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Odeon Capital Group LLC v. Ackerman

United States Court of Appeals, Second Circuit

July 21, 2017

ODEON CAPITAL GROUP LLC, MATHEW VAN ALSTYNE, EVAN SCHWARTZBERG, Petitioners-Appellants-Cross-Appellees,
v.
BRET ACKERMAN, Respondent-Appellee-Cross-Appellant.

          Argued: April 19, 2017

         Appeal and cross-appeal from the April 25, 2016 opinion and order of the United States District Court for the Southern District of New York (Rakoff, J.) denying petitioners' motion to amend their petition to vacate an arbitration award. Bret Ackerman worked as a bond trader for Odeon Capital Group before he was fired. He arbitrated a variety of claims arising out of his employment against Odeon and its principals, Mathew Van Alstyne and Evan Schwartzberg (collectively, "Odeon"). As is relevant to this appeal, the arbitrators awarded Ackerman $1, 102, 193.00 on his claim for unpaid wages.

         Odeon brought a petition to vacate the award, alleging the arbitrators engaged in misconduct and acted in manifest disregard of the law. It then sought to amend its petition to assert fraud as an additional ground for vacatur. Odeon alleged Ackerman committed perjury during the arbitration, and that the perjury so tainted the proceedings as to require vacatur. The district court disagreed, finding that even if Ackerman committed perjury, the perjury was not material to the arbitration panel's award.

         We hold that to vacate an arbitration award on the ground that the award was fraudulently procured, the petitioner must demonstrate the fraud was material to the award. That is, there must be a nexus between the alleged fraud and the decision made by the arbitrators. The petitioner, however, need not demonstrate that the arbitrators would have reached a different result. In this case, Odeon failed to establish that Ackerman's alleged perjury had any impact on the arbitration award. The district court therefore correctly denied the petition to vacate.

         The district court also denied Ackerman's request for attorneys' fees incurred in defending the arbitration award, and Ackerman cross-appeals from that denial. We agree with Ackerman that the district court applied the wrong legal standard in denying his fee request. The district court based its denial on the ground that the petition to vacate was not unjustified, such that the court's invocation of its inherent powers to make a fee award was unwarranted. However, New York law provides statutory authority for Ackerman's fee request. Where, as here, an employee prevails against an employer on a claim for unpaid wages, New York law mandates that the employee recover "all reasonable attorney[s'] fees." N.Y. Labor Law § 198(1-a). We therefore vacate the denial of attorneys' fees and remand for further proceedings consistent with this opinion.

         Affirmed in part, vacated and remanded in part.

          MARK D. KNOLL, Bressler, Amery & Ross, P.C. (Nikolas S. Komyati, on the brief), New York, NY, for Petitioners-Appellants-Cross-Appellees Odeon Capital Group LLC, Mathew Van Alstyne, and Evan Schwartzberg.

          JANIE BYALIK, Pashman Stein, Walder Hayden P.C. (Sean Mack, on the brief), Hackensack, NJ, for Respondent- Appellee-Cross-Appellant Bret Ackerman.

          Before: CALABRESI, POOLER, and WESLEY, Circuit Judges.

          POOLER, Circuit Judge:

         Bret Ackerman worked as a bond trader for Odeon Capital Group before he was fired. He arbitrated a variety of claims arising out of his employment against Odeon and its principals, Mathew Van Alstyne and Evan Schwartzberg (collectively, "Odeon"). As is relevant to this appeal, the arbitrators awarded Ackerman $1, 102, 193.00 on his claim for unpaid wages.

         Odeon brought a petition to vacate the award, alleging the arbitrators engaged in misconduct and acted in manifest disregard of the law. It then sought to amend its petition to assert fraud as an additional ground for vacatur. Odeon alleged Ackerman committed perjury during the arbitration, and that the perjury so tainted the proceedings as to require vacatur. The district court disagreed, finding that even if Ackerman committed perjury, the perjury was not material to the arbitration panel's award. Odeon appeals from the April 25, 2016 opinion and order of the United States District Court for the Southern District of New York (Rakoff, J.) denying its motion to amend, as well as its petition to vacate the award.

         We hold that to vacate an arbitration award on the ground that the award was fraudulently procured, the petitioner must demonstrate the fraud was material to the award. That is, there must be a nexus between the alleged fraud and the decision made by the arbitrators. The petitioner, however, need not demonstrate that the arbitrators would have reached a different result. In this case, Odeon failed to establish that Ackerman's alleged perjury had any impact on the arbitration award. The district court therefore correctly denied the petition to vacate.

         The district court also denied Ackerman's request for attorneys' fees incurred in defending the arbitration award, and Ackerman cross-appeals from that denial. We agree with Ackerman that the district court applied the wrong legal standard in denying his fees request. The district court based its denial on the ground that the petition to vacate was not unjustified, such that the court's invocation of its inherent powers to make a fees award was unwarranted. However, New York law provides statutory authority for Ackerman's fees request. Where, as here, an employee prevails against an employer on a claim for unpaid wages, New York law mandates that the employee recover "all ...


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