d. at 7.) Even f there ~as some degree of overlap, 1 as Fuller argues, Arbtrator Berger was notl exempt from decdng the contractual ssues that were brought n front of hm. As ntervew and BP ndcate, Fuller contends that ntervew and BPl's -16-.r

18 [* 17] falure to pay her commssons volated not only the Employment Agreement, :' but also the FMLA. (See Rch Opp. Mem. at 4:1.) Fuller's attorney stated at the hearngs that payment of the commssons ~as "wthn the damages that are sought" n the federal acton." (Tr. at 110.) ntervew and BP also argue that the Award s "fnal" because the Commssbns Clam was dened wthout prejudce. nstructve. 1: Papapetro v Pollack & Kotler (9 AD3d j419, 420 [2d Dept 2004]) s n Papapetro, the plantff soug~t to vacate a confesson of judgment related to legal fees for servces that the defendants rendered to the plantff. The partes were drected to submt the fee dspute to arbtraton. The arbtraton panel rendered an award r the defendants' favor, but expressly stated that t dd not consder the. '"ssue of the confesson of judgment', whch t deemed was pendng before the Supreme Court." (d.) The Appellate Dvson, Second Department affrmed the Supreme Court's order vacatng the award on the ground that t was not a fnal and defnte award. The Appellate Dvson reasoned, ;' "a determnaton of whether the defendants were enttled to an award for attorneys fees cannot be made,, n ths nstance, wthout consderng whether they volated 22 NYCRR n obtanng the confesson of judgment, as such a volaton would result n forfeture of any unpad fees. Although the ssue could have been addressed by the Supreme Court pror to the submsson of the -17-

19 [* 18] fee dspute to the arbtraton panel, t also would have been proper for the panel to address the ssue n reachng ts determnaton." (d. at 420 [emphass suppled].),1 Here, lke the arbtrator panel n Papapet~o. Arbtrator Berger expressly declned to consder a clam submtted to hm n arbtraton, whch he deemed should be decded by the court. Arbtrator Berger dd not decde any ssues of fact or law n order to determne the Commssons Clam on the merts. Arbtrator Berger heard evdence about the co~mssons yet dd "not resolve the controversy submtted." (Matter of WestJhester County Corr. Offcers Benevolent Assn., nc. v Cheverko, 112 AD3d at 842; (Matter of Guetta [Raxon Fabrcs Corp.], 123 AD2d at 45.) Even assumng, as ntervew and BP argued, that Fuller would not be enttled to any commssons f she dd not preval n the FMLA acton, t would have been proper for Arbtrator Berger to decde whether Fuller was owed commssons whle she was on leave, under ; the terms of the Employment Agreement. 1, Feld v BOO USA, LLP (2013 WL [Sup Ct, NY County 2013]) s dstngushable. There, the court rejected the!pettoner's argument that the arbtrator exceeded the scope of hs power when he decded not to decde a clam and nstead dened t wthout prejudce. The court reasoned that t was -18-

20 [* 19] wthn the arbtrator's power to decde, under JAMS rules, whether a controversy was arbtrable. Here, unlke Feld; the ground asserted here s that the Award s ndefnte and not fnal. Arbtrjator Berger dd not declne to ' " decde the Commssons Clam because he thought that the Commssons Clam was not arbtrable. Arbtrator Berger dd not determne that the ]1 Commssons Clam dd not fall wthn the scope of the partes' agreement to arbtrate, or that he otherwse lacked power, or authorty to arbtrate the ~ Commssons Clam. lo Thus, the ffth determnaton of the Awar~ s vacated. D. Pursuant to CPLR 7511 (b) (1) (), an ~ward may be vacated by the court only f the award s "volatve of strong publc polcy, t s totally or completely rratonal, or f t manfestly exc)eds a specfc, enumerated lmtaton on the arbtrator's power." (Matter of Ern Constr. & Dev. Co., nc. v Meltzer, 58 AD3d 729 [2d Dept 2009].) The 1 person movng to vacate the ;1 award has a heavy burden of provng by clear and convncng evdence, that the award s rratonal. (Murel Sebert & Co. v Ponmany, 190 AD2d 544, 544 [1st Dept 1993].) j -19-

