Major League Baseball Properties v. Corporacion de Television y Microonda Rafa

Background

Major League Baseball Properties, Inc. (MLB) petitioned under Section 207 of the Federal Arbitration Act and the New York Convention to confirm an arbitration award against Corporacion de Television y Microonda Rafa, S.A. (Telemicro). The dispute arose from a contract giving Telemicro rights to broadcast MLB content in the Dominican Republic during the 2016–2018 seasons. The opinion states that Telemicro failed at various points to make payments required by the contract, and MLB terminated the contract in 2017.

MLB demanded arbitration on December 18, 2017. During the arbitration’s beginning, Telemicro asked the American Arbitration Association to halt the proceedings and sought a stay in New York state court. Telemicro also failed to submit a required list ranking potential arbitrators. The American Arbitration Association treated that failure as acceptance of the entire list and appointed Stephen Strick as arbitrator. The New York Supreme Court later denied Telemicro’s request to stay the arbitration. After more than six months of participation in the arbitration, the parties received a partial final award and then a final award in MLB’s favor. The opinion states that Telemicro had not paid the amounts owed under the final award.

Arguments

Telemicro did not dispute that MLB had made the initial showing required to seek confirmation. Instead, it argued that summary judgment was improper because disputed factual issues concerned the arbitrator’s selection and the attorneys’ fee award.

Telemicro argued that the arbitrator was improperly appointed without its input. It also argued that proceeding with the appointment after Telemicro sought a state-court stay violated due process and that submitting an arbitrator-ranking list might have waived its challenge to the arbitration’s authority. The court noted that Telemicro did not explain why it waited until the ranking-list deadline to seek a stay, ignored the American Arbitration Association’s notice that the deadline remained in place, or challenged the appointment within the arbitration after the stay was denied.

Telemicro separately argued that the arbitrator acted in serious disregard of the law by awarding MLB attorneys’ fees. It contended that the arbitrator failed to account for Telemicro’s successful defense of one claim and improperly reviewed MLB’s unredacted invoices privately to address attorney-client privilege concerns.

Court’s Analysis

The court held that the issues Telemicro identified were legal conclusions based on undisputed facts, not genuine disputes of material fact. It therefore decided the petition on summary judgment. The court explained that judicial review of arbitration awards is narrowly limited and that the party opposing confirmation faces a high burden. Under the New York Convention, one relevant ground for refusing recognition is whether the arbitrator was selected consistently with the parties’ agreement. The court also considered the limited doctrine allowing an award to be set aside for “manifest disregard” of the law, which it described as applying only in exceedingly rare cases involving serious arbitrator misconduct.

Regarding the appointment, the court found that the parties’ contract required arbitration under the American Arbitration Association’s Commercial Arbitration Rules. The relevant rule treated Telemicro’s failure to return the arbitrator list as acceptance of all persons on it, after which the American Arbitration Association appointed the arbitrator. The court further held that Telemicro’s failure to timely object to the arbitrator’s selection barred it from later seeking to avoid the award on that ground. The challenge was therefore too late and insufficient to justify rejecting the award.

Regarding attorneys’ fees, the court found that the award was based on a contract provision requiring Telemicro to reimburse MLB for attorneys’ fees and costs connected with a contract breach and collection of amounts due. The court rejected Telemicro’s claim that its success on one claim prevented an award of all attorneys’ fees, stating that Telemicro offered no support for that argument. The court also found no manifest disregard of the law or fundamental unfairness in the arbitrator’s in-camera review of unredacted invoices to address possible privileged material. The opinion notes that courts commonly review billing records in camera when deciding fee awards.

Disposition

The court concluded that Telemicro offered no legitimate basis to disturb the arbitration award. Judge Mary Kay Vyskocil granted MLB’s motion for summary judgment and confirmed the final award in American Arbitration Association Case Number 01-17-0007-5412.