Court Affirms Arbitrators’ Authority to Grant Summary Judgment
The Third Circuit Court of Appeals upheld a lower court’s decision determining that arbitrators are empowered to grant any relief reasonably fitting the matter submitted, including summary judgment.
In Sherrock Brothers, Inc. v. DaimlerChrysler Motors Co., LLC., No. 06-4767, 2008 WL 63300 (3rd Cir. Jan. 7, 2008), Sherrock and DaimlerChrysler submitted an automobile dealership dispute to arbitration.
Previously, Sherrock had unsuccessfully pursued its claims before the State Board of Motor Vehicle Manufactures, Dealers, and Sales Persons; the Commonwealth Court of Pennsylvania; and the Pennsylvania Supreme Court.
The arbitration panel granted summary judgment in favor of DaimlerChrysler, finding that the previous litigation barred arbitration under res judicata, collateral estoppel, and waiver of right to arbitrate by engaging in litigation. The lower court denied Sherrock’s motion to vacate the award.
On appeal, Sherrock argued that the arbitration panel committed a manifest disregard of the law in finding that res judicata and collateral estoppel barred Sherrock’s claims and that Sherrock waived its right to arbitration.
The Court noted that a court may vacate an arbitration award made in manifest disregard of the law. But in this case, the arbitration panel stated and applied the accurate elements of res judicata and collateral estoppel. The merits of the panel’s analysis were not relevant to the Court’s review. It was enough that the panel set forth and applied the correct legal principals.
Sherrock also argued that the arbitrators exceeded their powers by granting summary judgment. The Court rejected this argument and determined that except where prohibited by the plain and express terms of the parties’ submissions, an arbitrator is empowered to grant any relief reasonably fitting the matter submitted to him.
Granting summary judgment surely falls within this standard. Since arbitration is a streamlined procedure that offers added efficiency in dispute resolution, it would be counterproductive to adopt rules that preclude summary disposition of ill-fated claims and defenses. Thus, the Court affirmed the lower court’s decision.