21 [* 20] 1. :!' Fuller argues that the frst, second and sxth determnatons of the :1 11 Award were totally rratonal. An award s rratonal when there s no proof 1 whatever to justfy the award." (Gaymon v MTA Bus Co., 117 AD3d 735 [2d '! Dept 2014]; Matter of Peckerman v D & D Assoc., 165 AD2d 289, 296 [1st ",! Dept 1991].) a. The frst determnaton of the Award states that ntervew and BP had ~1 cause under the Employment Agreement to termnate Fuller. The Opnon. f ' explans, n relevant part: J " 'The Arbtrator has carefully revewed the record evdence and assessed the credblty of the wtnesses.presented. After havng done so, the undersgned fnds that n ths case, four of Clamant's assstants each testfed that the Clamant drected them to submt for rembursement as busness expenses what they knew to be personal expenses. 'f (Uddn Tr. 217, 226; LaFrance Tr ; Bellezza T ~2; Homer Tr ). Ther testmony s consstent and credble. They lack the ulteror motves for fabrcatng testmony that th.e Clamant attempts to attrbute to them. Moreover, ther testmony s corroborated by documentary evdence. Based on ths testmony, t s clear that the Clamant would drect the assstants to lnk these expenses to tems n her calendar, and would drect them to enter false explanatons for those expenses.., More specfcally, each of the assstants gave the followng consstent explanatons of the nstructons that they had receved,. from the Clamant... The Clamant's explanaton that she had gven her personal :,, " 0- f['.

22 [* 21] recepts to her assstants n error (Tr ) must be weghed aganst the testmony of the four assstants. Whle the Clamant mantans t was nadvertent, she admts that she submtted twenty-eght recepts for tax trps totalng $215 that were taken for personal reasons. Furthermore, t s undsputed that she certfed, n wrtng, the accuracy of her expense reports. The Clamant's explanaton s smply not belevable. The Clamant dd not make a credble wtness. A revew of her testmony shows that t s replete wth contradctons (e.g., whether and to what extent she traned her assstants) and, for the most part, was evasve (e.g., whether her therapy appontments were regularly scheduled). The undersgned concludes that the weght of the credble evdence establshes that the Clamant knew she was submttng personal expenses for rembursement from her employer. Ths consttutes ntent, and thus the Clamant breached her oblgatons to the Respondents by engagng n "theft" and "or other acts of materal dshonesty" n volaton of the Agreement. (Respondents' Ex. M 6.1 (a)). When an employee 11 submts a false clam... to gan some economc or personal beneft from the employer t s... akn to theft". DSCPLNE AND DSCHARGE N ARBTRATON 299 (Norman Brand & Melssa Bren, eds., 2d ed. 2008). The Arbtrator s cognzant of the fact that the total amount of money receved by the Clamant as a result of false submssons s relatvely nsgnfcant compared to the sze of Clamant's salary, and her responsbltes. However, the amount at stake s not the ssue. When the Clamant engaged n the falsfcaton of clams, and drected her subordnates to partcpate n ths msconduct, she both volated the Agreement and breached the element of trust necessary to mantanng an employment relatonshp." (Opnon, at ) Arbtrator Berger set forth a plausble bass for the determnaton that -21-

