United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 16, 2001 Decided April 24, 2001
Linda E. LaPrade,
Kidder, Peabody & Co., Inc.,
Appeal from the United States District Court
for the District of Columbia
Steven W. Teppler argued the cause for appellant. With
him on the briefs was Frazer Walton, Jr.
Kathy B. Houlihan argued the cause for appellee. With
her on the brief was Andrew J. Schaffran.
Before: Williams, Sentelle and Rogers, Circuit Judges.
Opinion for the Court filed by Circuit Judge Rogers.
Rogers, Circuit Judge: Linda E. LaPrade appeals the
confirmation of an arbitration award requiring her to pay a
portion of the forum fees for arbitration of her statutory and
non-statutory claims against her former employer.1 She con-
tends that assessment of the forum fees contravenes Cole v.
Burns International Security Services, 105 F.3d 1465 (D.C.
Cir. 1997), where the court held when a federal statutory
claim is subjected to arbitration pursuant to an arbitration
agreement executed as a condition of employment, an employ-
ee cannot be required to pay arbitration-related costs that are
analogous to a judge's salary or expenses in a traditional
judicial forum. Because LaPrade has not met her burden of
demonstrating that the arbitrators acted in manifest disre-
gard of the law, we affirm.
In January 1989 LaPrade began working for Kidder Pea-
body in the State of New York as an Assistant Vice President
and Manager of the New Issue Agency Syndicate, and in July
1989 she was promoted to Vice President, Product Manager-
Agency Bond Trading. Her position at Kidder Peabody
required her to be a registered representative in the securi-
ties industry, which, in turn, required that she execute a
Uniform Application for Securities Industry Registration or
Transfer, or "Form U-4."2 By signing the Form U-4 La-
Prade agreed to arbitrate any claims that might arise be-
tween her and Kidder Peabody.3
1 This case was previously before the court on a matter unrelat-
ed to the instant appeal. See LaPrade v. Kidder, Peabody & Co.,
146 F.3d 899 (D.C. Cir. 1998).
2 See 15 U.S.C. s 78s (1994); 17 C.F.R. s 240.15b7-1 (2000);
NASD Regulation Rules 1031 (a)-(b), 1013(a)(2)(B), http://se
odbye.htm (last visited March 28, 2001).
3 LaPrade's Form U-4 states in relevant part:
I agree to arbitrate any dispute, claim, or controversy that may
arise between me and my firm, or a customer, or any other
person, that is required to be arbitrated under the rules,
constitution, or by-laws of the organizations with which I
Following a series of disagreements with her employer,
LaPrade left Kidder Peabody in October 1991. Thereafter,
she sued her former employer in the United States District
Court for the District of Columbia for breach of contract,
fraud, and for violations of federal and state law. Over
LaPrade's objection, the district court granted Kidder Pea-
body's motion to stay the lawsuit pending arbitration. The
parties then pursued arbitration before the National Associa-
tion of Securities Dealers, Inc. ("NASD") under the terms of
the arbitration clause contained in LaPrade's Form U-4.
In the arbitration proceedings, LaPrade claimed gender
discrimination under Title VII and New York state law, and
denial of equal pay under New York state law and the
Federal Equal Pay Act, as well as common law defamation
and fraud. The arbitration panel conducted seven pre-
hearing conferences and 67 hearing sessions from November
1994 to May 1999. In October 1999, the arbitration panel
dismissed LaPrade's statutory claims for discrimination un-
der New York and federal law, but granted her injunctive
relief with respect to her Form U-5 and ordered Kidder
Peabody to pay her $65,000.00.4 The panel decision stated
that "all other claims not specifically addressed ... are
denied in their entirety, including defamation and fraud." In
addition, while ordering that "[e]ach party shall be responsi-
ble for its own attorneys' fees and other costs related to this
arbitration," the arbitration panel assessed forum fees, total-
4 After LaPrade left the firm, Kidder Peabody filed a Uniform
Termination Notice for Securities Industry Registration, or "Form
U-5," stating that "[d]uring the course of an inquiry by firm
personnel, Ms. LaPrade initially provided information which the
firm believed to be inaccurate (inadvertently, by her account), which
she subsequently clarified. She was then permitted to resign." See
15 U.S.C. s 78o-5 (1994 & Supp. V 1999); 15 U.S.C. s 78ff(a)
(1994); 17 C.F.R. s 400.4 (2000). As part of the relief ordered by
the arbitration panel, Kidder Peabody was ordered to revise the
explanation section of the Form U-5 to read: "During the course of
an inquiry by firm personnel, Ms. LaPrade offered to provide her
cooperation and information if the firm agreed to permit her to
resign, and the firm agreed."
