Filed: Apr. 14, 2020
Latest Update: Apr. 14, 2020
Summary: FILED United States Court of Appeals Tenth Circuit PUBLISH April 14, 2020 Christopher M. Wolpert UNITED STATES COURT OF APPEALS Clerk of Court TENTH CIRCUIT MID ATLANTIC CAPITAL CORPORATION, Petitioner Cross Defendant - Appellant / Cross-Appellee, v. Nos. 18-1195 and 18-1200 BEVERLY BIEN; DAVID H. WELLMAN, Respondents Cross Claimants - Appellees / Cross-Appellants. Appeal from the United States District Court for the District of Colorado (D.C. No. 1:17-CV-00122-RPM) Andrew Stanton, Jones Day, Pi
Summary: FILED United States Court of Appeals Tenth Circuit PUBLISH April 14, 2020 Christopher M. Wolpert UNITED STATES COURT OF APPEALS Clerk of Court TENTH CIRCUIT MID ATLANTIC CAPITAL CORPORATION, Petitioner Cross Defendant - Appellant / Cross-Appellee, v. Nos. 18-1195 and 18-1200 BEVERLY BIEN; DAVID H. WELLMAN, Respondents Cross Claimants - Appellees / Cross-Appellants. Appeal from the United States District Court for the District of Colorado (D.C. No. 1:17-CV-00122-RPM) Andrew Stanton, Jones Day, Pit..
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FILED
United States Court of Appeals
Tenth Circuit
PUBLISH April 14, 2020
Christopher M. Wolpert
UNITED STATES COURT OF APPEALS Clerk of Court
TENTH CIRCUIT
MID ATLANTIC CAPITAL
CORPORATION,
Petitioner Cross Defendant -
Appellant / Cross-Appellee,
v. Nos. 18-1195 and 18-1200
BEVERLY BIEN; DAVID H.
WELLMAN,
Respondents Cross Claimants -
Appellees / Cross-Appellants.
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:17-CV-00122-RPM)
Andrew Stanton, Jones Day, Pittsburgh, Pennsylvania, (Derek C. Anderson,
Winget, Spadafora & Schwartzberg, LLP, Boulder, Colorado, with him on the
briefs), for Appellant / Cross-Appellee.
Richard Fosher, Oakes & Fosher, LLC, St. Louis, Missouri, for Appellees / Cross-
Appellants.
Before BRISCOE, HOLMES, and McHUGH, Circuit Judges.
HOLMES, Circuit Judge.
A married couple, Ms. Beverly Bien and Mr. David Wellman, invested
money with Mid Atlantic Capital Corporation (“Mid Atlantic”). Their
investments performed poorly. Stung by the losses, Ms. Bien and Mr. Wellman
initiated arbitration proceedings against Mid Atlantic. The arbitration panel
awarded Ms. Bien and Mr. Wellman damages, attorney’s fees, and arbitration
costs. The panel also ordered Ms. Bien and Mr. Wellman to reassign their
ownership interests in their investments to Mid Atlantic.
Mid Atlantic moved the federal district court to modify the arbitration
award to correct “an evident material miscalculation of figures.” 9 U.S.C.
§ 11(a). The district court denied the motion because the alleged error that Mid
Atlantic sought to remedy did not appear on the face of the arbitration award. In
the amended final judgment, in addition to ordering Mid Atlantic to pay Ms. Bien
and Mr. Wellman certain damages, the court ordered that prejudgment interest
would accrue on the damages portion of the award and that postjudgment interest
would accrue at the federal rate specified in 28 U.S.C. § 1961. Lastly, the court
ordered Ms. Bien and Mr. Wellman to reassign to Mid Atlantic their ownership
interests in their investments, including any distributions that they had received
since the arbitration award due to the investments.
Both parties appeal from the district court’s order. Mid Atlantic
specifically challenges the court’s denial of its motion to modify the arbitration
2
award. Ms. Bien and Mr. Wellman cross-appeal, challenging the court’s rulings
applying prejudgment interest to only the damages portion of the award and
ordering them to reassign any distributions that they had received since the
arbitration award due to their ownership interests in the investments. Exercising
jurisdiction under 28 U.S.C. § 1291 and 9 U.S.C. § 16(a)(1)(D) and (a)(3), we
affirm the district court’s judgment in all respects.
I
Mid Atlantic is a brokerage firm registered with the Financial Industry
Regulatory Authority (“FINRA”). 1 Ms. Bien and Mr. Wellman opened several
brokerage accounts with Mid Atlantic. Through those accounts, Ms. Bien and Mr.
Wellman invested in two investment vehicles, Sonoma Ridge Partners and KBS
REIT [i.e., real estate investment trusts] (“KBS”). Ms. Bien and Mr. Wellman’s
contracts with Mid Atlantic each included an identically worded arbitration
1
FINRA is “a quasi-governmental agency responsible for overseeing
the securities brokerage industry.” ACAP Fin., Inc. v. S.E.C., 783 F.3d 763, 765
(10th Cir. 2015). “FINRA is the successor to the National Association of
Securities Dealers (‘NASD’)” and was formed in 2007 when NASD “consolidated
with the regulatory arm of the New York Stock Exchange.” Fiero v. Fin. Indus.
Regulatory Auth., Inc.,
660 F.3d 569, 571 & n.1 (2d Cir. 2011); see Cory v.
Allstate Ins.,
583 F.3d 1240, 1242 n.1 (10th Cir. 2009) (explaining that NASD
“changed its name” to FINRA in 2007). Some documents in the appellate record
reference NASD instead of FINRA. For our purposes, the distinction between
NASD and FINRA is one without a difference. See, e.g., Birkelbach v. S.E.C.,
751 F.3d 472, 475 n.1 (7th Cir. 2014) (“[T]here is no meaningful distinction
between the entities [FINRA and NASD]. . . .”). We thus read all record
references to NASD as referring to FINRA.
3
clause. That clause obligated the parties to resolve all disputes through binding
arbitration conducted according to FINRA rules. See, e.g., Aplt.’s App., Vol. III,
at 715 (Brokerage Account Appl. of Ms. Bien, executed Feb. 12, 2007) (“All
controversies that may arise between you, [and] us . . . including, but not limited
to, controversies concerning . . . breach of this or any other agreement between
you and us . . . shall be determined by arbitration”).
A
After their investments in Sonoma Ridge Partners and KBS suffered heavy
losses, Ms. Bien and Mr. Wellman initiated arbitration proceedings against Mid
Atlantic. They alleged that Mid Atlantic had, among other things, sold them
unreasonably risky investments. To remedy the resulting harm, Ms. Bien and Mr.
Wellman sought damages, as well as attorney’s fees, costs, and interest.
The arbitration panel held a hearing. At the hearing, Ms. Bien and Mr.
Wellman’s expert offered the panel two ways to calculate the losses at issue. The
first option looked to Ms. Bien and Mr. Wellman’s “net out-of-pocket” losses.
Aplt.’s App., Vol. II, at 244 (Arbitration Hr’g Tr., dated Nov. 3, 2016). The
expert calculated Ms. Bien and Mr. Wellman’s net out-of-pocket losses as
$292,411. The second measure of damages looked to Ms. Bien and Mr.
Wellman’s “market-adjusted damages.” Id. at 250. The measure of those
damages is “the difference between the actual return on these investments and
4
what the return would have been if [Ms. Bien and Mr. Wellman’s] money had
been invested in a well-managed ‘benchmark’ account.” Id., Vol. V, at 1079
(Order, entered Mar. 23, 2018); see also
id., Vol. II, at 251 (the expert observing
that “market-adjusted damages” is “[t]he difference” between what Ms. Bien and
Mr. Wellman would have received if they “had been invested in a diversified
portfolio” and what they actually received by “investing” in the riskier
investments at issue). The expert calculated Ms. Bien and Mr. Wellman’s market-
adjusted damages as between $484,684 and $618,049. Mid Atlantic did not
present any expert testimony on damages.
During the hearing’s closing arguments, Ms. Bien and Mr. Wellman read
into the record a written final prayer for relief. In it, they requested only market-
adjusted damages. Indeed, they asserted that compensating them for their net out-
of-pocket losses would be “inconsistent with the case law” and would not make
them whole. Id., Vol. II, at 434 n.1 (Final Prayer for Relief, dated Mar. 13,
2017). And so Ms. Bien and Mr. Wellman prayed for market-adjusted damages.
Together, they also requested $118,560 in attorney’s fees, $26,812.82 in costs,
interest on the damages at 8% per year, and punitive damages.
The arbitration panel ruled in substantial part in favor of Ms. Bien and Mr.
Wellman. It ordered Mid Atlantic to pay them two forms of damages: (1) initial-
5
investment-loss damages and (2) compensatory damages. The panel’s damages
award looked like this:
Damages Award Ms. Bien Mr. Wellman Both Total
Initial Investment Loss $240,321 N/A $52,090 $292,411
Compensatory Damages $437,286 $47,397 N/A $484,683
Total $677,607 $47,397 $52,090 $777,094
In addition, the arbitration panel ordered Mid Atlantic to pay interest at 8% per
year on each form of damages. That interest would accrue from the date Ms. Bien
and Mr. Wellman initiated arbitration proceedings until the damages were “paid
in full.” Id., Vol. I, at 28 (Arbitration Award, dated Dec. 12, 2016). The award
also called for Mid Atlantic to pay $118,560 in attorney’s fees, $26,812.82 in
costs, and all arbitration fees. The panel declined, however, to award any other
remedies, such as punitive damages. And it did order Ms. Bien and Mr. Wellman
to “reassign ownership of all Sonoma Ridge Partners and KBS REIT investments
to [Mid Atlantic].”
Id.
B
Mid Atlantic moved the district court to modify the arbitration award. 2 It
argued, among other things, that the arbitration panel had given Ms. Bien and Mr.
Wellman a double recovery. According to Mid Atlantic, the panel’s $292,411
2
Mid Atlantic’s motion also asked the district court to vacate the
award. The court denied this request, which is not at issue on appeal.
6
award in initial-investment-loss damages corresponded with Ms. Bien and Mr.
Wellman’s expert’s testimony that their net out-of-pocket losses were $292,411.
And the panel’s $484,683 award in compensatory damages almost exactly
matched the $484,684 in market-adjusted damages that the expert had at one point
said Ms. Bien and Mr. Wellman incurred. Yet, that expert had presented net out-
of-pocket damages and market-adjusted damages as alternative measures of their
losses, and Ms. Bien and Mr. Wellman had asked for only market-adjusted
damages in their final prayer for relief. Thus, by effectively awarding Ms. Bien
and Mr. Wellman both net out-of-pocket damages and market-adjusted damages,
the panel allegedly gave them a double recovery. To correct this purported
double recovery, Mid Atlantic asked the district court to modify the arbitration
award.
In response, Ms. Bien and Mr. Wellman moved the district court to confirm
the award. As they saw it, the district court could modify the arbitration award to
correct the alleged double recovery only if there was “an evident material
miscalculation of figures” on the face of the award. Id., Vol. III, at 517 (Br. in
Supp. of Mot. to Confirm Award) (quoting 9 U.S.C. § 11(a)). And the alleged
double recovery here appeared only when one delved into the arbitration record.
Thus, they argued that the district court lacked authority to modify the award.
7
The district court sided with Ms. Bien and Mr. Wellman. Like Mid
Atlantic, the court thought the arbitration award was “disturbing.” Id., Vol. V, at
1084. It agreed that “what the panel called ‘initial investment loss[es]’” and
“compensatory damages” corresponded with what Ms. Bien and Mr. Wellman had
called, respectively, “net out-of-pocket losses” and “market-adjusted damages.”
Id. So the court found that by awarding “both net out-of-pocket losses . . . and
market-adjusted damages,” the panel effectively gave Ms. Bien and Mr. Wellman
a double recovery.
Id. But the district court read 9 U.S.C. § 11(a) as authorizing
it to correct “an evident material miscalculation of figures” only if the
miscalculation appeared “on the face of the award.”
Id. at 1085. Because the
alleged double counting at issue appeared only upon looking to the arbitration
record, the district court concluded that it lacked authority to modify the award.
