Tourmaline Partners, LLC v. Williams Trading, LLC
Tourmaline Partners, LLC v. Williams Trading, LLC
2023 WL 8058430 (Conn. Super. Ct. 2023)
November 14, 2023
Povodator, Kenneth B., Judge
Summary
The court denied the defendant's challenge to the reimbursement of expenses in an arbitration proceeding, finding no evidence of fraud or material misstatement in the plaintiff's submission of Electronically Stored Information. The court was highly deferential to the decision of the arbitration panel and found no basis to vacate the award.
Note: This is an unpublished decision. Check your jurisdiction’s rules about citing unpublished decisions before citing this case to a court.
TOURMALINE PARTNERS, LLC
v.
WILLIAMS TRADING, LLC
v.
WILLIAMS TRADING, LLC
FSTCV236061612S
Superior Court of Connecticut, JUDICIAL DISTRICT OF STAMFORD/NORWALK. AT STAMFORD
November 14, 2023
Povodator, Kenneth B., Judge
MEMORANDUM OF DECISION re: CROSS-APPLICATIONS TO CONFIRM AND VACATE ARBITRATION AWARD (#100.31 and #102.00)
UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING.
Background
*1 The parties have filed cross-applications relating to an arbitration award; the plaintiff (the party initiating this action) has filed an application to confirm the award. The defendants have filed their own application to vacate the arbitration award as well as an objection to the plaintiff's application to confirm.
The plaintiff asserts that confirmation is appropriate, pursuant to General Statutes § 52-407vv, a provision in the uniform act recently adopted in Connecticut. The defendants invoke the Federal Arbitration Act (9 U.S.C. § 10 (a)) as well as the older version of the Connecticut statutes applicable to arbitration (General Statutes § 52-418 et seq.), not fully superseded by the uniform act-as adopted in Connecticut. As far as the court can determine, the parties do not identify any aspect of this case that depends upon which Connecticut statutory framework is applicable.
Somewhat unusually (or at least unusual from the court's perspective), the dispute at this stage does not implicate the merits of the underlying disputes between the parties. The record as reported to the court is that the underlying arbitration was commenced by the defendants on or about May 27, 2020; the plaintiff filed a counterclaim in the arbitration proceeding on or about July 31, 2020. The arbitration was conducted by way of FINRA Dispute Resolution Services, pursuant to an agreement of the parties (Exhibit B to plaintiff's application, #100.31).[1]
The Award (decision) of the arbitration panel, as to the merits of the disputes, was a denial of any substantive relief to the plaintiff and to the defendants. There was a substantial award of costs and expenses (reimbursement) to the plaintiff. The plaintiff was awarded $702,724.36 (explicitly stated not to be an award on the plaintiff's counterclaim which had been dismissed/denied on the merits).
There was an additional award of fees, primarily declared to be the responsibility of the defendants. The defendants do not appear to be contesting the award of those fees.
The plaintiff's application seeks confirmation of the award, without qualification; it has not sought partial correction or modification or an order vacating the award in part. The defendants’ application appears to be addressed solely to the award of reimbursement of costs, payable by the defendants. More specifically, the defendants contend that the plaintiff submitted false/fraudulent information to the panel relating to the awarded costs, which undermined the reliability/validity of the award based on that submission.
The parties submitted affirmative requests for relief as well as objections to the adversaries’ submissions. The court denied the defendants’ request for discovery.
The court heard argument on the cross applications on July 11, 2023.
