Opinion
Civil Action No. 97-4609 (JBS).
March 27, 2000.
S. Robert Freidel, Jr., Esq., University Executive Campus, Turnersville, New Jersey, Attorney for Plaintiff.
David W. Field, Esq., Lowenstein Sandler PC, Roseland, New Jersey, Attorney for Defendant.
OPINION
On February 18, 1999, David L. Glass, an arbitrator with the American Arbitration Association, ordered defendant, M.A. Hanna Company, to pay plaintiff, T.J. Squared, Inc., $171,019.74 in owed sales commissions. The arbitrator found that plaintiff had properly invoked a "buy out" clause in the contract between the parties when a change in management brought about a change to a fixed compensation system. Now before the Court are the parties' cross-motions to confirm and vacate the arbitration award. Because the arbitrator's award draws its essence from the parties' agreement and has a rational basis in the evidence before him, this Court will grant plaintiff's motion to confirm the arbitration award and deny defendant's motion to vacate the award.
I. BACKGROUND
In October of 1994, Terry P. Smith, as principal of plaintiff T.J. Squared, which was not yet incorporated, and Keith D. Rodden, General Manager of M.A. Hanna Company Engineered Materials Group ("Materials Group"), on behalf of M.A. Hanna Company ("Hanna"), a Delaware corporation, entered into an Independent Contractor Sales Representative Agreement (the "Agreement"), whereby T.J. Squared would serve as Hanna's exclusive sales representative for a certain geographic region. (Freidel Certif. at Ex. E.) At the time, as defendant Hanna was aware, T.J. Squared was operating as a sole proprietorship with Smith as its sole employee (id. at Ex. H), but Hanna later became incorporated in New Jersey on December 14, 1994. (Id. at Ex. F.)
The Agreement noted that Smith was a full-time employee of T.J. Squared (to whom the Agreement refers as Representative) and would be "the executive in charge of the [Hanna] account." (Field Certif. Ex. D, ¶ 2.) The Agreement further provided that in exchange for serving as an exclusive sales representative which could not work for any other business or offer for sale any other products, T.J. Squared would earn sales commissions, but T.J. Squared employees would not receive other benefits, such as insurance, vacation, and the like, because T.J. Squared was an independent contractor. (Id. at ¶ 3 and Annex B.) The Agreement was for one year and would automatically renew unless terminated by either party. (Id. at ¶ 1.) It provided two ways in which Hanna could terminate the Agreement prior to the end of a one year term: either with cause or, second,
out cause (as hereinafter defined) by giving the esentative at least sixty (60) days prior written notice. In event the Materials Group shall pay the Representative an nt equal to the amount of commissions properly payable by rials Group to Representative during the six (6) months eding the date of termination. . . .
(Id. at ¶ 7.)
T.J. Squared had two different mechanisms by which it could terminate the Agreement before the end of the term. First, the ¶ 7 termination provision states that
[T]he Representative may terminate this Agreement at any time by giving the Materials Group at least sixty (60) days prior written notice. In such event (and except as set forth in Section 11), the Materials Group shall pay the Representative the amount of compensation due and owing to Representative hereunder up to the date of termination.
(Id.) Second, the ¶ 11 termination clause states that
[i]n the event that there is a change in control of Hanna or the management of Materials Group which results (within twelve (12) months of such change) in the compensation structure for representatives of Materials Group being modified from commission to a fixed form of compensation, and as a result of such change in control and compensation, Representative terminates its relationship with Materials Group, the Representative shall be paid an amount equal to the amount of commissions properly payable by Materials Group to Representative during the twelve (12) months preceding the date of notice of Representative's termination. Compensation shall be paid to the Representative in twelve (12) equal monthly installments commencing on the date of termination. . . . For the purpose of this Section, the term "fixed form of compensation" shall include by way of example salary or limited commission compensation.
(Id. at ¶ 11.) Thus, if there was a change in the management of Materials Group that resulted in a change of compensation structure to a fixed form of compensation, T.J. Squared had the right to automatically terminate and receive an amount equal to twelve months' worth of commissions.
