SOUTHERN GLAZER WINE AND SPIRITS LLC v. MOD CHAMPAGNE LLC (2022)

The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 9, 10, 56 were read on this motion to/for CONFIRM/DISAPPROVE AWARD/REPORT.

Petitioner Southern Glazer's Wine and Spirits, LLC (“Southern”) brings this petition to confirm an arbitration award entered in favor of petitioner and against respondent MOD Champagne, LLC (“MOD”), pursuant to CPLR § 7510 and Federal Arbitration Act § 9 (9 U.S.C. § 9). Respondent opposes this petition and cross moves to vacate the arbitration award.

Upon the foregoing documents, it is ordered that the petition to confirm the November 15, 2021 arbitration award issued by JAMS arbitrator Vivian Shelanski, Esq. in favor of Southern Glazer's Wine and Spirits, LLC and against MOD Champagne, LLC is granted. It is ordered that respondent's cross motion to vacate the arbitration award is denied.

On March 29, 2018, the parties entered into a Master Distribution and Brokerage Agreement in which Southern was appointed as the exclusive distributor of certain products of MOD in designated territories. Under the agreement, Southern had certain marketing obligations and was required to place a “non-cancellable order for 4,000 cases” of MOD champagne (and its variants).

On October 15, 2019, in accordance with paragraph 12(b)(ii) of the agreement, Southern sent MOD a notice of termination, effective January 31, 2020. On February 5, 2020, Southern provided MOD with Southern's inventory of MOD products and Southern's laid-in costs. Southern demanded payment of the costs from MOD, citing § 13(c) of the agreement. MOD did not pay Southern. On March 27, 2020, Southern filed a Demand for Arbitration with JAMS. The principal claim is that MOD breached the agreement by failing to repurchase unsold inventory after Southern terminated the agreement. MOD filed an answer with counterclaims alleging that Southern had breached its own contractual obligations.

On November 15, 2021, finding that MOD breached its post-termination obligation under the agreement, the arbitrator ordered MOD to pay Southern the sum of $5,602,432.00, plus interest at the statutory rate from March 12, 2020 (i.e., 40 days after the effective date of the termination) to the date of payment. For the period from March 12, 2020 through August 30, 2021, the arbitrator determined the amount of the prejudgment interest is $486,142.22; the prejudgment interest shall continue to accrue at the statutory rate to the date of payment. Additionally, the arbitrator ordered MOD to pay Southern reasonable legal fees and expenses of $1,965,449.25 incurred in conjunction with the action. The arbitrator dismissed all of MOD's claims and counterclaims in their entirety.

“The scope of judicial review of an arbitration proceeding is extremely limited” and courts are “obligated to give deference to the decision of the arbitrator” (Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 NY3d 471, 479 [2006]). “To modify or vacate an award on the ground of manifest disregard of the law, a court must find ‘both that (1) the arbitrators knew of a governing legal principle yet refused to apply it or ignored it altogether, and (2) the law ignored by the arbitrators was well defined, explicit, and clearly applicable to the case” (id. at 481). “An arbitration award must be upheld when the arbitrator offer[s] even a barely colorable justification for the outcome reached” (id. at 479 [internal quotations omitted]).

First, MOD argues that the arbitrator manifestly disregarded the law and the facts. The record does not support respondent's assertion. The arbitration was thorough and included testimony from eight witnesses over the course of five days. In the final arbitration award, Arbitrator Shelanski provided a detailed recital of the facts and the parties’ arguments. She fully considered the arguments and applicable law and rendered a well-reasoned, 28-page decision. This court does not find a manifest disregard of the law by Arbitrator Shelanski.

Second, respondent accuses petitioner of interfering with the arbitrator's ability to render a fair award because petitioner continued to sell MOD's product after the termination of the contract. The record reveals that respondent requested a preliminary injunction on the post-termination sale of MOD products by Southern before the final award was rendered. In a detailed pre-hearing decision, the arbitrator denied respondent's request. There is no evidence that petitioner interfered with the arbitrator's ability to render a fair award. On the contrary, the arbitrator carefully considered these issues in her pre-hearing decision.

Finally, respondent accuses the arbitrator of lack of candor for failure to disclose a previous federal court decision criticizing her for bias. The publicly available federal court decision involved a different case and was published more than a year before the final award in this case was rendered. Neither the JAMS rules nor the ABA Code of Ethics for Arbitrators requires disclosure of such an opinion. MOD does not accuse the arbitrator of any bias or corruption related to the instant action. Accordingly, this court finds respondent's argument devoid of support.

Accordingly, it is

ADJUDGED that the petition is granted, and the award rendered in favor of petitioner and against respondent is confirmed; and it is further

ADJUDGED that petitioner Southern Glazer's Wine And Spirits, LLC, having an address at 1600 N.W. 163rd Street, Miami, Florida 33169, do recover from respondent MOD Champagne, LLC, having an address at 8700 Melrose Avenue, West Hollywood, CA 90069, the amount of $5,602,432.00, plus prejudgment interest in the amount of $486,142.22 through August 30, 2021, plus interest continuing to accrue at the Florida statutory rate from August 31, 2021 until the date of judgment in the amount of $_ (304 days at the daily Florida rate of 4.25% from August 30, 2021 through June 30, 2022 ($652.34 per day) plus _ days at the daily Florida rate of 4.34% from July 1, 2022 through entry of Judgment ($666.15 per day), and $1,965,449.25 in legal fees, and costs for the total amount of $_, and that the petitioner have execution therefor.

Robert R. Reed, J.