Legal Standards
“Because we favor arbitration as a means of settling private disputes, we undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution. ... Furthermore, in applying this general rule of deference to an arbitrator's award, [e]very reasonable presumption and intendment will be made in favor of the [arbitration] award and of the arbitrators’ acts and proceedings. Judicial review of [arbitration] decisions is narrowly confined. ... When the parties agree to arbitration and establish the authority of the arbitrator through the terms of their submission, the extent of our judicial review of the award is delineated by the scope of the parties’ [arbitration] agreement. This is because [a]rbitration is a creature of contract and the parties themselves, by the terms of their submission, define the powers of the arbitrators.*2 “The standard of review in this context depends on whether the submission to the arbitrator is restricted or unrestricted. A restricted submission, which expressly restrict[s] the breadth of the issues [to be resolved by the arbitrator], reserv[es] explicit rights, or condition[s] the award on court review, is subject to de novo review. The arbitrator's award in an unrestricted submission, by contrast, is considered final and binding; thus the courts will not review the ... award for errors of law or fact. Where the submission does not otherwise state, the arbitrators are empowered to decide factual and legal questions and an award cannot be vacated on the grounds that ... the interpretation of the agreement by the arbitrators was erroneous. Courts will not review the evidence nor, where the submission is unrestricted, will they review the arbitrators’ decision of the legal questions involved.” (Internal quotation marks and citations, omitted.) Blondeau v. Baltierra, 337 Conn. 127, 152–54, 252 A.3d 317, 336–37 (2020).“The plaintiff next argues that the defendant submitted a fraudulent document to the arbitrator, and therefore, the award should be vacated under § 52-418(a)(1)....“The general rule is that the elements of a fraud action are: (1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the other party relied on the statement to his detriment. ‘A petitioner seeking to vacate an award on the ground of fraud must plead that (1) respondent engaged in fraudulent activity; (2) even with the exercise of due diligence, petitioner could not have discovered the fraud prior to the award issuing; and (3) the fraud materially related to an issue in the arbitration.’ Odeon Capital Group, LLC v. Ackerman, 864 F.3d 191, 196 (2d Cir. 2017) (holding that alleged fraud did not procure arbitration award when award was decided on grounds other than alleged fraudulent information and award made no indication that award was based on this information). Furthermore, [for fraud to be material [to the arbitration award] ... petitioner must demonstrate a nexus between the alleged fraud and the decisions made by the arbitrators ...” (Internal quotation marks and citation, omitted.) Arvys Protein, Inc. v. A/F Protein, Inc., No. CV206100673S, 2021 WL 2593894, at *7 (Conn. Super. Ct. June 7, 2021).
Discussion
As set forth above, the court is not being asked to review any aspect of the decision on the merits of the parties’ substantive claims against each other – with a decision denying any affirmative relief. Rather, the defendants focus solely on the submissions relating to reimbursement of costs alleged to have been incurred by the plaintiff and for which relief was awarded by the arbitrators.
As something of a required threshold matter, the court notes that the parties do not appear to address the restricted vs. unrestricted nature of the submission. Absent an affirmative identification of a basis to treat the submission as restricted (with specific identification of the nature of any restrictions), the court is proceeding on the assumption that this was an unrestricted submission. (The parties do not appear to have identified any condition that might be considered a restriction on the authority of the arbitrators, and in any event, the claim of fraud would seem to be independent of the restricted-unrestricted dichotomy.)
The defendants focus on their claim that there were falsehoods in the plaintiff's submission to the arbitrators relating to the claims for reimbursement, the claims at issue here. The defendants do not address whether any or all of the claimed falsehoods – if actually false – might have been innocent or negligent, and as discussed below, there is scant attention to whether the claimed falsehoods were material. Instead, any perceived disparity or unusual aspect of a claim is – from the defendants’ perspective – presumptively an act of fraud.
*3 To be sure, falsity requires that a statement made as if it were true, in reality, must not be true. Even then, certain errors are in the category of “typos” or otherwise obvious misstatements;[2] while perhaps technically capable of being weeded out by other criteria, such obvious diversions from facts should not require detailed analysis. On the other end of the spectrum, there are statements that are made that are ultimately opinion-based, even if facially presented as factual. Some statements are effectively hybrids – an attorney's fee bill may be factual as to what was billed but is implicitly a judgment-call as to whether it is reasonable.
The plaintiff's response to the defendant's position – both in terms of the defendant's objection to the plaintiff's request for confirmation of the award as well as the defendant's affirmative request for the award to be vacated – emphasizes the culpability of the defendant. The defendant had essentially all of the information upon which it relies, at the time the plaintiff requested reimbursement for fees and expenses from the arbitrators – and to the extent that the defendant claims it needs more information to flesh out its claims, it apparently made no such claim to the arbitrators. None of the issues claimed in the submissions to this court appear to have been presented to the arbitrators, and there is no claim that the claimed misdeeds of the plaintiff were not equally apparent – if the submissions to the arbitrators had been examined prior to the award reimbursing certain fees and expenses claimed by the plaintiff. There is no plausible or credible reason advanced for the failure to identify the problems presented to this court prior to the arbitration award as to reimbursement, why these issues were not (could not have been) presented to the arbitrators prior to the award (or potentially on a post-award-issuance basis).
