Sussex et al v. Turnberry/MGM Grand Towers, LLC et al

RESPONSE to 85 MOTION to Vacate Arbitration Ruling

D. Nev.April 28, 2011

i MORRIS PETERSON Steve Morris, No. 1543 2 Email: sm@morrislawgroup.com Akke Levin, No. 9102 Email: al@morrislawgroup.com Jean-Paul Hendricks, No. 10079 Email: jph@morrislawgroup.com 900 Bank of America Plaza 300 South Fourth Street 6 Las Vegas, Nevada 89101 Telephone: (702) 474-9400 7 Facsimile: (702) 474-9422 8 WOOD, SMITH, HENNING & BERMAN LLP Jason C. Gless, No. 8469 Email: jgless@wshblaw.com 7670 West Lake Mead Boulevard, Suite 250 Las Vegas, Nevada 89128 11 Telephone: (702) 222-0625 Facsimile: (702) 253-6225 12 Attorneys for Defendants 13 14 UNITED STATES DISTRICT COURT 15 DISTRICT OF NEVADA 16 MARY ANN SUSSEX; MITCHELL PAE; ) Case No. 2:08-cv-00773-RLH-PAL ‘7 MALCOLM NICHOLL and SANDY ) SCALISE; ERNESTO VALDEZ, SR. and ) 18 ERNESTO VALDEZ, JR; JOHN HANSON and ELIZABETH HANSON, ) ‘9 ) Plaintiffs, ) DEFENDANTS’ OPPOSITION TO 20 v. ) MOTION TO VACATE ) ARBITRATION RULING21 TURNBERRY/MGM GRAND TOWERS,) 22 LLC, a Nevada LLC; MGM GRAND )CONDOMINIUMS LLC, a Nevada LLC; ) 23 THE SIGNATURE CONDOMINIUMS, ) LLC, a Nevada LLC; MGM MIRAGE, a ) 24 Delaware Corporation; TURNBERRY/ ) HARMON AVE., LLC, a Nevada LLC; ) 25 and TURNBERRY WEST REALTY, INC.,) a Nevada Corporation, ) 26 Defendants. 27 __________________________________ 28 MORRIS PETERSON ATTORNEYS AT LAW OO BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 1 of 15 1 The defendants hereby submit their opposition to plaintiffs’ motion 2 to vacate the arbitrator’s partial final clause construction award (“Award”). The 3 opposition is based on the Award, attached as Exhibit A hereto, the papers and 4 pleadings on file, the following points and authorities, and such argument that the Court may allow. 6 I. INTRODUCTION 7 The Court should deny Plaintiffs’ motion to vacate the arbitrator’s 8 Award because it falls far short of making a showing that the Award was 9 “completely irrational” or that the arbitrator manifestly disregarded the law. 10 Plaintiffs have done little more than repeat the arguments they unsuccessfully ii made before the arbitrator in the hope that the Court will overturn him. 12 However, Plaintiffs are not entitled to a “full-bore legal and evidentiary 13 appeal{j .. .“ Hall St. Assoc., LLC v. Mattel, Inc., 552 U.s. 576, 588 (2008). The Court 14 must confirm the Award, even assuming the arbitrator had made serious 15 mistakes of fact or law. Lagstein v. Certain Underwriters at Lloyd’s, London, 607 F.3d 16 634, 640 (9th Cir. 2010). 17 The arbitrator did not disregard the law; he correctly applied it. He 18 did not make public policy as the arbitrators had done in Stolt-Nielsen. He 19 considered both parties’ interpretations of the arbitration provision and 20 concluded that the provision could not be construed to permit class arbitration. 21 Award at 23. There is nothing “completely irrational” about the arbitrator’s 22 Award. Even assuming there was any doubt that the arbitrator disregarded 23 analogous Nevada law on consolidation, AT&T Mobility, LLC v. Concepcion puts to 24 final permanent’ rest any notion that class arbitration could be imposed against 25 Defendants’ will based on a competing Nevada policy. 563 U.S. -, - S. Ct. -, 26 2011 WL 1561956 (U.S. April 27, 2011). 27 The Award should be confirmed. 28 MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET 2 LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 2 of 15 1 II. ARGUMENT 2 A. Standard of Review. 3 A party seeking to vacate an arbitration award under 9 U.s.c. 4 § 10(a)(4) on the ground that the arbitrator exceeded his powers “must clear a high 5 hurdle.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. _, 130 S. Ct. 1758, 6 1767 (2010). Review of an arbitration award under the grounds listed in 9 U.S.C. 7 § 10 is “extremely limited. .. .“ Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 8 341 F.3d 987, 998 (9th Cir. 2003); accord Health Plan ofNevada Inc. v. Rainbow Med., 9 LLC, 120 Nev. 689, 699, 100 P.3d 172, 179 (2004) (interpreting the grounds for 10 vacatur under NRS 38.241).1 The purpose of a limited review is to prevent 11 informal arbitration from becoming “a prelude to a more cumbersome and 12 time-consuming judicial review process.” Kyocera Corp., 341 F.3d at 998; see also 13 Hall St. Assoc., LLC v. Mattel, Inc., 552 U.S. 576, 588 (2008) (to same effect)(citing to 14 Kyocera, supra). 