Peter Grain v. Trinity Health ( 2008 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 08a0459p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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PETER G. GRAIN, M.D., and ANNETTE
Plaintiffs-Appellants, --
BARNES, M.D.,
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No. 08-1410
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>
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v.
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TRINITY HEALTH, MERCY HEALTH SERVICES
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INC., d/b/a Mercy Hospital, and MARY R.
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Defendants-Appellees. -
TRIMMER,
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 03-72486—Patrick J. Duggan, District Judge.
Submitted: December 12, 2008
Decided and Filed: December 24, 2008
Before: ROGERS, SUTTON and McKEAGUE, Circuit Judges.
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COUNSEL
ON BRIEF: Elmer L. Roller, LAW OFFICE OF ELMER L. ROLLER, Bloomfield Hills,
Michigan, Gary P. Supanich, LAW OFFICE, Ann Arbor, Michigan, for Appellants. W.
Mack Faison, Richard Joseph Seryak, MILLER, CANFIELD, PADDOCK & STONE,
Detroit, Michigan, Linda O. Goldberg, MILLER, CANFIELD, PADDOCK & STONE, Ann
Arbor, Michigan, for Appellees.
1
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OPINION
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SUTTON, Circuit Judge. Peter Grain and Annette Barnes challenge the district
court’s denial of their motion to confirm in part and modify in part a $1.6 million arbitration
award. We affirm.
I.
Grain and Barnes, husband and wife, are medical doctors who once worked for
Mercy Hospital. In 2003, they sued Mercy and the related defendants for taking a variety
of “punitive actions” that allegedly interfered with their medical practices. JA 41. Grain
complained that the defendants had violated 42 U.S.C. § 1981 by discriminating on the basis
of race in contracting and by violating several state laws, while Barnes sought only state-law
relief. After the defendants moved to compel arbitration, the district court dismissed the
state-law claims that were subject to a pre-existing arbitration agreement and stayed the
remaining claims pending arbitration.
Grain and Barnes prevailed in the arbitration proceeding and won $1,641,870.44.
They then filed a motion in the district court, asking the court to confirm the merits of the
arbitration decision and to increase the size of the award. The district court confirmed the
award but refused to increase it. Grain v. Trinity Health (Grain I), No. 03-72486, 2008 WL
441060, at *3 (E.D. Mich. Feb. 14, 2008). After a failed motion to reconsider, see Grain v.
Trinity Health (Grain II), No. 03-72486, 2008 WL 1742718, at *3 (E.D. Mich. April 11,
2008), Grain and Barnes appealed.
II.
The parties agree that we have jurisdiction over this appeal. But because the parties
to a lawsuit cannot by consent create appellate jurisdiction that does not otherwise exist, we
must determine for ourselves whether we have authority to resolve this appeal. Arbaugh v.
Y&H Corp., 546 U.S. 500, 514 (2006).
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The traditional ground for appellate jurisdiction—the final-judgment rule, 28 U.S.C.
§ 1291—does not give us authority to decide this appeal. Although the district court has
done everything that can be done with respect to the arbitration and although it dismissed the
other claims subject to the arbitration agreement, it retains jurisdiction over, and indeed
continues to consider, the non-arbitrable claims filed by Grain and Barnes. Section 1291
generally does not permit piecemeal appeals but only permits an appeal once there is nothing
left to do but enter the judgment and enforce it. See Digital Equip. Corp. v. Desktop Direct,
Inc., 511 U.S. 863, 867 (1994). Nor do the general exceptions to the final-judgment rule
appear to apply here. The district court did not enter a Rule-54(b) certification, which
permits a court to “dispose[] of one or more but fewer than all of the claims or parties in a
multi-claim/multi-party action,” Brotherton v. Cleveland, 173 F.3d 552, 559 (6th Cir. 1999)
(emphasis omitted), and which at any rate may not apply to interlocutory arbitration
decisions, see Perera v. Siegel Trading Co., 951 F.2d 780, 786 (7th Cir. 1992). No party
relies on § 1292(b) as a basis for jurisdiction. And the collateral-order doctrine—which is
frequently invoked but rarely invoked successfully, see, e.g., Coopers & Lybrand v. Livesay,
437 U.S. 463, 468 (1978)—does not apply because the propriety of the district court’s
confirmation order would not be “effectively unreviewable on appeal from a final judgment”
after the remaining matters are resolved below. United States v. Parrett, 530 F.3d 422, 427
(6th Cir. 2008).