The parties were operating under the Agreement in 1996. During that year, Keith Rodden, General Manager of Materials Group, stepped down from his overall management position of Materials Group and was replaced by Jim Chapman in March of 1996. (Freidel Certif. Ex. G.) As a result, reporting relationship changes were effected. (Id.) Gary Farris, Materials Group's Manager of Sales and Marketing stepped down in January of 1996.
According to plaintiff, on October 18, 1996, Hanna's agent Gary Foote ("Foote"), acting upon instructions from Hanna/Materials Group, called Smith and indicated that a compensation change was scheduled for the first of the year. Plaintiff additionally asserts that the following Monday, Foote advised Smith that if he was not willing to agree to the change, Smith should take the buyout provided for in paragraph 11 of the Agreement.
Review of an arbitration decision is not done de novo, Marion Mfg. Co. v. Long , 588 F.2d 538, 541 (6th Cir. 1978) , and the facts are limited to those presented to the arbitrator. Because no transcript was created from the arbitration hearing, there is no specific evidence to which this Court can point as support for the assertion that Foote made such a statement. However, defendant, in its reply brief, does not contest that this assertion was made in testimony before the arbitrator. Thus, this Court will assume that Smith testified before the arbitrator that Foote made such statements.
On October 20, 1996, Smith forwarded correspondence to Foote clarifying the proposed compensation conversion:
Dear Gary,
I was pleased that we were finally able to get together by phone on Friday morning. It certainly does get trying at times attempting to communicate when two people are traveling.
In order that there not be any misunderstandings regarding our conversation I have listed the issues as I understand them. If I have misunderstood any part of our conversation please advise. M.A. Hanna Corporate wishes to change my present compensation package by years end. The reasons for the change are threefold:
1. To bring continuity to the Hanna business units.
2. Strengthen the overall Hanna sales efforts by eliminating the self serving interests of manufacturers representatives.
3. Avoid any potential IRS concerns regarding the current compensation package. Regional Sales Staff meeting scheduled for October 28th in Cleveland. Topics of discussion to include:
1. Compensation package.
2. New support staff.
3. Top five or six home office support concerns.
I would be available either Thursday or Friday night to meet with you and Jim. I will let you know as soon as I check with Jim regarding this flight schedule.
Gary, Congratulations again on your appointment. I look forward to working with you.
Best regards,
Terry Smith
(Id. at Ex. I.) After this correspondence, Foote again reiterated to Smith that if he was not happy with the changed compensation package, Smith should elect to take the "buyout" as provided for in paragraph 11 of the Agreement.
Again, as with all other facts in this background section for which cites are not provided, defendant does not contest this statement, and this Court assumes that testimony regarding Foote's statement that Smith could elect the buyout of paragraph 11 was presented before the arbitrator.
On October 24, 1996, Foote and Chapman met with Smith at Hanna's Bethlehem facility to discuss the change in compensation and informed Smith that a written offer would be forthcoming. The next day, Foote issued an Agenda for a meeting to be held on October 28, 1996. In accordance with item #7 on the Agenda, there was a discussion at the meeting on "Compensation/Conversion Issues." (Id. at Ex. J.) One part of the changed compensation package discussed that day was the offer of an automobile. (Id. at Ex. K.)
On November 14, 1996, Foote told Smith that if Smith did not take the new compensation plan, Hanna would allow Smith to continue only until new management had been in place for one year and then dismiss Smith without cause, thereby preventing Smith from invoking paragraph 11 of the Agreement. On November 22, 1996, Chapman issued a memorandum to "All Associates" under the subject "Organizational Change" which described the management changes. (Id. at Ex. G.)
On December 18, 1996, Foote wrote a letter to Smith offering him a position as a District Manager of Hanna (for a certain geographic region). (Id. at Ex. L.) The offer included a combination base salary and commission compensation package:
We are delighted to offer you a position with M.A. Hanna Engineered Materials as a District Manager effective January 1, 1997, reporting to me. As I have communicated to you, we are excited about you joining our management team and expect you will contribute significantly to the success of M.A. Hanna Engineered Materials and the M.A. Hanna Company.
The following is a summary concerning our offer of employment:
• Your base salary will be at the annual rate of $78,000 before taxes and other payroll deductions.
