Choice Hotels International , Inc. v. Jai Sai Baba, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

__________________________________________

CHOICE HOTELS INTERNATIONAL , INC., :

et al., :

Petitioners, :

:

v. : Civil No. 2:23-cv-03360-JMG

:

Jai Sai Baba LLC, et al., :

Respondents. :

__________________________________________

MEMORANDUM OPINION

GALLAGHER, J. September 11, 2025

I. OVERVIEW

This matter arises from a final arbitration award issued on January 12, 2023, in favor of

Petitioners. Before the Court is Petitioners’ Application for Confirmation of Arbitral Award and

Respondents’ Motion to Vacate the Arbitral Award. Respondents argue the arbitral award must be

vacated based upon three alleged violations of the Federal Arbitration Act (“FAA”): (1) the

arbitrator’s misconduct in refusing to hear evidence pertinent and material to the controversy, (2)

the arbitrator’s evident partiality, and (3) the arbitrator’s exceedance of his authority by issuing a

late decision. For the reasons discussed below, the Court grants Petitioners’ Application for

Confirmation of Arbitral Award and denies Respondents’ Motion to Vacate the Arbitral Award.

II. PROCEDURAL HISTORY

On June 12, 2020, Respondents Jai Sai Baba, LLC, Dipesh Patel, and MDPD13

Investments, LLC filed an action in this Court against Petitioners Choice Hotels International, Inc.

and Choice Hotels Owners Council alleging, among other claims, fraud and breach of

contract. ECF No. 16-1, at 10.1 However, on March 19, 2021, the Court granted Petitioners’

Motion to Compel Arbitration and Stay Proceedings pursuant to the parties’ agreement to

arbitrate. See ECF No. 16-1, at 10; ECF No. 1, at 3. On June 29, 2021, Respondents filed their

Arbitration Demand against Petitioners. ECF No. 16-1, at 10. Discovery commenced and

consisted of interrogatory responses and thousands of pages of documents. ECF No. 31, at 6-7.

After discovery, an eight-day hearing was held August 1-5 and 22-24, 2022. ECF No. 16-1, at

10. Testimony from 13 witnesses was presented and over 170 exhibits were produced. ECF No.

31, at 7.

Following the hearing, Arbitrator Alan Baron (“Arbitrator Baron”) decided that post-

hearing oral arguments would be necessary and requested post-hearing briefing from the

parties. ECF No. 31, at 7. Respondents believed the issuance of the arbitral award was due on

October 23, 2022, and inquired about the award on October 27, 2022, and November 7, 2022.

ECF No. 16-1 at 15. On November 9, 2022, Respondents formally objected to the award as

untimely. ECF No. 16-1 at 15. However, upon reviewing the briefs, and apparently determining

that oral arguments were no longer necessary, Arbitrator Baron closed the record on October 24,

2022. ECF No. 31 at 27. The record was reopened on November 23, 2022, for post-hearing

briefing to be submitted on the issue of attorney’s fees and costs. ECF No. 31 at 27.

On January 12, 2023, Arbitrator Baron denied all of Respondents’ claims and issued an

award in Petitioners’ favor in the sum of $645,770.43 inclusive of fees, costs, and expenses. ECF

No. 1-3 at 10.

1 Citations to page numbers are to the page numbers assigned by the Court’s CM-ECF electronic

docketing system.

Shortly after, on January 19, 2023, Petitioners filed their Application for Confirmation of

Arbitral Award. ECF No. 1 at 1. On February 12, 2023, Respondents opposed such and filed their

Motion to Vacate the Arbitral Award. ECF No. 14 at 1; ECF No. 16-1 at 6. Petitioners responded

on March 9, 2023, by filing their Opposition to the Motion to Vacate the Arbitral Award. ECF No.

31 at 6.

III. LEGAL STANDARD

A district court must presume that an arbitral award is enforceable under the FAA. See

Sutter v. Oxford Health Plans LLC, 675 F.3d 215, 219 (3d Cir. 2012) (citing Moses H. Cone Mem’l

Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24–25 (1983)).

“Arbitration awards are entitled to extreme deference.” Stone v. Bear, Stearns & Co., 872

F. Supp. 2d 435, 438 (E.D. Pa. 2012), judgment entered, 2012 WL 1946970 (E.D. Pa. May 29,

2012), and aff'd, 538 F. App'x 169 (3d Cir. 2013). Obtaining a vacatur of an arbitral award is a

“steep climb.” Credit One Bank, N.A. v. Lieberman, 2023 WL 4014471, at *2 (3d Cir. June 15,

2023) (quoting France v. Bernstein, 43 F.4th 367, 377 (3d Cir. 2022)). That climb is a burden

belonging to the moving party. Id. (citing Jersey Shore Univ. Med. Ctr. v. Loc. 5058, Health Prof'ls

& Allied Emps., 2017 WL 1025180, at *3 (D.N.J. Mar. 16, 2017).