All of these rules, however, deal with general grounds for declining to adhere to the
final-judgment rule established by § 1291. They do not preclude Congress from granting
specific jurisdiction over appeals arising under certain federal laws, even appeals that do not
resolve the rest of the claims pending in the district court. See Livesay, 437 U.S. at 474;
Moglia v. P. Employees Ins. Co., 547 F.3d 835, 837 (7th Cir. 2008); see also In re Saco
Local Dev. Corp., 711 F.2d 441, 444 (1st Cir. 1983); accord 16 Wright, Miller & Cooper,
Fed. Prac. & Proc. § 3926.2. See generally Robert J. Martineau, Defining Finality and
Appealability by Court Rule: Right Problem, Wrong Solution, 54 U. Pitt. L. Rev. 717,
729–36 (1993) (collecting statutory exceptions to the final-judgment rule of § 1291).
One such grant of specific appellate jurisdiction appears in the Federal Arbitration
Act. See Omni Tech Corp. v. MPC Solutions Sales, LLC, 432 F.3d 797, 799 (7th Cir. 2005).
Congress has empowered the courts of appeals to entertain a variety of appeals from
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interlocutory and final district-court arbitration decisions, including “[a]n appeal . . . from
. . . an order . . . confirming . . . an award.” 9 U.S.C. § 16(a)(1)(D). This appeal falls within
this grant of appellate authority.
Grain and Barnes filed this action under the Federal Arbitration Act, seeking to
confirm the arbitrators’ decision in part (by upholding their liability ruling) and seeking to
modify the arbitrators’ decision in part (by increasing the award from $1.6 million to roughly
$3.2 million). Although the Act permits a district court to grant both forms of relief, 9
U.S.C. §§ 9, 10, the court in this instance granted just one of them: It granted the couple’s
request to confirm the liability ruling but denied their request to modify the damages award.
All of this resulted in a district-court order “confirming . . . an award,” which is precisely
what § 16(a)(1)(D) permits a disappointed party, even a partly disappointed party, to appeal.
Nothing about this provision of the Act, or anything else in the Act, indicates that a party to
a district-court proceeding under the Act must challenge all of a district court’s confirmation
decision, as opposed to just some of it, in order to file an appeal. The Act, it is true, directly
authorizes appeals from district-court orders that “modify[]” arbitration awards, 9 U.S.C.
§ 16(a)(1)(E), and yet does not directly say that an unsuccessful party may appeal an
“unmodified” award or a “denied modification request.” But this is of no moment because
an “unmodified” award frequently will become a “confirm[ed]” award, as indeed happened
here. Jurisdiction exists to review the district court’s decision.
III.
In attempting to vacate or modify an arbitration award governed by the Federal
Arbitration Act, a disappointed party must look to sections 10 and 11 of Title 9, which
“provide [the] exclusive regime[] for the review provided by the [Federal Arbitration Act].”
Hall St. Assocs. v. Mattel, Inc., __ U.S. __, 128 S. Ct. 1396, 1406 (2008). Section 10
enumerates several grounds for vacating an award, while section 11 does the same for
modifying an award. As the arbitration winners, Grain and Barnes, unsurprisingly, do not
seek to vacate the award under § 10. They instead wish to modify the award—in truth, to
double it—and thus rely on § 11, which provides the following grounds for modifying an
arbitration award:
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(a) Where there was an evident material miscalculation of figures or an
evident material mistake in the description of any person, thing, or property
referred to in the award.