ing $69,800.00, save 12%, against Kidder Peabody. See
NASD Code of Arbitration Procedure Rule 10205(c). Thus,
LaPrade was ordered to pay 12%, or $8,376.00.5
Kidder Peabody returned to the district court, filing a
motion to lift the stay and confirm the arbitration award.
LaPrade filed a cross motion to vacate the arbitration award
insofar as it directed her to pay $8,376.00 in forum fees. The
district court confirmed the arbitration award. Concluding
that the law regarding the assessment and allocation of
arbitral forum fees was neither "well defined, explicit, [nor]
clearly applicable" to her case, the district court rejected
LaPrade's argument that the arbitration panel had acted in
manifest disregard of the governing law in this circuit in
assessing and allocating arbitral fees. In the district court's
view Cole was not dispositive, and it followed Sobol v. Kidder,
Peabody & Co., Inc., 49 F. Supp. 2d 208 (S.D.N.Y. 1999). In
Sobol the court distinguished Cole and ruled that assessment
against a former employee of half of the arbitral forum fees
neither offended public policy nor discouraged arbitration
because NASD rules authorized the sharing of expenses and
arbitration is generally less expensive than traditional litiga-
tion in court. Id. at 224. Finally, noting the scope of
permissible fees identified in Cole, the district court found
that LaPrade had not demonstrated that the panel's award
lacked colorable support in the record.
It is well settled that a court's review of an arbitration
award is limited. In addition to the limited statutory grounds
5 The arbitration panel assessed forum fees for six pre-hearing
conferences at $300.00 each, one pre-hearing conference with the
full panel at $1,000.00, and 67 hearing sessions at $1,000.00 per
session. See NASD Code of Arbitration Procedure Rule 10205(k)
(schedule of fees). Deducting the balances previously deposited,
the panel directed LaPrade to pay $6,776.00, and Kidder Peabody
to pay $50,824.00. The assessment against LaPrade was indepen-
dent of the $250.00 non-refundable filing fee that she had previously
paid; the panel ordered that the filing fee be retained by NASD.
on which an arbitration award may be vacated,6 "arbitration
awards can be vacated [only] if they are in 'manifest disre-
gard of the law,' " Cole, 105 F.3d at 1486 (quoting First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (1995)),
or "if they are contrary to 'some explicit public policy' that is
'well defined and dominant' and ascertained 'by reference to
the laws or legal precedents.' " Id. (quoting United Paper-
works Int'l Union v. Misco, Inc., 484 U.S. 29, 43 (1987)).
Manifest disregard of the law "means more than error or
misunderstanding with respect to the law." Kanuth v. Pres-
cott, Ball & Turben, Inc., 949 F.2d 1175, 1178 (D.C. Cir. 1991)
(citing Sargent v. Paine Webber Jackson & Curtis, Inc., 882
F.2d 529, 532 (D.C. Cir. 1989)). Consequently,
to modify or vacate an award on this ground, a court
must find 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.
DiRussa v. Dean Witter Reynolds, Inc., 121 F.3d 818, 821 (2d
Cir. 1997) (quotations omitted); see also Glennon v. Dean
Witter Reynolds, Inc., 83 F.3d 132, 136 (6th Cir. 1996).
