                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-13-2005

Comm Consul Inc v. Nextel Comm Mid Atl
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-2750




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                                                           NOT PRECEDENTIAL

                 IN THE UNITED STATES COURT OF APPEALS
                          FOR THE THIRD CIRCUIT

                                 Case No: 04-2750

                   COMMUNICATIONS CONSULTANT, INC.,

                                                Appellee

                                          v.

  NEXTEL COMMUNICATIONS OF THE MID-ATLANTIC, INC., d/b/a NEXTEL
               and/or NEXTEL COMMUNICATIONS,

                                             Appellant
                        _________________________________

                  On appeal from the United States District Court
                       for the Eastern District of Pennsylvania
                             District Court No.: 04-MC-41
                  District Judge: The Honorable Charles R. Weiner
                     __________________________________

                          Submitted pursuant to LAR 34.1(a)
                                    June 28, 2005

             Before: *NYGAARD, SMITH, and FISHER, Circuit Judges

                               (Filed: July 13, 2005 )
                              _____________________

                             OPINION OF THE COURT
                              _____________________

SMITH, Circuit Judge.

      Nextel Communications appeals from an order entered on May 28, 2004, in which


    *Honorable Richard L. Nygaard assumed senior status on July 9, 2005
the United States District Court for the Eastern District of Pennsylvania granted the

motion of appellee Communications Consultant, Inc. (“CCI”) to confirm an arbitration

award in favor of CCI. The District Court found that under the contract between Nextel

and CCI, Nextel had effectively waived the right to challenge the legal analysis of the

arbitration panel. The District Court also determined that in light of the considerable

deference owed by federal courts to the determinations of arbitration panels, there was no

basis for overturning the award in favor of CCI. We will affirm the judgment of the

District Court.

       Because we write only for the parties, we restrict our discussion to those facts and

legal principles necessary to the resolution of this appeal. The dispute between the parties

arises out of a March 10, 2000 Authorized Representative Agreement (the “Agreement)

between Nextel and CCI, under which CCI was authorized to solicit customers for

Nextel’s wireless telecommunications services. Nextel terminated the agreement on

September 10, 2001. Nextel cited as the basis for the termination the fact that CCI had

purportedly sent an advertisement bearing the Nextel trademark to a marketing target

without first obtaining the Nextel pre-approval required under the Agreement. CCI

initiated arbitration proceedings pursuant to the Agreement, and the arbitrators found in

favor of CCI. The arbitration panel determined that CCI had not violated the pre-

approval provisions contained in the Agreement, reasoning that the advertisement that

resulted in CCI’s termination was virtually identical to an earlier advertisement that had

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already been approved by Nextel, and that once approval for an advertisement had been

obtained, the Agreement did not require further approvals for continued use of the same

or substantially identical advertisements. The arbitration panel also awarded $601,112 in

damages to CCI, including lost profits from the period during which CCI would

presumably have continued to serve as Nextel’s marketing representative had it not been

improperly terminated by Nextel on September 10, 2001.

       CCI filed a motion seeking to confirm the arbitration award pursuant to the Federal

Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16. Nextel filed a response in opposition,

arguing that the arbitrators had exceeded their authority by ignoring applicable Virginia

law. The District Court rejected Nextel’s arguments and granted CCI’s motion to confirm

the award.

       Review of arbitration awards under the FAA is “extremely deferential.” Dluhos v.

Strasberg, 321 F.3d 365, 370 (3d Cir. 2003). Vacatur is appropriate only in “exceedingly

narrow” circumstances, such as where arbitrators are partial or corrupt, or where an

arbitration panel manifestly disregards, rather than merely erroneously interprets, the law.

See id.; Local 863 Int’l Bhd. of Teamsters v. Jersey Coast Egg Producers, Inc., 773 F.2d

530, 533 (3d Cir. 1985) (stating that error of law is insufficient basis for vacatur).

Likewise, an arbitrator’s “‘improvident, even silly, factfinding’ does not provide a basis

for a reviewing court to refuse to enforce the award.” Major League Umpires Assoc. v.

American League of Professional Baseball Clubs, 357 F.3d 272, 279-80 (3d Cir. 2004)



                                               3
(quoting Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001)).

