Arbitration
Arbitration Generally
Except as indicated, all indented material is copied directly from the court’s opinion.
Decisions of the Tennessee Supreme Court
Decisions of the Tennessee Court of Appeals
CIC Services, LLC v. Prabhu, No. W2022-01431-COA-R3-CV, p. 6-8 (Tenn. Ct. App. Sept. 18, 2023).
Our Supreme Court has explained the deferential standard of review that should be used by this Court in reviewing a trial court’s decision to confirm an arbitration award:
Judicial review of arbitration decisions is statutorily limited, and any judicial review must be conducted within those limits. Nevertheless, the standard of review to be used by the intermediate court in reviewing a trial court’s decision that refuses to vacate, or confirms, an arbitrator’s award is an issue. Most of these controversies will be determined by the facts, and the intermediate court should accept those facts as found unless clearly erroneous. First Options of Chicago[, Inc. v. Kaplan], 514 U.S. [938, 947- 8], 115 S. Ct.[1920,] 1926 .
Matters of law, if not able to be resolved by resort to the controlling statutes, should be considered independently, with the utmost caution, and in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution.5
Arnold v. Morgan Keegan & Co., 914 S.W.2d 445, 450 (Tenn. 1996).
To the extent that our opinion in Arnold can be read to adopt a standard of review of issues of law other than de novo, we take this opportunity to clarify our holding. We adopt the statement of the United States Supreme Court in First Options of Chicago, Inc. [v. Kaplan, 514 U.S. 938, 948 (1995)] that “ordinary, not special, standards” of appellate review should apply in arbitration cases and that appellate courts need not “give extra leeway to district courts that uphold arbitrators.”
In adopting this deferential standard, the Arnold Court reasoned that “[o]nce an arbitration award is entered, the finality that courts should afford the arbitration process weighs heavily in favor of the award.” Id. (quoting State ex rel. Hooten Constr. Co. v. Borsberry Constr. Co., 769 P.2d 726, 727 (N.M. 1989)). “Courts are justified in exercising great caution when asked to set aside an arbitration award, which is the product of the theoretically informal, speedy and inexpensive process of arbitration, freely chosen by the parties.” Id.
When, as here, the parties have contracted to be bound in arbitration proceedings by the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (2002) (the “FAA”), “Section [Ten] of the FAA provides the exclusive grounds for vacating an arbitration award.”6 See Thomas Builders, Inc. v. CKF Excavating, LLC, No. M2021-00843-COA-R3-CV, 2023 WL 3792712, at *4 (Tenn. Ct. App. June 2, 2023) (citing Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 586 (2008); Grain v. Trinity Health, Mercy Health Servs. Inc., 551 F.3d 374, 378 (6th Cir. 2008)). Section Ten of the FAA, codified at 9 U.S.C. § 10, provides that a court may vacate an arbitration award only in the following circumstances:
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(1) where the award was procured by corruption, fraud, or undue means;
- (2) where there was evident partiality or corruption in the arbitrators, or either of them;
- (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
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(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
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9 U.S.C. § 10 (a). The burden of proof required of the movant who seeks vacatur of an arbitration award pursuant to this section “is very great.” Thomas Builders, 2023 WL 3792712, at *4 (quoting Federated Dep’t Stores, Inc. v. J.V.B. Indus., Inc., 894 F.2d 862, 866 (6th Cir. 1990)).
Williams v Smyrna Residential, LLC, No. M2021-00927-COA-R3-CV, p. 5 (Tenn. Ct. App. Apr. 8, 2022).
In Trigg v. Little Six Corp., a case involving a Tennessee Rule of Appellate Procedure 9 interlocutory appeal of a trial court’s decision on a motion to compel arbitration, this Court articulated the standard of review for a trial court’s grant or denial of a motion to compel arbitration as follows:
Our review of a trial court’s grant or denial of a motion to compel arbitration is governed by the same standards that apply to a bench trial. Mitchell v. Kindred Healthcare Operating, Inc., 349 S.W.3d 492, 496 (Tenn. Ct. App. 2008). As we observed in Rosenberg v. BlueCross BlueShield of Tenn., Inc., 219 S.W.3d 892, 903-04 (Tenn. Ct. App. 2006),
[a]s a general rule, a court’s enforcement of an arbitration provision is reviewed de novo. See Cooper v. MRM Inv. Co., 367 F.3d 493, 497 (6th Cir. 2004). A trial court’s order on a motion to compel arbitration addresses itself primarily to the application of contract law. We review such an order with no presumption of correctness on appeal. See Pyburn v. Bill Heard Chevrolet, 63 S.W.3d 351, 356 (Tenn. Ct. App. 2001); see also Nelson v. Wal-Mart Stores, Inc., 8 S.W.3d 625, 629 (Tenn. 1999). However, to the extent that findings of fact are necessary concerning the “cost-prohibitive” nature of the arbitration sought, these findings come to us with a presumption of correctness absent a preponderance of evidence to the contrary. Tenn. R. App. P. 13(d); T.R. Mills Contractors v. WRH Enterprises, LLC et al., 93 S.W.3d 861, 864 (Tenn. Ct. App. 2002).
Trigg v. Little Six Corp. 457 S.W.3d 906, 911 (Tenn. Ct. App. 2014). There are no disputed facts relevant to the issues on appeal. The appeal at bar presents purely legal questions, which we review de novo without a presumption of correctness.