(b) Where the arbitrators have awarded upon a matter not submitted to them,
unless it is a matter not affecting the merits of the decision upon the matter
submitted.
(c) Where the award is imperfect in matter of form not affecting the merits
of the controversy.
9 U.S.C. § 11.
A.
Grain and Barnes claim that the award must be modified because there was “an
evident material miscalculation of figures.” 9 U.S.C. § 11(a). But because they failed to
raise this argument in the district court, they have forfeited the argument on appeal. See
Enertech Elec., Inc. v. Mahoning County Comm’rs, 85 F.3d 257, 261 (6th Cir. 1996). The
argument, at any rate, has nothing to recommend it. By its terms, “an evident . . .
miscalculation of figures” concerns a computational error in determining the total amount
of an award—what the Fourth Circuit calls a “mathematical error appear[ing] on the face of
the award.” Apex Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 194 (4th Cir.
1998); see also Capital Wholesale Elec., Inc. v. McCarthy Constr., No. 93-16578, 1995 WL
105987, at *2 (9th Cir. Mar. 9, 1995) (requiring an “evident mathematical miscalculation”)
(emphasis added); Eljer Mfg., Inc. v. Kowin Dev. Corp., 14 F.3d 1250, 1254 (7th Cir. 1994)
(finding a material miscalculation when an arbitrator mistakenly awarded the same damages
twice in the same award). No such error appears on the face of the award, and Grain and
Barnes have not pointed to any such error. Instead of complaining that the arbitrators made
an obvious numerical gaffe in computing the total award, Grain and Barnes argue that the
arbitrators made a mistake on the merits when they refereed a dispute between the parties
over the appropriate start and stop dates for calculating the interest award. Whatever else
such an alleged error may be, it is not “an evident material miscalculation of figures.”
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B.
Grain and Barnes face a similar problem in contending that the award was “imperfect
in matter of form not affecting the merits of the controversy,” 9 U.S.C. § 11(c), on the theory
that it did not include a sufficient amount of attorneys’ fees. Here, too, we have a complaint
about a merits dispute, and here, too, we have a provision that deals with a process-driven
problem. An award that is “imperfect in matter of form,” as these terms suggest, is one that
suffers from a scrivener’s error or that otherwise does not deliver on the arbitrator’s stated
purpose in granting relief. See Atlantic Aviation, Inc. v. EBM Group, Inc., 11 F.3d 1276,
1284 (5th Cir. 1994); see also Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341
F.3d 987, 997 (9th Cir. 2003) (describing the type of errors affected by this subsection as
“technical error[s]”); Diapulse Corp. of Am. v. Carba, Ltd., 626 F.2d 1108, 1110 (2d Cir.
1980) (holding that district court had no power to revise arbitration award amount for
violating public policy because “Section 11(c) . . . does not license the district court to
substitute its judgment for that of the arbitrators”); cf. Nationwide Mut. Ins. Co. v. First State
Ins. Co., 213 F. Supp. 2d 10, 15 (D. Mass. 2002) (modifying an award when the arbitrators’
written decision did not reflect the award they orally announced due to a “simple mistake”
in the completion of a form).
Grain and Barnes cite no case—and we can locate none—in which the outcome of
an arbitrator’s reasoned decision regarding the appropriate amount of an attorneys’ fees
award is viewed as a “matter of form.” The one case on which they rely in this portion of
their argument cuts against them. It held that an award of attorneys’ fees was “not imperfect
in matter of form with respect to the adjudication of attorney’s fees [because] [t]he issue of
attorney’s fees was presented to the arbitrator, and he made a clear determination of the
parties’ rights to attorney’s fees under [the arbitration agreement].” Mantaline Corp. v. PPG
Indus., Inc., No. 2:02CV269, 2006 WL 297263, at *5 (W.D. Pa. Feb. 7, 2006) (emphasis
added) (internal quotation marks omitted). Exactly. Because Grain and Barnes have not
shown that this aspect of the award was inconsistent with the arbitrators’ merits ruling on
attorneys’ fees, § 11(c) provides no basis for relief.