As the party seeking to vacate or otherwise modify the
arbitration award, LaPrade bears the burden of demonstrat-
ing that the arbitration panel acted in manifest disregard of
the law. See Al-Harbi v. Citibank, N.A., 85 F.3d 680, 683
6 Under the Federal Arbitration Act, 9 U.S.C. s 10 (1994), an
arbitration award may be vacated where:
(1) the award was procured by corruption, fraud, or undue
means; (2) there was evident partiality or corruption in the
arbitrators, or either of them; (3) the arbitrators were guilty of
misconduct in refusing to postpone the hearing, upon sufficient
cause shown, or in refusing to hear evidence pertinent and
material to the controversy; or of any other misbehavior by
which the rights of any party have been prejudiced; or (4) the
arbitrators exceeded their powers, or so imperfectly executed
them that a mutual, final, and definite award upon the subject
matter submitted was not made.
LaPrade makes no claim of such error here.
(D.C. Cir. 1996); DiRussa, 121 F.3d at 825; cf. Green Tree
Fin. Corp. v. Randolph, 531 U.S. 79, ----, 121 S.Ct. 513, 522
(Dec. 11, 2000); Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 26 (1991). Our review of the district court's factual
findings in the order confirming the arbitration award is for
clear error, while the court reviews questions of law de novo.
See First Options, 514 U.S. at 947-48.
In Gilmer, the Supreme Court held that federal statutory
claims alleging age discrimination in employment could be
subjected to compulsory arbitration pursuant to an arbitra-
tion agreement that an employee was required to sign as a
condition of employment. See Gilmer, 500 U.S. at 23. Sub-
sequently, in Cole, this court was confronted with the ques-
tion "can an employer condition employment on acceptance of
an arbitration agreement that requires the employee to sub-
mit his or her statutory claims to arbitration and then re-
quires the employee to pay all or part of the arbitrators'
fees?" Cole, 105 F.3d at 1483. The district court had dis-
missed Cole's complaint alleging claims under Title VII and
compelled arbitration pursuant to the parties' agreement. Id.
at 1467. This court upheld the arbitration agreement. Id. at
1485. But reasoning, in reliance on Gilmer, that there was no
reason to conclude that the Supreme Court would have
approved mandatory arbitration where the employee had to
pay the cost of the arbitrator's services, id. at 1484, the court
also concluded that "Cole could not be required to agree to
arbitrate his public law claims as a condition of employment if
the arbitration agreement required him to pay all or part of
the arbitrator's fees or expenses." Id. at 1485. The court
noted that the arbitration agreement executed by Cole did
not explicitly address the issue and merely incorporated the
American Arbitration Association rules, which were silent on
the question of which party should bear the arbitrator's fees
and expenses. Id. Thus, to uphold the validity of the
parties' contract, the court interpreted the arbitration agree-
ment to require the former employer to pay all arbitrators'
fees in connection with the resolution of Cole's claims.7 Id. at
7 In Cole, the court defined "arbitrators' fees"
Contrary to LaPrade's contention that the assessment of
arbitral forum fees contravenes Cole, Cole does not bar the
assessment of all forum fees against an employee. In Cole
the court explained that an employee who executed a compul-
sory arbitration provision as a condition of employment could
be "required to assume the [reasonable] costs of filing fees
and other administrative expenses" arising from arbitration of
statutory claims because "parties appearing in federal court"
may likewise be required to pay such costs. Id. at 1484.
Other than by misinterpreting Cole to afford her a right to
arbitration as a virtually cost-free alternative to traditional
court proceedings, LaPrade makes no claim that the panel
otherwise lacked authority to assess and allocate forum fees.
LaPrade nonetheless contends that the district court erred in
confirming the arbitral award because the assessment of
forum fees violates public policy by burdening the assertion of
her federal statutory right to be free from gender discrimina-
tion. Unfortunately for LaPrade, she has not met her burden
of demonstrating that the arbitration panel acted in manifest
disregard of the law or in violation of public policy. See Al-
Harbi, 85 F.3d at 683; DiRussa, 121 F.3d at 825; cf. Green
Tree, 121 S.Ct. at 522; Gilmer, 500 U.S. at 26.