       The deference we owe to the arbitration panel places a high hurdle before Nextel’s

challenge to the panel’s analysis. This hurdle becomes insurmountable for Nextel in light

of the language of the arbitration provision contained in the Agreement, in which Nextel

as a matter of contract further restricted its own right to challenge the arbitration panel’s

determinations. The arbitration clause indicates that disputes arising under the

Agreement “shall be resolved by binding arbitration” and that “[t]he decision of the

arbitrators shall be final and unreviewable for error of law or legal reasoning of any kind

and may be enforced in any court having jurisdiction of the parties.” We have held that a

settlement agreement containing similar language eliminates an arbitration participant’s

ability to challenge the arbitration panel’s legal determinations in federal court. See

Tabas v. Tabas, 47 F.3d 1280, 1288 (3d Cir. 1995). In the presence of such language, the

only permissible basis upon which a litigant may challenge the panel’s award is if the

litigant can show that the panel’s actions were influenced by “corruption, fraud, or

partiality,” or that the panel failed to provide a hearing to consider each party’s views

prior to issuing its decision. See id. Nextel has not alleged “corruption, fraud, or

partiality,” and it is clear from the record that the panel conducted hearings and provided

extensive additional process prior to issuing its decision. The language of the

Agreement’s arbitration clause thus forecloses the very arguments raised by Nextel in its

appeal.



                                               4
       Even if we were to consider the merits of Nextel’s assertion that the arbitration

panel exhibited “manifest disregard” for the law, we would still reject Nextel’s position.

With respect to the propriety of Nextel’s termination for cause, Nextel argues that the

arbitration panel ignored contractual language requiring CCI to obtain advance approval

for “any and all” advertisements bearing the Nextel mark. The arbitration panel did not

ignore this language; instead, it concluded that Nextel’s initial approval of an

advertisement conferred approval for use of the same or substantially similar

advertisements on a going forward basis. The arbitration panel based this finding on its

consideration of testimony provided by multiple witnesses concerning the manner in

which the parties to the Agreement had interpreted and applied the advertising approval

provisions on a day-to-day basis. Nextel’s disagreement with the panel’s assessment of

the competing evidence does not provide a basis for overturning the panel’s finding that

the disputed advertisement had indeed been approved by Nextel, and thus we will not

disturb the panel’s conclusion that Nextel was precluded from relying on CCI’s

distribution of the advertisement as the basis for terminating CCI “for cause.”

       With respect to the issue of damages, Nextel argues that Virginia law limits the

award of lost profits on a wrongful termination claim to the amount that would have

accrued to the terminated party during the notice period required under a contractual

provision permitting termination without cause. Nextel relied before the arbitration panel

on Newberry Condominium Unit v. Green Team, 1989 WL 646412 (Va. Cir. Ct. 1989), a



                                              5
Virginia trial court decision that has never been cited by a higher Virginia court. The

arbitration panel found Newberry inapposite, and held that the Virginia Supreme Court’s

decision in Arwood v. Hill’s Adm’r, 135 Va. 235, 117 S.E. 603 (1923), barred Nextel

from seeking to limit its damages by retroactively converting a termination for cause to a

termination without cause. The arbitration panel reasoned that Newberry was

distinguishable, in that the defendant in Newberry had cited the contract’s “without

cause” provision as an alternative basis for its termination of the plaintiff at the time the

termination occurred.

       Here, in contrast, the arbitration panel found that Nextel’s termination notice to

CCI relied solely upon the Agreement’s “for cause” termination provision. The panel

observed that the termination notice did not indicate to CCI that Nextel was, in the

alternative, providing thirty days notice and terminating CCI without cause, as

contemplated by the Agreement’s “without cause” termination provision. Nextel may

disagree with the approach reflected in the arbitration panel’s award decision, but it is

plain that the panel did not “manifestly disregard” Virginia law in connection with its

damages analysis. Moreover, any error attributable to the panel in terms of its treatment

of Newberry would be “an error of law or legal reasoning,” and the Agreement’s

arbitration provision bars Nextel from challenging the panel’s award on such grounds.

       We have considered Nextel’s other arguments in addition to those discussed

above, and find them to be without merit. We have also considered CCI’s motion for



                                               6
Rule 38 sanctions. While we have rejected Nextel’s challenge to the arbitration panel’s

award, we do not believe that Nextel’s position is so frivolous as to warrant imposition of

sanctions. The judgment of the District Court will be affirmed.




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