23 [* 22] Fuller was termnated for cause. (Azre/ant v AzJelant, 301 AD2d 269, 275 [1st Dept 2002] ["An arbtrator's award wll be confrmed 'f any plausble bass exsts for the award"'].) The partes were able to address Fuller's expenses and, after consderng the evdence, Arbtrator Berger found that Fuller drected assstants to enter false explanatons for the expenses. 1 The arbtrator found that there was ntent, and that therefore Fuller breached her oblgatons to ntervew by engagng n thett.\ Arbtrator Berger ratonally artculated n hs award why he beleved that Fuller commtted fraud and why t was proper for her to be termnated for cause~ Arbtrator Berger concluded that the relatvely small amount of mpermssble expenses dd not mltate aganst her termnaton. Although Fuller argues that the testmony' of her assstants was based, \ t s well settled that "[an arbtrator's] determnatons of credblty... are largely unrevewable because the [arbtrator] observed the wtnesses and was able to perceve the nflectons, the pauses, the glances and gestures- all the nuances of speech and manner that combne to form an mpresson of ether candor or decepton [nternal quotaton marks and ctaton omtted]. 11.,' (Matter of Asch v New York Cty Bd./Dept. of Educ.,.~ 04 AD3d 415, 420 [1st Dept ].) Arbtrator Berger had the authorty to determne what weght, f any, should be gven to the evdence. (Matter of Board of Educ. of Byram Hlls -22- '

24 [* 23] Cent. School Dst. v Carlson, 72 AD3d 815, 815 [2d Dept 201 O].) Fuller's arguments suggestng that ths Court scrutnze the wtnesses' testmony and documentary evdence, are wthout mert. b. The sxth determnaton of the Award states, "All clams not expressly granted are hereby dened." The Opnon states, n pertnent part: "B. Allegatons of Breach of the Agreement The record s clear that pror to takng her dsablty leave, the relatonshp between the Clamant and the Respondents was deteroratng. n November, 2006, the Clamant met wth both Sandra Brant and Blasucc to dscuss Clamant's performance. On December 5, 2006, two days before she began her dsablty leave, Sandra Brant sent the Clamant an emal expressng her dspleasure wth the way the Clamant was handlng a clent matter. The Clamant argues that, when she took her leave, the Respondents breached the Agreement by undermnng her poston and mandatng that she have no contact wth any of ntervew's clents. n addton, the Clamant contends that when the Clamant returned from her leave the Respondents permtted Hamlton, her subordnate, to act n a dsrespectful and nsubordnate matter towards her. The undersgned fnds that these allegatons, whether true or not, do not consttute an actonable breach of contract. n the perod n queston, the Clamant took dsablty leave at a tme when her relatonshp wth her superors was on shaky ground. Whle on leave, the Clamant receved her full base salary. As such, she cannot argue that she was damaged fnancally by the Respondents' actons. n addton, n order to receve dsablty benefts, the Clamant submtted medcal documentaton statng that she could not work durng her leave (Clamant's Ex. 28) and -23-

25 [* 24] ' told Mascaro that she felt "ncoherent". ~oreover, the Clamant never contacted Brant, Blasucc or Mascaro to request the opportunty to work from home. Her return to work on March 2, 2007 consttuted a complete surprse to the Respondents. Wth respect to the Clamant's relatonshp wth Hamlton, the Clamant argues that the Respondents breached the contract by permttng Hamlton to be nsubordnate. Agan, even f true, ths would not consttute a breach of the Agreement. The Clamant cannot be heard ;to complan that the Respondents may have looked for reasons to termnate her. Ths clam must also fal for as dscussed above, when Blasucc began her nvestgaton, she uncovered suffcent evdence to justfy termnatng the Clamant for cause." (Opnon, at } At the arbtraton, Fuller contended that, before she was termnated, 'j ntervew and BP had materally changed Fulle~'s dutes and had sgnfcantly "lowered her rank", whch Fuller contended amount to a breach of the Employment Agreement. Here, Fuller mantans that Arbtrator Berger "ntentonally omtted the. numerous and most serous acts that formed the bass of Fuller's clam for breach based on the lowerng of her rank and authorty." (Fuller Opp. Mem. at 43.} Fuller's arguments are unpersuasve. To the extent that Fuller appears to contend that Arbtrator Berger dsregarded the cases that Fuller cted for the proposton that a materal change n dute~ and rank consttutes breach of an employment agreement, Arbtrator Berger was "not bound by prncples -24-

