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Williams v. RI/WFI Acquisition Corp.

February 11, 2009

ZELMA WILLIAMS, PLAINTIFF,
v.
RI/WFI ACQUISITION CORPORATION, WOODFIELD FORD, DEFENDANT.



The opinion of the court was delivered by: Judge Ronald A. Guzmán d/b/a

MEMORANDUM OPINION AND ORDER

In this case, plaintiff Zelma Williams seeks to confirm the arbitration award entered in her favor and defendant RI/WFI Acquisition Corporation, d/b/a Woodfield Ford ("Woodfield"), seeks to vacate it. For the reasons provided herein, the Court confirms the arbitration award and denies the application to vacate it.

Facts

Williams is a sixty-two-year-old, right-handed woman whose right arm was amputated above the elbow in 1989. (Arbitration Award 3.) In November 1998, Woodfield hired Williams as manager of its Collision Center in Woodfield, Illinois. (Def.'s Mem. Supp. Application Vacate Arbitration Award ("Def.'s Mem.") 2-3.)*fn1 Woodfield was owned and operated by AutoNation, which owns several automobile dealerships and body shops nationwide. (Id. 3.) During the course of her employment, Williams and Woodfield entered into a mandatory arbitration agreement covering all employment-related disputes between the parties. (Id.)

In September 2003, Williams heard rumors that the Collision Center was being sold to CARS Collision ("CARS"). (Arbitration Award 3.) She contacted AutoNation's human resources department to discuss the possibility of being transferred to another managerial position at a different AutoNation facility. (Id. 3-4.) Despite her concern, Williams did not formally apply for a transfer. (Def.'s Mem. 5.) On September 22, 2003, Woodfield sold the Collision Center to CARS. (Arbitration Award 4.) When the sale closed, Woodfield terminated all Collision Center employees, including Williams, and CARS hired them on a trial basis. (Def.'s Mem. 3.) Williams continued to work in her position as manager until October 2003, when CARS terminated her. (Id.)

In March 2004, Williams filed a charge against Woodfield with the Equal Employment Opportunity Commission ("EEOC"), claiming that she was discriminated against because of her age, disability and gender. (Arbitration Award 4.) In January 2006, the EEOC sent her a right-to-sue notice, and on April 14, 2006, Williams filed this action, alleging violations of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621, the Americans with Disabilities Act ("ADA"), 42 U.S.C. §§ 12101, 12112(b)(5)(A), and Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000(e). (Compl. ¶ 2.)*fn2 Based on the Arbitration Agreement between the parties, this Court compelled the parties to arbitrate. (Order of June 26, 2006.)

Arbitrator Jack Cerone ("Cerone") heard the case over a three-day period in early November 2007. (Arbitration Award 2.) On March 3, 2008, Cerone held that Williams had proved her claim of employment discrimination and awarded her $250,000.00 in back pay. (Id. 14.) Cerone denied Williams's claim for front pay, punitive damages and attorneys' fees. (Id.) Cerone relied on the ADEA, ADA and Title VII in making his decision. (Id. 2.)

On April 8, 2008, Woodfield applied to this Court to vacate the arbitration award under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 10(a)(4). (Def.'s Application Vacate Arbitration Award.) On October 3, 2008, Williams applied to this Court to confirm the arbitration award. (Pl.'s Application Confirm Arbitration Award.)

Discussion

It is undisputed that the FAA governs this case. Congress enacted the FAA to promote arbitration as a cost-effective alternative to dispute resolution in the federal court system. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 280 (1995). Accordingly, federal court review of arbitration awards is very narrow. Halim v. Great Gatsby's Auction Gallery, 516 F.3d 557, 563 (7th Cir. 2008); IDS Life Ins. Co. v. Royal Alliance Assocs., Inc., 266 F.3d 645, 649-50 (7th Cir. 2001). Furthermore, the Supreme Court recently held that the statutory grounds specified in §§ 9-11 of the FAA are the exclusive bases for federal court review of an arbitration award. Hall Street Assocs., L.L.C. v. Mattel, Inc., 128 S.Ct. 1396, 1400 (2008).

In this case, Woodfield relies on § 10(a)(4) of the FAA, which permits a district court to vacate an arbitration award if an arbitrator "so exceeded [his] powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made." In the Seventh Circuit, a corollary to § 10(a)(4) is vacatur for "manifest disregard of the law." Halim, 516 F.3d at 563; George Watts & Son, Inc. v. Tiffany & Co., 248 F.3d 577, 581 (7th Cir. 2001).*fn3 This standard applies in two situations: (1) when an arbitrator orders the parties to do something illegal; and (2) when the arbitrator does not follow the directives of the parties' agreement. Halim, 516 F.3d at 563; George Watts & Son, 248 F.3d at 581. The Seventh Circuit has made abundantly clear that "[f]actual or legal error, no matter how gross, is insufficient to support overturning an arbitration award." Halim, 516 F.3d at 563; see also IDS Life Ins. Co., 266 F.3d at 650 ("[N]either error nor clear error nor even gross error is a ground for vacating an award."). This is because arbitration does not provide for a system of "junior varsity trial courts," Eljer Manufacturing, Inc. v. Korwin Development Corp, 14 F.3d 1250, 1254 (7th Cir. 1994) (quotation omitted), but instead is a contractual agreement by the parties to settle their disputes in a non-judicial forum, Baravati v. Josephthal, Lyon & Ross, 28 F.3d 704, 706 (7th Cir. 1994).

Woodfield argues that the arbitrator manifestly disregarded the law by ignoring the legal principles specified in the Arbitration Agreement that required him to resolve claims based solely upon the law governing the claims and defenses set forth in the pleadings. Woodfield argues that the arbitrator disregarded the law by: (1) applying the incorrect standard for discriminatory failure to transfer; (2) ignoring the burdens of proof applicable to the various claims; (3) applying the incorrect standard for establishing whether an employee is similarly situated; (4) disregarding Judge Coar's decision that Williams was not disabled for purposes of the ADA; and (5) awarding Williams damages despite her failure to mitigate.

In support, Woodfield relies on Edstrom Industries, Inc. v. Companion Life Insurance Co., 516 F.3d 546 (7th Cir. 2008). In Edstrom, the parties entered into an insurance policy containing an arbitration clause specifying that Wisconsin substantive law would govern any dispute between the parties related to the policy. Id. at 549. During arbitration, the plaintiff argued for the application of a specific Wisconsin insurance statute that was directly on point. Id. at 552-53. The arbitrator never mentioned the statute or demonstrated why it was inapplicable and found in the defendant's favor, although the statute mandated a contrary result. Id. The district court denied the motion to vacate the arbitration award, and the plaintiff appealed to the Seventh Circuit. Id. at 549.

The Seventh Circuit reversed, holding that "precisely because arbitration is a creature of contract, the arbitrator cannot disregard the lawful directions the parties have given them." Id. at 552. The court determined that although the arbitration clause required the arbitrator to apply Wisconsin substantive law, the arbitrator did not even attempt to apply the relevant statutory provision and ignored the statute. Id. at 552-53. The court emphasized that although mistakes of law by arbitrators are not grounds for overturning an award, the contractual nature of arbitration entitles the parties to have the arbitrator follow ...


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