There are limited routes to vacate an arbitral award, including:

(2) where there was evident partiality or corruption in the arbitrators, or either of them;

(3) where 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) where 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.

9 U.S.C. §10(a)(1-4). These limited routes are described as “egregious departures from the parties’

agreed-upon arbitration.” Hall St. Assoc., L.L.C. v. Mattel, Inc., 552 U.S. 576, 586 (2008).

Arbitrators have the power to interpret contracts, make credibility determinations, and act

as the factfinders. See Egan Jones Ratings Co. v. Pruette, 765 F. App’x. 659, 662 (3d Cir. 2019)

(citing Acro–Polymers, Inc. v. Loc. 8-74, 671 F.2d 752, 755 (3d Cir. 1982)). “‘The Supreme Court

has made clear that findings of fact and inferences to be drawn therefrom are the exclusive province

of the arbitrator.’” Id. at 662 (quoting Exxon Shipping Co. v. Exxon Seaman's Union, 73 F.3d 1287,

1297 (3d Cir.1996)). Reviewing courts do not have the power to “reexamine the evidence” after

the arbitrator. Id. (citing Mut. Fire, Marine & Inland Ins. Co. v. Norad Reins. Co. Ltd., 868 F.2d

52, 56 (3d Cir. 1989); accord Misco, United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29,

36-38 (1987). “If an arbitrator is even arguably construing or applying the contract and acting

within the scope of his authority, the fact that a court is convinced he committed serious error does

not suffice to overturn his decision.” Akers Nat. Roll Co. v. United Steel, Paper and Forestry,

Rubber, Mfg., Energy, Allied Indus. and Serv. Workers Int. Union, 712 F.3d 155, 160 (3d Cir. 2013)

(citing Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509 (2001)).

IV. DISCUSSION

The Court confirms the entire arbitral award because it is required to do so when there are

no grounds for vacatur, as is the case here.

Respondents make three separate unavailing claims for vacatur. First, Respondents claim

Arbitrator Baron engaged in misconduct under §10(a)(3) by refusing to hear additional evidence

on an issue that was fully briefed. This claim is denied because Arbitrator Baron provided

adequate opportunity for both parties to present their case. Arbitrator Baron’s decisions regarding

evidence, specifically not allowing Respondents to cross-examine a witness, did not produce an

unfair hearing. Arbitrator Baron reviewed multiple forms of evidence to inform his findings and

was not required to create endless opportunities for the parties to argue.

Next, Respondents claim Arbitrator Baron was partial under §10(a)(2) because Arbitrator

Baron has a history of serving as an arbitrator for Choice and making factual determinations in

their favor. This claim is denied because Arbitrator Baron acted normally within his

authority. Respondents consented to Arbitrator Baron after learning of his prior professional

relationship with Choice and utilized the opportunity to question him about this matter. In addition,

Respondents have failed to provide any concrete evidence that Arbitrator Baron acted with

bias. Respondents’ arguments are centered around their disapproval of Arbitrator Baron’s

conclusions, which he had both the power and evidentiary support to make.

Last, Respondents claim Arbitrator Baron exceeded his powers under §10(a)(4) by issuing

an award later than anticipated. This claim is denied because the contract governing the arbitration

is silent on a deadline for issuance of an award, consequences of not adhering to an award deadline,

and the applicability of the Commercial Arbitration Rules. Furthermore, Petitioners should not be

punished for Arbitrator Baron’s delay in good faith while thoughtfully considering the issues when

Respondents were unharmed by such delay.

The entire arbitral award must be confirmed if there is no basis for vacatur.

Therefore, the Court grants Petitioners’ Application for Confirmation of Arbitral Award and denies

Respondents’ Motion to Vacate the Arbitral Award.

a. Respondents had an adequate opportunity to present their case, and Arbitrator Baron

considered more evidence than the affidavit in question.

Arbitrator Baron did not engage in misconduct as defined under 9 U.S.C. § 10(a)(3).