For that reason, it denied Mid Atlantic’s motion to modify and granted Ms. Bien
and Mr. Wellman’s motion to confirm the award.
After receiving proposed judgments from the parties, in April 2018, the
district court entered an amended final judgment. That judgment awarded Ms.
Bien and Mr. Wellman damages, attorney’s fees, and costs in the same amounts
that the arbitration panel had specified. The court likewise confirmed the
arbitration panel’s award of 8% yearly prejudgment interest on the damages—but
with no interest on the attorney’s fees or costs. As for postjudgment interest, the
8
court applied the 2.1% federal rate listed in 28 U.S.C. § 1961. Lastly, the district
court ordered Ms. Bien and Mr. Wellman to reassign to Mid Atlantic their
ownership interests in their investments in Sonoma Ridge Partners and KBS,
including any associated distributions that they had received since the arbitration
award (as well as interest thereon).
C
Both parties filed timely appeals from the amended final judgment. Mid
Atlantic’s appeal presents one question for our review: Did the district court err
by holding that it lacked authority to modify the arbitration award to correct an
alleged evident material miscalculation of figures because that miscalculation
does not appear on the face of the arbitration award? In their cross-appeal, Ms.
Bien and Mr. Wellman raise three questions. Did the district court err by (1)
granting post-award interest on damages, but not on attorney’s fees and other
costs; (2) awarding postjudgment interest at the federal rate; and (3) ordering Ms.
Bien and Mr. Wellman to reassign to Mid Atlantic any post-award distributions
from their ownership interests in Sonoma Ridge Partners and KBS (as well as
interest thereon).
II
In answering these questions, we “review the district court’s factual
findings for clear error and its legal determinations de novo.” Burlington N. &
9
Santa Fe Ry. Co. v. Pub. Serv. Co. of Okla., 636 F.3d 562, 567 (10th Cir. 2010).
We “must give extreme deference” to the arbitration panel’s conclusions because
our “review of arbitral awards is among the narrowest known to law.” THI of
N.M. at Vida Encantada, LLC v. Lovato,
864 F.3d 1080, 1083 (10th Cir. 2017)
(emphasis omitted) (quoting Brown v. Coleman Co.,
220 F.3d 1180, 1182 (10th
Cir. 2000)). Given this limited review, we should “exercise ‘great caution’ when
a party asks for an arbitration award to be set aside” or modified.
Id. (quoting
Ormsbee Dev. Co. v. Grace,
668 F.2d 1140, 1147 (10th Cir. 1982). Indeed,
“[o]nce an arbitration award is entered, the finality of arbitration weighs heavily
in its favor and cannot be upset except under exceptional circumstances.”
Burlington, 636 F.3d at 567 (quoting
Ormsbee, 668 F.2d at 1146–47).
More specifically, the party seeking vacatur or modification bears the
burden of establishing a ground for relief under either 9 U.S.C. § 10 or § 11—that
is, § 10 or § 11 of the Federal Arbitration Act (“FAA”). 3 See Frazier v.
3
In addition to the reasons for vacatur and modification listed in §§ 10
and 11, this circuit has recognized “a handful of judicially created reasons.”
Sheldon v. Vermonty, 269 F.3d 1202, 1206 (10th Cir. 2001) (quoting Denver &
Rio Grande W. R.R. Co. v. Union Pac. R.R. Co.,
119 F.3d 847, 849 (10th Cir.
1997)). But the Supreme Court cast doubt on the vitality of those judicially
created reasons in Hall Street Associates, L.L.C. v. Mattel, Inc.,
552 U.S. 576
(2008); see
id. at 584 (“We now hold that §§ 10 and 11 respectively provide the
FAA’s exclusive grounds for expedited vacatur and modification.”); see also
Stolt-Nielson S.A. v. AnimalFeeds Int’l Corp.,
559 U.S. 662, 672 n.3 (2010) (“We
do not decide whether ‘manifest disregard’ survives our decision in Hall Street . .
. as an independent ground for review or as a judicial gloss on the enumerated
(continued...)
10
CitiFinancial Corp., LLC, 604 F.3d 1313, 1324 (11th Cir. 2010); Apex Plumbing
Supply, Inc. v. U.S. Supply Co.,
142 F.3d 188, 194 (4th Cir. 1998). If the party
cannot carry this burden, “[i]t [will] not [be] enough . . . to show that the
[arbitration] panel committed an error—or even a serious error.”
Stolt-Nielsen,
559 U.S. at 671; see
id. at 696 (Ginsburg, J., dissenting) (noting that we “may not
disturb the arbitrators’ judgment, even if convinced that ‘serious error’ infected
the panel’s award” (quoting United Paperworkers Int’l Union v. Misco, Inc.,
484
U.S. 29, 38 (1987))); accord Oxford Health Plans, LLC v. Sutter,
569 U.S. 564,
569 (2013); cf. Major League Baseball Players Ass’n v. Garvey,
532 U.S. 504,
511 n.2 (2001) (per curiam) (noting that the arbitrator’s “decision hardly qualifies
as serious error, let alone irrational or inexplicable error” and “any such error
would not justify the actions taken by the [circuit] court [in rejecting the
arbitrator’s findings]”).
3
(...continued)
grounds for vacatur set forth at 9 U.S.C. § 10.”); DMA Int’l, Inc. v. Qwest
Commc’ns Int’l, Inc., 585 F.3d 1341, 1344 n.2 (10th Cir. 2009) (declining to
resolve the “interesting issue” of whether the judicially created reasons for
vacatur and modification survived Hall Street). Because only the first part of
§ 11(a) is at issue here, we need not and thus do not opine on the continuing
vitality of the judicially created reasons for vacatur or modification. See Valley
Forge Ins. Co. v. Health Care Mgmt. Partners, Ltd.,
616 F.3d 1086, 1094 (10th
Cir. 2010) (explaining that we answer “only the questions we must, not those we
can”).
11
III
Guided by those standards, we turn first to the question Mid Atlantic raises
in its appeal. That question has two parts. First, does 9 U.S.C. § 11(a) permit
courts to look beyond the face of the arbitration award when deciding whether to
modify an award to correct an alleged evident material miscalculation of figures?
And second, if not, does the face of the arbitration award here contain an evident
material miscalculation of figures? As explained below, we answer each question
in the negative.
A
Section 11(a) authorizes courts to modify an arbitration award if it contains
“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.” 9
U.S.C. § 11(a). We are concerned with only the first half of § 11(a)—the
“evident material miscalculation of figures” portion. 4 The district court read that
4
Section 11 reads in full:
In either of the following cases the United States court in and for
the district wherein the award was made may make an order
modifying or correcting the award upon the application of any
party to the arbitration—
(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
(continued...)
12
phrase as allowing it to correct only those miscalculations that appear on the face
of the award. Mid Atlantic argues that the district court erred in interpreting the
text of § 11(a) to embody such a face-of-the-award limitation.
Whether § 11(a) permits courts to go beyond the face of the arbitration
award in looking for an evident material miscalculation of figures is a question of
first impression in this circuit. We answer that question in the negative: that is,
we conclude that § 11(a) embodies a face-of-the-award limitation. In reaching
that conclusion, first and foremost, we draw inferences from the text and context
of the FAA. Our independent reading of this text and context is reinforced by our
recognition of the narrow and deferential standard of review applicable in the
arbitration context. We close our analysis of this matter by recognizing,
moreover, that the persuasive authority of our sister circuits has reached a similar
conclusion.
4
(...continued)
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.
The order may modify and correct the award, so as to effect the
intent thereof and promote justice between the parties.
9 U.S.C. §11. Because the parties do not argue that the other authorizations in
subsections (a), (b), or (c) apply, we do not consider them as separate bases of
authority to modify the award. Unless otherwise indicated, when referring to
§ 11(a), we mean only the “evident material miscalculation of figures” language.
13
1
We must interpret § 11(a) as written. See, e.g., Henry Schein, Inc. v.
Archer and White Sales, Inc., --- U.S. ----, 139 S. Ct. 524, 529 (2019). That
endeavor entails giving words their plain meaning when “read in their context and
with a view to their place in the overall statutory scheme.” Home Depot U.S.A.,
Inc. v. Jackson, --- U.S. ----,
139 S. Ct. 1743, 1748 (2019) (quoting Davis v.
Michigan Dep’t of Treasury,
489 U.S. 803, 809 (1989)); see Antonin Scalia &
Bryan A. Garner, R EADING L AW : T HE I NTERPRETATION OF L EGAL T EXTS 56–58
(2012) (discussing the “Supremacy-of-Text Principle”). Doing so, we conclude
that § 11(a) embodies a face-of-the-award limitation.
Let’s start with § 11(a)’s plain meaning. See Jones v. Comm’r, 560 F.3d
1196, 1200 (10th Cir. 2009). That section says, in relevant part, that a court may
modify an award if it contains “an evident material miscalculation of figures.” 9
U.S.C. § 11(a). In ordinarily English, a “miscalculation of figures” refers to
mathematical, not legal, errors. See Calculate, N EW O XFORD A MERICAN
D ICTIONARY 242 (2d ed. 2005) (“Determine (the amount or number of something)
mathematically.”); Figure,
id. at 626 (defining “figures” as “arithmetical
calculations”). Likewise, “material” in this context takes its ordinary meaning of
“important; essential; relevant.” Material,
id. at 1045. The word “evident,” too,
14
takes its ordinary meaning of “plain or obvious.” Evident, id. at 585. 5 The
parties do not appear to dispute the ordinary meaning of these terms. See, e.g.,
Mid Atlantic’s Opening Br. at 19–21; Ms. Bien & Mr. Wellman’s Resp. &
Principal Br. at 17. Putting these definitions together, we read § 11(a) to allow
courts to correct obvious, significant mathematical errors.
But even with these dictionary definitions, the meaning of
§ 11(a)—particularly the word “evident”—is not clear. Must a miscalculation be
obvious on the face of the award or must it be obvious after one looks to the
arbitration record? Devoid of context, the text arguably could support either
possibility. Fealty to text, however, is more than blind adherence to dictionary
definitions; we must consider context. See Jackson, 139 S. Ct. at 1748 (“It is a
fundamental canon of statutory construction that the words of a statute must be
read in their context and with a view to their place in the overall statutory
5
Other established dictionaries have similar definitions. For example,
consider the American Heritage Dictionary. See, e.g., Calculate, T HE A MERICAN
H ERITAGE D ICTIONARY 271 (3d ed. 1992) (“To perform a mathematical process;
figure[.]”); Figures, id. at 679 (defining the term as “[m]athematical calculations”
or “[a]n amount represented in numbers”); Evident,
id. at 636 (“Easily seen or
understood; obvious.”); Material,
id. at 1109 (“Being both relevant and
consequential; crucial[.]”). Or, alternatively, examine Webster’s Third New
International Dictionary. See, e.g., Calculate, WEBSTER ’ S T HIRD N EW
I NTERNATIONAL D ICTIONARY 315 (2002) (defining the term as “to ascertain or
determine by mathematical processes”); Figure,
id. at 848 (defining the term as
“arithmetical calculations” or “a number symbol (as one of the arabic
numerals)”); Evident,
id. at 789 (defining the term as “clear to the understanding:
obvious, manifest, apparent (small capitals omitted)); Material,
id. at 1392
(meaning “being of real importance or great consequence”).
15
scheme.” (quoting Davis, 489 U.S. at 809); see also United States v. Santos,
553
U.S. 507, 532 (2020) (Alito, J., dissenting) (“I do not suggest that the question
presented in this case can be answered simply by opening a dictionary. When a
word has more than one meaning, the meaning that is intended is often made clear
by the context in which the word is used . . . .”); see also Scalia &
Garner, supra,
at 33 (“[V]agueness can often be clarified by context.”); cf. Cabell v. Markham,
148 F.2d 737, 739 (2d Cir. 1945) (Hand, J.) (“Of course it is true that the words
used, even in their literal sense, are the primary, and ordinarily the most reliable,
source of interpreting the meaning of any writing: be it a statute, a contract, or
anything else. But it is one of the surest indexes of a mature and developed
jurisprudence not to make a fortress out of the dictionary; but to remember that
statutes always have some purpose or object to accomplish, whose sympathetic
and imaginative discovery is the surest guide to their meaning.”), aff’d on other
grounds,
326 U.S. 404 (1945). And § 11(a)’s context supports reading the term
“evident” as contemplating a face-of-the-award limitation.
