DAVID M. GLOVER, Judge.
Joshua Kilgore appeals from the trial court's May 28, 2015 order confirming the arbitrator's award (combined interim and final awards) in favor of Robert Mullenax and Senior Dental Care, LLC. He contends the trial court erred in doing so because 1) Arkansas public policy forbids an arbitrator from entering an award against a party who communicates information about fraudulent insurance acts to the Arkansas Insurance Department where the speaker reasonably believes the information to be true, and 2) the arbitrator lacked jurisdiction under the Federal Arbitration Act (FAA). We affirm.
In its interim award, the arbitrator set forth the basic facts of this case, which are not in dispute. We will further condense them here. Robert Mullenax, an insurance agent and business owner, formed Senior Dental Care, LLC (SDC) with Dr. Chad Matone, an Arkansas dentist. SDC operates a dental-management company, which administers dental practices that provide dental care to residents of skilled nursing facilities.
Joshua Kilgore, a businessman and licensed nursing-home administrator, approached Mullenax in late 2010 or early 2011 concerning the acquisition of an interest in SDC. Kilgore was familiar with the SDC program through his work as an administrator. On January 1, 2012, Kilgore, Mullenax, Matone, and SDC executed a purchase-and-sale agreement by which Kilgore was able to purchase membership units in SDC. Section 7 of the purchase-and-sale agreement provided in part:
Although Matone subsequently left SDC, an addendum to the purchase-and-sale agreement was executed, leaving the noncompete provisions of the agreement in full force and effect between the remaining owners, Mullenax and Kilgore.
A conflict subsequently developed between Mullenax and Kilgore, resulting in the May 2013 execution of a confidential-settlement agreement and full release (settlement agreement). The parties thereby agreed that they had continuing obligations under the purchase-and-sale agreement and that those continuing obligations included the noncompete provisions. They further agreed that the two-year time period for the noncompete provisions would begin on April 1, 2013, and end on April 1, 2015.
The settlement agreement provided in part
Both the purchase-and-sale and the confidential-settlement agreements provided that disputes were to be settled by arbitration under the rules of the American Arbitration Association (AAA).
On June 1, 2013, Kilgore acquired an ownership interest in Care Services Management, LLC (CSM). CSM markets the dental services of Marquis Mobile Dental Services, LLC (MMDS) in the State of Arkansas and elsewhere. It also markets other medical services. CSM's offices are located in the State of Tennessee. CSM and MMDS operate out of the same location in Tennessee. MMDS and SDC are competitors. CSM uses marketing materials in Arkansas that contain a separate page labeled "Dental Services," which provides in part:
SDC's vice president testified that after Kilgore withdrew from SDC, nineteen facilities sent termination notices to either Senior Care Solutions or Senior Works, which are companies affiliated with the SDC dental program.
Mullenax testified he found it strange that shortly after Kilgore left, nineteen facilities terminated their relationships with SDC-affiliated companies. He acknowledged, however, he had no evidence that anyone left SDC because of any defamation.
Kilgore explained his motivation for calling the Insurance Department was to "see if [he] could use a particular situation as a defense." He further testified,
Kilgore then became unhappy with the progress of the Insurance Department's investigation, and he talked to Senator Percy Malone about it. Senator Malone contacted the Insurance Department and reported Kilgore had some information that might interest them.
Also, shortly after terminating his relationship with Mullenax and SDC, Kilgore asked Dr. Richard Wike, who was providing optometry services for the Mullenax program, whether "he was still doing the illegal kickback deal with Bob Mullenax." Dr. Wike had been serving Kilgore's nursing facilities until Kilgore terminated his relationship with Mullenax and SDC.
At least two persons testified that Kilgore approached them about his new dental program and stated it was better than that offered by Mullenax, offering one of the persons the brochure that stated CSM provided one of the "only truly legal" means of providing dental care in long-term care (LTC) settings. However, all of the witnesses who testified on the issue stated they did not abandon SDC services because of Kilgore.
Kilgore challenges the arbitrator's exercise of jurisdiction under the Federal Arbitration Act as his second point of appeal. For ease of discussion, we address it first and find no error.
The issue of whether the arbitrator's jurisdiction should be exercised pursuant either to the federal or to the state arbitration act was presented to the arbitrator, and he concluded the FAA governed. The trial court confirmed the arbitration award, finding that "the Arbitration Award of the Arbitrator was proper and that there is no basis for vacating, modifying, or correcting the Arbitration Award," and specifically noting in his posthearing rulings that the arbitrator had fully discussed the jurisdiction issue.