The hearing was held over eight days from August 1-5 and 22-24, 2022. ECF No. 31, at

7. Originally, the hearing was supposed to last five days total. Id. at 11 n.3. During Respondents

presentation of their case, Respondents concluded that they would need the entire five days for

their arguments and evidence. Id. Arbitrator Baron and the parties agreed to such and decided that

Petitioners would present their case for three days from August 22-24, 2022. Id.

During Respondents presentation, Respondents called Michael Shemer, Choice’s Vice

President of Strategic Finance and Financial Planning and Analysis, to testify about the key money

issue involving forgivable loans offered to prospective franchisees that Respondents alleged

Choice offset by taking money from the system fund. ECF No. 16-1 at 6, 11. Shemer testified

that Choice operated a system fund, which is comprised of money from an array of different

sources, to “drive profitability for franchisees.” ECF No. 31 at 10. One of those sources is system

fees paid by franchisees. Id. Shemer continues by stating that approximately $250 million of the

$570 million system fund is derived from system fees. Id.

Further, Choice used approximately $4-6 million of the system fund in 2017 to fund key

money loans (“key money”) to new franchisees. Id. Shemer’s testimony is corroborated by system

fund financial statements. Id. Shemer explains that key money is offered to “new and prospective

franchisees an as incentive prior to the execution by the franchisee of a franchise agreement” and

is a “form of marketing.” Id. Key money loans are not used until after the franchise agreement has

been executed and the franchisee meets certain criteria. Id. According to Shemer, key money is

used while negotiating a franchise agreement and not to solicit franchisees. Id. Any solicitation

comes from a separate fund entirely. Id. at 10-11.

The franchise disclosure document (“FDD”) states that system fees will not be used to

solicit new franchisee. ECF No. 16-1 at 7. Furthermore, the franchise agreement states that system

fees may be used for, among other things, marketing. ECF No. 16-1, at 12-13.

However, on August 3, 2022, shortly after Shemer’s testimony, Choice executives made

three public statements that Respondents characterized as contradicting Shemer. ECF No. 31, at

11. The parties disagreed on this characterization, and Arbitrator Baron ordered Respondents and

Petitioners to submit briefing addressing the key money issue prior to the start of Petitioners

presentation. Id. Upon Respondents’ resting their case on August 5, 2022, Respondents did not

call other witnesses to testify about the system fund or key money. Id.

Both parties submitted briefing on the issue, and Petitioners included an affidavit from

Frank Cuomo, Choice’s Senior Director of SEC Reporting, Technical & International Accounting.

Id. Cuomo’s affidavit mostly confirmed Shemer’s testimony and addressed how the public

statements made by Choice executives did not contradict Shemer. Id. at 11-12. On August 19,

2022, Arbitrator Baron resolved the key money issue in Petitioners’ favor. Id. at 12. Respondents

requested a reconsideration which was denied because Arbitrator Baron concluded that the

“additional filings did not warrant reconsideration,” and the hearing resumed on August 22, 2022.

Id. Respondents further requested that they be allowed to cross-examine Cuomo, which Arbitrator

Baron also denied. Id.

“‘Arbitrator[s] are not constrained by formal rules of procedure or evidence… .’” Calbex

Min. Ltd. V. ACC Res. Co., L.P., 90 F. Supp. 3d 442, 459 (W.D. Pa. 2015) (quoting Hoteles

Condado Beach, La Concha & Convention Ctr. v. Union De Tronquistas Loc. 901, 763 F.2d 34, 38

(1st Cir. 1985); Bernhardt v. Polygraphic Co., 350 U.S. 198, 203–04 n.4 (1956)). “Arbitrators

have wide latitude in how they conduct proceedings; hence, a court's role in reviewing an

arbitrator's procedural decisions is extremely limited.” Sabre GLBL, Inc v. Shan, 779 F. App’x.

843, 856 (3d Cir. 2019) (citing Off. & Prof'l Emps. Int'l Union, Loc. No. 471 v. Brownsville Gen.

Hosp., 186 F.3d 326, 334-35 (3d Cir. 1999). An arbitrator has unfettered control over what

evidence to receive or reject, unless their decision amounts to misconduct.