The defendants emphasize what they perceive to be an excessive statement of the data stored or processed (in terms of gigabytes). It is not clear whether this is an example of innumeracy or hoped-for reliance on possible innumeracy of the court. A major focus of the defendant's argument is on an entry for 937,557.00 GB – described as “TIFF for Production.” The court understands that that is a large number – but of what?
The defendants’ discussion of file-sizes, and the claim that all of Shakespeare's works can be stored on 5MB of disk space, is an interesting anecdotal factoid – assuming it to be accurate – but lacks context. As of the initial writing of this paragraph, this court had just submitted a decision on a motion to dismiss. Prior to being signed, it was a 12-page document; as a Word document (docx) file stored on the undersigned's computer, it took up 37KB of disk space. As a test, the document was saved (via Word) as a text document; the file size was 22KB. After the document was printed and signed, it was scanned, for the purpose of uploading for e-filing; the file size of the resulting pdf was approximately 1060 KB – essentially, 1 MB. Using OCR software to make the pdf document searchable increased the size of the file to over 1100KB. Again, as a test, using Word to save the document as a pdf (before printing on red-lined paper and signing and then scanning), resulted in a file size of 177KB. What is the appropriate measure of the size of that document – when there is a factor of 50 between the smallest and largest file sizes, based on the foregoing actual and test file formats?
*4 The defendants refer to “TIFF for Production” and “tiffing” in their submission, an undefined term in the context of this dispute. (The court assumes that it does not refer to quarrelling or engaging in a minor dispute, the ordinary definition/meaning of the term “tiffing.”) The court is aware that TIFF (or sometimes TIF) is a file format for images – are the defendants referring to a process whereby files are converted to TIFF format? On the assumption that that might be the meaning intended, the court converted the pdf described above, into TIFF format. That process transformed a file of approximately 1MB in size into a file of more than 23MB. The factor of 50, recited in the preceding paragraph, grew to a factor of 1000 when the possibility of a TIFF format was added to the mix. Extrapolating from this figure, 1GB of file storage might reasonably reflect approximately 500 pages of scanned documents.[3]
This focuses on 937,557.00 GB as if it were file storage – but it is a figure ascribed to some form of process (especially given the defendant's use of the verb-derived term “tiffing”). There is a separate entry for what appears to be the equivalent of file storage – data hosting, in the amount of 7,684 GB (rounded off) – but that is less than 0.1% of the “TIFF for Production” figure. Comparing the defendant's own storage/hosting to an undefined process – also part of the defendant's argument – provides no illumination as to whether 937,557.00 GB is an accurate figure or some form of misstatement.
A distinction that will be repeated throughout this decision with minor variations – the issue is not the reasonableness of 937,557.00 GB for some undefined process. The defendant is claiming fraud, such that unless the claim is that the plaintiff fabricated a bill reflecting a service involving 937,557.00 GB, or that the plaintiff fabricated its claim that it paid for a service involving 937,557.00 GB, the existence of the figure 937,557.00 GB as a basis for a charge does not seem to have any bearing on a claim of fraud. If $18,751.14 was an excessive amount to have paid for “TIFF for Production” or “tiffing,” that is an issue that should have been presented to the arbitrators on the merits; there is no basis to convert that into a claim of fraud.
As the plaintiff observed, the defendants raised no questions about the documentation submitted to the arbitrators until after the award relating to costs and fees had been issued. If the affidavit upon which the arbitrators presumably relied had what is now claimed to be an unreasonable if not impossible report of data storage/processing, that is something that could have been identified and pursued prior to the decision.
Of course, this is far from determinative of anything; at best, secondary if not less significant. The arbitrators did not award costs on a per-KB or per-MB or per-TB basis such that the actual aggregate size of files being stored or processed was not directly being addressed by the award. The award of expenses was on a reimbursement basis; as confirmed by a submission to this court, the arbitrators ordered reimbursement for actually-incurred/paid expenses for technical services associated with data storage and management and processing.