Consider the FAA’s purposes. See Abramski v. United States, 573 U.S.
169, 179 (2014) (noting the importance of considering a statute’s textually
derived purpose in interpreting a provision). Its “‘principal purpose’ . . . is to
‘ensur[e] that private arbitration agreements are enforced according to their
terms.’” AT&T Mobility LLC v. Concepcion,
563 U.S. 333, 344 (2011) (alteration
16
in original) (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior
Univ., 489 U.S. 468, 478 (1989)). “This purpose is readily apparent from the
FAA’s text.”
Id. And it “reflects the overarching principle that arbitration is a
matter of contract.” Am. Express Co. v. Italian Colors Rest.,
570 U.S. 228, 233
(2013). Moreover, part of the parties’ arbitration contract is their “bargain[] for
the arbitrator’s construction of their agreement.” Oxford Health
Plans, 569 U.S.
at 569 (quoting E. Associated Coal Corp. v. United Mine Workers,
531 U.S. 57,
62 (2000)). In striking that bargain, the parties “trade[] the procedures and
opportunity for review of the courtroom for the simplicity, informality, and
expedition of arbitration.” Gilmer v. Interstate/Johnson Lane Corp.,
500 U.S. 20,
31 (1991) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473
U.S. 614, 628 (1985)).
Reading this statutory term “evident” as relating to a material
miscalculation that appears on the face of the award furthers the FAA’s purposes.
A face-of-the-award limitation preserves the integrity of the parties’ bargain.
Specifically, it preserves the parties’ deal for an arbitrator’s, rather than a court’s,
resolution of their dispute. This bargain essentially negates the risk that a court
may substitute its judgment (inadvertently or otherwise) for that of the arbitrator
when it goes beyond the award’s face in search of obvious, material mathematical
errors. Further, a face-of-the-award approach also ensures that arbitration
17
remains an efficient means to resolve disputes rather than “merely a prelude to a
more cumbersome and time-consuming judicial review process.” Hall St., 552
U.S. at 588 (quoting Kyocera Corp. v. Prudential-Bache Trade Servs., Inc.,
341
F.3d 987, 998 (9th Cir. 2003)). Reading § 11(a) to allow courts to hunt through
the arbitration record for “evident” miscalculations “opens the door to the full-
bore legal and evidentiary appeals” that the parties would have contracted to
avoid.
Id. Faced with one interpretation of § 11(a) that furthers the FAA’s
purposes and one that undermines them, we prefer the former. See
Abramski, 573
U.S. at 181; cf. AIG Baker Sterling Heights, LLC v. Am. Multi-Cinema, Inc.,
508
F.3d 995, 1001 (11th Cir. 2007) (reading the second half of §11(a) as
incorporating a face-of-the-award limitation partly because that reading was
“consistent with the purpose of the [FAA]”).
The FAA’s history supports this reading. “When a statutory term is
‘obviously transplanted from another legal source,’ it ‘brings the old soil with
it.’” Taggart v. Lorenzen, 587 U.S. ----, 139 S. Ct. 1795, 1801 (2019) (quoting
Hall v. Hall, 584 U.S. ----,
138 S. Ct. 1118, 1128 (2018)); see also AIG
Baker,
508 F.3d at 1000 (noting that it was “be[ing] guided by the established meaning
that the words of section 11(a) had at the time they were adopted”). Congress
enacted the FAA in 1925 and lifted the statute’s text from “New York’s [1920]
arbitration statute.” Hall
St., 552 U.S. at 589 n.7; accord AIG
Baker, 508 F.3d at
18
1000; see also Hall
St., 552 U.S. at 589 n.7 (“The text of the FAA was based
upon that of New York’s arbitration statute. . . . The New York Arbitration Law
incorporated pre-existing provisions of the New York Code of Civil Procedure.”).
Section 11(a)’s text, in particular, was “virtually identical” to New York’s
provision in effect in 1925. Hall
St., 552 U.S. at 589 n.7; see AIG
Baker, 508
F.3d at 1000 (“The language of section 11(a) of the federal Act matched almost
verbatim the language of section 2375 of the New York Code of Civil Procedure,
which had long been a part of New York law and the New York Arbitration Law
incorporated by reference.”). That provision allowed courts to modify an
arbitration award to correct “an evident miscalculation of figures.” N.Y. C ODE
C IV . P. § 2375 (Frank B. Gilbert & Austin B. Griffin 1920).
By the time Congress transplanted that language into § 11(a), New York
courts had long interpreted the language “an evident miscalculation of figures” to
mean a miscalculation that appeared in the award “on its face.” In re Burke, 84
N.E. 405, 406 (N.Y. 1908); see Remington Paper Co. v. London Assurance Corp.
of Eng.,
12 A.D. 218, 225 (N.Y. App. Div. 1896) (affirming order concluding that
“[t]he party who seeks to set aside an award upon the ground of mistake must
show, from the award itself, that but for the mistake the award would have been
different” (quoting Sweet v. Morrison,
22 N.E. 276, 280 (N.Y. 1889))); see also
19
AIG Baker, 508 F.3d at 1001 (collecting New York cases showing that this
reading has “been part of New York jurisprudence for many years”).
The face-of-the-award limitation therefore “was part of the ‘old soil’” that
§ 11(a) brought with it from New York law. AIG Baker, 508 F.3d at 1001. Over
the intervening decades, Congress has left the “evident material miscalculation”
language untouched. Compare Pub. L. No. 68-401, § 11(a), 43 Stat. 883, 885
(1925), with 9 U.S.C. § 11(a) (2019). Therefore, we must not, in effect, do what
Congress has not done by effacing the face-of-the-award limitation that has long
been old soil attached to § 11(a).
Looking to the FAA’s structure confirms what its purposes and statutory
history have already taught. Sections 9 through 11 of the FAA provide for
“expedited judicial review to confirm, vacate, or modify arbitration awards.”
Hall St., 552 U.S. at 578. Section 9 “unequivocally” commands that courts
“‘must’ confirm an arbitration award ‘unless’ it is vacated, modified, or
corrected.”
Id. at 582. Section 11(a) likewise allows for modifications only to
“address egregious departures from the parties’ agreed-upon arbitration.”
Id. at
586. This structure counsels narrowly interpreting § 11(a). Cf. Scalia &
Garner,
supra, at 362–63 (noting that narrowly interpreting exceptions is warranted if the
text indicates such a preference). The broad construction that Mid Atlantic
proposes would transform § 11(a) from an exception to address egregious
20
circumstances into a freewheeling authorization for the courts to dig through the
arbitration record in search of significant miscalculations. On the other hand, our
construction—that limits the courts to considering the face of the
award—preserves § 11(a)’s status as a narrow exception to “the limited review
needed to maintain arbitration’s essential virtue of resolving disputes
straightaway.” Id. at 588; see AIG
Baker, 508 F.3d at 1001 (“This appeal
illustrates the danger of broad judicial review of arbitration awards. The parties
elected to settle their dispute by arbitration rather than litigation, but this appeal
is now before us after more than three years of litigation.”).
This reading of § 11(a) draws additional support from the narrow and
deferential standard of review applicable in the arbitration context. Recall that
our “review of arbitral awards” is “among the narrowest known to law.” Lovato,
864 F.3d at 1083 (quoting
Brown, 220 F.3d at 1182). We therefore do “not sit to
hear claims of factual or legal error by an arbitrator.”
Stolt-Nielsen, 559 U.S. at
696 (Ginsburg, J., dissenting) (quoting
Misco, 484 U.S. at 38); accord Oxford
Health
Plans, 569 U.S. at 569. Nor may we “disturb the arbitrators’ judgment,
even if convinced that ‘serious error’ infected the panel’s award.”
Stolt-Nielsen,
559 U.S. at 696 (Ginsburg, J., dissenting) (quoting
Misco, 484 U.S. at 38).
Consistent with this limited review, we “exercise ‘great caution’ when a party
asks for an arbitration award to be set aside” or modified.
Lovato, 864 F.3d at
21
1083 (quoting
Ormsbee, 668 F.2d at 1147). Indeed, “[o]nce an arbitration award
is entered, the finality of arbitration weighs heavily in its favor and cannot be
upset except under exceptional circumstances.”
Burlington, 636 F.3d at 567
(quoting
Ormsbee, 668 F.2d at 1146–47). While § 11(a) enumerates one such
circumstance, it does not override the “extreme deference” we owe the arbitration
award.
Lovato, 864 F.3d at 1083 (emphasis omitted) (quoting
Brown, 220 F.3d at
1182). Similarly, if we read § 11(a) to allow courts to hunt for errors lurking in
the arbitration record—as Mid Atlantic does—we undercut such deference and
open up arbitration awards to judicial second-guessing. We cannot countenance
such a departure from our narrow and deferential review of arbitration awards.
Mid Atlantic’s primary textual argument against the face-of-the-award
limitation is unpersuasive. 6 It argues that “[t]he only way to determine whether a
6
Ms. Bien and Mr. Wellman argue that Mid Atlantic “failed to raise
its arguments regarding the ‘on the face of the award’ requirement . . . with the
District Court.” Ms. Bien & Mr. Wellman’s Resp. & Principal Br. at 27. The
record belies this suggestion. The district court noted that Mid Atlantic had cited
authority for the proposition “that a court may look beyond the face of an award
to correct a double recovery under 9 U.S.C. § 11(a)” and then rejected that
argument. Aplt.’s App., Vol. V, at 1085 n.4. Even if there was some meaningful
doubt as to whether Mid Atlantic did enough to preserve its face-of-the award
argument, we have discretion to consider unpreserved issues on appeal. See, e.g.,
Abernathy v. Wandes, 713 F.3d 538, 552 (10th Cir. 2013) (“[T]he decision
regarding what issues are appropriate to entertain on appeal in instances of lack of
preservation is discretionary.”). And under these circumstances—where the
district court recognized that the theory Mid Atlantic presents on appeal was at
play in the litigation and rejected it—we exercise our discretion to consider that
theory on appeal. Cf. United States v. Hernandez-Rodriguez,
352 F.3d 1325, 1328
(continued...)
22
miscalculation or mistake is ‘material’ is to analyze the [arbitration] record.” Mid
Atlantic’s Opening Br. at 20. And thus, as Mid Atlantic reasons, § 11(a) could
not embody a face-of-the-award limitation because such a limitation would give
the term “material” no effect.
We find this reasoning wholly unpersuasive. Take a hypothetical award
that orders the defendant to pay $100,000 in punitive damages and $100,000 in
compensatory damages but then adds these figures on the award’s face for a total
of $2,000,000. One need not dive into the arbitration record to say that the award
includes a significant (i.e., material) mathematical error. It is untrue, then, that a
face-of-the-award limitation renders null § 11(a)’s materiality requirement.
We are similarly unmoved by Mid Atlantic’s related policy argument that a
face-of-the-award limitation effectively produces arbitrary results. To illustrate
these supposedly arbitrary results, Mid Atlantic offers the following hypothetical:
[C]onsider a hypothetical award which grants postjudgment
interest at the rate of 8%. Assume further that the award does not
cite any source for the 8% rate of interest, but that the parties had
in fact stipulated to the statute governing interest and that statute
provides for a 4% rate of interest. In other words, assume the 8%
interest rate is indisputably wrong but the “face of the award”
does not contain information required to reach that conclusion.
Under the District Court’s interpretation, this error cannot be
corrected.
6
(...continued)
(10th Cir. 2003) (“[W]hen the district court sua sponte raises and explicitly
resolves an issue of law on the merits, the appellant may challenge that ruling on
appeal . . . .”).
23
Id. at 28–29. According to Mid Atlantic, this hypothetical outcome is arbitrary.
