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Prime Pork, LLC v. NBO3 Technologies, LLC

United States District Court, D. Minnesota

December 13, 2019

Prime Pork, LLC, Plaintiff,
v.
NBO3 Technologies, LLC, and H3 Enterprises, LLC, Defendants.

          ORDER CONFIRMING ARBITRATION AWARD

          WILHELMINA M. WRIGHT UNITED STATES DISTRICT JUDGE

         In this contract dispute between Petitioner Prime Pork, LLC (Prime Pork), and Respondents NBO3 Technologies, LLC (NBO3), and H3 Enterprises, LLC (H3), Prime Pork petitions this Court to confirm an arbitration award against Respondents. (Dkt. 1.) H3 opposes the confirmation of the arbitration award as against it, asserting that the arbitration award imposes no liability on H3. (Dkt. 16.) NBO3 separately moves to partially vacate the arbitration award as against it. (Dkt. 23.) For the reasons addressed below, NBO3's motion to partially vacate the arbitration award as against it is denied and the arbitration award is confirmed as against NBO3.

         BACKGROUND

         Prime Pork is a Minnesota limited liability company that owns and operates a meat packing plant in Windom, Minnesota. NBO3 and H3 are Kansas limited liability companies. In September 2016, Prime Pork entered into a Joint Marketing and Distribution Agreement (the Agreement) with NBO3 and H3 for the sale and marketing of the meat produced by Prime Pork. The terms of the Agreement include, among other things, Prime Pork's utilization of NBO3's Omega-3 enriched feed system to produce higher quality pork products. The Agreement also includes an arbitration clause, which provides that any dispute arising out of the Agreement must be submitted to binding arbitration.

         After Prime Pork terminated the Agreement in May 2018, NBO3 commenced arbitration against Prime Pork for breach of contract. Prime Pork filed an answer and counterclaim against NBO3 and asserted third-party claims against H3. The arbitrator[1]conducted an 8-day arbitration hearing in November and December 2018. On March 28, 2019, the arbitrator issued a 25-page written arbitration award that resolved all claims and counterclaims, resulting in a net award to Prime Pork of $1, 915, 120. Prime Pork subsequently commenced this action seeking confirmation of the arbitration award as against both NBO3 and H3. In response, H3 opposes confirmation of the arbitration award as against it. And NBO3 separately moves to partially vacate the arbitration award as against it.

         ANALYSIS

         The Federal Arbitration Act (FAA) provides that a district court must confirm an arbitration award unless the award is vacated, modified, or corrected as permitted by the FAA. 9 U.S.C. § 9. A district court may vacate an arbitration award if the award was procured by corruption, fraud, or undue means; if there was evident partiality, corruption, or misconduct on the part of the arbitrator; or if the arbitrator exceeded his or her authority. 9 U.S.C. § 10. A district court may modify or correct an arbitration award if there was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award; if the arbitrator made an award on a matter that was not submitted to the arbitrator; or if the award “is imperfect in matter of form not affecting the merits of the controversy.” 9 U.S.C. § 11.

         These bases are the exclusive grounds for vacating, modifying, or correcting an arbitration award under the FAA's expedited confirmation procedure. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 584 (2008). A district court lacks the authority to reconsider the merits of an arbitration award. Med. Shoppe Int'l, Inc. v. Turner Inv., Inc., 614 F.3d 485, 488 (8th Cir. 2010). Rather, courts must give the arbitrator's decisions “an extraordinary level of deference” and should confirm the award as long as the arbitrator is “even arguably construing or applying the contract and acting within the scope of [the arbitrator's] authority.” Crawford Grp., Inc. v. Holekamp, 543 F.3d 971, 976 (8th Cir. 2008) (internal quotation marks omitted); see also Bhd. of Maint. of Way Emps. v. Terminal R.R. Ass'n, 307 F.3d 737, 739 (8th Cir. 2002) (observing that the “scope of review of the arbitration award itself is among the narrowest known to the law”).

         I. NBO3's Motion to Partially Vacate the Arbitration Award

         NBO3 moves to partially vacate the arbitration award, arguing that the arbitrator exceeded his authority by denying NBO3's claims for breach of the Agreement and misappropriation of confidential information. Prime Pork counters that the arbitrator acted within the scope of his authority, applied the plain language of the Agreement, and provided a reasoned basis for his award.

         In support of its motion, NBO3 relies on Section 10(a)(4) of the FAA, which provides that an arbitration award may be vacated if the arbitrator “exceeded [his or her] powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a)(4). A party seeking relief under Section 10(a)(4) has a heavy burden. Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 569 (2013). “It is not enough . . . to show that the [arbitrator] committed an error- or even a serious error, ” because “an arbitral decision even arguably construing or applying the contract must stand, regardless of a court's view of its (de)merits.” Id. (internal quotation marks omitted) (alterations in original). For these reasons, the only question to be decided by a court “is whether the arbitrator (even arguably) interpreted the parties' contract, not whether [the arbitrator] got its meaning right or wrong.” Id. Because, unlike adjudication, arbitration “is designed primarily to avoid the complex, time-consuming and costly alternative of litigation, ” parties that choose to submit their disputes to arbitration relinquish some of the “controls and safeguards” of litigation. Hoffman v. Cargill Inc., 236 F.3d 458, 462-63 (8th Cir. 2001).

         NBO3 first argues that, although the arbitration award addresses certain categories of allegedly confidential information-namely, “the concept of selling omega-3-enhanced pork” and NBO3's “customer information”-the arbitrator failed to analyze other categories of allegedly confidential information, such as “information related to the creation of omega-3-enhanced pork.” But an arbitrator is not required to elaborate the reasoning in support of an award. El Dorado Sch. Dist. No. 15 v. Cont'l Cas. Co., 247 F.3d 843, 847 (8th Cir. 2001) (rejecting argument that arbitrator's failure to make “an express finding of fact” as to a particular issue warranted vacating the arbitration award). Here, after acknowledging that NBO3's claims allege misappropriation of “trade secrets and confidential information in violation of the provisions of Article V of the Agreement, ” the arbitration award analyzes NBO3's allegations and arguments and concludes that “NBO3 has not identified any alleged trade secret that Prime Pork would be using by selling Omega-3 enriched pork.” The arbitration award clearly demonstrates that the arbitrator construed and applied the Agreement when rendering his decision.

         Notably, the arbitrator concluded that NBO3 had “not identified any alleged trade secret” being misappropriated. (Emphasis added.) The breadth of this conclusion establishes that the arbitrator considered all categories of allegedly confidential information, not only those categories of information expressly discussed in the arbitration award. NBO3 has not satisfied its burden to establish that vacating the arbitration award is warranted on this basis.

         NBO3 next argues that, while the arbitrator was required to issue a “reasoned award, ” the arbitrator exceeded his authority by not expressly analyzing the allegedly confidential information pertaining to the creation of omega-3-enhanced pork. It is true that the arbitrator's preliminary hearing and scheduling order provides that “[t]he Arbitrator shall issue a reasoned award.” NBO3 cites no legal authority from the Eighth Circuit as to what constitutes a “reasoned ...


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