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C.
Grain and Barnes principally argue that their award should be doubled, not because
it implicates one of the enumerated grounds for modifying an award, but because it turned
on a “manifest disregard of the law.” This theory, however, appears nowhere in § 11, and
the Supreme Court has recently explained that the enumerated grounds in §§ 10 and 11
provide the “exclusive” grounds for obtaining relief from an arbitration decision. Hall St.,
128 S. Ct. at 1406. To the extent that “manifest disregard” is “shorthand” for the grounds
enumerated in § 11, as the Supreme Court suggested might be the case for some of the
grounds listed in § 10, id. at 1404, that does Grain and Barnes no good. As we have shown,
the enumerated grounds upon which they rely simply do not apply to their merits-based
complaints about the award.
It is true that we have said that “manifest disregard of the law” may supply a basis
for vacating an award, at times suggesting that such review is a “judicially created”
supplement to the enumerated forms of FAA relief. See, e.g., Merrill Lynch, Pierce, Fenner
& Smith, Inc. v. Jaros, 70 F.3d 418, 421 (6th Cir. 1995). Hall Street’s reference to the
“exclusive” statutory grounds for obtaining relief casts some doubt on the continuing vitality
of that theory. But, either way, we have used the “manifest disregard” standard only to
vacate arbitration awards, not to modify them. As we held in NCR Corp. v. Sac-Co, Inc.,
“[a] court’s power to modify an arbitration award is confined to the grounds specified in
[FAA] § 11,” 43 F.3d 1076, 1080 (6th Cir. 1995), which do not include “manifest disregard
of law.” See Thomas H. Oehmke, Commercial Arbitration § 132:1 (2008); cf. Major League
Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509–11 (2001) (noting that, in the labor-
arbitration context, neither procedural misconduct nor irrational findings by an arbitrator will
justify a court’s reformation of the arbitration of the award because the appropriate remedy
in both situations is to remand the case for further arbitration).
Grain and Barnes claim that we have repudiated the holding of NCR, but that is an
overstatement. The two cited cases deal only with a court’s power to vacate awards based
on the “manifest disregard” standard, and neither one contains even a kernel of dicta
supporting this theory. See Dawahare v. Spencer, 210 F.3d 666, 669 (6th Cir. 2000); Jaros,
70 F.3d at 421. Other cases, it is true, do contain dicta suggesting that a reviewing court may
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vacate or modify an arbitration award based on manifest disregard. But nothing turned on
these casual remarks. In two cases, we noted in passing that an award may be modified
based on manifest disregard, despite the fact that the parties were seeking only vacatur, not
modification. See Elec. Data Sys. Corp. v. Donelson, 473 F.3d 684, 686, 691 (6th Cir.
2007); Buchignani v. Vining-Sparks IBG, No. 98-6692, 2000 WL 263344, at *1–2 (6th Cir.
2000). Another case made a similar comment, without indicating that modification had been
sought below and without concluding that modification was warranted. See Legair v. Circuit
City Stores, Inc., 213 F. App’x 436, 439 (6th Cir. 2007). By contrast, the vast majority of
our decisions applying the manifest-disregard standard do so only to determine whether
vacatur is an appropriate remedy. See, e.g., Coffee Beanery, Ltd. v. WW, L.L.C., No. 07-
1830, 2008 WL 4899478, at *3 (6th Cir. Nov. 14, 2008); Donelson, 473 F.3d at 686, 691;
Jaros, 70 F.3d at 421; Anaconda Co. v. Dist. Lodge No. 27, Int’l Ass’n of Machinists, 693
F.2d 35, 37–38 (6th Cir. 1982). NCR remains the law of this circuit and prohibits modifying
an award based on an alleged “manifest disregard” of law.
IV.
For these reasons, we affirm.