• You will have a variable sales incentive compensation target of $31,200. This amount will be guaranteed for 1997 and paid during the month following the end of each quarter, at the rate of $7800. After this first year, your variable sales incentive compensation will not be guaranteed and will be paid according to your actual quarterly sales performance compared to the Annual Operating Plan or AOP (AOP equals contribution margin dollars for your territory for the quarter).
• It is the intention of M.A. Hanna Engineered Materials to provide you with the use of a leased automobile in accordance with the present policy. You have indicated your desire to continue to use your personal vehicle. To accommodate this desire, M.A. Hanna Engineered Materials will pay you a $450 monthly allowance as reimbursement for your Company related use of this vehicle for a period of eighteen months. Beginning July 1, 1998, or prior to this date if you elect to do so, M.A. Hanna Engineered Materials will begin providing you with the use of a leased automobile.
• In the event of a base salary or target incentive compensation decrease or job elimination prior to January 1, 1998, you will be given a minimum of accepting an alternative position, if available, or receiving six months severance pay (based on a six month proration of your base pay and targeted incentive compensation) and outplacement services arranged for you by M.S. Hanna Company. . . .
(Id.) The offer letter continued by explaining that Smith would receive benefits, such as participation in a 401(k) plan, health care, life insurance, accidental death and dismemberment insurance, and vacation, and would be asked to enter a confidentiality and non-compete clause for six months. (Id.)
It was Smith's understanding that such an offer was being made to most if not all of six independent contractors sales representatives, thereby effectively eliminating such positions. Only one independent contractor was not given an offer, James Toner, and in exchange, Hanna paid Toner one year's worth of commissions. According to plaintiff, this was done in accordance with paragraph 11 of the Agreement because of the change of management. According to defendant, Hanna terminated the Agreement with Toner under ¶ 7 and paid him six months of commissions, but that it later elected to pay him an additional six months of sales commissions because Toner had certain medical problems and might be at an age where it could be difficult for him to find another job. Other than Smith, only one individual refused a position with Hanna, Bruce Graves. Graves' company elected to continue to do business with Hanna as an Independent Representative, and no payment or other compensation was made to either Graves or his company.
Defendant cites to Foote's testimony for this. Again, though there is no transcript to confirm this, plaintiff does not contend that such testimony was not presented at the hearing before the arbitrator.
On December 20, 1996, Smith received the new compensation package and was instructed to return the offer by December 26, 1996. (Freidel Certif. Ex. L.) The AOP to which the offer letter referred was not unveiled until January 8-11, 1997.
Based upon the prior statements, correspondence, and memoranda made by Foote, plaintiff elected to invoke the provisions on paragraph 11 of the Agreement. On December 31, 1996, Smith issued correspondence to Foote rejecting the new compensation package and terminating the Agreement pursuant to paragraph 11 of the Agreement. (Id. Ex. M.) Smith wrote that "[i]t appears from the Plan outlined in your correspondence that the compensation for my services would be greatly reduced." (Id.) Accordingly, Smith listed his commissions from the previous twelve months (which totaled $171,019.74) and calculated what each of the twelve monthly payments should be (namely, $14,251.65) beginning on February 28, 1997, his official date of termination. (Id.) Hanna viewed T.J. Squared's termination as one under ¶ 7, rather than ¶ 11, entitling T.J. Squared only to earned but unpaid commissions, and it refused to pay amounts that would have been due and owing under the "buy out" clause.
Defendant presented testimony to the arbitrator that Smith could have received more under the new plan than he previously received. For 1997, Hanna "guaranteed" Smith a "floor" of $109,200, plus a company car and other benefits not previously presented, in comparison to Smith's personal income of approximately $105,000-$108,000 in each of 1995 and 1996, without benefits. However, the floor in future years would only be $78,000, plus benefits and whatever commissions Smith earned. Foote estimated that Smith would have personally earned between $150,000 and $180,000 a year, plus benefits, if he had accepted employment.