*5 If, in its submission to the arbitrators, the plaintiff provided erroneous information as to the aggregate size of the materials handled by the contractor, that would go to the ability to verify the amounts charged by way of backup information. There is no basis to dispute whether the amounts ordered to be paid by the defendants as expenses/costs were actually paid by the plaintiff – and the plaintiff has submitted proof that such amounts were paid. There is no suggestion that the defendants thought anything was amiss based on the total dollar amount being sought for reimbursement, whether measured against the costs incurred by the defendants for similar services or simply based on the dollar magnitude.
At the risk of beating a dead horse, the discussion of 937,557.00 GB may not even be material. That figure is associated with a $0.02 charge (2 cents) per GB – doing the multiplication, as reflected on the claim for reimbursement, the total cost being claimed was $18,751.14. That is under 4% of the entire amount of reimbursement sought relating to Trust Point services. Unless the services for which the plaintiff was charged did not occur at all, how much is the defendant claiming that the plaintiff inflated the actual number of units of service (in terms of GB) that had been provided?
This is not the only aspect of the award challenged by the defendant, after issuance of the award (resulting from having “more closely scrutinized” the affidavit that had been submitted by the plaintiff to the arbitrators (¶ 19 of #102.00[4])). The affidavit of attorney Jordan is the focus of the defendant's arguments, as recited in ¶ 17 of #102.00:
“The arbitration panel was explicit in that its award was for costs derived exactly from the amounts stated in the Attorney Affidavits. These amounts are identical to the costs claimed in Ms. Jordan's Attorney Affidavit ....”
The figures awarded, as relevant to this dispute, are set forth in ¶ 16 of that submission, where the defendant quotes what it characterizes as the “relevant part” of the award:
“Claimants are jointly and severally liable for and shall pay Respondent the sum of $702,724.36 in costs. This is not an award for Respondents Counterclaim, which the Panel dismissed but because all of Claimants’ claims were either dismissed during the arbitration or are denied herein. The Panel determined that the following costs should be awarded to the Respondent: Trustpoint (the electronic discovery vendor) $499,277.90; AVIVA (the audio visual vendor) $25,096.58; TSG (the court reporter) $124,296.39; TransPerfect (printing and reproductive services) $10,206.49; and Immersion (legal graphics) $43,847.00.”
Paragraph 21 of the submission states that the affidavit recited “unreasonable fees and costs supposedly incurred.” For some inexplicable reason, the first identified “unreasonable [fee] and [cost] supposedly incurred” is a reference to “well over six million dollars in attorney fees alone” – but there was no award of that amount and there is no claim that any amount of legal fees was ordered reimbursed by the order being challenged. The language “supposedly incurred” is consistent with the claim of fraud being asserted; “unreasonable” fees and costs, if actually incurred, would not seem to be relevant to a claim of fraud.
Returning to the specifics of the charges challenged by the defendant, it claims that it received less than 200 GB of data (¶ 30); it then uses that figure to establish its claim that “this statement in Ms. Jordan's Attorney Affidavit is untrue.” If that is a comparison with 937,557.00 GB recited in the previous paragraph of the submission – the only obvious antecedent for “this statement ... is untrue” – then the court has already more-than-adequately explained why there is no basis for any comparison of that nature. If the antecedent was intended to be the plaintiff's own storage/hosting, the figures would not be comparable, at least presumptively, as the plaintiff's hosting may have included data not deemed proper for disclosure and/or duplicative content (two obvious reasons why direct comparison would be unremarkable). There is no reasonable basis for jumping from a claimed disparity in fees and storage, to a claim of fraud – unless the plaintiff has fabricated the payments it made (and subsequently documented).
*6 The defendant argues that there was overlap with another arbitration (“Manaster”). Paragraph 22 of the affidavit identifies the existence of overlap, and reports that there is no practical means of allocation – concluding with a statement that the affiant understands that the fees charged by TrustPoint would be the same, with or without the Manaster work done by TrustPoint. Where is the fraud or misstatement in this regard, when there appears to have been full disclosure to the arbitrators? Unless the defendants have reason to believe that the plaintiff was told that the services were separately allocatable despite the representation to the contrary, there is no apparent misstatement that has been identified.
Further, the details of billing and services rendered would not have been required for the defendant to have challenged that aspect of the claim, before the arbitrators issued their decision. The defendants presumably could have challenged the entirety of the unallocated claim precisely based on the admitted “failure” of the plaintiff to allocate between the two proceedings Where is the fraud?