First, LaPrade makes no showing that the arbitration
panel, which was aware of Cole, "refused to apply [Cole] or
ignored [Cole] altogether." DiRussa, 121 F.3d at 821; see
also Kanuth, 949 F.3d at 1182. Rather, she relies on the
unjustified assumption that the forum fees assessed against
her are the type of costs forbidden by Cole.8 Under the
to include not only the arbitrator's honorarium, but also the
arbitrator's expenses and any other costs associated with the
105 F.3d at 1484 n.15.
8 At oral argument, LaPrade noted that she paid the $250.00
filing fee and $5.00 in copying costs, that the parties paid court
reporter fees, and that the proceedings were conducted on the
premises of the NASD. Consequently, LaPrade argued, because
there were no other costs left to be paid, the forum fees assessed by
the arbitration panel must be the type prohibited by Cole.
NASD's rules, two of the arbitrators were entitled to compen-
sation in the amount of $200.00 per hearing session while the
chairperson of the panel was entitled to $275.00 per hearing
session.9 Therefore, of the $1,000.00 assessed for each hear-
ing session with the full panel, $325.00 cannot be character-
ized as arbitrators' compensation. LaPrade's assessment, in
turn, appears to be well below that amount.10
In any event, there is a substantial possibility that, fully
consistent with Cole, the entire assessment against LaPrade
covers only the costs associated with her non-statutory
claims. Given the lengthy nature of the parties' proceedings,
spanning six years and involving 74 arbitral sessions, it is
reasonable to conclude, as Kidder Peabody suggests, that the
forum fees assessed against LaPrade were attributable to
arbitration of her non-statutory claims. LaPrade protests
that Kidder Peabody's proposed reasonable conclusion is
speculative, but she has failed to provide an evidentiary basis
for any alternate conclusion, and it is her burden to do so.
See Al-Harbi, 85 F.3d at 683; DiRussa, 121 F.3d at 825; cf.
Green Tree, 121 S.Ct. at 522; Gilmer, 500 U.S. at 26.
Second, in articulating the " 'liberal federal policy favoring
arbitration agreements,' " Gilmer, 500 U.S. at 25 (quoting
Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983)), the Supreme Court explained that "so long
as the prospective litigant effectively may vindicate his or her
statutory cause of action in the arbitral forum, the [statutory
right created by Congress] will continue to serve both its
remedial and deterrent function[s]." Id. at 28 (citing Mitsu-
bishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614, 637 (1985)). While the court in Cole declined to
read Gilmer "as holding that an arbitration agreement is
9 See NASD Code of Arbitration Procedure Rule IM-10104, at
http://www.nasdadr.com/arb_code/arb_code#IM_10104 (last updat-
ed March 15, 2001).
10 Kidder Peabody suggests in its brief that LaPrade's per
session share of the non-compensation costs ($325.00, or $1,000.00
minus a total of $675.00) is $113.19, and LaPrade does not contest
this figure in her reply brief.
enforceable no matter what rights it waives or what burdens
it imposes," 105 F.3d at 1482, LaPrade has not shown that the
arbitration panel manifestly disregarded Cole in assessing a
limited amount of forum fees against her. LaPrade makes no
claim that the possibility of a large assessment arising from
arbitration of her claims prevented her from attempting to
vindicate her rights. See Green Tree, 121 S. Ct. at 522.
Neither does she claim that the arbitration panel failed to
consider the evidence that she submitted to show she was
financially unable to pay any assessment. That evidence
consisted of her W-2 forms from 1993 through 1998 and a
single commission statement for January 1999, which the
arbitration panel might reasonably view as an incomplete
portrait of her financial resources. Because LaPrade has not
demonstrated that the assessment against her runs afoul of
the balance of public policies struck in Cole, her effort to have
the assessment vacated on public policy grounds fails.
Accordingly, we affirm the district court's order confirming
the arbitration award.
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