United States District Court, D. Connecticut
UTPALA B. VYAS, Plaintiff,
DOCTOR'S ASSOCIATES, INC., Defendant.
RULING RE: MOTION TO VACATE ARBITRATION AWARD (DOC.
NO. 1) AND MOTION TO CONFIRM ARBITRATION AWARD (DOC. NO.
C. Hall United States District Judge
case comes before the court pursuant to a Motion to Vacate
Arbitration Award filed by the plaintiff, Utpala Vyas
(“Vyas”). See Motion to Vacate
(“Pl.'s Mot.”) (Doc. No. 1). The defendant,
Doctor's Associates, Incorporated (“DAI”), is
the franchisor of Subway sandwich shops in the United States.
See Pl.'s Mot. at ¶ 2; Answer (Doc. No. 11)
at ¶ 2. The plaintiff, Vyas, was a Subway franchisee,
with three franchises. See Pl.'s Mot. at ¶
1; Defendant's Memorandum of Law in Opposition to
Plaintiff's Motion to Vacate (“Def.'s
Mem.”) (Doc. No. 9) at 1-2. In her Motion, Vyas moves
to vacate a final, ex parte arbitration award
terminating her franchise agreements with DAI pursuant to the
Federal Arbitration Act (“FAA”), title 9 section
10(a)(3) and (4) of the United States Code. See
generally Pl.'s Mot.; Final Ex-Parte Award (Doc. No.
1-1) at 112-16. DAI opposes Vyas's Motion to Vacate and
cross-moves for an order confirming the arbitration award.
Motion to Confirm (“Def.'s Mot.”) (Doc. No.
following reasons, Vyas's Motion to Vacate (Doc. No. 1)
is denied, and DAI's Motion to Confirm (Doc. No. 10) is
entered into franchise agreements with DAI for three
different franchises between March 2007 and June 2015.
See Pl.'s Mot. at ¶¶ 5-7; Answer at
¶¶ 5-7. It is undisputed that the arbitration
clause in the third and final franchise agreement, for
franchise number 36986, superseded the arbitration clauses in
the first two franchise agreements, thereby becoming the
relevant contractual agreement for the purposes of this case.
See Superseding Franchise Agreement, Exh. 3,
Def.'s Mem. (“Franchise Agreement”) (Doc. No.
9-1) at 50 ¶ 14 (“This Agreement, including the
Recitals and all exhibits, contains the entire understanding
of the parties and supersedes any prior written or oral
understandings or agreements of the parties relating to the
subject matter of this Agreement . . . .”).
10 of the Franchise Agreement contains the arbitration
clause, which provides that “[a]ny dispute arising out
of or relating to this Agreement or the breach thereof will
be settled by arbitration.” Franchise Agreement at
¶ 10(a). It further provides that such arbitration may
be conducted by either the American Arbitration Association
or the American Dispute Resolution Center
(“ADRC”). Id. If arbitration is
conducted by the ADRC, the Franchise Agreement provides that
arbitration will be conducted pursuant to the ADRC's
“administrative rules (including, as applicable, the
Rules of Commercial Arbitration or under the Rules for
Expedited Commercial Arbitration).” Id. The
arbitration clause also states that “[j]udgment
rendered by the arbitrator may be entered in any court having
jurisdiction thereof.” Id. Finally, the
Franchise Agreement's arbitration clause states that
“[a]ny disputes concerning the enforceability or scope
of the arbitration clause will be resolved pursuant to the
[FAA].” Id. at ¶ 10(f); see also
Pl.'s Mot. at ¶ 3 (FAA governs this proceeding);
Answer at ¶ 3 (same).
about January 9, 2017, DAI initiated an arbitration
proceeding with the ADRC seeking termination of two of
Vyas's three franchises. See Pl.'s Mot. at
¶ 9; Answer at ¶ 9. That demand was subsequently
amended on or about February 20, 2017, to seek termination of
all three franchises. See Pl.'s Mot. at ¶
9; Answer at ¶ 9. DAI's demand alleged that the
amount in controversy was less than $10, 000, which resulted
in the ADRC applying its Rules of Expedited Commercial
Arbitration (“Expedited Rules”) to the dispute.
See Pl.'s Mot. at ¶ 9; Answer at ¶ 9.
Vyas filed an Answer with Affirmative Defenses and
Counterclaims on January 27, 2017, alleging up to $500, 000
in damages. See Pl.'s Mot. at ¶ 16; Exh.
C., Pl.'s Mot. (Doc. No. 1-1) at 28. On February 2, 2017,
the ADRC issued a statement noting that, due “to the
amount of the Counterclaim, this matter will now be heard
under the Regular Rules of Commercial Arbitration.”