The court notes that Connecticut law, in a somewhat related area, recognizes that the losing party may be held responsible for costs that cannot be allocated. In a situation where there are multiple claims on which a party prevails, and some but not all provide for a recovery of attorney's fees, “when certain claims provide for a party's recovery of contractual attorney's fees but others do not, a party is nevertheless entitled to a full recovery of reasonable attorney's fees if an apportionment is impracticable because the claims arise from a common factual nucleus and are intertwined.” Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 308 Conn. 312, 333, 63 A.3d 896 (2013). Here, the plaintiff disclosed overlapping costs but claimed an inability to apportion the costs. Under such circumstances, it was not unreasonable for the arbitrators to have allowed the full cost of certain expenses – certainly not within the framework of an arbitration award for which the court's authority to review the results is extremely limited, and with an analogous approach having been recognized in Connecticut as to legal fees. There is no fraud or other illegality that has been identified in this regard.
The defendant argues that there is a roughly $200 discrepancy between what it paid AVIVA and what the plaintiff claims to have paid AVIVA – in the context of an agreement between the parties, at the outset, that they would split the costs associated with services by AVIVA. The “discrepancy” is less than 1% of the approximate $25,000 charged. Is that material? Are there possible explanations – explanations that are not worth pursuing on that level? Again, there is no basis to challenge the statement that that is the amount actually charged by AVIVA to the plaintiff.
Too precise to be a coincidence, the supposed discrepancy appears to correspond to a specific bill, as sot forth in the plaintiff's submission (Exhibit C in #106.00). All but one of the AVIVA invoices were in excess of $1000. There is one relatively small invoice for $214.03 (dated 4/27/22). The difference between $25,096.58 (the amount claimed by the plaintiff) and $24,882.55 (the amount paid by the defendant (¶ 38 of #102.00)) is exactly $214.03. Inferentially, either plaintiff paid for an additional service for which only the plaintiff had been billed or the defendants failed to pay their half of a presumed $428.06 combined charge. Or are the defendants claiming that the plaintiff has now fabricated a bill for the purpose of its submission (#106.00), doubling down on its fraudulent conduct?
*7 The defendant challenges the allowance of $124,296.39 for transcript fees. The defendant makes two independent arguments. First, the defendant cites a reported 8466 of pages for all of the transcripts, with a presumed $3.45 cost per page, to yield an expected total cost of $29,207.70. There is no explanation of rate structure or how the rate structure might be determined – especially since it is a non-governmental proceeding and therefore may not be regulated at all. Based on form JD-ES-262, establishing rates for court proceedings in Connecticut, that is in the range of costs – as established by/for the Judicial Branch – for non-expedited transcripts. It is also in the range of standard-expedited if a transcript has already been produced for another party. (The court's understanding of standard-expedited is approximately one week delivery.) The rate jumps to $10.00 per page for next-morning delivery of a transcript, which might be required if there are consecutive days of hearings. At $10/page, the page count would correspond to approximately $85,000, and that is a benchmark based on regulated fees. Unless hearings were scheduled at monthly intervals (the timeframe for non-expedited transcripts in Connecticut), some form of expedited if not overnight preparation likely would have been ordered.
The other calculation is probably more damaging to the defendant's position.
“43. There were twenty-four (24) hearing days and one day of closing arguments. For the eight hearing days November 16, 2022 through November 29, 2022, TSG charged Defendants a range between $3,466.50 and $4,738.68 per day, or an average of $4,2450089 [sic] per day or $33,960.71. Based on Defendant's TSG charges it is impossible reverse engineer to Plaintiff's TSG cost total.”
If there were 24 days of hearings, then using the defendant's per-day figure of an average of $4,245, the total cost is $101,880. That does not include any charge for the transcript of the day of arguments, and does not take into account the uncertainty of the length of the 16 days of hearings not included in the calculated average (whether they might have skewed the average to a higher number). Yet again, the plaintiff has produced evidence indicating that it actually paid the amount of money ordered to be reimbursed.
A more global problem in the defendant's arguments is that the affidavit in question was not reciting estimates of value, etc., but asserts that it is reporting fees actually charged by vendors and/or paid to vendors. Was it unreasonable for the arbitrators to accept sworn statements as to fees actually incurred and paid, particularly when there was no timely objection based on unreasonableness or fabrication? Again, this court is required to be highly deferential to the decision of the arbitrators – for a recent (extreme) example, see Ahmed v. Oak Management Corp., 348 Conn. 152 (2023). In a submission to this court, the plaintiff has submitted evidence confirming that it paid the figures identified in affidavits submitted, which figures were accepted by the arbitrators.