And Mid Atlantic reasons that it “advances zero compelling policy interests” to
prevent courts from correcting this error concerning the interest rate, when—even
under the face-of-the-award approach—courts would have been able to correct the
error if the award had referenced explicitly the parties’ stipulation concerning the
4% interest rate.
Id. at 29. Mid Atlantic concludes that the face-of-the-award
approach thus “leaves the question of whether clear math errors can be corrected
up to the random chance that arbitrators ‘show their work.’”
Id.
Yet, contrary to Mid Atlantic’s contentions, the FAA’s purpose, history,
and structure make it clear that this is precisely how Congress intended § 11(a) to
function. And its operation is not arbitrary at all. Section 11 authorizes courts to
review an arbitration award—not the arbitration record. See 9 U.S.C. § 11
(permitting courts to “make an order modifying or correcting the award”
(emphasis added)); see also Fellus v. Sterne, Agee & Leach, Inc.,
783 F. Supp. 2d
612, 622 (S.D.N.Y. 2011) (declining to correct an award because the plaintiff
could “not point to any patently obvious miscalculation on the face of the award,
nor can it do so, for the award does not explain the arbitrators’ rationale . . . or
reference any numbers other than the total damages awarded”); cf. ARW Expl.
Corp. v. Aguirre,
45 F.3d 1455, 1463 (10th Cir. 1995) (“[C]ourts are not to
instruct the arbitrator as to the correct computation of damages.”). Further, the
24
face-of-the-award approach is congruent with Congress’s purpose of providing
“just the limited review needed to maintain arbitration’s essential virtue of
resolving disputes straightaway.” Hall St., 552 U.S. at 588. Irrespective of
whether Mid Atlantic considers this purpose to be the stuff of compelling public
policy, that is Congress’s judgment, and we are obliged to defer to it.
What’s more in dispelling Mid Atlantic’s misguided notion that the statute
functions in an arbitrary manner—under a face-of-the-award approach—it is
important to keep in mind that “arbitration is a matter of contract.” Henry Schein,
139 S. Ct. at 529. If Mid Atlantic wished to avoid the supposedly random chance
that the arbitration panel would not show its work, it could have contracted for a
fully explained award. See Am.
Express, 570 U.S. at 233 (noting that parties can
contract to specify the arbitrator and the rules for arbitration); United
Steelworkers v. Enter. Wheel & Car Corp.,
363 U.S. 593, 598 (1960)
(“Arbitrators have no obligation to the court to give their reasons for an award.”).
But Mid Atlantic did not do so. In fact, the current contracts lead us to the
opposite conclusion. Most obviously, Mid Atlantic’s contracts with Ms. Bien and
Mr. Wellman specify, “[t]he arbitrators do not have to explain the reason(s) for
their award.” Aplt.’s App., Vol. III, at 737. We thus cannot (and would not
attempt to) rewrite the parties’ contracts just because Mid Atlantic is now
dissatisfied with the fruits of its bargain. After all, “by agreeing to arbitrate,”
25
Mid Atlantic traded “procedures and opportunity for review of the courtroom for
the simplicity, informality, and expedition of arbitration.” Gilmer, 500 U.S. at 31
(quoting
Mitsubishi, 473 U.S. at 628). Stated otherwise, that Mid Atlantic is
displeased with the level of informality with which the arbitration panel resolved
the dispute is not cause to undo the bargain it struck with Ms. Bien and Mr.
Wellman. Cf. Beumer Corp. v. ProEnergy Servs., LLC,
899 F.3d 564, 566 (8th
Cir. 2018) (“The parties bargained for the arbitrator’s decision; if the arbitrator
got it wrong, then that was part of the bargain.”).
In sum, we conclude that § 11(a) allows courts to correct only those evident
material miscalculations that appear on the face of the award. The provision’s
text compels that conclusion, when it is read in the context of the FAA’s
purposes, history, and structure. And this conclusion is bolstered by the narrow
and deferential standard of review applicable in the arbitration context.
2
Persuasive authority from our sister circuits confirms our reading of
§ 11(a). Take the Fourth Circuit’s decision in Apex Plumbing Supply. As part of
the award there, the arbitrator compensated Apex for the value of its inventory.
But in calculating that figure, the arbitrator wrongly included the value of
inventory over one year old. See 142 F.3d at 193. This inadvertently large figure
for Apex’s inventory value made its way into the final arbitration award;
26
however, the mathematical calculations by which the arbitrator arrived at that
figure did not. U.S. Supply therefore moved under § 11(a) to correct this error.
The district court, however, denied that motion. On appeal, the Fourth Circuit
affirmed, emphasizing the “severely circumscribed” review that federal courts
have of arbitration awards and the fact that § 11 “allows modification of an
arbitrator’s award only in limited instances.” Id. With these considerations in
mind, the court determined that the “claimed miscalculation of the inventory’s
value . . . was not ‘evident’ because it did not appear on the face of the arbitration
award.”
Id. at 194. Thus, the Fourth Circuit held that the district court correctly
declined to modify the award.
The Fourth Circuit’s reasoning and holding in Apex buttress ours. As we
do here, Apex grounds its holding on § 11(a)’s text—read in the context of the
federal courts’ “severely circumscribed” review of arbitration awards. Id. at 193.
From this text and context, the Fourth Circuit interpreted “evident” to mean that a
miscalculation must “appear on the face of the arbitration award” to satisfy
§ 11(a).
Id. at 194. The court’s conclusion and its reasoning are congruent with
our own holding.
To escape this potent and persuasive authority, Mid Atlantic tries to
distinguish Apex. In doing so, it casts that case as one involving “an alleged
miscalculation of a line item in an arbitration award.” Mid Atlantic’s Opening
27
Br. at 26. But that fact does not distinguish Apex from this case. Indeed, akin to
the error in Apex, the miscalculation here involves an alleged duplication of a line
item in an arbitration award. Compare id. at 17 (complaining that the arbitration
panel awarded net-out-of-pocket losses and market-adjusted damages), with
Apex,
142 F.3d at 193 (summarizing U.S. Supply’s complaint that the arbitration panel
“included inventory over one year old in its valuation of Apex’s entire
inventory”). So Mid Atlantic’s effort to distinguish Apex falls flat.
Trying a different tack, Mid Atlantic faults Apex for “borrow[ing] the ‘face
of the award’ phrasing from Hough v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 757 F. Supp. 283, 288 (S.D.N.Y. 1991).” Mid Atlantic’s Opening Br. at 27.
As Mid Atlantic points out, Hough involved New York’s arbitration statute, not
the FAA. Implicit in that observation is the critique that by citing a case
interpreting New York law to support its view that § 11(a) includes a face-of-the-
award limitation, the Apex court effectively undercut the persuasive value of its
reasoning.
Such an implicit critique, however, is misguided because of the close
connection between New York arbitration law and the FAA—especially with
respect to the language of § 11(a). As discussed above, the New York provision
operative in 1925 allowed courts to correct “an evident miscalculation of figures.”
N.Y. C ODE C IV . P. § 2375, supra. Congress transplanted that language into
28
§ 11(a). And by the time it did so, New York courts had long interpreted it to
mean a miscalculation that appears on the face of the award. See In re Burke, 84
N.E. at 406. In borrowing that “evident miscalculation of figures” language from
New York law, as noted, Congress also borrowed the New York courts’
longstanding interpretation of that phrase as including a face-of-the-award
limitation. Therefore, Mid Atlantic’s implicit critique of Apex for its reliance on
New York law, and in particular on Hough, is misguided.
To be sure, although Congress has left the relevant language of § 11(a)
intact, New York has amended its counterpart to § 11(a) to omit the word
“evident.” That is, the New York provision in effect today and when Hough was
decided allows courts to modify awards if “there was a miscalculation of figures.”
N.Y. C.P.L.R. § 7511(c)(1). But, importantly, even though New York’s amended
text conceivably could contemplate a more searching judicial inquiry because of
the elimination of the restrictive term “evident,” New York courts continue “to
require that the miscalculation appear on the face of the award.” Avamer Assocs.,
L.P. v. 57 St. Assocs., L.P., 67 A.D.3d 483, 484 (N.Y. App. Div. 2009). 7
7
See also Cardinale v. 267 Sixth Street LLC, No. 13 Civ. 4845 (JFK),
2014 WL 4799691, at *9 (S.D.N.Y. Sept. 26, 2014) (unpublished) (citing Hough
for proposition that New York law and FAA, generally limits modification to
“patently obvious mistakes on the face of the award”); Hemlall v. Ngo, No. 2008-
1825 QC,
2009 WL 3297542, at *1 (N.Y. Sup. Ct. Oct. 8, 2009) (unpublished)
(“We are of the view that plaintiff’s motion [to modify award] was properly
denied since a mathematical error in the computation of damages was not evident
(continued...)
29
Consequently, Apex was on solid ground in relying on New York law—and, more
specifically, Hough—in holding that § 11(a) contemplates a face-of-the-award
limitation.
Mid Atlantic also complains that Apex, in any event, misread Hough. It
contends that the language from Hough that Apex relied on was taken out of
context, resulting in Apex’s misreading of Hough’s import. Set in its full context,
Mid Atlantic explains, the Hough language that Apex relies on reads: “Where no
mathematical error appears on the face of the award and where no computational
error can be clearly inferred, an arbitration award will not be altered.” Mid
Atlantic’s Opening Br. at 27 (quoting Hough, 757 F. Supp. at 288). But Apex
omitted the italicized language.
See 142 F.3d at 194. And that “clearly inferred”
language, Mid Atlantic posits, proves that the phrase “face of the award” is “non-
statutory shorthand” that imposes no “actual requirement that district courts
ignore a properly submitted arbitration record” in determining whether an award
has an “evident material miscalculation.” Mid Atlantic’s Opening Br. at 27–28.
Put differently, Mid Atlantic argues that the “face of the award” language
7
(...continued)
from the face of the award.”); 23A C ARMODY -WAIT N.Y. P RACTICE WITH F ORMS
§ 141:256 Westlaw (database updated March 2020) (“[A] modification based
upon the statutory ground of a miscalculation of figures is proper only where a
mathematical error in the computation of damages is evident from the face of the
award.”); 5 N.Y. J UR . 2 D A RBITRATION AND A WARD § 280 Westlaw (database
updated February 2020) (“Mistakes apparent on the face of the award may be
corrected in an action brought for that purpose . . . .”).
30
encompasses clear inferences that courts may glean from the arbitration record.
In this sense, it reasons that Hough—and by extension, Apex—“actually supports
[its] position here.” Id. at 27.
We disagree. Hough’s “clearly inferred” language came from an earlier
New York case, City of Troy v. Village of Menands, 48 A.D.2d 733, 734 (N.Y.
Sup. Ct. 1975). See
Hough, 757 F. Supp. at 288 (citing City of Troy). However,
neither City of Troy nor Hough specified the source from which courts are to
make these inferences. And, without citation to any supportive legal authority,
Mid Atlantic has no clear footing to support its position; instead, it baldly
contends that this language contemplates that courts may look to the arbitration
record for those inferences. This view is unpersuasive because one may naturally
read the “clearly inferred” language as being entirely consistent with a face-of-
the-award limitation. And, such a reading would be congruent with the long line
of New York cases that have historically endorsed such a limitation. See, e.g., In
re
Burke, 84 N.E. at 46. Specifically, the language “clearly inferred” (as it
appears in City of Troy and Hough) naturally could be read to mean that courts are
still limited to the face of the award in looking for obvious, material
miscalculations, but that the face-of-the-award limitation simply includes, not
only obvious mathematical errors that can be discerned from the explicit
31
computations of the award (e.g., 2+2=5), but also such errors that can be clearly
inferred from the language and other figures of the award.