Pl.'s Mot. at ¶ 20.
ADRC Rules of Commercial Arbitration (“Regular
Rules”) provide that the ADRC will provide a list of
potential arbitrators to the parties, at which point the
parties will have an opportunity to object in writing to any
of the proposed arbitrators. See Regular Rule 7
(“As soon after the initiation of a case as is
practicable, ADR Center shall provide the parties with a list
of arbitrators from which to select an arbitrator or
arbitrators, as necessary.”). Upon receipt of such a list,
the Regular Rules provide that the parties will have fourteen
days to provide written objections to the proposed list of
arbitrators and may request up to seven additional days for a
total of twenty-one days in which to respond. See
id. Rule 7 further provides that “[a]ny potential
arbitrator to whom either or both parties object[ ] shall be
stricken from the list of potential arbitrators.”
E-4 of the Expedited Rules governs appointment of arbitrators
in expedited arbitrations. Rule E-4 provides:
The parties will each receive an identical list of
arbitrators consisting of five names from ADR Center's
panel of neutrals. The parties may each have one peremptory
strike. The parties may also strike off an unlimited number
of names for factual, for cause reasons. However, the parties
must provide a reason in writing for such strikes. The
parties must return their selections to ADR Center within ten
calendar days. If ADR Center is unable to appoint the
arbitrator from the parties' selections, the Case Manager
will appoint the arbitrator.
Expedited Rule E-4. As this text reflects, under either the
Expedited Rules or the Regular Rules, the ADRC provides the
parties with a list of potential arbitrators, to whom the
parties may object in writing. The only apparent substantive
distinction between the two provisions is the deadline for
responding, which is not at issue in this case.
of the Regular Rules states that an arbitrator who has been
chosen will not be “formally empanelled” until
such prospective arbitrator discloses “any
circumstances that may present an appearance of a conflict of
interest or otherwise appear to affect his or her
impartiality” and the parties are given the opportunity
to file written objections based on such disclosures. Regular
Rule 12. If an objection is received, Rule 12 grants the ADRC
authority to “determine whether the arbitrator will be
permitted to serve and the parties will be informed of such
decision, which shall be binding.” Id. The
Expedited Rules do not contain a provision akin to or
inconsistent with Rule 12, which, pursuant to Expedited Rule
E-8, means that Rule 12 applies with equal force to expedited
and regular arbitrations. See Expedited Rule E-8
(“All other Rules set forth in the standard Rules of
Commercial Arbitration, which are not inconsistent with, or
otherwise covered by these Expedited Rules, shall also
January 23, 2017, DAI and the ADRC received correspondence
from Attorney Myles Alderman, counsel for Vyas, in which
Attorney Alderman appeared on his client's behalf and
objecting to procedure under the Expedited Rules on the
ground that the amount in controversy exceeded $75, 000.
See Exh. 10, Def.'s Mem. (Doc. No. 9-1) at
86-89. Attorney Alderman also requested that all five of the
proposed arbitrators provide conflict disclosures from those
on the potential arbitrator list before making written
objections. Id. In that correspondence, Attorney
Alderman included ten questions largely related to potential
conflicts of interest. Id.
January 31, 2017, a representative of ADRC responded to
counsel for Vyas's January 23 email. See Exh.
11, Def.'s Mem. (Doc. No. 9-1) at 90-91. She informed
Attorney Alderman that the case would proceed under the
Expedited Rules until he filed an answer and counterclaim, at
which point the arbitrator would determine whether to
continue applying the Expedited Rules. Id. She
further extended the deadline for responses to the proposed
arbitrators to February 2, 2017, and informed Attorney
Alderman that the arbitrator would disclose “all his
conflicts after he/she is selected, ” citing
counsel to Rule 12. Id. Attorney Alderman replied
that Vyas “would like to know which of the proposed
arbitrators have a demonstrated history of regularly granting
to [DAI] the relief [DAI] seeks and which proposed
arbitrators have already made findings as to the credibility
of [DAI]'s witnesses and findings as to the
interpretation of [DAI]'s operations manual” before
she responded to ADRC's list of proposed arbitrators.
Exh. D, Pl.'s Mot. (Doc. No. 1-1) at 29-32.
did not submit a response to the list of proposed
arbitrators. See Exh. E, Pl.'s Mot (Doc. No.