15 Courts may vacate an arbitration award only if (1) the award 16 constitutes “manifest disregard of the law”; or (2) the award is “completely 17 irrational.” Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1288 (9th Cir. 18 2009) (internal citations omitted). To show manifest disregard of the law, it is not 19 enough to contend that the arbitrator interpreted or applied the law incorrectly. 20 Lagstein v. Certain Underwriters at Lloyd’s, London, 607 F.3d 634, 641 (9th Cir. 2010); 21 accord Health Plan of Nevada, Inc., 120 Nev. at_, 100 P.3d at 178 (legal mistakes do 22 not justify setting aside an award). Instead, “[i]t must be clear from the record 23 that the arbitrators recognized the applicable law and then ignored it.” Mich. Mut. 24 Ins. Co. v. Unigard Sec. Ins. Co., 44 F.3d 826, 832 (9th Cir. 1995). 25 Similarly, an award is not “irrational” merely because an arbitrator 26 made “erroneous findings of fact.” Kyocera Corp., 341 F.3d at 997. Even if the court 27 28 1 The grounds for vacatur listed under 9 U.S.C. § 10(a)(1)-(4) are MORRIS PETERSON substantially similar to those listed under NRS 38.241(1)(a)-(d). ATTORNEYS AT LAW 100 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 3 of 15 1 2 3 4 5 6 7 8 9 10 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26, 27 28 MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 is convinced that the arbitrator made a serious mistake, this is not enough to overturn his decision. Eastern Associated Coal Corp. v. Mine Workers, 531 U.s. 57, 62 (2000). The award must be confirmed as long as arbitrators “even arguably construed or applied the contract and acted within the scope of their authority,” Barnes v. Logan, 122 F.3d 820, 822 (9th Cir. 1997), as much as courts may disagree with the decision. Envtl. Indus. Servs. Corp. v. Souders, 304 F. Supp. 2d 599, 601 (D. Del. 2004). Arbitrators exceed their powers only when they refrain from interpreting and applying the agreement and choose to simply impose their “own view of sound policy regarding class arbitration.” Stolt-Nielsen, 130 S. Ct. at 1767-68 (emphasis added). As discussed below, the arbitrator did not ignore the applicable law but applied it. He examined the arbitration provision but found nothing in it evidencing the parties’ intention to permit class arbitration under any circumstances. Even assuming the arbitrator made legal or factual errors in the process of construing the arbitration clause, mere errors are insufficient as a matter of law to support vacatur. The Court should deny Plaintiffs’ motion and confirm the Award. B. There is no Question that the Arbitrator Had Jurisdiction to Decide Whether the Parties Agreed to Class Arbitration. As a preliminary matter, the Court should reject Plaintiffs’ attempt at identifying the issue of whether the parties agreed to class arbitration as a “gateway issue” that “the courts have jurisdiction to decide.” Motion at 4 (emphasis added). The arbitration provision of the purchase and sales agreement (“PsA”) commits questions as to the interpretation of PSA, including its arbitration provision, to the arbitrator. PSA, section 24.10. The parties agreed to the “Dispute Resolution Rules of the American Arbitration Association (“AAA”) as modified herein.” PSA, section 24.10. These rules provide that “the arbitrator shall determine as a threshold matter. . .whether the applicable arbitration clause permits the arbitration to 4 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 4 of 15 1 proceed on behalf of or against a class. . . . AAA Class Rules, Rule 3 (emphasis added). 2 Thus this Court does not decide this gateway issue but reviews it and does so under 3 a highly deferential review. Kyocera Corp. 341 F.3d at 998; Stolt-Nielsen, 130 S. Ct. at 4 1767-68. 5 C. The Arbitrator Recognized and Applied Stolt-Nielsen to the Letter. 6 1. The Sto it-Nielsen Holding and Rationale. The arbitrator began his analysis by discussing Stolt-Nielsen S.A. v. 8 AnimalFeeds Int’l Corp., 559 U.S. .