There is evidence before this court that the claims of expenses incurred and paid, as ordered be reimbursed by the defendants, actually were paid. There is no evidence to the contrary, and the defendants’ suppositions and speculations are not a basis for vacating an arbitration award.
Conclusion
The court is required to be highly deferential to the decision of an arbitrator (arbitration panel). The defendants are correct in the theoretical proposition that there should be no deference if the award is based on – or materially tainted by – fraud. Fraud, in that sense, requires materiality and something in the nature of willful/wanton/reckless disregard for the truth. Reliance on fees actually charged by vendors (and paid by the plaintiff) would not seem to satisfy even a standard based on negligence – when there is a claim for reimbursement of expenses actually incurred, and the expenses actually incurred/charged/paid form the basis for the claim.
The court has focused on the defendant's initial submission (#102.00) rather than its later submission (#115.00), because the latter does little more than insist on the importance of an ability to rely on affidavits, especially from attorneys, coupled with its claim that it has not had an opportunity to explore the accuracy of the statements and documents submitted by the plaintiff. Attached to #115.00 is a transcript-excerpt from a status conference relating to the cross-applications, consistent with the practice in Stamford to have a status conference prior to any formal proceedings in a special-proceedings matter (which generally includes arbitration hearings). The excerpt includes a recitation that the plaintiff would submit additional documents, in support of the expenses it claimed for reimbursement; while the defendant was not willing to opine that such a procedure necessarily would be sufficient, there was a recognition that such a submission might address the problems claimed by the defendant to exist.
*8 It would have been easy to reject the defendant's claims, for the reasons stated in the plaintiff's submissions (in favor of confirmation and opposing the application to vacate). The court accepts those arguments, but has gone into the details of the defendants’ claims to establish the lack of any indicia of fraud that might justify relief to the defendants on a more fine-grained basis. To the extent that the defendants sought to argue numbers, the court thought it appropriate to evaluate the numbers, and see whether they pointed in the direction claimed by defendants (to the extent that there was any direction identified).
The Jordan affidavit reflects a claim for reimbursement for legal expenses, and that is mentioned in the defendants’ submissions as being in the millions of dollars. It appears that the arbitrators did not award any reimbursement for that claim (even though the defendants felt compelled to mention that claim in their submission). Because there appears to have been no such award, the record before the court is generally silent as to the extent to which the defendants opposed such a claim – but given relative magnitudes, it would be expected that primary attention had been paid to that claim as had been presented to the arbitrators. Only after the arbitrators awarded approximately $700,000 in reimbursement of other expenses did the defendants appear to turn their attention to a closer reading of the Jordan affidavit (and other related submissions) to find fault with the order-of-magnitude-less award actually issued as to such other expenses.
That the defendant has argued that the plaintiff committed fraud, apparently including an effort to recover an extra $214.03 with respect to the agreement to split the cost of AVIVA – at what collective cost to the parties and the court, in effort required to address the claim? – tends to establish a failure to appreciate what might and might not be useful, especially in a review process such as this. Ignoring that the Jordan affidavit identifies amounts claimed to have been charged by vendors and/or paid to them, the defendant relies largely on speculative uncertainties as to whether the figures were appropriate. The two largest expenses of TrustPoint – totaling more than half of the award (almost $300,000 out of just under $500,000 – “Analytics and Consulting” and “Document Reviews”) are unchallenged, but an $18,751.14 charge for “TIFF for production” – an unexplained service – is challenged as fraudulent because there is an unexplained/Undefined (to the court) reference to 937, 557 GB[5] – in turn because it is such a big number.
In a more precise sense, most of the defendant's arguments effectively conflate two separate concepts. The reasonableness of charges, such as TrustPoint's charges, whether in terms of GB of data processed or otherwise, does not seem to fit into the claim of fraud in seeking reimbursement of claimed charges for services. If 937,557.00 GB is an unreasonably-high number (for an inadequately-defined service), unless the plaintiff itself fabricated the number, it is not a matter of fraud, if in fact (as represented) the plaintiff paid for those services. (There is not even a scintilla of evidence or reasonable inference suggesting that the plaintiff did not pay the $18,751.14 charge for that service.) If there was an overcharging for services, or the services were not needed, that is a matter going to the merits of a claim for reimbursement, not a claim of fraud. “He's cheating” is not an all-purpose response to any aspect of the award for reimbursement made by the arbitrators that the defendants don't understand or don't like.
