by Andrew Flake
When an arbitration award comes down, if the winning party moves first to confirm it, the challenging party needs to respond directly, rather than simply moving to vacate. In an Eleventh Circuit case of first impression, McLaurin v. Terminix, we see how the pest control company, in failing to understand this distinction, exterminated its own legal defense.
In McLaurin , the plaintiffs were two retired teachers in their seventies. Avid “birders,” they purchased their dream home on Dauphin Island in Alabama, intending to watch migrating birds. Unfortuntately, they watched as their house was torn down, having been eaten by termites after what the opinion calls “various sub-standard [Terminix] repairs.” An arbitration panel awarded them $2,767,900, and the plaintiffs moved quickly in the district court to confirm this award.
Party options after receiving an arbitration award include challenging the award, via a motion to vacate, or confirming the award, via a motion to confirm. Under the Federal Arbitration Act, a motion to vacate has a shorter fuse, of three months, as compared to the longer period for a motion to confirm, of a year. That will often mean it is the party challenging the award who makes the first strike, but not always.
Terminix, which had presumably been preparing its own motion to vacate, chose not to respond with any argument, filing a short, four-page brief with no substance, claiming that the motion to confirm was “premature.” It then filed its own separate motion to vacate, probably considering that this motion would double as its opposition to the motion to confirm.
But Terminix should have opposed the motion to confirm and filed its own motion to vacate. The standards and bases for the two types of motions are different. Especially in complicated commercial cases, the relief sought in a motion to confirm might not line up exactly with the relief sought in a motion to vacate; either could seek confirmation or be challenging some aspects, but not all, of an award. And a challenging party could be seeking to vacate the award, but it could also seek to modify or correct it.
Whatever the basis for challenge, a failure to move within the three-month deadline bars a party from later challenging a motion to confirm.
And that is exactly what happened. What Terminix must have viewed as a harmless pest, the early motion to confirm, bit back, and that bite was fatal: the district court granted the motion to confirm as unopposed, and struck the motion to vacate as untimely.
Parties who wish to oppose, or seek to modify or correct, an arbitration award need to do so by motion, within the three-month window and, if a motion to confirm is filed, oppose it clearly, separately, and substantively.
Was the District Court required to treat Terminix so strictly? No. But the result should have been avoidable, and as the Court of Appeals recognizes, district courts have a lot of discretion in how they manage their dockets and handle scheduling deadlines.
While acknowledging this discretion, Judge Brasher, writing for the Court, offered this suggested best practice:
We recommend that, when faced with a motion to confirm filed within three months of an arbitration
award, district courts enter a briefing schedule that sets simultaneous deadlines for
the losing party to file an opposition to the motion to confirm, if any, and to file a
motion to vacate, modify, or correct, if any. This practice will prevent similar
disputes from arising in the future.
In addition to counsel’s own vigilance, this is sensible case management advice that should help future parties avoid the same mousetrap.[The case is McLaurin et al. v. The Terminix Int’l Co., LP et al., Case No. 20-12904 (decided Sept. 17, 2021).]