STATE OF MINNESOTA
IN COURT OF APPEALS
In the Matter of the Arbitration between:
Fredrikson & Byron, P.A., et al.,
Piper Jaffray Incorporated, et al.,
Filed February 2, 1999
Toussaint, Chief Judge
Hennepin County District Court
File No. 9720980
Lewis A. Remele, Jr., Christopher R. Morris, Bassford, Lockhart, Truesdell & Briggs, P.A., 3550 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for respondents)
Lawrence J. Field, Todd A. Noteboom, Leonard, Street and Deinard, 150 South Fifth Street, Suite 2300, Minneapolis, MN 55402 (for appellants)
Considered and decided by Toussaint, Chief Judge, Crippen, Judge, and Mulally, Judge.*
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
Appellants, Piper Jaffray Incorporated, et. al. (Piper), challenges a judgment confirming an arbitration award. Piper argues that (1) Minnesota should adopt the "manifest-disregard" standard of review as a basis for vacating an arbitration award; (2) the arbitration panel acted in manifest disregard of the law in awarding punitive and compensatory damages after respondent Fredrikson & Byron (Fredrikson) discovered the risks associated with its investment with Piper; and (3) this court should reverse the judgment because the award of punitive damages and rejection of an investor's duty to mitigate damages violates well-defined public policy. Because (1) we again decline to adopt the "manifest-disregard" standard of review; and (2) there are no grounds for vacating the arbitration award under the Minnesota Arbitration Act or the Federal Arbitration Act, we affirm.
An appeal from an arbitration award is subject to an extremely narrow standard of review. State Auditor v. Minnesota Ass'n of Prof'l Employees, 504 N.W.2d 751, 755 (Minn. 1993). An arbitration award may be vacated only on the grounds listed in the Minn. Stat. § 572.19, subd. 1 (1996). Hunter, Keith Indus. v. Piper Capital Mgmt. 575 N.W.2d 850, 854 (Minn. App. 1998). The grounds for vacating an award under the Federal Arbitration Act are similar. Id.; see 9 U.S.C. §10 (grounds for vacating).
Arbitrators are the final judges of both law and fact and their award will not be reviewed or set aside for mistake of either law or fact in the absence of fraud, mistake in applying their own theories, misconduct, or other disregard of duty. Cournoyer v. American Television & Radio Co., 249 Minn. 577, 580, 83 N.W.2d 409, 411 (1957). "This court must exercise 'every reasonable presumption' in favor of the award's finality and validity." Hunter, Keith, 575 N.W.2d at 854 (quoting state auditor, 504 N.W.2d at 754). When parties have availed themselves of the benefits of arbitration, judicial interference should be kept to a minimum. AFSCME Dist. Council 96 v. Independent Sch. Dist. No. 381, 351 N.W.2d 33, 35 (Minn. App. 1984).
Piper argues that this court should adopt the doctrine of manifest disregard as an additional basis for vacating an arbitration award. Earlier this year in Hunter, Keith, Piper urged this court to adopt this doctrine. In declining to adopt the doctrine, we reiterated that an arbitration award could only be vacated upon proof of one or more of the grounds for vacating found in the Minnesota Arbitration Act. Hunter, Keith, 575 N.W.2d at 854. Again, we decline to adopt the doctrine of manifest-disregard.
Piper also urges this court to vacate the arbitration award of punitive and compensatory damages for losses suffered after Fredrikson discovered the risks of its investment, claiming the award violates well-defined public policy. As we stated in Hunter, Keith, "Minnesota courts have not formally adopted the public policy exception" as a basis for vacating an arbitration award. Id. at 857. Therefore, Piper's asserted violations of public policy are not grounds for vacating the award.
Fredrikson requests that this court exercise its discretion to award attorney fees and costs associated with defending this appeal pursuant to Minn. R. Civ. App. P. 138, because of Piper's bad-faith refusal to pay the compensatory and punitive damage awards.
If an appeal delays proceedings on the judgment of the trial court and appears to have been merely for delay, the appellate court may award just damages and single or double costs to the respondent.
Minn. R. Civ. App. P. 138. "To award damages under rule 138, it must be apparent that the appeal was taken merely for delay." Sievert v. LaMarca, 367 N.W.2d 580, 590 (Minn. App. 1985) (citation omitted), review denied (Minn. July 17, 1985). Fredrikson argues that this appeal is a strategy undertaken by Piper to reap the financial benefit of using the money owed to Fredrikson's pension and profit-sharing plan, while Piper is only obligated to pay a modest 5% interest.
In response, Piper raises the same issues that were conclusively decided by this court in Hunter, Keith. Furthermore, it was Piper that requested postponement of the district court's ruling on Fredrikson's confirmation motion until this court decided Hunter, Keith. We conclude that Fredrikson is entitled to fees and costs incurred as a result of this appeal. Fredrikson shall serve and file documentation supporting their claim for fees and costs within 15 days after the filing of this opinion. Any response shall be served and filed within five days after service of Fredrikson's supporting documentation. This shall not affect the taxation of costs and disbursements, which is governed by Minn. R. Civ. App. P. 139.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.