B. Procedural History
Smith attempted to invoke the Agreement's dispute resolution procedure, but Hanna either refused or failed to respond, and Hanna again failed to respond within the required ten day period to Smith's January 6, 1997 request for step negotiations. On February 7, 1997, Smith requested Mediation as provided for in the Agreement. Hanna did not respond. Thus, on August 14, 1997, T.J. Squared filed suit against Hanna in the Superior Court of New Jersey, Law Division, Gloucester County, seeking approximately $175,000.00 plus other unnamed sums in commissions. Hanna removed the case to this Court on September 16, 1997, on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332, and this Court does have such jurisdiction. On October 21, 1997, Magistrate Judge Joel B. Rosen administratively terminated this case without prejudice, sending it to contractual arbitration pursuant to the Agreement.
The matter was arbitrated on November 16, 1998 by an arbitrator assigned by the American Arbitration Association. No transcript was made from that proceeding. On February 18, 1999, after hearing testimony and reviewing the exhibits, the arbitrator made the following award:
I, THE UNDERSIGNED ARBITRATOR, having been designated in accordance with the Arbitration Agreement entered into between the above-named parties and dated October 1, 1994, and having been duly sworn, and having duly heard the proofs and allegations of the Parties, do hereby, FIND and AWARD, as follows:
A. There was a change in management of the M.A. Hanna Materials Group within the meaning of Paragraph 11 of the Independent Contractor Sales Representative Agreement.
B. It is clear on all the facts of record that Respondent intended to, and did, bargain for Terry Smith's services personally. T.J. Squared has no other significant employees at the time the Agreement was signed. The record reflects that the corporation (T.J. Squared) was created contemporaneously with the signing of the Agreement, and indeed that Respondent recommended that Smith organize his sole proprietorship into corporate form. It is disingenuous for Respondent to contend that the offer of employment to Smith in December 1996 was not intended to supersede its Agreement with claimant.
C. The offer of employment to Smith looked to payment of all or most of his compensation in a form other than commissions and was, therefore, a "fixed form of compensation" within the meaning of Paragraph 11.
D. Claimant, accordingly, had the right to invoke the remedy provided by Paragraph 11 following the offer of employment to Smith in December 1196. Had he delayed doing so, the Agreement could have been terminated by Respondent a relatively short time thereafter (i.e., after the expiration of one year from the date of the change in management), thereby leaving Claimant with no remedy. Furthermore, it appears from the record that Respondent was seeking to replace its representatives with a captive sales force under a substantially different compensation scheme. Accordingly, Claimant reasonably inferred that Respondent was likely to terminate the Agreement, if Smith did not agree to the new employment terms.
E. Smith alleged that he is entitled to commissions on certain additional sales; however, no proof was adduced at the hearings to substantiate this.
Accordingly, I do hereby, AWARD, as follows:
1. Within thirty (30) days from the date of transmittal of this Award to the Parties, M.A. HANNA COMPANY (HANNA ENGINEERED MATERIALS GROUP), hereinafter referred to as RESPONDENT, shall pay to T.J. SQUARED, INC., hereinafter referred to as CLAIMANT, the sum of ONE HUNDRED SEVENTY ONE THOUSAND NINETEEN DOLLARS AND SEVENTY FOUR CENTS ($171,019.74), representing CLAIMANT's commissions earned during the previous twelve months prior to termination of the Agreement, as provided by Paragraph 11 of said Agreement.
2. CLAIMANT shall receive interest on the above amount, computed at the rate of seven percent (7%) per annum, from the date each monthly installment should have been made (i.e., the January 1997 payment is treated as 25 months in arrears, while the December 1997 payment is 14 months in arrears).
3. The balance of CLAIMANT's claim is hereby denied.
4. Each party is to bear its own attorney's fees and expenses.
5. The compensation of the Arbitrator totaling ONE THOUSAND DOLLARS ($1,000.00), shall be borne equally by the Parties.
6. The administrative fees and expenses of the American Arbitration Association totaling TWO THOUSAND SIX HUNDRED THIRTY ONE DOLLARS AND FOURTEEN CENTS ($2,631.14), shall be borne as incurred by the Parties, and the postponement fees shall be borne by the Party having requested same.
7. This Award is in full settlement of all claims submitted to this Arbitration.
(Field Certif. Ex. I.)