26 [* 25] of substantve law or rules of evdence." (Hunter v Glenwood Mgt., 156 AD2d 310, 311 [1st Dept 1989].) Arbtrator Berger was enttled to apply hs own "sense of law and equty to the facts... " (Matter of Ern Constr. & Dev. Co.,.j nc. v Meltzer, 58 AD3d at 730.) Arbtrator Berger found that there was no breach of contract because she receved her full salary whle on leave, and ~ therefore dd not sustan any damages. 1.; Whether Arbtrator Berger focused "only; on the most mnor ncdents" does not render the Award totally rratonal. "The path of analyss, proof and 1 ' persuason by whch the arbtrator reached ths concluson s beyond judcal scrutny." (Matter of Peckerman, 165 AD2d at 296 [nternal quotaton marks ' f and ctatons omtted].) c. The second determnaton of the Award.states that ntervew and BP were prevalng partes enttled to attorneys' fees and related costs aganst Fuller. The Opnon states, "At the concluson of the hearng, the undersgned noted that the prevalng party was enttled to an award of attorneys' fees and costs under the Agreement. (Respondents' Ex. M 11.2)... Havng found that the Respondents had :'cause' to termnate the Clamant, the undersgned fnds that the Respondents are the prevalng party n ths arbtraton proceedng." (Opnon, at 21.) The fourth determnaton drects Fuller to pay the attorneys' fees, related costs, and arbtraton fees wth~ days of the date of the

27 [* 26] Award. Fuller argues, "The Arbtrator was only able to conclude that Pettoners were prevalng partes because the Arbtrator faled to consder Ms. Fuller's clam for unpad commssons. ~.. Had the Arbtrator found n Ms. Fuller's favor on those clams-as he should havet would have been mpossble for hm to: award attorneys' fees, costs, and expenses to Pettoners, as Pettoners would not have been the prevalng party n the Arbtraton." {Fuller Opp. Mem., at 6.) The Court agrees. On ts face, the Opnon states that ntervew and! : BP were prevalng partes n the entre arbtraton proceedng because there was cause for Fuller's termnaton, even though the Commssons Clam was left undecded. Arbtrator Berger offered no colorable justfcaton to support. hs concluson that pettoners were the prevalng partes. {Cf. Kudler v Truffelman, 93 AD3d 549 [1st Dept 2012] [arbtrator's award of attorney fees was not warranted, where there was no clearly prevalng party n arbtraton].) There s also an apparent dscrepancy between the Opnon and Award n the amount of costs and expenses awarded to ntervew and BP as ' prevalng partes. n the Opnon, Arbtrator Berger found that $42, n costs and expenses were reasonable {Opnon, at 21 ), but the amount of! related costs stated n the Award s $11, (Award, at 23.) The ssues of the amount of costs and expenses, and the a pparent dscrepancy, must be " d ' -26-

28 [* 27] remanded to Arbtrator Berger." Accordngly, the second determnaton of the Award s vacated, along wth so much of the fourth determnaton that drects Fuller to pay the attorneys' fees and related costs wthn 30 days of the date! of the Award [C]ourts wll only ntervene n the arbtraton process n those 'cases n whch publc polcy consderatons, emboded: n statute or decsonal law, ' prohbt, n an absolute sense, partcular matters beng decded or certan relef beng granted by an ~rbtrator."' (Matter of Santer v Board of Educ. of East Meadow Unon Free School Dst., 23 NY3d 251, 261 [2014] [ctatons omtted].) "'Stated another way, the courts ~ust be able to examne an " arbtraton agreement or an award on ts face wthout engagng n extended ' factfndng or legal analyss, and conclude that publc polcy precludes ts ' enforcement."' (New York Cty Tr. Auth. v Transport Workers Unon of ' Amerca, Local 100, AFL-CO, 99 NY2d 1, 7 [2002], quotng Matter of Sprnzen, 46 NY2d 623, 631 [1979].) Fuller descrbes n great lengths why the' award should be vacated as beng nconsstent wth publc polcy. She bjleves that Arbtrator Berger gnored the applcable federal, state and ~ty laws whch requre that reasonable accommodatons be made for people wth dsabltes. She alleges -27- :

