Southwest Barricades v. Traffic Management (CA1 6/9/16)

The court holds that “Rule 60(c) cannot be used to set aside a compulsory arbitration award.”

Traffic lost a compulsory-arbitration case brought by Southwest and then blew the appeal date. It tried moving to set aside the award under Rule 60(c), arguing that figuring the appeal time wrongly constituted excusable neglect and also that Southwest withheld evidence. The trial court granted the motion. Southwest appealed – but from an unsigned minute entry, which it didn’t get reduced to judgment, so the appeal was dismissed. It also hadn’t reduced the award to judgment and so, back in the trial court, it moved to do so (an interesting decision, given that its position – more on which below – rested on the fact that the award had never been made a judgment); the trial judge, having already set the award aside, denied the motion. There followed a second arbitration, an appeal from that, and a jury trial, which Traffic won. (This, by the way, over a $10,000 claim. It all makes you proud to be a lawyer, yes?) Southwest appealed.

It argued, as it had wanted to in its practice-run appeal, that using Rule 60 to set aside an arbitration award was wrong. The Court of Appeals agrees. Rule 60 applies to “final judgments, orders, or proceedings,” not to “interlocutory judgments.” “[T]he arbitration award was not final  because it did not dispose of any claims between the parties.” That doesn’t happen until judgment is entered on the award. “An arbitrator does not have the power to dispose of the case.” Southwest argued that the passage of time makes an award final, citing cases under which an award itself could be appealed in cases of excusable neglect. But that applied only to a version of rule 76 that hasn’t existed since 2007.

The court reverses the Rule 60(c) ruling and vacates everything that happened after that.

The parties apparently raised with the court a number of procedural issues that could arise on remand. The court lists them but appropriately, or at least prudently, declines to rule. Arise they will, though. This is a contract case; its now all about who will have liability for the attorneys’ fees when the music stops, so both sides have every incentive to double down.

(Opinion: Southwest Barricades v. Traffic Management)