*9 In the course of writing this decision, the court had increasing difficulty with accepting the proposition that the defendant's objections to the arbitration award have been made in good faith. Returning to the AVIVA charge for $214.03: was there a good faith belief that the plaintiff fraudulently attempted to inflate the AVIVA claim for reimbursement by 1%? Was the figure “$214.03” believed to be a random number (or perhaps 2/14/03 was someone's birthday or anniversary, used to generate a fraudulent claim)? Even assuming that the lack of equivalence in charges for AVIVA was at least sufficiently unexplained at the outset to cause some concern on the part of the defendants (without regard to materiality), the court does not recall anything during argument (or in any written submission) suggesting that the itemization of payments actually made, as contained in #106.00, warranted acknowledging the legitimacy of this or any of the initially-disputed charges.
The court cannot conclude that the award being challenged was procured by fraud or any other improper mechanism (corruption, undue means, etc.). Especially with the confirmation that the plaintiff did pay the amounts for which reimbursement was sought, there is no possible basis for a claim of fraud or other basis for vacating the award. The defendants’ application is denied.
Complementarily, the failure to succeed in having the award vacated, modified or corrected requires the court to confirm the award – see, General Statutes § 52-407vv[6] (recently enacted provision of uniform act) and General Statutes § 52-417 setting forth the corresponding provision in the pre-uniform-act statutes,[7] both requiring that result. Accordingly, the arbitration award is hereby confirmed.
Footnotes
FINRA is the acronym for the Financial Industry Regulatory Authority. See, https://www.finra.org/about for general information about its purpose and functions.
In a discussion, below, of ¶ 43 of the defendant's submission, the court noted a monetary figure used by the defendants – $4,245,089. Although trivial, the court could not “correct” what likely is a typographical error because the court cannot determine whether “089” should be “08” or “09” or “89” – or whether it is a matter of an intentional extra digit (false precision) whereby an extra figure was included because a calculator provided one or more extra figures to the right of the decimal point in the averaging process being described.
Given its somewhat speculative or anecdotal nature, the court originally intended to put this paragraph into a footnote. The court decided that the defendants’ insistence on the importance of size of files, individually and in the aggregate, warranted more prominent attention (Although of relatively modest significance, the court notes that the pdf as uploaded into the e-filing system was a little less than the 1MB file as originally scanned; possibly due to additional processing (possibly a print-and-rescan procedure) or perhaps some level of compression during the upload process, the e-filed version of the pdf, when downloaded to a computer, was 936KB.)
Indirectly, this confirms that there was nothing preventing the issues from being presented to the arbitrators, other than a lack of adequate attention to the relevant details of the plaintiff's submission.
The court notes that the defendant, in its arguments, takes some liberties with the facts. In ¶ 21 of #102.00, the defendant states: “As noted in the Award and more specifically detailed infra, Ms. Jordan's Attorney Affidavit appeared to contain unreasonable fees and costs supposedly incurred, i.e., well over six million dollars in attorney fees alone, plus nearly $500,000 for simple discovery data storage, plus nearly $150,000 for court reporting services, along with more costs.” The phrase “plus nearly $500,000 for simple discovery data storage” ignores the fact that well over half of that bill (58%) was described as attributable to “Analytics and Consulting” and “Document Reviews,” with just under $105,000 as described as attributable to “Active Document Hosting.” If perhaps informally, the defendant effectively appears to have multiplied the cost of “simple discovery data storage” by a factor of almost 5.
“After a party to an arbitration proceeding receives notice of an award, the party may make a motion to the court for an order confirming the award at which time the court shall issue a confirming order unless the award is modified or corrected pursuant to section 52-407tt or 52-407xx or is vacated pursuant to section 52-407ww.”
If an applicant has filed a motion seeking confirmation of an award, “[t]he court or judge shall grant such an order confirming the award unless the award is vacated, modified or corrected as prescribed in sections 52-418 and 52-419.”