29 [* 28] that Arbtrator Berger gnored the strong publclpolcy mandatng ntervew's oblgatons under federal, state and cty laws to provde reasonable '. accommodatons to employees wth dsabltes. Fuller contnues that ntervew dd not engage wth her n an nteractve process to provde a reasonable accommodaton. Fuller wrtes, Ar~trator Berger "excluded any legal argument ncorporatng these strong publ~ polcy norms under cty, state and federal law... " (d. at 49.) Fuller ctes.to the State and Cty Human 1. Rghts Laws to demonstrate that she should have been gven a reasonable accommodaton whle out on leave. Fuller's arguments regardng vacatng for publc polcy lack mert. Fuller's attorney apparently contends that ds~rmnaton based on dsablty would amount to breach of her Employment Agreement, n that "her contract '. had to be carred out n complance wth the oblgatons under dsablty laws just lke any vald contract has to be carred out n a legal way." (Fuller Opp. Mem. At 48.) However, Fuller's amended clamfor arbtraton asserted clams soundng n breach of contract, that s, breach of the Employment Agreement! (See Delarco Affrm., Ex 3]), as opposed to clams that are statutory n na~re. l More mportantly, Fuller does not appear to argue that publc polcy :! prohbted, n an absolute sense, Arbtrator Berger from decdng the matters J l -28-

30 [* 29] submtted to hm or prohbted the relef granted. Federal, state, and cty : dscrmnaton statutes dd not prohbt Arbtrator Berger from fndng that Fuller had engaged n "theft" and "or other acts of materal dshonesty" n volaton of the Employment Agreement, that ~uller could be termnated for ' cause for those acts, and that there was no other breach of the terms of the! Employment Agreement. Nether dd the dscrmnaton statutes prohbt the relef granted n the Award,.e., Fuller's termnaton for acts of "theft" or "or other acts of materal dshonesty." E. Fuller alleges that Arbtrator Berger faled to address her clam for "unpad salary durng the tme she was suspelnded wthout pay pro; to her termnaton." (Fuller Opp. Mem., at 6.) She fu'rther notes that ntervew and BP "lacked any authorty to suspend Ms. Fuller wthout pay under the terms of the Employment Agreement." (d. at 17.) However, although Fuller made a clam for commssons from her return to work on March 2, 2007 through her date of termnaton, ths separate and addtonal clam for unpad salary or addtonal compensaton was not a part of her amended clam. Therefore, Arbtrator Berger was not expected to resolve these ssues. "[A]n arbtrator's authorty extends to only those ssues that a,re actually presented by the partes." (See e.g. Matter of Joan Hansen ~ Co., nc. v Everlast World's -29-

31 [* 30] Boxng Headquarters Corp., 13 NY3d 168, 173' [2009].), n addton, the majorty of Fuller's reply papers attempt to nform the Court about motons for summary judgment made n federal court after the arbtraton award was rendered. Because these motons, or any nformaton whch came after the award, were not a part of the arbtraton proceedngs 1 and rased before Arbtrator Berger, such nformaton may not be consdered as possble grounds for vacatng the award. (See Stephens v Prudental ns. ~ Co. of Am., 278 AD2d 16 [1st Dept 2000] [publc polcy ground not rased n. j. the arbtraton proceedng does not consttute ground for challengng ;J '1 arbtraton award]; see also MatterofG.K. Las Vegas Ltd. Partnershp v Boes Schller & Flexner LLP, 96 AD3d 538 [1st Dept 2012] [arguments were not suffcently brought to the attenton of the arbtrator].). ll. 1: As dscussed above, the second and ffth determnatons of the Award are vacated, along wth so much of the fourth determnaton that drected Fuller to pay ntervew and BP attorneys' fees and related costs wthn 30 days. However, that does not mean that the entre Award must be vacated. ;j "An award whch s vald n part wll be sustanef to the extent that t s proper, provded that the vald and nvald portons are not nextrcably ntertwned." -30-

