IN RE: Daniel MICHALOW (2024)

Order, the Supreme Court, New York County (Andrew Borrok, J.), entered on or about May 15, 2023, which denied the petition to vacate a portion of an arbitration award denying petitioner's claims for certain post-termination compensation, unanimously affirmed, with costs.

The Arbitrators’ decision to deny petitioner's claim for his deferred compensation and profit interests following the termination of his employment from respondent D.E. Shaw & Co., L.P. does not violate public policy or evince a manifest disregard of the law (see Transparent Value, L.L.C. v. Johnson, 93 A.D.3d 599, 600–601, 941 N.Y.S.2d 96 [1st Dept. 2012]).  Petitioner has failed to identify a public policy embodied in statute or decisional law prohibiting the arbitrators, in an absolute sense, from enforcing the employment agreements underlying his compensation claims (Matter of Sprinzen [Nomberg], 46 N.Y.2d 623, 630, 415 N.Y.S.2d 974, 389 N.E.2d 456 [1979];  cf.  Denson v. Donald J. Trump for President, Inc., 180 A.D.3d 446, 450–451, 116 N.Y.S.3d 267 [1st Dept. 2020]).  Contrary to petitioner's position otherwise, the agreements at issue do not violate public policy by insulating D.E. Shaw from liability for future intentional wrongdoing (see e.g. Richardson v. Island Harvest, Ltd., 166 A.D.3d 827, 828, 89 N.Y.S.3d 92 [2d Dept. 2018]).  Rather, they condition the release of certain post-termination compensation on the execution of a general release that waives liability for claims that accrued by the time the release was signed.

We note that during the arbitration proceedings, petitioner requested a “non-reasoned” award rather than an explained or “reasoned” award.  We reject petitioner's argument that the arbitrators manifestly disregarded well-defined, explicit, and clearly applicable law, as there are colorable justifications for a finding that the compensation petitioner seeks is incentive compensation rather than earned wages under Labor Law § 190 (Roffler v. Spear, Leeds & Kellogg, 13 A.D.3d 308, 310, 788 N.Y.S.2d 326 [1st Dept. 2004];  see Matter of Anderson v. AHS [At Home Solutions, LLC], 200 A.D.3d 487, 487, 155 N.Y.S.3d 84 [1st Dept. 2021]).  In any event, even if the Arbitrators’ interpretation of the employment agreements was erroneous, a mere error in the law “does not equate to manifest disregard of the law” (Matter of Nexia Health Tech., Inc. v. Miratech, Inc., 176 A.D.3d 589, 591, 110 N.Y.S.3d 420 [1st Dept. 2019] [internal quotation marks omitted];  see also Wien & Malkin LLP v. Helmsley–Spear, Inc., 6 N.Y.3d 471, 480, 813 N.Y.S.2d 691, 846 N.E.2d 1201 [2006]).