FROM THE PULASKI COUNTY CIRCUIT COURT [NO. 60CV-15-469]
HONORABLE CHRISTOPHER CHARLES PIAZZA, JUDGE.
Cohen & Horan, PLC, by: Matthew T. Horan and Stephen C.
Smith, for appellant.
Ragon Owen, P.A., by: Dylan H. Potts and Danielle M.
Whitehouse, for appellees.
K. WOOD, Associate Justice.
case involves the registration of an arbitration award. In
deciding this appeal, we must address the following two
issues: (1) whether jurisdiction was proper under the Federal
Arbitration Act (FAA), and (2) whether the award should have
been vacated on public-policy grounds. We conclude the FAA
applied and the circuit court did not err in failing to
vacate the award on public-policy grounds. We affirm the
circuit court's order confirming the award.
appeal arises from a dispute submitted to arbitration. The
arbitrator established the following facts by a written
opinion. Joshua Kilgore and Robert Mullenax were business
partners in an Arkansas dental-management company, Senior
Dental Care, LLC (SDC).Kilgore left SDC in 2013. Kilgore signed
a settlement agreement, which included both a noncompete
clause and a nondisparagement clause. Kilgore and Mullenax
agreed to submit any disputes to arbitration in accord with
the rules of the American Arbitration Association (AAA).
after signing the noncompete, Kilgore bought an ownership
interest in a Tennessee company that was a direct competitor
with Mullenax. Accordingly, Mullenax filed an arbitration
claim to enforce the non-compete. In response, Kilgore filed
a claim with the Arkansas Insurance Department. He alleged
Mullenax was engaged in a kickback scheme. Mullenax spent
$7000 defending this unsubstantiated allegation.
underlying business dispute proceeded to arbitration. The
arbitrator first noted that under AAA rules, which the
parties agreed would govern the arbitration, the arbitrator
had the power to determine jurisdiction. The arbitrator
concluded the FAA applied because the agreement and its
prohibited activities involved interstate commerce. Turning
to the merits, the arbitrator found that Kilgore had violated
the noncompete, but did not award damages on that claim. The
arbitrator also found that Kilgore had violated the
nondisparagement clause by making his report to the Insurance
Department. The arbitrator noted that Kilgore's motive
for making the report was to gain an advantage in
arbitration. The arbitrator awarded Mullenax $7000 on this
claim. Later on, the arbitrator awarded Mullenax an
additional $136, 000 in attorney's fees, expert-witness
fees, and expenses.
filed a petition to enforce the award in circuit court. In
response, Kilgore filed a cross-petition to vacate the award.
First, he argued the arbitrator lacked the authority to hear
the case under either federal or Arkansas law. Second, he
argued his statements to the Insurance Department were
protected by Arkansas public policy. The circuit court
ultimately confirmed the award. Kilgore then appealed to the
court of appeals, which affirmed. See Kilgore v.
Mullenax, 2016 Ark.App. 143, 485 S.W.3d 705. We
subsequently accepted the case on petition for review. When
we grant a petition for review, we consider the appeal as
though it had been originally filed in this court.
Covenant Presbytery v. First Baptist Church, 2016
Ark. 138, 489 S.W.3d 153.
Principles of Law and Analysis
begin with, our standard of review for arbitration awards is
deferential. We have explained that the court's role is
limited to determining if the arbitrator acted within its
jurisdiction. Hart v. McChristian, 344 Ark. 656, 42
S.W.3d 552 (2001). State and federal courts have concurrent
jurisdiction to enforce an arbitration agreement pursuant to
the FAA. Ruth R. Remmel Revocable Trust v. Regions Fin.
Corp., 369 Ark. 392, 255 S.W.3d 453 (2007). The party
attempting to vacate the arbitration award has the burden of
proof. Anthony v. Kaplan, 324 Ark. 52, 58, 918
S.W.2d 174, 177 (1996). Judicial review of an
arbitrator's award is more limited than appellate review
of a trial court's decision. Ark. Dep't of Parks
& Tourism v. Resort Managers, Inc., 294 Ark. 255,
260, 743 S.W.2d 389, 391-92 (1988). Whenever possible, a
court must construe an award so as to uphold its validity,
and gross errors of judgment in law or a gross mistake of
fact will not serve to vitiate an award unless these mistakes
or errors are apparent on the face of the award. Id.
"The decision of the arbitration board on all questions
of law and fact is conclusive. . . . The court shall confirm
an award unless grounds are established to support vacating
or modifying the award." Dean Witter
Reynolds, Inc. v. Deislinger, 289 Ark. 248, 251, 711
S.W.2d 771, 772 (1986) (citing Wessell v. Crossett Public
Sch. Dist., 287 Ark. 415, 701 S.W.2d 99 (1985)).
the FAA apply?
parties' written agreement provided that the rules of the
AAA would apply to any future arbitration. AAA Rule 7
provides that "the arbitrator shall have the power to
rule on his or her own jurisdiction." AAA Commercial
Arbitration Rules (available at
http://www.adr.org/commercial). The arbitrator here
determined that jurisdiction was proper under the FAA. The
FAA covers arbitration disputes concerning transactions in
interstate commerce. 9 U.S.C. § 2.
"applies if the transaction involves interstate
commerce, even if the parties did not contemplate an
interstate commerce connection, and the language of the FAA
makes an arbitration provision enforceable in a contract
evidencing a transaction involving commerce to the limits of
Congress' Commerce Clause power." Gruma Corp. v.
Morrison, 2010 Ark. 151, at 8, 362 S.W.3d 898, 903
(internal quotation marks omitted). The United States Supreme
Court has noted that "Congress' Commerce Clause
power may be exercised in individual cases without showing
any specific effect upon interstate commerce if in the
aggregate the economic activity in question ...