1-1) at 33-34. Absent objections from the parties, ADRC
appointed Attorney Mark R. Carta arbitrator on February 16,
2017. See Exh. 15, Def.'s Mem. (Doc. No. 9-1) at
108-09. Later that same day, Attorney Alderman sent the
following response to the ADRC:
You have done it again. This is just [sic] latest, in the ADR
Center's pattern of appointing arbitrators over the
written objection of franchisees in DAI-commenced
arbitrations. As you know, the last two times the ADR Center
did this, substantial time and money was wasted before the
improperly appointed arbitrators finally removed themselves.
Ms. Vyas object [sic] to the appointment of this arbitrator
in writing (twice).
While awaiting the arbitrator's conflict disclosure, we
reserve all right [sic].
Exh. 16, Def.'s Mem. (Doc. No. 9-1) at 110-11.
Carta subsequently issued a conflicts disclosure, which was
shared with the parties on March 9, 2017. See Exh.
F, Pl.'s Mot. (Doc. No. 1-1) at 35-40. On March 20, 2017,
Attorney Alderman objected to the appointment of Attorney
Carta as arbitrator. See Exh. G, Pl.'s Mot.
(Doc. No. 1-1) at 41-45; Exh. H, Pl.'s Mot. (Doc. No.
1-1) at 46-52. On March 24, 2017, the ADRC notified the
parties that the ADRC “has considered the objections
and responses and has determined that Mark Carta will
continue his service as the neutral in the above captioned
matter.” Exh. 19, Def.'s Mem. (Doc. No. 9-1) at
10, 2017, Attorney Carta issued a Scheduling Order, which set
the evidentiary hearing for September 13 and September 14,
2017. See Exh. 25, Def.'s Mem. (Doc. No. 9-2) at
7-10. The scheduling order also set various discovery
deadlines and pre-hearing briefs. Id. On July 6,
2017, Vyas requested the depositions of two fact witnesses,
Rafe Hughes (“Hughes”) and Nate Bennett.
See Exh. 30, Def.'s Mem. (Doc. No. 9-2) at
37-40. Both Hughes and Nate Bennett work as “Field
Consultants, ” inspecting Subway franchises.
See Pl.'s Mot. at ¶ 18. Hughes and Nate
Bennett are employed as Field Consultants by Nick Bennett,
father of Nate Bennett, who is employed as a
“Development Agent” for DAI in the region where
Vyas's franchises were located. See id.;
Def.'s Mem. at 13-14. In response to Vyas's Motion to
depose Hughes and Nate Bennett, DAI erroneously objected to
the request to depose Hughes and Nick Bennett, in part on the
basis that both witnesses would be called by DAI to testify
at the evidentiary hearing. See Exh. 28, Def.'s
Mem. (Doc. No. 9-2) at 25-31. Vyas then compounded DAI's
error by further referencing Nick Bennett, rather than Nate
Bennett, in her reply to DAI's objection. See
id. Attorney Carta granted Vyas's Motion over
DAI's objection on July 12, 2017. See id. In
that decision, however, Attorney Carta stated that Vyas
“shall be permitted to conduct the depositions of Mr.
Hughes and Mr. Bennett.” Id. Attorney
Carta's decision did not, therefore, clarify the
confusion surrounding which Mr. Bennett was at issue.
contacted Vyas twice to schedule the depositions, first on
July 18, 2017, and then on July 26, 2017. See Exh.
29, Def.'s Mem. (Doc. No. 9-2) at 32-36. Attorney
Alderman responded to DAI's July 26 email later that same
day suggesting dates for the depositions, including July 31,
August 3, August 4, August 17, and August 18. Id.
Then, on July 31, 2017, Vyas moved to compel DAI to produce
Hughes and Nate Bennett and to modify the May 10, 2017
Scheduling Order, asserting that DAI “never provided
[Vyas] with dates when the Witnesses would be available to be
deposed” and “did not respond” to
Vyas's correspondence suggesting dates. Exh. 30,
Def.'s Mem. (Doc. No. 9-2) at 37-40. Vyas further
asserted that “[i]t is no longer possible to schedule
and complete the deposition of the Witnesses in time for
[Vyas] to file a disclosure of witnesses by August 14, 2017,
” and that, “because the depositions cannot be
started until after August 17, (at the earliest) the
deposition transcripts will not be available in time for
[Vyas] to prepare for the arbitration hearing without the
extraordinary cost of expedited transcripts.”
Id. On August 1, 2017, Attorney Carta issued a
decision regarding Vyas's Motion, which stated, in
pertinent part, as follows:
1. The hearing dates of September 13 and 14th will not be
postponed. The hearing will be conducted in Bridgeport.
2. The depositions noticed by the Respondent will be conduct
on August 17 (or if the parties can agree in the next 48
hours on the 18th).
5. The witness disclosure deadline is moved to August ...