__, 130 S. Ct. 1758 (2010)(”Stolt-Nielsen”), correctly noting that this recent, seminal, decision is “central to the issues raised” in his 10 award. Award, Exhibit A hereto, at 6. In Stolt-Nielsen, the Supreme Court answered the question that the plurality left open in Green Tree Fin. Corp. v. Bazzle, 12 539 U.S. 444, 453 (2003) i.e., the applicable rule “in deciding whether class 13 arbitration is permitted.” Stolt-Nielsen, 130 5. Ct. at 1172. To answer that question, 14 the Supreme Court began by emphasizing the consensual nature of arbitration and the fundamental role of the Federal Arbitration Act (“FAA”): 16 While the interpretation of an arbitration agreement is 17 generally a matter of state law. . . the FAA imposes certain rules offundamental importance, including the basic 18 precept that arbitration ‘is a matter of consent, not coercion.” 19 20 Stolt-Nielsen, 130 5. Ct. at 1773 (internal quotation omitted) (emphasis added). An 21 arbitration agreement, like any other contract, must be construed to give effect to 22 the parties’ “contractual rights and expectations.” Id. at 1773. Because the parties 23 are free to “specify with whom they choose to arbitrate their disputes,” it falls to the 24 courts and arbitrators to give effect to such contractual limitations. Id. at 1773-74 25 (emphasis in opinion). Based on these principles, the Supreme Court held that “a 26 party may not be compelled under the FAA to submit to class arbitration unless 27 there is a contractual basis for concluding that the party agreed to do so.” Id. at 28 1775 (emphasis in the opinion). MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 5 of 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 The Stolt-Nielsen court rejected the notion of implying an agreement to arbitrate as a class, because “the differences between bilateral and class-action arbitration are too great for arbitrators to presume.. . that the parties’ mere silence on the issue of class-action arbitration constitutes consent to resolve their disputes in class proceedings.” Id. at 1776. In a class arbitration, an arbitrator “no longer resolves a single dispute between the parties to a single agreement but instead resolves many disputes between hundreds or perhaps even thousands of parties.” Id. The presumption of confidentiality does not apply under the AAA rules. Id. Moreover, the commercial stakes in class arbitration are similar to those in class litigation, although the arbitration award would be subject to a very limited judicial review. Id. Based on these “fundamental differences,” the Supreme Court held that the question is not whether the parties intended to exclude class arbitration; the question is “whether they agreed to authorize class arbitration.” Id. at 1776 (emphasis in opinion). 2. The Arbitrator Adopted Plaintiffs’ Reading of Sto it-Nielsen. The arbitrator interpreted the holding of Stolt-Nielsen narrowly, in favor of Plaintiffs. For example, the arbitrator agreed with Plaintiffs that the holding should be considered in light of the specific circumstances of the case, including the fact that the parties were “sophisticated business entities. . .“ Award at 9. In fact, the arbitrator noted that “the majority did not take issue with the view expressed by the dissent.. . that the decision had no application to small value consumer claims arising from a contract of adhesion.” Id. n.2 (citing to Stolt Nielsen, 130 S. Ct. at 1783 (Ginsburg, J., dissenting).2 The arbitrator opined that 2 now know that the holding of Stolt-Nielsen is much broader than the arbitrator anticipated. The majority in AT&T Mobility, LLC v. Conce-pcion, 563 U.S. , - S. Ct. -, 2011 WL 1561956 *8 (U.S. April 27, 2011), decided just a day before this Opposition is being filed, went one step further and held that class arbitration cannot be imposed in the absence of the parties’ agreement even in small-value consumer cases. 6 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 6 of 15 1 Stolt-Nielsen left open the possibility to supply a contract term permitting class 2 arbitration in an appropriate case, and therefore went on to determine whether 3 Nevada had a “default rule” permitting class arbitrations, precisely as Plaintiffs 4 had suggested he do. To be sure, the arbitrator rejected Defendants’ argument that 5 the language of the arbitration provision evidenced an intent for bilateral 6 arbitration and lacked the necessary ambiguity to justify supplementing a default 7 rule.3 3. The Arbitrator Agreed with Plaintiffs that Nevada Has a 8 Default Rule on Consolidation ofArbitrations. 