32 [* 31] (Johnston, 161 AD2d 125, 129 [1st Dept 1990], ctng 8 Wensten-Korn-Mller - 1 J ~ ) Fuller faled to demonstrate any val,d grounds to vacate the frst, 11 thrd, and sxth determnatons of the Award, as':well as so much of the fourth ' lj1 determnaton that drected Fuller to pay the arbtraton fees wthn 30 days of ' ~' the date of the Award. These determnatons afe not nextrcably ntertwned., " wth the vacated determnatons of the Award. Jherefore, these parts of the 1 ] Award are confrmed., Pursuant to CPLR 7511 (3) (d) "[u]pon vacatng an award, the court may order a rehearng and determnaton of all or any of the ssues ether before! ' the same arbtrator or before a new arbtratorjapponted." n addton, the Court has the dscreton to remand the matter to the same or dfferent, f arbtrator. (East Ramapo Cent. School Dst. v EJast Ramapo Teachers Assn., '' 108 AD2d 717, 717 [2d Dept 1985].) Here, brcause there was no form of msconduct on the part of Arbtrator Berger, an~ due to the fact that Arbtrator ' : ;,J Berger already heardthe evdence presented, the matter should be remanded ~ jl. to Arbtrator Berger. (See Johnston, 161 AD2d at 129 ["snce there was no msconduct, and due to the protracted and coj,plex nature of the testmony, ' there s no reason the remand should be to a ~fferent arbtrator"].) : Upon resubmsson to Arbtrator Berger] a full hearng de novo s not ' 11 1 requred, but Arbtrator Berger "may reconsder the matter on the bass of the, -31-!J! :1 '

33 [* 32] pror hearng and such addtonal evdence as he may requre." (Matter of Lvngston [Banff, Ltd.], 13 Msc 2d 766, 767 [Sup Ct, NY County 1958]), ctng Matter Frst Nat. Ol. Corp. [Arreta], 2 Msc 2~ 225, 234 [Sup Ct, Queens County], affd 2 AD2d 590 [2d Dept 1956] ["nasmuch as ths court s satsfed that the ndcated errors were unntentonal and(ot culpable, the proceedng s remtted to the same arbtrators for the purpose of reconsderng the amount of damages n lght of the testrl1ony already before them, supplemented by such other relevant and materal proof as the,y may requre"].) The Court has consdered Fuller's remanng contentons, ncludng the ' allegatons that ntervew and BP have now l~st the rght to arbtrate, and fnds them wthout mert. V. The petton s granted n part, to the extent that the frst, thrd, and sxth determnatons of the Award, as well as so much of the fourth determnaton that drected Fuller to pay the arbtraton fees wthn 30 days of the date of the! Award, are confrmed, and the petton s other-wse dened. Fuller's cross moton s granted n part, to the extent that the second l and ffth determnatons of the Award are vacated, along wth so much of the fourth determnaton that drected Fuller to pay; ntervew and BP attorneys' -32-

34 [* 33] ;11 fees and related costs wthn 30 days, and\ the matter s remanded to Arbtrator Berger on those ssues only, and t~e cross moton s otherwse, 1 dened. '' Settle order and judgment. Dated: September '2014 New York, New York, ' J.S.C. HON. MC~AEL O. ST ALLMAN : 1 '.;' :r -33-