District Court Confirms $220 Million Award, Finds No Manifest Disregard of Law

Carlton Fields
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Carlton Fields

The Seneca Nation of Indians moved under Section 10 of the Federal Arbitration Act (FAA) to vacate certain arbitration awards issued in favor of the state of New York, finding that Seneca must pay the state millions in revenue-sharing pursuant to an exclusive gaming compact. The issue before the Western District of New York was whether the awards “manifestly disregarded” the Indian Gaming Regulatory Act (IGRA). The state cross-moved to confirm.

At the outset, Seneca’s petition to vacate was deemed timely. The court ruled that a partial award issued by the panel regarding liability only was not “final” and thus did not trigger the three-month filing period for a petition to vacate an arbitral award, as the partial award did not “definitively resolve” all the issues submitted to arbitration. The state relied on a Second Circuit decision finding a partial award to be “final” under the FAA, but the court found the case to be factually distinguishable here. Nonetheless, both the partial and final awards were confirmed. First, the court found no statutory basis for vacatur pursuant to Section 10 of the FAA. It also found no basis for vacating the awards based on a manifest disregard of the law, noting that the extreme deference afforded to arbitration awards “essentially bars review of whether an arbitrator misconstrued a contract.” Citing a recent decision by the Second Circuit and applying a two-step analysis, the court agreed with the state that this is not one of the “exceedingly rare instances where some egregious impropriety on the part of the arbitrator is apparent,” as is required for a finding of “manifest disregard.” As such, Seneca’s petition to vacate was denied, and the state’s cross-petition to confirm was granted.

Seneca Nation of Indians v. State of N.Y., No. 1:19-cv-00735 (W.D.N.Y. Nov. 8, 2019).

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