Under such a reading, the sole touchstone for the court’s analysis would
still be the face of the award. And crucially, the arbitration record would remain
off limits. Indeed, at least one New York court quoting City of Troy’s “clearly
inferred” statement has read that language precisely in this manner. See Curtis
Lumber Co. v. Am. Energy Care, Inc., 910 N.Y.S.2d 761,
2010 WL 1756883 at
*4, (N.Y. Sup. Ct. Apr. 30, 2010) (unpublished) (reading “miscalculation of
figures” to mean “‘mathematical errors on the face of the . . . award’ or
‘computational errors [that] can be clearly inferred’ from the award” (alterations
in original) (emphasis added) (quoting City of
Troy, 48 A.D.2d at 734)). And we
have discerned no contrary view in other New York cases. Thus, as we see it,
neither the “clearly inferred” language in Hough nor Apex’s reliance on Hough
“actually supports” Mid Atlantic’s position. Mid Atlantic’s Opening Br. at 27.
Finally, Mid Atlantic wrongly claims that Apex did “not identify a statutory
basis for limiting a court’s review to errors that appear ‘on the face of the
award.’” Mid Atlantic’s Reply & Resp. Br. at 8. However, as we do, Apex
grounded the face-of-the-award limitation in § 11(a)’s text—namely, the word
“evident.” See Apex, 142 F.3d at 194 (“[T]he miscalculation was not ‘evident’
because it did not appear on the face of the arbitration award.”). In short, despite
32
Mid Atlantic’s arguments to the contrary, Apex supports our holding that § 11(a)
allows district courts to correct only those material miscalculations that appear on
the face of the award.
We find similar (though admittedly less robust) support in Grain v. Trinity
Health, Mercy Health Services Inc., 551 F.3d 374 (6th Cir. 2008). In that case, a
married couple won a sizable arbitration award but moved to modify the award to
correct “an evident material miscalculation of figures.”
Id. at 378 (quoting 9
U.S.C. § 11(a)). However, because the couple “failed to raise this argument in
the district court,” the Sixth Circuit did not address it at length.
Id. But the court
considered the argument enough to read the phrase “an evident . . . miscalculation
of figures” to mean “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.’”
Id. (alterations in original) (emphasis added) (quoting
Apex,
142 F.3d at 194). “No such error appear[ed] on the face of the award,” the Sixth
Circuit concluded.
Id. at 379. Indeed, rather than “complaining that the
arbitrators made an obvious numerical gaffe in computing the total award,” the
couple had argued “that the arbitrators made a mistake on the merits.”
Id.
“Whatever else such an alleged error may be,” the Sixth Circuit explained that it
was “not ‘an evident material miscalculation of figures.’”
Id.
33
Grain supports our reading of § 11(a). Guided by Apex, Grain focused on
the statutory text and concluded that, for the error to be “evident” within the
meaning of § 11(a), it must appear “on the face of the award.”
Id. And Grain
concluded that the couple could not demonstrate that its alleged error satisfied
this standard. Thus, Grain is persuasive support for the face-of-the-award
holding we reach here.
We recognize that Mid Atlantic marshals certain cases that purportedly
bolster its position. Chief among them is Eljer Manufacturing, Inc. v. Kowin
Development Corp., 14 F.3d 1250 (7th Cir. 1994). The arbitration award there
gave the defendant, Kowin, almost $15 million in damages.
See 14 F.3d at 1253.
The award divided these damages “into three separate” categories of (1) about $3
million, (2) around $8.4 million, and (3) $3.5 million.
Id. The award itself did
not clarify what these amounts represented or how the arbitrator calculated them.
Id. But as it turned out, the three categories “duplicated precisely the amounts
requested by Kowin in the damages section of its post-hearing brief.”
Id. By
consulting that brief, the district court determined that the first category
inadvertently included $1.25 million that Eljer had already paid Kowin, and that
the third category included $2.5 million that the first category had already
accounted for. To correct these errors, the district court granted Eljer’s motion
for modification under § 11. Kowin appealed this decision.
34
The Seventh Circuit in Eljer agreed with the district court that the “[t]he
basis for each of the arbitrator’s awards” was Kowin’s brief. Id. at 1254. It
rejected Kowin’s contention that “the [district] court’s reduction of the award
rest[ed] on impermissible speculation as to what each of the arbitrator’s three
awards was attempting to redress,” reasoning that “[i]t was hardly speculative for
the district court to base its analysis on Kowin’s own explanation of its
damages.”
Id. The court observed that “Kowin confuses a narrow standard of
review with a nonexistent standard of review.”
Id. With this information from
beyond the face of the award, the Seventh Circuit concluded that the award
provided for double recoveries. And it reasoned that a “[d]ouble recovery
constitutes a materially unjust miscalculation which may be modified under
section 11.”
Id. Thus, the Seventh Circuit affirmed the district court’s order
modifying the award. See
id. at 1257.
The face-of-the-award limitation that we adopt here is admittedly in some
tension with the Seventh Circuit’s decision in Eljer. But we do not find Eljer’s
analysis persuasive, and, thus, it gives us no pause. See, e.g., United States v.
Krueger, 809 F.3d 1109, 1116 n.9 (10th Cir. 2015) (declining to rely on
“unpersuasive out-of-circuit cases”). For starters, Eljer did not expressly hold
that § 11(a) permits district courts to go beyond the face of the arbitration award
to find evident material mathematical miscalculations. And, notably, Eljer
35
undertook no textual analysis of § 11(a); for instance, the word “evident” appears
nowhere in the body of the opinion. See Eljer, 14 F.3d at 1253 n.4. This failing
is particularly salient given the Supreme Court’s repeated instruction to “interpret
the [FAA] as written.” Henry
Schein, 139 S. Ct. at 529; see also Hall
St., 552
U.S. at 587–88. What’s more, the non-textual analysis that does exist in Eljer
comes in a brief discussion devoid of any on-point authority.
See 14 F.3d at 1254
(citing two cases for the proposition that § 11 allows modification to correct
double recovery but citing no authority for the proposition that courts may look
beyond the face of the award to determine whether such a double recovery exists).
Indeed, Mid Atlantic concedes that Eljer only “tacitly endorsed . . . review of the
arbitration record.” Mid Atlantic’s Reply & Resp. Br. at 7. Therefore, we are not
persuaded by Eljer’s analysis, and it does not lead us to question the face-of-the-
award limitation we adopt here.
The other cases Mid Atlantic cites are similarly unpersuasive. Consider
Transnitro, Inc. v. M/V Wave, 943 F.2d 471 (4th Cir. 1991). The arbitrator there
awarded M/V damages accounting for, among other things, certain expenses that
M/V had incurred and about $57,000 in interest that had accrued on a bond. After
the award was issued, M/V discovered that it had failed to inform the arbitrator or
Transnitro that it had already earned about $34,000 in interest on the bond.
Likewise, M/V had not reported some $28,000 in expenses. In federal court,
36
Transnitro moved to modify the award to subtract the unreported $34,000 from
the $57,000 interest award. For its part, M/V asked to collect the $28,000 in
unreported expenses. The district court agreed to subtract the $34,000 from the
interest award because it would be “unfair to permit [M/V] to reap the benefit of
[its own] failure.” Id. at 474. But fairness did not likewise compel the court to
allow M/V to collect the unreported expenses.
On appeal, M/V argued “that the district court had no power under 9 U.S.C.
§ 11 to modify” the award because the provision’s “last sentence . . . [which
speaks of modifications to awards “so as to . . . promote justice between the
parties”] d[id] not create an independent basis for modification.” Id. at 373–74.
Rather, it contended that § 11 authorized “modification only if the provisions of
one of subparagraphs (a), (b) or (c) [were] met.”
Id. The Fourth Circuit
sidestepped that question. It reasoned instead that whatever the effect of the last
sentence of § 11, “there were, within the meaning of subsection (a), material
mistakes made in the arbitration proceeding as to interest on the bond and . . . as
to other expenses.”
Id. True, the court noted,“[t]hose errors were apparently not
the fault of the arbitrators.”
Id. However, that fact did “not also mean that where
there is ‘an evident material mistake’ attributable to one or both parties to an
arbitration, a district court lacks power under subsection (a) to do equity and
justice,” the court explained.
Id. (emphasis added). The Fourth Circuit further
37
reasoned that “the court below was right in reaching and correctly determining the
interest issue. However, that court also should have reached and determined the
additional expenses issue.” Id. Therefore, the Fourth Circuit affirmed the
interest modification and remanded for the district court to consider the expense
issue further.
Mid Atlantic relies heavily on Transnitro. It reads that case as proof that
“the Fourth Circuit . . . endorsed a review of material beyond even the arbitration
record itself.” Mid Atlantic’s Opening Br. at 22. Mid Atlantic adds that
Transnitro even “revers[ed] a district court’s decision not to correct an error
based upon a review of factual information that was never submitted to the
arbitration Panel.” Id. At bottom, Mid Atlantic reads Transnitro to stand for the
proposition that when, “as here, there is a mathematical error in an award, the
district court could have (and should have) looked at the materials in the
arbitration record . . . to determine the fix for that mathematical error.”
Id. at 25.
Drilling down on it, however, Transnitro is less helpful than Mid Atlantic
thinks. To begin, that case interpreted the language “evident material mistake”
from the second half of § 11(a). See Transnitro, 943 F.2d at 474. And recall, we
are concerned here with only the language from the first half of § 11(a), which
authorizes courts to correct an “evident material miscalculation.” To be sure,
ordinarily, Transnitro’s interpretation of the second half of § 11(a) could not be
38
easily dismissed as irrelevant, given the presumption that a term, such as
“evident,” bears the same meaning throughout a statutory text. See Scalia &
Garner, supra, at 170. But the Fourth Circuit—the same court that issued
Transnitro—subsequently spoke in Apex to the precise meaning of “evident” in
the first half of § 11(a) and held that a “miscalculation was not ‘evident’ because
it did not appear on the face of the arbitration
award.” 142 F.3d at 194. For our
purposes, then, Apex—not Transnitro—offers the Fourth Circuit’s on-point
determination of the language we are concerned about here. And that
interpretation supports our holding. 8
Even if Transnitro were the only word from the Fourth Circuit on § 11(a),
we would respectfully decline to follow it because we are not persuaded by its
analysis. See Krueger, 809 F.3d at 1116 n.9; cf. AIG
Baker, 508 F.3d at 1000
(“We are convinced that the earlier decision of the Fourth Circuit in Transnitro is
erroneous.”). Significantly, the court in Transnitro seemed to draw and rely on a
distinction between errors by arbitrators for which “relief under [the terms of] 9
U.S.C. § 11(a) would have been available,” and errors by one or more litigants, as
8
Because Apex and Transnitro concern different portions of § 11(a),
we do not interpret their holdings to directly conflict. As a result, the Fourth
Circuit’s interpretive rule that “[w]hen published panel opinions are in direct
conflict on a given issue, the earliest opinion controls” plays no role in our
analysis. McMellon v. United States, 387 F.3d 329, 333 (4th Cir. 2004) (en banc)
(emphasis added); see United States v. Rosales-Miranda,
755 F.3d 1253, 1261
(10th Cir. 2014) (recounting similar rule).
39
there, for which the district court had “power under subsection (a) to do equity
and justice.” 943 F.2d at 474 (emphasis added); cf. AIG
Baker, 508 F.3d at 999
(“Because the arbitration panel crafts the award, only the panel can make a
mistake in the award.”). This suggests that Transnitro’s holding is inapposite
because we are concerned here with an alleged error of the arbitrator, not a
litigant. And this reading of Transnitro is supported by the fact that the court did
not purport to engage with the terms of § 11(a)—which the court itself seem to
recognize would be relevant only if the error was one committed by the arbitrator.
See 943 F.2d at 474. Rather, the court appeared to rely on § 11(a) only as a
source of equitable power. See
id. at 474 (noting that district courts have the
“power under subsection (a) to do equity and justice” (emphasis added)).
At the end of the day, what is important is what the Transnitro court
did—and, especially, did not do—in reaching its holding, not the theory that
motivated its actions. And, in addition to tacitly eschewing a textual analysis of
§ 11(a), the court in Transnitro did not consider the FAA’s purposes, history, or
structure in arriving at its holding. Yet, as explained above, it is these sources
(combined with § 11(a)’s plain text) that ultimately led us to the conclusion that
we reach here concerning the face-of-the-award limitation. Therefore, even if
Transnitro were the only word from the Fourth Circuit on § 11(a), the fact that
the court elided these key sources in reaching its holding would render it an
40
unpersuasive touchstone for our own interpretation of that provision. In sum,
contrary to Mid Atlantic’s reading of the case, we do not find that Transnitro
speaks persuasively—if at all—to the circumstances before us.
