In Hill v. CAG2 of Tuscaloosa, LLC, No. 7:19-cv-02044-LSC, 2020 U.S. Dist. LEXIS 104442 (N.D. Ala. June 15, 2020), Judge Coogler held that a car dealer was stuck with an adverse arbitration award. The facts were as follows:

On January 9, 2019, Plaintiffs filed their Demand for Arbitration against Carlock, alleging violations of the Truth in Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”); wrongful repossession; conversion; violations of the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. (“ECOA”); breach of contract; negligence or wantonness; negligent hiring, supervision, and retention; and fraud, suppression, or misrepresentation. On November 14, 2019, a hearing was held before the Hon. R. Bernard Harwood, Jr. (“Arbitrator”). On November 27, 2019, the Arbitrator served a signed copy of the final arbitration award on the parties. The Arbitrator found that Carlock violated TILA and awarded Plaintiffs monetary relief as well as costs and attorney’s fees pursuant to 15 U.S.C. § 1640(a)(3). The Arbitrator’s total award against Carlock and in favor of Plaintiffs was $69,698.09, with $5,782.48 in monetary damages, $2,498.11 in costs, $500 in paralegal fees, and $60,917.50 in attorney fees.

The District Court held that the Defendant was stuck with the Award.

Carlock’s primary argument for vacatur in its six-page motion is that the award evinces a “manifest disregard for the law.” While Carlock does cite to 9 U.S.C. § 10(a) in passing, it does not explain or cite any authority for the argument that the Arbitrator “exceeded [his] powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter was not made.” Upon this Court’s independent review of the record, this Court concludes that the arbitration award does not fall into any of the categories listed in Section 10 or 11. Nothing in the record suggests a miscalculation of figures, corruption or fraud, partiality, or misbehavior by the Arbitrator. Moreover, although Carlock complains that the attorney fee award was grossly excessive, nothing in the record suggests to this Court that the Arbitrator exceeded his powers in formulating his award. It appears to the Court that the Arbitrator based the fee award on itemized submissions from Plaintiffs’ counsel and concluded that the fees sought were reasonable. In fact, the Arbitrator stated: “I do not find the hourly rate unreasonable and I have closely compared the two timesheets and detect no unreasonable time allocations for the services described, or any unnecessary duplication or overlap between the time entries for the two attorneys.” (Doc. 2-5 at 4.) The Arbitrator cannot be said to have “exceeded [his] powers[] or so imperfectly executed them” in making this attorney’s fee award. Accordingly, Carlock’s motion to vacate the arbitration award is due to be denied because the Eleventh Circuit does not recognize non-statutory grounds for vacating an arbitration award and because the award does not fall under one of the “narrow grounds upon which an award can be vacated, modified, or corrected.” As a result, Plaintiffs’ amended petition to confirm the arbitration award is also due to be granted.

The District Court also held that sanctions were appropriate.

Plaintiffs have also asked this Court to sanction Carlock for filing a groundless motion. In 2006, the Eleventh Circuit provided “notice and warning” that sanctions may result when losing parties assert unfounded challenges to arbitration awards. See B.L. Harbert Int’l, LLC v. Hercules Steel Co., 441 F.3d 905, 913-14 (11th Cir. 2006), abrogated on other grounds by Frazier, 604 F.3d at 1321. In Hercules Steel, the Eleventh Circuit made clear that it was “exasperated by those who attempt to salvage arbitration losses through litigation that has no sound basis in the law applicable to arbitration awards” and that these sanctions are grounded in “the purposes of the FAA and to protect arbitration as a remedy.” 441 F.3d at 914. The Eleventh Circuit has consistently held that these sanctions can be awarded in appropriate situations. See United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union AFL-CIO-CLC v. Wise Alloys, LLC, 807 F.3d 1258, 1275 (11th Cir. 2015); see also Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte Int’l GmbH, 783 F. App’x 972, 974 (11th Cir. 2019) (affirming an award of sanctions following a motion to vacate an arbitration award which “attacked the award in court without any real legal basis for doing so”); World Bus. Paradise, Inc. v. Suntrust Bank, 403 F. App’x 468, 471 (11th Cir. 2010).2 Here, Carlock appears to be trying to salvage an arbitration loss “through litigation that has no sound basis in the law applicable to arbitration awards,” given that Carlock based its motion on old case law that has been expressly overruled and made no meaningful attempt at explaining how Sections 10 or 11 might support its argument for vacatur. The case for sanctions is further strengthened when the Eleventh Circuit’s decisions in Hercules Steel and Suntrust Bank are considered. In Hercules Steel, the court considered but ultimately declined to impose sanctions for the filing of a frivolous motion to vacate. 441 F.3d at 914. The court reasoned that the party contesting the award had cited some legal authority, albeit weak, for its position; the opposing party never requested sanctions; and the contesting party “did not have the benefit of the ‘notice and warning’ that this opinion provides.” Id. In Suntrust Bank, an unpublished decision, the court found that sanctions were appropriate because the contesting party had failed to cite any controlling authority to support their position, failed to file a reply brief, and had “notice and warning” from the Hercules Steel opinion. Suntrust Bank, 403 F. App’x at 471. Here, the considerations from the aforementioned Eleventh Circuit decisions all weigh in favor of imposing sanctions. Carlock filed a six-page motion that cited no controlling authority, failed to respond to Plaintiffs’ request for sanctions, and had the “notice and warning” from the Hercules Steel opinion. Accordingly, the Court in its discretion determines  that an award of sanctions is appropriate in order to “protect arbitration as a remedy.” Hercules Steel, 441 F.3d at 914.