Misconduct under § 10(a)(3) is not found in “every failure to receive relevant evidence;”

it is only found when an arbitrator commits an “[error] which so affects the rights of a party that it

may be said that he was deprived of a fair hearing.” Whitehead v. Pullman Grp., LLC, WL

12915099, at *4 (E.D. Pa. Feb. 13, 2015), aff’d Whitehead v. Pullman Grp., LLC, 811 F.3d 116,

120 (3d Cir. 2016) (citing Newark Stereotypers' Union No. 18 v. Newark Morning Ledger Co., 397

F.2d 594, 599 (3d Cir. 1968)). A “fair hearing” is defined as “one where the parties have notice

and an opportunity to present evidence and arguments.” CPR Mgmt., S.A. v. Devon Park

Bioventures, L.P., 119 F.4d 236, 245 (3d Cir. 2021) (citing Newark Stereotypers' Union, 397 F.2d

at 600).

An arbitrator must provide the parties with an “adequate opportunity” to present their case

with evidentiary support. However, an arbitrator is not required to permit the parties to present any

and all evidence they wish. See Vitarroz Corp. v. G. Willi Food Intern. Ltd., 637 F. Supp. 2d 238,

250-251 (D. NJ 2009) (citing Sunshine Mining Co. v. United Steelworkers of Am., AFL–CIO, 823

F.2d 1289, 1295 (9th Cir. 1987)). In Vitarroz Corp., the court held that vacatur of the arbitral award

was improper because the arbitration panel did not outright exclude evidence a party wished to

present – it simply limited the testimony of one witness. Id. at 249. The panel initially shortened

the witness’s testimony length to 30 minutes each for direct and cross-examination due to a

personal commitment of one of the arbitrators. Id. at 242. The cross examination was then further

limited to 25 minutes after the direct testimony went ten minutes over the allotted

time. Id. However, the Court pointed out that “a party does not have an absolute right to cross

examination” in an arbitration proceeding. Id. at 250 (citing Sunshine Mining Co., 823 F.2d at

1295).

A Third Circuit case similarly affirmed the notion that exclusion of certain evidence does

not automatically render an arbitration hearing unfair. Transtech Indus. v. A&Z Septic Clean, 270

F. App’x. 200, 209 (3d Cir. 2008). The court rejected the petitioner’s argument that the arbitration

proceedings were unfair because they “lacked certain pertinent evidence, a live hearing, and cross-

examination of witnesses” where there were “multiple submissions, voluminous supporting

materials, and frequent opportunities for oral arguments” all considered by the arbitrator. Id.

In the present case, the eight-day arbitration hearing consisted of testimony from 13

witnesses, presentation of over 170 exhibits, and extensive briefing and arguments from the

parties. ECF No. 31 at 7. The hearing was extended, at Respondents’ request, to allow them five

extra days to present their case. Id. at 11 n.3.

On the third day of the hearing, Respondents called Shemer, Choice’s Vice President of

Strategic Finance and Financial Planning and Analysis, to testify about key money. ECF No. 16-

1, at 11. Respondents alleged that Shemer’s testimony directly contradicted multiple public

statements made by Choice executives. ECF No. 31, at 11. Petitioners denied such allegations,

and, on the fourth day of the hearing, Arbitrator Baron ordered the parties to submit briefs

addressing their positions on this issue. Id. On the fifth day of the hearing, Respondents rested

their case. Id.

Both Respondents and Petitioners submitted briefing on whether Mr. Shemer should be

recalled testifying in light of the allegedly contradictory testimony. Id. Petitioners submitted their

brief and included an affidavit from Cuomo, Choice’s Senior Director of SEC Reporting, Technical

& International Accounting, that confirmed Shemer’s testimony. Id. at 11-12. Respondents,

however, did not include comparable evidentiary support with their brief. ECF No. 16-1, at 20.

On August 19, 2022, Arbitrator Baron resolved the key money issue in favor of Petitioners, as the

Respondents failed to offer evidence during the presentation of their case to the contrary. ECF No.

30, at 12. Respondents requested reconsideration, Arbitrator Baron denied such, and the hearing

continued with Petitioners’ three-day presentation. Id.

Clearly, Arbitrator Baron thoroughly considered and ultimately rejected the issue raised by

Respondents, and there was evidence available for Arbitrator Baron to point to in his

decision. Since Arbitrator Baron extended the hearing to allow Respondents to fully present their

case to their satisfaction, reviewed briefing in support of and in opposition to Respondents’ request

for reconsideration, and considered a multitude of other evidence, the rejection of Respondents’

request to cross-examine Cuomo cannot be deemed misconduct.

