United States District Court, D. New Jersey
UNITED MERCHANDISE WHOLESALE INC. and MY IMPORTS USA LLC, Plaintiffs,
DIRECT CONTAINERS INC, JIAN YANG ZHANG, MING YANG SOURCING INC, 75 ETHEL REALTY LLC, GLOBAL WIN LLC, XU JING WONG, JIAN MING ZHANG, and GUO SHENG ZHANG, Defendants.
McNULTY, UNITED STATES DISTRICT JUDGE
matter comes before the court after plaintiffs were awarded
net damages in arbitration. Plaintiffs petition the court to
affirm the arbitration award. Defendants seek to vacate the
award, arguing that the arbitrator showed evident partiality
and the punitive-damages award was unreasonable. For the
reasons stated herein, the plaintiffs' motion to confirm
the arbitration award is granted, and the defendants'
motion to vacate the award is denied.
United Merchandise Wholesale, Inc. and MY Imports USA LLC
arbitrated a dispute with defendants Direct Containers, Inc.,
Jian Yang Zhang, Ming Yang Sourcing, Inc., 75 Ethel Realty
LLC, Global Win, LLC, Xu Jing Wong, Jian Ming Zhang, and Guo
Sheng Zhang. The matter comes before this Court on dueling
motions to confirm or vacate an arbitration award.
arbitrator, retired federal District Judge Joel A. Pisano,
entered a mixed final award on December 24, 2017. Judge
Pisano awarded plaintiffs damages in the amount of $6, 727,
532 and fees of $378, 527.75 (Pet. ¶ 4); he also awarded
defendants offsetting damages in the amount of $1, 196,
449.20. (Pet. ¶ 4). As a result, plaintiffs received a
net damages award of $5, 909, 610.55. On January 2, 2018,
respondents filed a letter application to modify the award so
as to "clarify" that it did not bind three of them:
Kevin Zhang, Xu Jing (a/k/a Judy) Wong, and 75 Ethel Realty,
LLC. By letter opinion dated January 11, 2018, Judge Pisano
denied that application.
January 16, 2018, plaintiffs petitioned this court to confirm
the arbitration award. (ECF No. 1). Defendants filed a timely
motion to vacate the award, arguing that (1) Judge
Pisano's partiality required his disqualification or
recusal; (2) defendants did not knowingly waive their right
to challenge Judge Pisano's partiality; and (3) the
punitive damages award was unreasonable or unwarranted. (Def.
Opp.). Plaintiffs respond that Judge Pisano was impartial,
the defendants waived the right to object regarding
partiality, the punitive damages were reasonable, and
defendants are judicially estopped from challenging the
arbitration because of contrary positions they took in New
Jersey state-court proceedings. (ECF Nos. 11, 13).
Federal Arbitration Act ("FAA") standard for
vacating an arbitration decision governs this dispute.
"It is well established that absent clear intent to
apply a non-FAA standard [for vacating an award], the FAA
standard is to be applied." CD & L Realty LLC v.
Owens III, Inc., 535 Fed.Appx. 201, 204 (3d Cir. 2013)
(citing Ario v. Underwriting Members of Syndicate 53 at
Llyods, 618 F.3d 277, 295 (3d Cir. 2010)). There is no
"clear intent" that the parties sought to
substitute the FAA's standard of review for vacating an
arbitration award with the New Jersey Uniform Arbitration
Act's ("NJUAA") standard. Choosing a New Jersey
forum, for example, is not deemed a sufficient implied
expression of such an intent. See Ario, 618 F.3d at
293-95. Nor is there any explicit expression. The relevant
contract in this dispute provides:
Governing Law. This Agreement and all performance
hereunder or breach hereof, the Parties' relationship in
connection herewith, together with any related claims of any
type or nature whatsoever, shall be governed by and construed
in accordance with the laws of New Jersey, irrespective of
conflict of law principals [sic].
(ECF No. 1-3, p. 11). There is a separate section, labeled
"Dispute Resolution" that provides for
arbitration with JAMS. (Id.). It does not refer to
the NJUAA or the FAA. (Id.).
parties here must show 'clear intent' to apply the
[state] vacatu[r] standards in order to displace those of the
FAA.... [I]t is not particularly difficult, for example, to
provide that 'any controversy shall be settled by
arbitration in accordance with the terms of the [state
arbitration statute]." See Ario, 618 F.3d at
293. This agreement does not do that. True, it provides that
New Jersey law applies to the contract and the parties'
relationship. But there is no "clear intent" to
substitute New Jersey's vacatur standard for the
rate, there is no relevant distinction between the FAA and
NJUAA vacatur standards that would change the outcome. This
Court and the New Jersey Supreme Court have both called the
NJAA and FAA "nearly identical." See, e.g.,
Int'l Foodsource, LLC v. Grower Direct Nut Co.,
Inc., No. 16-cv-3140, 2016 WL 4150748, at *9 (D.N.J.
Aug. 3, 2016); Atalese v. U.S. Legal Servs. Grp.,
L.P., 99 A.3d 306, 311-12 (N.J. 2014). The NJUAA
provides for vacating an award when "the court finds
evident partiality by an arbitrator." N.J. Stat. Ann.
§ 2A:23B-23. This language follows the FAA's
language, which provides that an arbitration award may be
vacated "where there was evident partiality." 9
U.S.C. § lO(a)(2).
Federal Arbitration Act Vacatur Standard
validity of an arbitration award is subject to attack on the
grounds enumerated in the FAA only-or if enforcement of the
award is contrary to public policy. Brentwood Med.
Assocs. v. United Mine Workers of Am., 396 F.3d 237, 241
(3d Cir. 2005) (citing W.J?. Grace & Co. v. Local
Union 759, 461 U.S. 757, 766 (1983); Exxon Shipping
Co. v. Exxon Seamen's Union, 993 F.2d 357, 360 (3d
Cir. 1993)). The FAA states, in pertinent part:
(a) In any of the following cases the United States court in
and for the district wherein the award was made may make an
order vacating the award upon the ...