Now before the Court are the parties' cross-motions to confirm and vacate the arbitration award. As the parties, by contract, have chosen Ohio law, this Court will apply the law of Ohio in interpreting the Agreement.
II. DISCUSSION
An arbitrator's authority comes from the agreement to arbitrate, Swift Industries, Inc. v. Botany Industries, Inc., 466 F.2d 1125, 1131 (3d Cir. 1972), which in this case states that any disputes otherwise not resolved "shall be finally settled by arbitration conducted expeditiously in accordance with the American Arbitration Association Commercial Arbitration Rules. Arbitration shall be held at Cleveland, Ohio or such other place as the parties shall agree." (Field Certif. Ex. D at ¶ 16.C.) Federal courts do not sit to review arbitrators' awards de novo; even if the results reached are inequitable, the courts must uphold them unless clearly erroneous. Marion Mfg. Co. v. Long, 588 F.2d 538, 541 (6th Cir. 1978).
Statutorily, there are certain situations in which a district court may vacate an arbitrator's award, none of which apply here. See 9 U.S.C. § 10 (court may vacate an arbitration award where it was procured by corruption, fraud, or undue means, where the arbitrators are totally or partially corrupt, where arbitrators were guilty of misconduct, or where arbitrators exceeded their power or imperfectly executed that power). Additionally, the Third Circuit has said that courts may vacate arbitrators' awards if they do not meet the test of "fundamental rationality." Swift, 466 F.2d at 1131. In so stating, the Third Circuit relied upon the standards of a labor dispute case, Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123 (3d Cir. 1969), for the proposition that "`mere error in the law or failure on the part of the arbitrators to understand or apply the law' will not justify judicial intervention, and that the courts' function in confirming or vacating a commercial award is `severely limited'. . .;" and that "the interpretation of. . .arbitrators must not be disturbed so long as they are not in `manifest disregard' of the law." Id., quoted in Swift, 466 F.2d at 1130. See also News America Publications, Inc. v. Newark Typographical Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990) ("there must be absolutely no support at all in the record justifying the arbitrator's determinations for a court to deny enforcement of an award"). The Sixth Circuit agrees:
It is very well settled that the courts are generally required to refrain from reviewing the merits of an arbitrator's award due to the policy favoring arbitration as a means of resolving labor disputes. . . . But there are at least two important exceptions to this general rule. First, `the arbitrator is confined to the interpretation and application of the collective bargaining agreement, and although he may construe ambiguous contract language, he is without authority to disregard or modify plain and unambiguous provisions. . . .' Second, `although a court is precluded from overturning an award for errors in the determination of factual issues, '(n)evertheless, if an examination of the record before the arbitrator reveals no support whatever for his determinations, his award must be vacated.''"Storer Broadcasting Co. v. American Federation of Television and Radio Artists, Cleveland Local, AFL-CIO, 600 F.2d 45, 47 (6th Cir. 1979) (internal citation omitted).
Defendant argues that the standard for vacating an award is whether the award is arbitrary and capricious, citing Borden v. Hammers, 941 F. Supp. 1170 (M.D.Fla. 1996). An award is arbitrary and capricious if it is a manifest misreading or disregard of plain and unambiguous contract language or if there is no factual support whatsoever for the decision. See United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38 (1987) ("as long as the arbitrator is even arguably construing or applying the contract," court must uphold the award even if "convinced [that the arbitrator] committed serious error"). "[I]t is the arbitrator's view of the facts and the meaning of the contract that [the parties] have agreed to accept." Bruno v. United Steelworkers of America, 784 F. Supp. 1286, 1298 (N.D.Ohio. 1992).
Defendant Hanna argues that the arbitrator erred as a matter of fact and law because:
1. there was no change in control of Hanna;
2. there was no change in the management of the Materials Group;
3. there was no proof offered to connect any change in the control of Hanna and/or the management of the Materials Group to any change in the compensation structure;
4. no change in compensation, fixed or otherwise, was offered to T.J. Squared;
5. the compensation package offered to Smith was not a "fixed form of compensation"; and
6. an offer of employment to Smith, regardless of its terms, did not give rise to any rights to T.J. Squared.
