V5 Investments, LLC v. GoWaiter Business Holdings, LLC

Citations: 210 F. Supp. 3d 1329; 2016 U.S. Dist. LEXIS 137788; 2016 WL 5417219Docket: Case No: 6:15-cv-2065-Orl-40KRS

Court: District Court, M.D. Florida; September 28, 2016; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The Court, presided over by Judge Paul G. Byron, addresses Plaintiffs' motion to vacate an arbitration award issued on November 24, 2015, in a franchise dispute involving V5 Investments, LLC (and its members Thomas and Laura Vooris) against Defendants GoWaiter Business Holdings, LLC and Tony Ceppaluni. The dispute arose after V5 entered into three franchise agreements with GWBH in 2013, leading to conflicts starting in early 2014. Given the mandatory arbitration clauses in the agreements, the parties submitted their disputes to arbitration, culminating in a final award favoring the Defendants.

Plaintiffs seek to vacate the award under the Federal Arbitration Act (FAA), which allows vacatur under four specific circumstances: corruption or fraud in obtaining the award, evident bias among arbitrators, misconduct affecting the hearing, or arbitrators exceeding their powers. The burden lies with the Plaintiffs to demonstrate that the award should be vacated, as there is a strong presumption in favor of upholding arbitration awards.

Plaintiffs argue for vacatur based on 9 U.S.C. 10(a)(1), claiming that Defendants improperly intercepted Mr. Vooris' emails, including confidential communications with legal counsel, which were then used to their advantage during arbitration. They assert that an administrative change made by Mr. Ceppaluni allowed him access to all emails sent to or from Mr. Vooris' franchise-related email account, thus severely prejudicing the Plaintiffs' position in the arbitration. The Court will confirm the arbitration award following its review of the arbitration record and the parties' motions.

To prove that an arbitration award was obtained through improper means, the complaining party must show that the alleged misconduct was not discoverable with due diligence before or during the arbitration. In this case, the Plaintiffs failed to demonstrate any such undue means, as they acknowledged discovering the alleged interception of emails prior to arbitration and included this issue in their Amended Statement of Claim. The arbitrator ruled in favor of the Defendants, determining that the email monitoring was consented to by Mr. Vooris upon accepting the terms of use.

The Plaintiffs' assertion that the arbitrator's decision was incorrect does not justify vacating the award, as courts do not review the merits or factual determinations of arbitration outcomes. Additionally, the Plaintiffs sought to vacate the award under 9 U.S.C. 10(a)(4), arguing that the arbitrator exceeded his authority by awarding damages based on the rebranding of GWBH from 'GoWaiter' to 'CitySpree.' However, a court must defer to the arbitrator's interpretation of the contract unless it contradicts the contract's plain language. The arbitrator concluded that the Plaintiffs breached the franchise agreements, awarding $380,000 in lost royalties, which aligns with the provision in the agreements allowing the arbitrator to award relief deemed appropriate. The arbitrator's interpretation did not contradict the terms of the contract and therefore stands.

In a breach of contract action, the objective is to restore the injured party to the position it would have occupied had the breach not occurred, thereby ensuring the aggrieved party receives the benefit of its bargain. The Court found no provisions in the franchise agreements that prohibit the awarding of expectation damages, affirming that the arbitrator acted within his authority by interpreting the agreements to allow such damages. The argument regarding GWBH’s rebranding from 'GoWaiter' to 'CitySpree' was deemed irrelevant, as the Plaintiffs remained legally bound by the franchise agreements, a point acknowledged by the arbitrator.

Regarding the confirmation of the arbitration award, the Federal Arbitration Act (FAA) allows a satisfied party to seek confirmation of an award within one year. The Court, having found no valid grounds to vacate, modify, or correct the award, confirmed it, as Defendants filed their cross-motion within the required timeframe. The Court denied Plaintiffs’ Amended Complaint for vacatur and granted Defendants’ motion for confirmation of the arbitrator's award dated November 24, 2015. Defendants were instructed to submit a proposed form of Judgment by October 6, 2016, with Plaintiffs given until October 13, 2016, to file any objections, which would be waived if not timely filed.

The Court determined that oral argument was unnecessary as the issues were sufficiently briefed by the parties. Although Plaintiffs claimed the arbitrator did not address all their concerns regarding alleged email interception and attorney-client privilege, the Court noted that these issues were addressed within the arbitrator’s finding that Mr. Vooris had consented to the email monitoring, thus waiving any applicable privilege.