9 After discussing the statutory requirements of NRS 38.224, the 10 arbitrator concluded “that Nevada does have a default rule relating to the 11 consolidation of arbitration.” Award at 12. The arbitrator went one step further, 12 stating that “[ut is beyond doubt that a court’s treatment of the consolidation of 13 arbitrations is relevant to its analysis on the availability of class arbitrations.” Id. at 14 13 (emphasis added). Thus Plaintiffs’ contention that the arbitrator “erroneously 15 ruled that this default rule was irrelevant,” Motion at 1, is wholly unsupported 16 and in fact expressly contradicted by the Award. Id. at 12-13. He ruled that a 17 default rule for consolidation does not reach and support class arbitration. 18 4. The Arbitrator Correctly Declined to Make Public Policy. 19 The arbitrator also considered, as Plaintiffs had urged him to do, the 20 rationale of Keating v. Superior Court, 645 P.2d 1192, 1208 (Cal. 1982) (“Keating I”), 21 overruled on other grounds in Southland Corp. v. Keating, 465 U.S. 1, 17 (1984) 22 (“Keating II”). In Keating I, the California Supreme Court relied on California’s 23 statute on consolidation of arbitrations “along with support by other state courts 24 and the California legislature for consolidation of arbitration proceedings. . . .“ to 25 26 Defendants argued that the provision for a single arbitrator, for limited 27 discovery, and for confidentiality of the proceedings were all indicia that the 28 parties intended bilateral arbitration and that such intent was controlling. MORRIS PETERSON Opposition brief at 5-7. ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 7 of 15 1 determine whether class arbitration could be permitted. Keating II, 465 U.S. at 9 2 n.4 (emphasis added). The California Supreme Court engaged in a comparison 3 between consolidation and class arbitration and came to the conclusion that class 4 arbitration is in many ways less intrusive than consolidated arbitration. Keating I, 5 645 P.2d at 1209; Award at 13-14 (quoting portions of Keating I). 6 However the arbitrator declined to follow Keating I and II, observing 7 that Keating I “preceded Justice Alito’s detailed analysis of the crucial differences 8 between bilateral and class arbitration in Stolt-Nielsen.” Award at 14. “That 9 analysis,” the arbitrator continued, “raises substantial doubts as to how much 10 weight the Nevada Supreme Court would now place on an analogy to consolidated 11 arbitration.” Id. (emphasis added). Indeed, Judge Alito’s discussion of the four 12 “fundamental differences” between class arbitration and bilateral arbitration is not 13 mere “dicta,” as Plaintiffs dismissively suggest. These four differences formed the 14 central basis for the Court’s conclusion that the FAA requires an agreement to 15 authorize class arbitration. Stolt-Nielsen, 130 S. Ct. at 1776. Given the absence of 16 guidance from the Nevada Supreme Court on the issue, the arbitrator restrained 17 himself from “assuming ‘the authority of a common law court to develop what [I] 18 view as the best rule be applied.” Award at 15-16 (quoting Stolt-Nielsen, at 1769); 19 Award at 16 (“I cannot, based on existing precedents, reasonably anticipate that 20 the Nevada Supreme Court would conclude the state has a default rule 21 permitting class arbitrations”). 22 By declining to make public policy, the arbitrator did not ignore but 23 followed Stolt-Nielsen to the letter. See Stolt-Nielsen, 130 S. Ct. at 1769 (“the task of 24 arbitrators is. . . not to make public policy”)(emphasis added). In fact, if the 25 arbitrator had done what Plaintiffs wanted him to do - i.e., to conclude, without 26 a basis in Nevada law, that Nevada has a default rule for class arbitration - he 27 would have clearly exceeded his powers and his Award would have been subject 28 to vacatur. See id. (arbitrators exceed their powers when imposing their “own MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 8 of 15 1 view of sound policy regarding class arbitration”). No matter how much 2 Plaintiffs may disagree with the arbitrator’s decision, it is perfectly sound as a 3 matter of Nevada and federal law. 4 5. The Arbitrator Did Not Ignore Controlling Precedent. 