Taking each of these contentions in order, however, and applying the great amount of deference that is due in reviewing arbitration awards, it is clear that the arbitrator's award was neither arbitrary nor capricious.
12: Change in Control of Hanna or Management of Materials Group
Defendant argues that the arbitrator's factual finding that there was a change in management of Materials Group was wrong, arbitrary, and capricious. Based on the record put before this Court that was before the arbitrator, while there does not appear to be evidence of a change in control of Hanna, there was at least some evidence of a change in management of the Materials Group, and in order to trigger ¶ 11, it was only necessary that one of those two situations have occurred. The arbitrator's finding of change in management of the Materials Group was not irrational.
3: Connection Between Change of Management and Change in Compensation
Defendant argues that the arbitrator's decision was arbitrary and capricious because there was no connection between any change of management and change in compensation structure. The language of ¶ 11 says that the buyout clause applies "[i]n the event that there is a change in control of Hanna or the management of Materials Group which results (within twelve (12) months of such change) in the compensation structure for representatives of Materials Group being modified from commission to a fixed form of compensation. . . ." Here, assuming that the arbitrator properly determined that the structure contained in the offer letter to Smith was a fixed form of compensation, there was more than enough evidence upon which the arbitrator could rely in determining that the change to a fixed compensation occurred within twelve months of the change in management of Materials Group. Moreover, there was at least some evidence from which the arbitrator could find that this change in compensation was a result of change in management, considering that agents of Hanna began to talk to Smith and other representatives about changes in compensation at the same time that the changes in management were taking place. There is no basis for disturbing the arbitrator's finding in this regard.
46: Whether a Change in Compensation Was Offered to T.J. Squared, and Whether the Offer to Smith Gives T.J. Squared Rights
Defendant contends that the arbitrator's decision was arbitrary and capricious because there was no change in compensation, fixed or otherwise, offered to T.J. Squared. Rather, defendant says, the offer was made to Smith personally by way of an offer of employment, and the arbitrator incorrectly determined that Smith and T.J. Squared, a corporation, were one and the same. According to Hanna, ¶ 11 was designed to protect T.J. Squared, but not Smith personally, from being unilaterally forced to accept a "fixed form of compensation," and thus an offer of employment to Smith personally is not the same as forcing T.J. Squared to accept a change in compensation. Only the latter, defendant contends, would give rise to plaintiff's right to invoke the buyout clause.
In the first instance, this Court notes that Hanna could not unilaterally force T.J. Squared or any other representative to accept a change in compensation. The amount of pay is a material term of this Agreement, and a unilateral change to that would be invalid. The "change" noted in the Agreement could only come by way of an offer and acceptance. The question, then, is whether the arbitrator had any rational basis to decide that an offer to Smith constituted an offer to T.J. Squared. Hanna notes that it is not the function of any judicial proceeding to rewrite a contract "to provide for more equitable results" than the contract itself provides, Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 678 N.E.2d 519, 526 (Ohio 1997), and argues that the arbitrator rewrote ¶ 11 of the Agreement in when he determined that an offer of employment to Smith constituted a change in compensation for "representatives" of Materials Group.
The Court also notes that ¶ 11 says that a change to a fixed form of compensation for "representatives" could give rise to the applicability of the payment clauses of ¶ 11, rather than the singular, capitalized term "Representative" otherwise used to designated T.J. Squared in the Agreement. Thus, under a permissible reading of ¶ 11, if T.J. Squared terminated the Agreement pursuant to ¶ 11 because of a change to fixed compensation for sales representatives of Hanna, then T.J. Squared is entitled to twelve months of commissions.