We are likewise unpersuaded by Valentine Sugars, Inc. v. Donau Corp.,
981 F.2d 210 (5th Cir. 1993), which Mid Atlantic also cites. That case contains
the following passage:
Next, Valentine argues that we should vacate the award because
it is based upon a material mistake of fact. Title 9 U.S.C. § 11(a)
allows us to vacate an award “[w]here there was an evident
material miscalculation of figures . . . .” The Sixth Circuit has
held that “where the record that was before the arbitrator
demonstrates an unambiguous and undisputed mistake of fact and
the record demonstrates strong reliance on the mistake by the
arbitrator in making his award, it can fairly be said that the
arbitrator ‘exceeded [his] powers or so imperfectly executed
them’ that vacation may be proper.”
981 F.2d at 214 (alterations in original) (quoting Nat’l Post Office Mailhandlers
v. United States Postal Serv.,
751 F.2d 834, 843 (6th Cir. 1985)). Later Fifth
Circuit cases have read that passage as holding “that an ‘evident material
[mis]calculation’ occurs ‘where the record that was before the arbitrator
demonstrates an unambiguous and undisputed mistake of fact and the record
demonstrates strong reliance on that mistake by the arbitrator in making his
award.’” Prestige Ford v. Ford Dealer Comput. Servs., Inc.,
324 F.3d 391,
396–97 (5th Cir. 2003) (emphasis added) (quoting
Valentine, 981 F.2d at 214),
41
overruled on other grounds by Hall St., 552 U.S. 576. Viewed in this light,
Valentine arguably stands for the proposition that § 11(a) permits district courts
to look beyond the face of the arbitration award to the arbitration record. While
this interpretation seems to conflict with the one we embrace today, we are not
persuaded by Valentine.
At its core, Valentine rests on an untenable reading of National Post Office.
See Valentine, 981 F.2d at 214 (relying on National Post Office). In that case, the
Postal Service fired an employee who had been indicted for drug trafficking. The
employee protested the discharge and initiated arbitration proceedings. Although
the arbitrator had “doubts,” he nevertheless “sustain[ed] the
discharge.” 751 F.2d
at 838. The arbitrator’s “written decision . . . includ[ed] the glaring misstatement
that the employee had pleaded guilty to marijuana trafficking . . . prior to the
Postal Service’s discharge action.”
Id. (emphasis added). In truth, the employee
pleaded guilty “four weeks after the discharge.”
Id. Given such an error, the
employee’s union moved to vacate the arbitration decision. The district court
denied the motion.
The Sixth Circuit reversed. It reasoned that when “the record that was
before the arbitrator demonstrates an unambiguous and undisputed mistake of fact
and the record demonstrates strong reliance on that mistake by the arbitrator in
making his award, it can fairly be said that the arbitrator ‘exceeded [his] powers,
42
or so imperfectly executed them’ that vacation may be proper.” Id. at 843
(quoting 9 U.S.C. § 10(d)). Because it was “undisputed that [the] arbitrator . . .
was in error regarding the date of the employee’s guilty plea” and that the error
“played a central if not essential role in his decision,” the Sixth Circuit held that
vacatur was appropriate.
Id. But rather than vacating and remanding for
“meaningless rearbitration,” the court determined that “under 9 U.S.C. § 11, the
intent of [the] arbitrator[’s] . . . award and the interests of justice . . . [would] best
be promoted by ordering simply that the employee be awarded back pay for the . .
. period between his discharge and the date he pleaded guilty.”
Id. at 844.
As this description suggests, properly read, National Post Office has
nothing to do with § 11(a) and the propriety of a face-of-the-award limitation.
Indeed, the case says nothing about what constitutes either “an evident material
miscalculation” or “an evident material mistake” and, in fact, does not even
include the word “face.” 9 U.S.C. § 11(a). Rather, National Post Office speaks
to only when an arbitrator “so imperfectly executed” her powers that a court may
vacate the award under another provision of the FAA, which is now codified at
§ 10(a)(4). 9 As for § 11, at most, National Post Office read the last sentence of
§ 11 as allowing courts to modify awards to promote justice when the conditions
9
The FAA provision that National Post Office relied on—9 U.S.C. §
10(d)—was moved in 1990 and is now codified at 9 U.S.C. § 10(a)(4). See
Administrative Dispute Resolution Act, Pub. L. 101-552, §5, 104 Stat. 2745
(1990).
43
for vacatur are met. Compare Nat’l Post Office, 751 F.2d at 844 (“[W]e conclude
that under 9 U.S.C. § 11, the intent of arbitrator[’s] award and the interests of
justice between the parties will best be promoted by ordering simply that the
employee be awarded back pay for the 31-day period between his discharge and
the date he pleaded guilty.” (emphasis added)), with § 11 (providing in the last
sentence that “[t]he order may modify and correct the award, so as to effect the
intent thereof and promote justice between the parties” (emphasis added)). But
even that proposition is irrelevant to the meaning of the plain terms of § 11(a)
and, more specifically, whether those terms allow courts to look beyond the face
of an award.
We must respectfully conclude, therefore, that Valentine misread National
Post Office. It took National Post Office’s discussion of when vacatur under
now-§ 10(a)(4) was appropriate and—without explanation or citation to on-point
legal authority—grafted that discussion onto § 11(a). Therefore, Valentine is an
unreliable guidepost for the interpretation of § 11(a), and we are unpersuaded by
its holding. As a result, the Fifth Circuit’s apparent rule—based on
Valentine—that “an ‘evident material [mis]calculation’ occurs ‘where the record
that was before the arbitrator demonstrates an unambiguous and undisputed
mistake of fact,” Prestige Ford, 324 F.3d at 396 (quoting
Valentine, 981 F.2d at
44
214), has no cogent force for us. We endorse instead a face-of-the-award
limitation.
* * *
To recapitulate, we hold that § 11(a) allows district courts to correct only
those evident material miscalculations of figures that appear on the face of the
arbitration award. District courts may not look beyond the face of the award
when determining whether such an error exists. We derive that face-of-the-award
limitation from the plain meaning of § 11(a) taken in context. And persuasive
out-of-circuit authority confirms our reading.
B
Having concluded that § 11(a) incorporates a face-of-the-award limitation,
we now must determine whether the face of the arbitration award here contains an
evident material miscalculation of figures. It is Mid Atlantic’s burden to prove
that such a miscalculation appears on the face of the award. See Apex, 142 F.3d
at 194 (concluding that U.S. Supply “did not meet its burden under section eleven
in order to modify the award”); see also Samaan v. Gen. Dynamics Land Sys.,
Inc.,
835 F.3d 593, 603 (6th Cir. 2016) (explaining that the party seeking vacatur
bears the burden); Cooper v. WestEnd Capital Mgmt., L.L.C.,
832 F.3d 534, 544
(5th Cir. 2016) (same). Put simply, Mid Atlantic has not satisfied that burden.
45
The arbitration award ordered Mid Atlantic to pay Ms. Bien and Mr.
Wellman two forms of damages: (1) initial-investment-loss damages and (2)
compensatory damages. The award broke down as follows:
Damages Award Ms. Bien Mr. Wellman Both Total
Initial Investment Loss $240,321 N/A $52,090 $292,411
Compensatory Damages $437,286 $47,397 N/A $484,683
Total $677,607 $47,397 $52,090 $777,094
Mid Atlantic argues that the award “included a clear ‘double-counting.’” 10
Mid Atlantic’s Opening Br. at 12. It posits that the $292,411 award for “initial
investment loss” reflected the $292,411 in net out-of-pocket losses that Ms. Bien
and Mr. Wellman’s expert had testified that they suffered. Similarly, the
$484,683 in “compensatory damages” almost exactly matched the $484,684 in
“market-adjusted damages” that the expert had at one point said Ms. Bien and Mr.
Wellman incurred. And, Mid Atlantic notes that the expert had testified, “market-
10
Ms. Bien and Mr. Wellman argue that Mid Atlantic failed to preserve
its double-recovery argument by not raising the issue during arbitration. In
particular, they fault Mid Atlantic for not invoking FINRA Rule 12905, which
allows a party to alert the panel to computational errors in the award within ten
days. See FINRA Code, Rule 12905(a)(2). Whether Mid Atlantic’s failure to
invoke that rule forfeited its double-recovery argument is an open question that
we need not resolve here given that we conclude that Mid Atlantic’s double-
recovery argument fails in any event. Cf. Murphy v. Royal, 875 F.3d 896, 912
(10th Cir. 2017) (declining to resolve whether an issue was waivable or waived),
cert. granted,
138 S. Ct. 2026 (2018); United States v. Zander,
794 F.3d 1220,
1233 (10th Cir. 2015) (same). We therefore assume without deciding that Mid
Atlantic preserved its double-recovery argument.
46
adjusted damages include net out-of-pocket losses.” Id. at 17. Indeed, the expert
had presented net out-of-pocket damages and market-adjusted damages as
alternative measures of the couple’s losses. And Ms. Bien and Mr. Wellman had
asked for only market-adjusted damages in their final prayer for relief. But the
arbitration panel awarded Ms. Bien and Mr. Wellman what it labeled “initial
investment losses” and “compensatory damages.” In so doing, according to Mid
Atlantic, the panel mistakenly awarded Ms. Bien and Mr. Wellman damages
twice.
Even if we accept Mid Atlantic’s double-counting argument, it does not
carry the day on appeal. For example, let us say that Mid Atlantic is correct that
the award included double counting. After all, it is conceivable that the
arbitration panel misunderstood the alternative measures of damages that Ms.
Bien and Mr. Wellman’s expert had presented. And the panel may have
inadvertently given them a double recovery by awarding them both measures of
damages (i.e., net out-of-pocket losses and market-adjusted damages).
Mid Atlantic’s double-counting argument, however, still would not permit
it to prevail. Most obviously, the alleged material miscalculation did not appear
on the face of the award. Further, the award did not even state that the “initial
investment loss” damages corresponded to what the expert had called net out-of-
pocket losses. Nor did the award say that the “compensatory damages” were
47
equivalent to the market-adjusted damages that the expert discussed. Critically,
missing from the award was an explanation as to how the panel calculated the
damages figures. We need not definitively opine on how much of such
information would have been sufficient to make the alleged material
miscalculation evident on the face of the award. Suffice it to say, the absence of
all of this information under the circumstances here prevented the alleged
material miscalculation from being evident on the face of the award. In short,
“there is no math issue” on the face of the award. Ms. Bien & Mr. Wellman’s
Resp. & Principal Br. at 26. And Mid Atlantic does not suggest otherwise,
arguing instead that courts are free to look beyond the face of the award. In the
end, Mid Atlantic has not carried its burden of identifying an evident material
miscalculation of figures that appears on the face of the award. Therefore, we are
obliged to uphold the district court’s decision not to rectify the alleged double
recovery in favor of Ms. Bien and Mr. Wellman.
IV
With the issue Mid Atlantic raises in its appeal resolved, we turn now to the
three questions that Ms. Bien and Mr. Wellman raise in their cross-appeal. Those
questions ask whether the district court erred by (1) granting post-award interest
on damages, but not attorney’s fees and other costs; (2) awarding postjudgment
interest at the federal rate; and (3) ordering Ms. Bien and Mr. Wellman to
48
reassign to Mid Atlantic any post-award distributions from their ownership
interests in Sonoma Ridge Partners and KBS (including interest thereon). We
hold that the district court did not err in any of these respects. Thus, we affirm
the remainder of the amended final judgment.
A
We start with the district court’s first supposed error—granting post-award
interest on damages, but not on attorney’s fees and other costs. As we explain,
the district court did not err.
The arbitration award ordered Mid Atlantic to pay Ms. Bien and Mr.