5 Plaintiffs’ argument that the arbitrator should have followed the 6 Keating decisions as “controlling precedent” is flawed. First, Keating I is not 7 binding precedent in Nevada. The PSA is governed by Nevada law - not 8 California law. Second, Keating II did not hold that a state’s default rule on 9 consolidation may be applied by analogy to permit class arbitrations. The 10 Supreme Court only noted that “[tjhe California Supreme Court thus ruled that 11 imposing a class-action structure on the arbitration process was permissible as a 12 matterof state law.” Keating II, 465 U.S. at 9 n.4 (emphasis added). The Supreme 13 Court did not thereby adopt the California Supreme Court’s ruling as a holding to 14 be applied and followed in other states such as Nevada. How could it have done 15 so? 16 As the Supreme Court observed, the California Supreme Court had 17 not ‘passed upon the question whether superimposing class-action procedures on 18 a contract arbitration was contrary to the federal [Arbitration] Act.” Id. at 9. 19 (emphasis added). The Stolt-Nielsen court indirectly passed on that question and 20 answered it in the affirmative, by holding that “a party may not be compelled 21 under the FAA to submit to class arbitration unless there is a contractual basis for 22 concluding the party agreed to do so.” Stolt-Nielsen, 130 S. Ct. at 1775 (emphasis 23 added, in part). In AT&T Mobility, LLC v. Concepcion, the Supreme Court made 24 that holding crystal clear and directly answered the question left open in Keating: 25 imposing class arbitration without the parties’ consent “is inconsistent with the 26 FAA.” Concepcion, 563 U.S. -, - S. Ct. -, 2011 WL 1561956 at *10. 27 28 MORRIS PETERSON ATTORNEYS AT LAW 800 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 9 of 15 1 6. Sto it-Nielsen Did not Endorse Applying a State Default Rule on Consolidation By Analogy. 2 3 Stolt-Nielsen did not “hold” or “rule” that arbitrators should look to the state default rule for consolidation by analogy, as Plaintiffs repeatedly and 5 mistakenly contend. Motion at 1, 9-11. There is not even a hint of such a 6 proposition in Stolt-Nielsen, especially not on page 1773, which page Plaintiffs cite to several times in support.4 There, the Supreme Court essentially rejected the 8 notion that a state law rule could impose a procedure to which the parties did not 9 agree: 10 While the interpretation of an arbitration agreement is generally a matter of state law. . . the IFederal 11 Arbitration Act] FAA imposes certain rules of 12 fundamental importance, including the basic precept that arbitration ‘is a matter of consent, not coercion.’ 13 14 Stolt-Nielsen S.A., 130 S. Ct. at 1773 (internal quotation omitted) (emphasis added); accord Concepcion, 563 U.S. -, - S. Ct., 2011 WL 1561956 at *13 (“States cannot 16 require a procedure that is inconsistent with the FAA, even if it is desirable for 17 unrelated reasons”). 18 The only reference to consolidation in Stolt-Nielsen appears on page 19 1769 of the opinion. There, the Supreme Court faulted the arbitrators for acting 20 like a “common-law court” instead of inquiring whether the FAA or “one of the 21 two bodies of law that the parties claimed were governing, i.e., either federal 22 maritime law or New York law. . .“ provided for a “default rule’ under which an 23 arbitration clause is construed as allowing class arbitration in the absence of 24 express consent.” Stolt-Nielsen, 130 S. Ct. at 1768-69 (emphasis added). In that 25 discussion, the Supreme Court observed that the arbitrators had ignored, among 26 other things, three binding federal cases in which courts had denied to consolidate 27 MORRIS PETERSON 4Motion at 10 (lines 15-17); 11 (lines 17-20). ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 10 of 15 1 arbitration proceedings. Stolt-Nielsen, 130 S. Ct. at 1769 n.5 (U.S. 2010) (citing to 2 Gov’t of United Kingdom v. Boeing Co., 998 F.2d 68, 71, 74 (2d Cir. 1993); Glencore, 3 Ltd. v. Schnitzer Steel Prods., 189 F.3d 264, 268 (2d Cir. 1999); and Champ v. Siegel 4 Trading Co., 55 F.3d 269 (7th Cir. 1995)). These three cases did not involve a state 5 law default rule for consolidation. They were decided exclusively under the FAA, 6 and held that district courts “cannot consolidate arbitration proceedings.. . absent 7 the parties’ agreement to allow such consolidation.” Boeing Co., 998 F.2d at 74 8 (emphasis added). 9 The Supreme Court’s observation that arbitrators ignored three 10 decisions denying consolidation under federal law cannot possibly be read as a 11 holding that arbitrators should apply state law rules on consolidatiOn by analogy 12 as default rules to permit class arbitration. Notably, the court did not “direct a 13 rehearing by the arbitrators” to consider whether New York had a statute on 14 consolidation that could be applied by analogy. Id. at 1770. Instead, the Supreme 15 Court concluded “that there can be only one possible outcome on the facts before 16 us.” Id. The Stolt-Nielsen Court came to that “one possible outcome” solely on the 17 basis offederal law - the FAA. Stolt-Nielsen, 130 5. Ct. at 1776. Without clear 18 guidance from the Stolt-Nielsen court or from Nevada law on whether state 19 default rules on consolidation may be applied by analogy as permitting class 20 arbitration, the arbitrator cannot have manifestly disregarded the law in deciding 21 against class arbitration. 22 D. There is Nothing Irrational About the Arbitrator’s Interpretation of 23 the Arbitration Provision. 24 On a motion to vacate an arbitration award, the question is not 25 whether the arbitrator’s contract interpretation was correct or whether his 26 findings were supported by the evidence. Lagstein, 607 F.3d at 642. Courts may 27 not vacate an award simply because they would have interpreted the contract 28 differently and they may not even question the sufficiency of the evidence. Id. MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET 11LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 11 of 15 1 Courts only need to determine whether the arbitrator’s interpretation of the 2 contract is plausible. Id. at 643. There is no basis to vacate the award if the 3 award”is derived from the agreement, viewed in light of the agreement’s 4 language and context, as well as other indications of the parties’ intentions.” 5 Bosack, 586 F.3d at 1106 (citations and internal quotation marks omitted). An 6 award will only be vacated if it is “completely irrational.” Lagstein, 607 F.3d at 642 7 (emphasis added). 8 Here, the arbitrator had every reason to reject Plaintiffs’ argument 9 that there was a “consensus” among the parties at the time of contracting to permit 10 class arbitration. Award at 20-21. As the arbitrator correctly recognized, Plaintiffs ii provided “no support” whatsoever for their “contention that a series of 12 interlocutory awards consistently ruling that class arbitration was allowed were 13 issued and publicly available” at the time the PSA was drafted and offered to the 14 Plaintiffs in 2004. Id. at 20. The arbitrator also correctly recognized that his role 15 under the Class Rules was not to look at clause construction awards issued in 16 other cases involving different arbitration provisions, but to look only to this 17 arbitration clause. Id. at 21. Plaintiffs make no effort to show - because they 18 can’t - what makes the arbitrator’s reasoning so “irrational.” All they do in their 19 motion to vacate is to stubbornly repeat the same arguments they unsuccessfully 20 made to the arbitrator - still without a shred of evidentiary support for them. 21 Motion at 17. 22 The arbitrator’s conclusion that the arbitration provision did not 23 reveal an intent one way or the other to permit or deny class arbitration is also 24 plausible. The arbitrator rejected Plaintiffs’ “expressio unius est exclusio alterius” 25 argument because under Stolt-Nielsen, it is not enough that the parties did not 26 exclude class arbitration. Award at 22. The arbitrator rejected Defendants’ 27 argument that the provision for a single arbitrator, limited discovery and 28 confidentiality of the proceedings evidenced an intent for only bilateral MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET 12LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 12 of 15 i arbitration; observing that single arbitrators often preside over class arbitrations, 2 discovery could be expanded, and that the confidentiality provision was limited. 