The arbitrator found that because Terry Smith was the only significant employee of T.J. Squared, which was not yet a corporation, when the Agreement was signed, and because other facts of record show that Hanna had always bargained for Smith's services personally, Hanna could not now use T.J. Squared's corporate form — which Hanna had suggested Smith take — as a shield against the buyout clause. Though there is evidence that another independent contractor continued on as an "exclusive sales representative" after turning down an employment offer, the record does contain evidence from which the arbitrator could rationally find that the offer to Smith was intended to supersede the Agreement. This evidence includes the fact that Smith was substantially T.J. Squared's only employee; Smith was, by contract, the (owner and) employee who represented Hanna, and, by the terms of the Agreement, T.J. Squared could only sell Hanna's products. The record also reflects that Foote, on behalf of defendant, held meetings with the "sales associates" to discuss, at the same time, issues that would be important to these principals of independent companies as representatives of those independent companies, such as territory assignments and communication, as well as issues that would be important to them as individuals, such as compensation. Additionally, there is evidence of record by way of testimony that defendant's agents told Smith that if he did not want to take the offer, he should use the "buyout clause," further evidencing that defendant, up until the offer was declined, believed that Smith and T.J. Squared were one and the same. As there is at least some evidence to support the arbitrator's finding, this finding will not be overturned.
5. Whether There Was a Change to a Fixed Compensation Structure
Defendant contends that the compensation scheme which was offered to Smith did not constitute a "fixed compensation structure." Hanna argues that the new structure simply set a floor for earnings, but did not limit the amount of money which Smith could earn. While that is correct, the arbitrator's finding that Smith was offered a fixed form of compensation is not arbitrary and capricious.
The Agreement itself does not provide an exclusive definition of "fixed form of compensation," but rather only provides two examples of what might constitute such a form of compensation: salary or limited commission compensation. No further definition is given. The term is suggestive but not especially limiting. This is not a plain and unambiguous term, and thus this Court cannot overturn the arbitrator's construction of it just because this Court might have chosen a different construction. Moreover, the terms of the offer letter regarded the compensation as fixed for purposes of severance pay, providing for "six months severance pay (based on a six month proration of your base pay and targeted incentive compensation)," that is, $78,000 plus $31,200. Further, the commission component was guaranteed for the first year at $31,200, recognizing that the actual amount of this component could be even less in future years, and logically providing a fixed compensation package of $109,200 in the first year. Also, as mentioned above, when discussing this anticipated new compensation package, Foote himself stated on or about October 20, 1996 and again on November 14, 1996, that Smith could opt for the ¶ 11 severance payment, implicitly intending that this would be a plan for a "fixed form of compensation," or else Foote's statements would not have made sense. The arbitrator could reasonably conclude that Foote was speaking about the same eventual compensation plan that he authored on December 18, 1996. Though Hanna's point that the new plan provides a floor and not a ceiling on commissions, thus not limiting overall compensation, is not unreasonable, it was within the arbitrator's power and discretion to define the new system, which presents a combination of salary, benefits, and commissions, as a "fixed form of compensation," consistent with the Agreement's examples of salary and limited commission compensation.
III. CONCLUSION
For the foregoing reasons, this Court finds that the arbitrator's decision that plaintiff was entitled to invoke ¶ 11 of the Agreement was not arbitrary or capricious, in manifest disregard of the law, or completely lacking in evidentiary support. There being no challenge to the amount the arbitrator has awarded, this Court will uphold the award. Accordingly, defendant's motion to vacate the arbitrator's award will be denied, and plaintiff's cross-motion to affirm the award will be granted. The accompanying Order is entered and Judgment will be entered in favor of plaintiff and against defendant, in the amount of $171,019.74 plus interest accruing at a rate of 7% per annum, from the date that each monthly payment should have been made, in accordance with the arbitrator's February 18, 1999 Award.
ORDER
This matter having come before the Court upon the parties' cross-motions to confirm and vacate an award entered into in plaintiff's favor by arbitrator David L. Glass on February 18, 1999; and the Court having considered the parties' submissions; and for the reasons expressed in an Opinion of today's date;
IT IS this day of March 2000 hereby
ORDERED that defendant's motion to vacate the arbitrator's award be, and hereby is, DENIED; and it is
ORDERED that plaintiff's motion to confirm the arbitrator's award be, and hereby is, GRANTED; and
JUDGMENT shall be entered in plaintiff's favor and against defendant in the amount of $171,019.74, plus interest accruing at a rate of 7% per annum, from the date that each monthly payment should have been made, as set forth in the arbitrator's February 18, 1999 Award.