Wellman damages, attorney’s fees, and arbitration costs. As discussed above, the
award ordered Mid Atlantic to pay two types of damages—“an initial investment
loss” and “compensatory damages.” Aplt.’s App., Vol. I, at 28. It also specified
that Mid Atlantic was “liable for and shall pay . . . interest at the rate of 8% per
annum beginning February 6, 2015[,] until” each type of damages was “paid in
full.” Id. However, in stating that Mid Atlantic was “liable for and shall pay”
attorney’s fees and costs, the award said nothing about interest.
Id. By negative
implication, the award seemed to effectively deny interest on the attorney’s fees
and costs. See Scalia &
Garner, supra, at 107–11. The award made this more
explicit by clarifying that “[a]ny and all claims for relief not specifically
addressed herein . . . are denied.” Aplt.’s App., Vol. I, at 28 (emphasis added).
49
A “claim for relief” is “[a] demand for money, property, or a legal remedy to
which one asserts a right.” Claim, B LACK ’ S L AW D ICTIONARY 311 (11th ed.
2019). As applicable here, the language “demand for money” in the definition of
“claim” is naturally read as encompassing Ms. Bien and Mr. Wellman’s request
for interest on the attorney’s fees and costs. See Aplt.’s App., Vol. I, at 27
(noting that Ms. Bien and Mr. Wellman sought any and all “relief which [the
arbitration] Panel deem[ed] just and proper”). Yet, the arbitration panel’s award
did “not specifically address[]” this claim for relief (i.e., demand for money) of
Ms. Bien and Mr. Wellman. Id. at 28. As a result, the arbitration award had the
effect of not ordering Mid Atlantic to pay interest on attorney’s fees or
costs—only on the damages, which the award did address. Accordingly, the
district court did not err in adhering to the award’s terms by ordering Mid
Atlantic to pay interest on only the damages.
Ms. Bien and Mr. Wellman, however, beg to differ. They contend that “the
terms of [their] agreement” with Mid Atlantic compelled the district court to grant
interest on the entire award—not just on the damages portion. Ms. Bien & Mr.
Wellman’s Reply Br. at 2. As they point out, the arbitration clause in the
contracts with Mid Atlantic incorporated FINRA’s arbitration rules. And FINRA
Rule 12904(j) provides in relevant part:
An award shall bear interest from the date of the award:
50
(1) If not paid within 30 days of receipt;
(2) If the award is the subject of a motion to vacate which
is denied; or
(3) As specified by the panel in the award.
FINRA Code, Rule 12904(j). According to Ms. Bien and Mr. Wellman, the
phrase “an award shall bear interest” means that interest accrues on “the entire
award, and not simply parts of it.” Ms. Bien & Mr. Wellman’s Resp. & Principal
Br. at 45. And, because their contracts with Mid Atlantic incorporated Rule
12904(j), they reason that “the explicit language” in their contracts compelled the
district court to grant them interest on the entire award, not just on the damages.
Id. at 47.
This argument fails. For starters, whether Rule 12904(j) requires interest to
be paid on the entire award—i.e., on attorney’s fees and costs as well as on
damages—is a question of contract interpretation. Such questions are the
province of the arbitration panel. After all, the parties bargained for “the
arbitrator’s construction” of their contract. Burlington, 636 F.3d at 570 (quoting
United
Steelworkers, 363 U.S. at 599); see, e.g., Aplt.’s App., Vol. III, at 715
(“All controversies that may arise between you, [and] us . . . including, but not
limited to, controversies concerning . . . breach of this or any other agreement
between you and us . . . shall be determined by arbitration”). The only question
for us is “whether the arbitrator (even arguably) interpreted the parties’ contract,
51
not whether he got its meaning right or wrong.” Lovato, 864 F.3d at 1083
(quoting
Oxford, 569 U.S. at 569). In awarding interest on damages but not on
attorney’s fees and costs, the arbitration panel here arguably interpreted the
contracts (including Rule 12904(j)) as not mandating that interest accrue on every
portion of the award. Cf. Carpenters 46 N. Cal. Ctys. Conference Bd. v. Zcon
Builders,
96 F.3d 410, 414 (9th Cir. 1996) (“[W]e hold that the district court
properly gave deference to the arbitrator’s implicit decision on the notice issue.”);
McKesson Corp. v. Local 150 IBT,
969 F.2d 831, 834 (9th Cir. 1992) (deferring to
arbitrator’s implicit interpretation of contract); E.I. DuPont de Nemours and Co.
v. Int’l Chem. Workers Union,
968 F.2d 456, 458 (5th Cir. 1992) (remarking that
arbitrator’s findings may be implicit). And we are bound by that interpretation
unless it is obviously contrary to “the plain language of the contract.”
Lovato,
864 F.3d at 1083 (quoting
Misco, 484 U.S. at 38). It is not.
Rule 12904(j) speaks to when interest on an award begins accruing. But
the rule does not specify that the arbitration panel was required to award interest
on the entire award. Indeed, the plain terms of the rule at least arguably leave the
panel with the discretion to reach a contrary conclusion: that is, a panel may
expressly or effectively “specif[y] . . . in the award,” FINRA Code, Rule
12904(j), that at no time will interest accrue on certain portions of the award.
Accordingly, because we cannot conclude that the arbitration panel’s award here
52
is obviously contrary to the plain terms of the contracts insofar as it did not grant
interest on attorney’s fees or costs to Ms. Bien and Mr. Wellman, we must defer
to that award.
In sum, the district court’s decision that interest did not accrue on the
attorney’s fees and costs that the arbitration panel awarded to Ms. Bien and Mr.
Wellman is consistent with the plain terms of the panel’s award and those terms
are not obviously contrary to the contracts of Ms. Bien and Mr. Wellman with
Mid Atlantic. Accordingly, the district court did not err. We therefore affirm
that portion of the amended final judgment.
B
We now consider the district’s second supposed error—awarding
postjudgment interest at the federal rate. Again, the district court did not err.
1
Federal law sets the rate at which postjudgment interest accrues on civil
judgments in federal court. See 28 U.S.C. § 1961; Youngs v. Am. Nutrition, Inc.,
537 F.3d 1135, 1146 (10th Cir. 2008). Judgments confirming or modifying
arbitration awards are not insulated by any exception from the operation of
federal law. See 9 U.S.C. § 13 (giving such judgments “the same force and
effect” as any other judgment and subjecting them to the same “provisions of
law”). Indeed, once a district court confirms or modifies an arbitration award, the
53
cause of action underlying the award “merges into the judgment” and the federal
rate set forth in 28 U.S.C. § 1961 applies. In re Riebesell, 586 F.3d 782, 794
(10th Cir. 2009); see Tricon Energy Ltd. v. Vinmar Int’l, Ltd.,
718 F.3d 448, 457
(5th Cir. 2013); Fid. Fed. Bank v. Durga Ma Corp.,
387 F.3d 1021, 1023 (9th Cir.
2004); R ESTATEMENT (S ECOND ) OF J UDGMENTS § 18 cmt. (a) (1982). That said,
parties may contract around the merger rule and specify a different postjudgment
interest rate. See Newmont U.S.A., Ltd. v. Ins. Co. of N. Am.,
615 F.3d 1268,
1276 (10th Cir. 2010). But to do so, they must express “their intent to override
[28 U.S.C. § 1961] using ‘clear, unambiguous and unequivocal language.’”
Id. at
1277 (quoting Soc’y of Lloyd’s v. Reinhart,
402 F.3d 982, 1004 (10th Cir. 2005)).
Outside the arbitration context, the parties’ failure to clearly,
unambiguously, and unequivocally express their intent to contract around the
federal rate is dispositive. See, e.g., In re Riebesell, 586 F.3d at 794–95. But in
the arbitration context, there is another wrinkle to consider. Whether the parties
intended to contract around the federal postjudgment interest rate “is a
quintessential fact question.”
Newmont, 615 F.3d at 1277. So the parties may
have agreed to have the arbitration panel decide whether they contracted around
the federal postjudgment interest rate.
Id. And if the arbitration panel concludes
that the parties have done so, the panel may, “[c]onsistent with § 1961,” order
that the contracted-for rate apply.
Id. In other words, if “the matter of post-
54
judgment interest was properly before the arbitration panel,” id. at 1276, and the
panel specifies that the contracted-for postjudment interest rate applies, we are
bound by that finding,
id. at 1277; see
Tricon, 718 F.3d at 458 (“[I]nsofar as an
arbitration panel sets a postjudgment rate as a matter of contract interpretation, its
award is entitled to almost absolute deference.”). But like parties, “arbitrators
must be just as clear and unequivocal” in expressing their intent to stray from the
federal postjudgment interest rate.
Id. at 459; see Durga
Ma, 387 F.3d at 1024
(holding that absent an express reference to postjudgment interest in the award
the federal rate applies); cf.
Newmont, 615 F.3d at 1276 (reversing imposition of
federal rate when the arbitration panel had expressly awarded a different rate).
To recap, the federal postjudgment interest rate in 28 U.S.C. § 1961 applies
unless one of two conditions is met. First, the federal rate does not apply if the
parties clearly, unambiguously, and unequivocally contract for a different
postjudgment interest rate. Second, if the parties put the postjudgment-interest
issue before the arbitration panel and the panel similarly awards postjudgment
interest clearly and unequivocally, then the awarded rate applies. Neither
condition is met here.
2
a
Given our narrow review of arbitration awards, we begin with the second
55
condition. Insofar as there was a “controvers[y]” between the parties with respect
to the rate of postjudgment interest, the parties contracted to place that dispute in
the hands of the arbitration panel. See, e.g., Aplt.’s App., Vol. III, at 715 (“All
controversies that may arise between you, [and] us . . . including, but not limited
to, controversies concerning . . . breach of this or any other agreement between
you and us . . . shall be determined by arbitration”). The award here, however,
never used the word “postjudgment.” See id., Vol. I, at 26–28. Indeed, in
reciting the relief Ms. Bien and Mr. Wellman had requested, the award listed
“[p]re-judgment interest” but not postjudgment interest.
Id. at 27. The arbitration
panel seemingly did not consider postjudgment interest. Perhaps for that reason,
the award did “not specifically address[]” postjudgment interest.
Id. at 28. As a
result, the terms of the award dictate that the arbitration panel denied a claim for
any specified rate of postjudgment interest, along with every other claim for relief
“not specifically addressed” in the award.
Id. Thus, even if “the matter of post-
judgment interest was properly before the arbitration panel,”
Newmont, 615 F.3d
at 1276, the panel did not award postjudgment interest at a rate other than that in
28 U.S.C. § 1961. Absent such an express award of postjudgment interest, the
federal rate applies—just as the district court concluded.
b
Our examination of the parties’ contracts ends with the same conclusion.
56
The word “postjudgment” appears nowhere in the contracts themselves See
Aplt.’s App., Vol. III, at 705–37. True, FINRA Rule 12904(j), which the
contracts incorporate, provides: “Interest shall be assessed at the legal rate, if
any, then prevailing in the state where the award was rendered, or at a rate set by
the arbitrator(s).” FINRA Code, Rule 12904(j). But that rule is silent as to
whether—or at what rate—postjudgment interest shall accrue. And consistent
with the merger rule, we have held that merely agreeing “to be bound by [a
jurisdiction’s] law does not amount to agreeing to a particular post-judgment
interest rate.” Reinhart, 402 F.3d at 1004; accord In re
Riebesell, 586 F.3d at
794; see
Tricon, 718 F.3d at 459 (requiring parties to “expressly refer[] to
postjudgment interest”); Durga
Ma, 387 F.3d at 1024 (same). Rule 12904(j)
simply amounts to an agreement to be bound by a certain jurisdiction’s law; that
is insufficient to contract around the merger rule and the federal rate. As a result,
the parties did not clearly, unambiguously, and unequivocally contract around the
federal postjudgment interest rate.
57
Ms. Bien and Mr. Wellman disagree. 11 They point to FINRA Rule 12904(j)
as evidence that they contracted with Mid Atlantic for the Colorado statutory
postjudgment interest rate of 8%. They reason that the arbitration panel “had the
power to award [postjudgment] interest” at that rate—i.e., 8%. Ms. Bien & Mr.