3 Id. While neither Plaintiffs nor Defendants may agree with his interpretation, 4 there is no doubt that his interpretation was “derived from the agreement” and 5 “viewed in light of the agreement’s language and context. . .“ Bosack, 586 F.3d at 6 1106. F. The Arbitrator’s Finding That Judicial Estoppel Had No 8 Application is Perfectly Sound and Supported by the Evidence. g Plaintiffs’ three-page argument on judicial estoppel, too, utterly 10 ignores the extremely limited standard of review that governs their motion to ii vacate. Plaintiffs’ argument merely rehash the same arguments they presented to 12 the arbitrator. Nowhere do Plaintiffs point out where the arbitrator exceeded his 13 powers, nor could they: the arbitrator considered the elements of judicial 14 estoppel, carefully looked at all the facts, considered both parties’ arguments, and i concluded the doctrine had no application. Award at 16-19. This was not only a 16 credible conclusion, it was the right one.. The Defendants observed in their 17 motion to compel arbitration that section 24.10 did not include a class action 18 waiver barring class arbitration, but also said that the “question of whether an 19 arbitration provision permits class arbitration is a matter of construction of the 20 arbitration provision. . . for the arbitrator to decide.” Motion to Compel Arbitration 21 at 16 (citing to Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444,453 (2003)) (emphasis 22 added). These two statements are not inconsistent. Award at 19. “Respondents 23 were stating that the availability of class arbitration was an issue to be contested 24 in arbitration.” Id. Moreover, Defendants noted that the case “could not be properly 25 maintained as a class action.” Motion to Compel at 16 n. 7. Thus, “[t]he message 26 delivered to the District Court was that the availability of the class mechanism 27 was to be decided in arbitration, not that it was a foregone conclusion.” Award at 28 19. MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET 13LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 13 of 15 1 Defendants did not “mislead” Plaintiffs by “conceding” class arbitration. They always expected the arbitrator to decide this question, precisely as provided by Rule 3 of the AAA Supplementary Rules for Class Arbitrations (“Class Rules”). Award at 19. The arbitrator correctly decided that there was no 5 basis to apply this “extraordinary remedy.” III. CONCLUSION Plaintiffs’ dissatisfaction with the arbitrator’s interpretation of the arbitration provision is not a basis for disregarding it. Lagstein, 607 F.3d at 640, 642. This motion to vacate the arbitrator’s award should be denied. 10 MORRIS PETERSON 11 12 ‘in, No. 9102 Jean-Paul Hendricks, No. 900 Bank of America Plaza 300 South Fourth Street Las Vegas, Nevada 89101 WOOD, SMITH, HENNING & BERMAN LLP Jason C. Gless, No. 8469 7670 West Lake Mead Blvd., Suite 250 Las Vegas, Nevada 89128 Attorneys for Defendants 2 3 4 6 7 8 9 By 10079 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 14 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 14 of 15 1 CERTIFICATE OF SERVICE 2 Pursuant to Fed. R. Civ. P. 5(b) and Section IV of District of Nevada 3 Electronic Filing Procedures, I certify that I am an employee of MORRIS 4 PETERSON, and that the following documents were served via electronic service: 5 OPPOSITION TO MOTION TO VACATE ARBITRATION RULING 6T0: 7 Robert B. Gerard Ricardo R. Ehmann 8 Gerard & Associates 2840 So. Jones Blvd. - Bldg. D, Suite 4 Las Vegas, Nevada 89146 10 rgerard@gerard1aw.com rehmann@gerardlaw.com 11 Robert Felimeth 12 University of San Diego Law School 5998 Alcala Park 13 San Diego, California 92110 cpil@sandiego.edu 14 15 Norman BlumenthalBlumenthal & Nordrehaug 16 2255 Calle Clara La Jolla, California 92037 17 norm@bamlawlj.com 18 Burton Wiand Wiand Guerra King 19 3000 Bayport Drive - Suite 600 Tam a Florida 33607 bwiand@wiandlaw.com 21 Attorneys DATED this ______day , 2011. MORRIS PETERSON ATTORNEYS AT LAW 900 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 90 Filed 04/28/11 Page 15 of 15