Floridians for Solar Choice, Inc. v. PCI Consultants, Inc., No. 15-cv-62688 (S.D. Fla. June 11, 2018) [click for opinion]
Plaintiff Floridians for Solar Choice (“FSC”) is a not-for-profit corporation formed for the purpose of qualifying a solar energy amendment in Florida’s general election in 2016. Defendant PCI Consultants, Inc. (“PCI”) is a national leader in obtaining signed petitions for ballot initiatives. In 2015, FSC and PCI entered into a series of contracts and amendments under which PCI agreed to obtain signed petitions for the solar energy initiative.
A dispute arose between the parties regarding PCI’s expenses, and, in response, PCI withheld a large number of the executed petitions from FSC. FSC and PSC each filed a Demand for Arbitration with the AAA, and the two cases were consolidated. The arbitrator ultimately ruled in FSC’s favor and, in a non-final July award, awarded FSC the total contract amount ($1,271,250) along with prejudgment interest, costs, and attorneys’ fees to be determined after further briefing. In an award in October, which was final, the Arbitrator awarded $230,218.24 in prejudgment interest, $18,277 in costs, and $340,000 in attorney’s fees. The arbitrator then issued a final award in November which corrected a typographical error in the October final award.
PCI filed a motion to vacate the award on all four permissible, exclusive grounds under the Federal Arbitration Act (the “FAA“). Noting the high burden to meet the standard of vacatur pursuant to any of those grounds, the court denied the motion to vacate and confirmed the award.
First, PCI argued that there was fraud or undue means because FSC initially argued for a lower damages amount during the hearing ($487,588.50—the total paid by FSC for the 217,000 withheld petitions at $2.25 per petition) and then, in post-hearing briefing, argued for the full contract price of damages, which exceeded $1 million. The court found that a “change in damages theory, while vexing to [PCI], does not amount to clear and convincing evidence of fraud or undue means.” Further, the arbitrator was clearly aware of the alleged undue means.
Second, the court rejected PCI’s argument that the arbitrator had exceeded his authority. The court found that PCI misquoted the AAA rules, which clearly provided that disputes of over $1 million could be decided by one arbitrator so long as the parties agreed, as they did in this case. The court also found that PCI had been on notice that its exposure could exceed $1 million based on FSC’s Demand for Arbitration.
The court similarly rejected PCI’s argument that the arbitrator lacked jurisdiction to issue the October and November final awards after the July award, which PCI argued was actually final. The parties had clearly stipulated that fees and costs would be determined after liability and therefore the July award was not intended to be final.
The court also rejected PCI’s arguments regarding bias, because the only “evidence” of bias was the arbitrator’s adverse rulings, which constituted neither irrefutable or unmistakable bias.
Finally, the court noted that “a federal court may vacate the award only if the arbitrator’s refusal to hear pertinent and material evidence prejudiced the rights of the parties to the arbitration proceedings.” The court found that this standard had not been met because, in each instance put forth by PCI, the arbitrator either allowed some limited evidence or precluded introduction of that evidence on a reasonable basis. The court therefore confirmed the arbitral award.
A version of this post originally appeared in the September 2018 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.