Kilgore contends the arbitrator erred in deciding this case was governed by the FAA because the federal act requires a contract evidencing a transaction in commerce, which he argues did not exist
The arbitration clauses of both agreements that were at issue in the underlying arbitration (purchase-and-sale agreement and confidential-settlement agreement) provided that disputes were to be settled by arbitration "in accordance with the rules ... of" or "under the auspices of" the AAA. As explained by the arbitrator, Rule 7 of the Rules of the AAA provides that the "arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim."
In addressing the jurisdictional questions, the arbitrator explained that the FAA applied to all contracts "evidencing a transaction involving commerce." In addressing the basic question of "What is a transaction involving commerce?" the arbitrator cited a 1995 United States Supreme Court case, Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995), and explained the Supreme Court concluded that an expansive interpretation of the FAA was correct, viewing "commerce" broadly, observing that the words "involving commerce" are broader than the more commonly used words "in commerce," and holding that use of the term "involving commerce" in the FAA "signals an intent to exercise Congress' commerce power to the full." The arbitrator further explained that the Court in Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003), addressed the question as to whether the contracts must involve commerce or whether they simply must be the types of contracts in general that involve commerce and concluded that "the proper focus of the inquiry is not upon the individual transaction, but upon `consideration of the `general practice' those transactions represent."
With that backdrop, the arbitrator explained,
Under the AAA rules, which the parties designated as applicable under both agreements, the arbitrator decides jurisdictional issues. The trial court specifically noted in its ruling at the conclusion of the hearing confirming the arbitrator's award that the arbitrator had fully discussed the jurisdiction issue. We agree. The arbitrator fully discussed the issue, cited applicable
Kilgore's remaining point of appeal contends that the arbitration award should be vacated because it violates Arkansas public policy. He asserts the arbitrator exceeded his powers because Arkansas Code Annotated section 23-60-111 (Repl. 2012) sets forth Arkansas public policy that "no civil cause of action of any nature shall arise against the person for supplying any information" to the Insurance Department relating to suspected fraudulent insurance acts. He argues this statute forbids an arbitrator from entering an award against a party who communicates information about fraudulent insurance acts to the Arkansas Insurance Department where the speaker reasonably believes the information to be true. Again, we find no basis for vacating the arbitration award.
Because we have rejected Kilgore's challenge to the arbitrator's exercise of jurisdiction under the FAA, we examine his public-policy challenge under the grounds for vacating arbitration awards set forth in 9 U.S.C. § 10:
The Eighth Circuit Court of Appeals, while recognizing that an arbitrator's broad authority is not unlimited, outlined the general parameters employed in reviewing arbitration decisions in Medicine Shoppe International, Inc. v. Turner Investments, Inc., 614 F.3d 485, 488 (2010):
(Citations omitted.) The Medicine Shoppe opinion further explains that, prior to the United States Supreme Court decision in Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008), a court could vacate arbitration awards on grounds other than those listed in the FAA. In Hall, however, the Court held that "`the text [of the FAA] compels a reading of the §§ 10 and
We wrestled with Kilgore's public-policy argument, but we concluded Arkansas Code Annotated section 23-60-111 and the facts presented in this case do not provide the type of basis for vacatur envisioned by 9 U.S.C. § 10(4). The arbitrator clearly had the "power" to address the issue before him, i.e., whether Kilgore violated the nondisparagement clause of the Settlement Agreement, and he fully explained why he concluded that Kilgore did violate that clause. In discussing the specific disparagement findings related to Kilgore's contact with the Insurance Department, the arbitrator was careful to note that Kilgore's "primary motivation was not protecting the interest of the public but to gain an advantage in the arbitration that SDC and Mullenax had filed against him, thinking that to discredit or disparage Mullenax might give him an advantage and result in the dismissal of the arbitration." Given the arbitrator's broad authority, the extraordinary level of deference we provide to the underlying arbitration award, our limited judicial review of arbitration decisions under 9 U.S.C. section 10, and Kilgore's acknowledgment that his motivation for contacting the Insurance Department was strategic in nature for his own benefit — not out of a sense of public interest — we have concluded he has not demonstrated that the arbitrator exceeded his power to any extent necessary to vacate the arbitration award pursuant to 9 U.S.C. section 10(4).
Affirmed.
Abramson and Harrison, JJ., agree.