Wellman’s Resp. & Principal Br. at 50. And according to Ms. Bien and Mr.
Wellman, the arbitration panel exercised that authority by ordering that Mid
Atlantic pay damages “plus interest at the rate of 8% per annum beginning
February 6, 2015[,] until . . . paid in full.” Aplt.’s App., Vol. I, at 28 (emphasis
added). Critical to their argument, Ms. Bien and Mr. Wellman read the “until
paid in full” language as an award of both pre- and postjudgment interest at the
rate of 8%.
This argument fails. Its key misstep is in reading the “until paid in full”
language as providing for an award of postjudment interest. Court after court has
11
In their reply brief, Ms. Bien and Mr. Wellman offer additional
arguments. First, they contend that the district court erred in applying the federal
rate because “the parties both agreed in their submissions to the District Court
that the post-judgment interest rate was 8%.” Ms. Bien & Mr. Wellman’s Reply
Br. at 9–10 (emphasis omitted). Second, they complain that “it simply makes no
sense whatsoever to modify an arbitration award regarding interest simply because
a judgment is now attached to the award.” Id. at 11. Third, they rattle off some
policy reasons why “[a]pplying a rate other than one stated by the arbitrators in
their award” has “undesirable effect[s].”
Id. at 12. We need not and do not
consider these late-blooming arguments, however, since Ms. Bien and Mr.
Wellman waited until their reply brief to raise them. See United States v. Harrell,
642 F.3d 907, 918 (10th Cir. 2011) (“[A]rguments raised for the first time in a
reply brief are generally deemed waived.”).
58
rejected this argument. Take Tricon as an example. As here, the arbitration
award imposed interest “until paid.” 718 F.3d at 459. “[T]hough, interpreted
literally,” that language would apply “beyond the judgment,” the Fifth Circuit
held that the award spoke only to prejudgment interest. See
id. at 459–60. “Such
boilerplate language,” the court explained, could not “circumvent the merger rule”
and deviate from the federal postjudgment interest rate.
Id. at 460. The Second,
Ninth, and Eleventh Circuits have reached similar or analogous conclusions in the
arbitration context. See Carte Blanche Pte., Ltd. v. Carte Blanche Int’l, Ltd.,
888
F.2d 260, 264, 270 (2d Cir. 1989) (holding the federal rate applied despite award
of interest “to the date of payment”); Parsons & Whittemore Ala. Mach. & Servs.
Corp. v. Yeargin Const. Co.,
744 F.2d 1482, 1483–84 (11th Cir. 1984) (holding
that the federal rate applied despite award of interest “until the award was paid”);
cf. Durga
Ma, 387 F.3d at 1024 (holding award of “interest at the statutory rate”
did not circumvent the federal rate).
Outside of the arbitration context, our court has likewise held that a
contract using the language “shall accrue interest until payment” was not a
“contract for a post-judgment interest rate,” meaning “the federal rate applie[d].”
In re Riebesell, 586 F.3d at 794–95. Given this contrary authority, Ms. Bien and
Mr. Wellman’s reliance on the “until paid in full” language is misplaced. 12
12
To support their until-paid-in-full argument, Ms. Bien and Mr.
(continued...)
59
In summary, even if the postjudgment-interest issue were properly before
the arbitration panel, we would not read the panel’s award as clearly and
unequivocally awarding postjudment interest. Nor did the parties clearly,
unambiguously, or unequivocally express their intent to contract around the
federal rate. The district court was therefore correct to apply the federal
postjudgment interest rate.
C
We now consider whether the district court erred by ordering Ms. Bien and
Mr. Wellman to reassign to Mid Atlantic any post-award distributions from their
ownership interests in Sonoma Ridge Partners and KBS (including interest
thereon). We conclude that Ms. Bien and Mr. Wellman have not demonstrated
that the district court erred.
The arbitration award ordered Ms. Bien and Mr. Wellman to “reassign
ownership of all Sonoma Ridge Partners and KBS REIT investments to [Mid
12
(...continued)
Wellman cite only two district court cases. The first case ordered that post-award
interest would continue “until payment.” Kruse v. Sands Bros. & Co., 226 F.
Supp. 2d 484, 489 (S.D.N.Y. 2002). But it said nothing about postjudgment
interest. See id. The second case applied the rules of FINRA’s predecessor (i.e.,
NASD) to award postjudgment interest at a state-law rate because the arbitration
award was silent on that issue and the opposing party had failed to timely offer
any arguments to the contrary. See McClelland v. Azrilyan,
31 F. Supp. 2d 707,
713 (W.D. Mo.), aff’d,
168 F.3d 494 (8th Cir. 1998). Our synopses of these cases
should be enough to reveal their weaknesses. Suffice it to say, neither is
persuasive.
60
Atlantic].” Aplt.’s App., Vol. I, at 28. Mid Atlantic was served with the award in
December 2016. After this service, Ms. Bien and Mr. Wellman say that they
contacted Mid Atlantic about reassigning the investments. According to the
couple, Mid Atlantic thought reassigning the investments was “premature”
because it had moved to vacate the award. Ms. Bien & Mr. Wellman’s Resp. &
Principal Br. at 52 n.18. Consequently, Ms. Bien and Mr. Wellman retained
ownership of the investments during the district court proceedings.
Having confirmed the arbitration panel’s award, in its amended final
judgment entered in April 2018, the district court ordered Ms. Bien and Mr.
Wellman to “reassign ownership of all Sonoma Ridge Partners and KBS REIT
investments to . . . Mid Atlantic.” Aplt.’s App., Vol. V, at 1093. However, the
court specifically clarified that “the reassignment shall include any and all
amounts distributed to [Ms. Bien and Mr. Wellman] by the Sonoma Ridge
Partners and KBS REIT investments after the [arbitration] Award, as well as any
interest earned on such distributions.” Id.
Ms. Bien and Mr. Wellman now argue that the district court erred in
ordering them to reassign to Mid Atlantic any post-award distributions from their
ownership interests in Sonoma Ridge Partners and KBS. They argue that the
district court strayed from “[t]he plain language of the [arbitration] Award.” Ms.
Bien & Mr. Wellman’s Resp. & Principal Br. at 52. That award “did not require”
61
them to pay Mid Atlantic the post-award distributions from the investments. Id.
Had the arbitration panel meant to do so, they argue it “could have stated so in the
Award.”
Id. But the panel did not, and instead ordered that Ms. Bien and Mr.
Wellman assign only “their ‘ownership’ in the [Sonoma Ridge Partners and KBS
investments].”
Id. Hence, Ms. Bien and Mr. Wellman contend that the district
court erred by improperly modifying the award to require them to reassign the
post-award distributions.
This argument is unpersuasive. Notably, Ms. Bien and Mr. Wellman cite to
no on-point legal authority to support this contention of error. This failing in
itself inclines us to reject their challenge. See, e.g., Grissom v. Roberts, 902 F.3d
1162, 1173 (10th Cir. 2018) (“It is a party’s duty to develop an argument if it
wishes a determination by this court.”); Adler v. Wal-Mart Stores, Inc.,
144 F.3d
664, 679 (10th Cir. 1998) (“Arguments inadequately briefed in the opening brief
are waived . . . .”).
Moreover, Ms. Bien and Mr. Wellman do not meaningfully dispute Mid
Atlantic’s factual assertions concerning the status of their investments at the time
the district court ruled. Specifically, Mid Atlantic underscores in its briefing that
“investments are not static” and that Ms. Bien and Mr. Wellman “were paid cash
distributions on those investments post-Award . . . . [and] both investments were
liquidated and have no value at all” after the arbitration award, except for a
62
substantial distribution that Ms. Bien and Mr. Wellman received for their
ownership interests in KBS. Mid Atlantic’s Resp. & Reply Brief at 39 (emphasis
added). In response, Ms. Bien and Mr. Wellman do no more than make one vague
assertion—without citation to the record—that Mid Atlantic “has completely
reversed course on its valuation of Sonoma Ridge” from the position it took “[a]t
the arbitration” by now asserting, “in an almost ironic twist,” that after the
arbitration award their interests in the Sonoma Ridge Partners investment became
worthless. Ms. Bien & Mr. Wellman’s Reply Br. at 14. Further, addressing our
questions at oral argument, counsel for Ms. Bien and Mr. Wellman acknowledged
that there had been a “liquidating distribution” and that there was nothing left of
the stocks themselves. Oral Arg. at 29:56–30:06; see id. at 30:32–37.
This failure to meaningfully dispute Mid Atlantic’s factual assertions is
significant. Part and parcel of Ms. Bien and Mr. Wellman’s overarching
obligation to explain how the district court erred is the obligation to give us an
accurate picture of the factual landscape before the district court when it ruled.
Cf. Nixon v. City & Cty. of Denver, 784 F.3d 1364, 1366 (10th Cir. 2015) (“The
first task of an appellant is to explain to us why the district court’s decision was
wrong.”). Consequently, because Ms. Bien and Mr. Wellman have not
meaningfully challenged—and indeed seem to agree with—Mid Atlantic’s
63
assertions concerning the status of their investments at the time the district court
ruled, we proceed on the premise that Mid Atlantic’s assertions are correct.
With this understanding of the factual landscape, and without the benefit of
citations of apposite authority from Ms. Bien and Mr. Wellman, we find their last
contention of error unpersuasive. Ms. Bien and Mr. Wellman’s argument begs the
important question—what does “ownership” of the investments mean? The
investments were “common stock” in KBS and Sonoma Ridge Partners. Aplt.’s
App., Vol. IV, at 885–87 (Proposed Assignment of Stock, dated June 12, 2017).
The ordinary legal understanding of “common stock” is “[a] class of stock
entitling the holder . . . to receive dividends . . . and to share in assets upon
liquidation.” Common Stock, B LACK ’ S L AW D ICTIONARY , supra, at 1713; see,
e.g., 18 C.J.S. Corporations § 215, Westlaw (database updated Mar. 2020) (noting
that “[a] common stockholder is an owner of the enterprise in proportion that his
or her stock bears to the entire stock and ordinarily he or she is entitled to . . .
ultimate distribution of assets of the corporation”).
“Ownership” of the investments, then, entailed the right to receive
distributions and to share in the liquidated assets. Thus, the arbitration award that
ordered Ms. Bien and Mr. Wellman in December 2016 to reassign ownership of
their investments in Sonoma Ridge Partners and KBS to Mid Atlantic also should
be read as having effectively ordered them to reassign to Mid Atlantic (in addition
64
to any actual common stock) their rights to future distributions from those
investments. And it is undisputed that—irrespective of the reason—Ms. Bien and
Mr. Wellman did not act on the arbitration panel’s order: that is, they did not
reassign their ownership interests in the Sonoma Ridge Partners and KBS
investments to Mid Atlantic before the district court entered its amended final
judgment in April 2018. It is further uncontested that at the time the court
entered its amended final judgment, essentially all that was left of the ownership
interests of Ms. Bien and Mr. Wellman in Sonoma Ridge Partners and KBS was
their distributions following liquidation.
Therefore, when the district court ordered Ms. Bien and Mr. Wellman to
reassign their distributions from Sonoma Ridge Partners and KBS (as well as
interest thereon) to Mid Atlantic, it was actually enforcing the terms of the
arbitration award—which required reassignment of their ownership interests in
those investment vehicles—instead of straying from those terms. Stated
otherwise, when the district court entered its amended final judgment in April
2018, it ensured that Mid Atlantic received all of the ownership interests—which
included the right to future distributions—that Ms. Bien and Mr. Wellman had in
their Sonoma Ridge Partners and KBS common stock, just as the arbitration panel
contemplated. Accordingly, we reject the last contention of error of Ms. Bien and
Mr. Wellman.
65
66
V
For the reasons stated above, we AFFIRM the amended final judgment in
all respects. 13
13
Having carefully considered the merits of Mid Atlantic’s pending
unopposed motion to file Volume VI of the appendix under seal in light of the
public’s “right of access to judicial records,” Eugene S. v. Horizon Blue Cross
Blue Shield of N.J., 663 F.3d 1124, 1135 (10th Cir. 2011), we grant the motion.
67
