SDNY Denies Plaintiff’s Attempt To Vacate Arbitral Awards In Administrative Charge Dispute With Verizon

by Carlton Fields
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Verizon Wireless prevailed recently in confirming certain arbitration awards related to a dispute based on allegedly unlawful administrative charges for a cellular contract. Verizon’s customer agreement contained an arbitration clause prohibiting class arbitrations, and an arbitrator issued two relevant decisions during the course of the dispute. The first decision held the plaintiff could not pursue general injunctive relief. The second decision held, in part, that plaintiff did not have standing because, while he continued to pay the phone bill, he had assigned his account to his partner, thus rejecting plaintiff’s request for individual injunctive relief. The arbitrator also ordered Verizon to pay $1,500 without interest—the full amount of disputed administrative charges that Verizon had previously tendered and plaintiff rejected—$500 in attorney’s fees, and arbitrator compensation. The parties cross-moved to confirm and vacate various aspects of the arbitral decisions.

First, the court declined plaintiff’s request to vacate the arbitrator’s first decision. It disagreed with plaintiff’s argument that the arbitrator exceeded his authority by precluding general injunctive relief where the claim for such relief should have been non-arbitrable, because the “narrowest of circumstances” required to overturn an arbitrator’s decision on that ground were not present. The court also refused to find the arbitrator manifestly disregarded the law by precluding injunctive relief because plaintiff’s contention constituted a “mere disagreement” with the arbitral decision and because the arbitrator had valid grounds for his decision.

Second, the court likewise refused plaintiff’s attempt to vacate the second decision. The court concluded the arbitrator did not exceed his powers in awarding $500 in attorney’s fees because attorney’s fees issue was properly before the arbitrator. It determined the arbitrator did not manifestly disregard the law because plaintiff failed to establish the arbitrator “intentionally defied the law” as required to overturn on that ground. Similarly, the court rejected plaintiff’s arguments of arbitral misconduct and partiality. There was no misconduct because the limited nature of permitted discovery, challenged by plaintiff, was entirely within the arbitrator’s broad discretion. Further, the arbitrator was not partial where Verizon paid the mandatory arbitrator fees because the arbitration agreement provided for such payment by Verizon. Lastly, the court declined to find the arbitration violated plaintiff’s due process rights because the “law of the case”—via a prior finding of the court—determined the signing of the arbitration agreement could not constitute state action required for a due process claim.

Thus, the court confirmed the arbitrator’s two decisions and closed the case.

Katz v. Cellco P’ship, Case No. 12-9193 (USDC S.D.N.Y. Apr. 17, 2018).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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