Similar to the defendants in Vitarroz Corp., Respondents were limited in their ability to

present all the evidence they wished. Yet, instead of having 25 minutes to cross-examine a witness,

Respondents were given extra days to present their case to the best of their ability as well as an

opportunity to argue the key money issue in brief format. Therefore, the inability to cross-examine

Cuomo on its own did not deprive Respondents of a fundamentally fair hearing. Arbitrator Baron

pointed to other parts of the record that supported his decision: Shemer’s testimony, documentary

evidence such as financial statements, and even the plain language of the franchise

agreement. ECF No. 31, at 21-22. Respondents provide no concrete evidence to the contrary.

Respondents simply claim that they could have elicited testimony from Cuomo to support their

key money claims, but this is not a guarantee. Id. at 16.

Since the right to cross-examine is not absolute, and there was ample opportunity for

Respondents to provide other evidence to bolster their key money claims, the rejection of the cross-

examination of a single witness does not amount to misconduct. There is a voluminous record in

this case, including examinations of other witnesses, documentary evidence, and many

submissions, similar to that in Transtech Industries, which Arbitrator Baron considered in reaching

his decision.

The voluminous record here also works against Respondents’ contention that Arbitrator

Baron engaged in misconduct by not considering their breach of contract claim. In Arbitrator

Baron’s award, he states that he reviewed briefing by both parties, Respondents’ request for

reconsideration, and Petitioners’ response related to Respondents’ key money claim. Arbitrator

Baron concluded that key money was used for marketing, not development, and was derived from

a larger system fund, not system fees. These facts refute Respondents’ allegation that Choice

breached its contract by impermissibly using system fees to fund key money loans. It is fair to

deduce, without evidence to the contrary, that Arbitrator Baron considered and rejected both the

fraud and breach of contract claim.

Therefore, it is improper to order a vacatur of the award because Arbitrator Baron did not

engage in misconduct as defined under the FAA.

b. Both parties chose Arbitrator Baron knowing of his previous professional

relationship with Choice, and there is no concrete evidence of bias.

Arbitrator Baron did not display partiality as defined under 9 U.S.C. § 10(a)(2).

Respondents and Petitioners agreed upon Arbitrator Baron prior to the start of the

hearing. ECF No. 31, at 23. Arbitrator Baron served as the arbitrator in twelve previous hearings

where Choice was a party; however, these hearings were limited to defaults by franchisees under

the franchise agreement, not the issues involved here. Id. Arbitrator Baron disclosed this

information and responded to all questions Respondents asked about such information. ECF No.

31 at 23. Satisfied with Arbitrator Baron’s responses, Respondents stated “we have decided not to

object and would like to proceed with Arbitrator Baron.” Id.

The parties arbitrating have the power to select an arbitrator of their choosing, and they

tend to select someone with experience in the industry at issue. See Freeman v. Pittsburgh Glass

Works, LLC, 709 F.3d 240, 253 (3d Cir. 2013) (citing Commonwealth Coatings Corp. v. Cont’l.

Cas. Co., 393 U.S. 145, 150 (1968)). “If the parties are willing to proceed in the face of apparent

bias, they should be free to do so.” Id. at 253 (citing Commonwealth Coatings, 393 U.S. at 151).

Respondents and Petitioners were aware of Arbitrator Baron’s prior professional

relationship with Choice where he arbitrated twelve previous cases in which Choice was a

party. Arbitrator Baron responded to all Respondents’ questions regarding Arbitrator Baron’s

relationship, and Respondents declared they would not object to Arbitrator Baron and wished to

proceed. ECF 31 at 23. Respondents cannot now claim, after fully and voluntarily participating

in the hearing, that the very information they were aware of and affirmatively accepted is evidence

of partiality. Furthermore, it would be inappropriate to find Arbitrator Baron was partial solely

because of his prior strictly professional relationship with Choice as an impartial arbitrator, which

merely indicates Arbitrator Baron has experience within the industry and is an arbitrator in

demand. As far as the Court is aware, neither party had a connection to Arbitrator Baron beyond

their knowledge of or experience with him in his professional capacity as an arbitrator. Therefore,

the Court will not disturb their willing decision to choose him as their impartial arbitrator, even in

the face of any alleged bias.

While proceeding with Arbitrator Baron, during a portion of Respondents’ presentation,

Respondents called Rick Summa, Head of Choice’s Procurement Department, to testify about the

issue of volume discounts. ECF No. 31, at 24. Summa testified that Choice, when limiting the

number of qualified vendors, was obligated to obtain volume discounts for their franchisees. ECF

No. 16-1, at 23. However, the franchise agreement states that Choice “may” limit the number of

vendors to obtain volume discounts. ECF No. 1-3, at 4. Arbitrator Baron, in his award, stated that

“may” indicates “permissive rather than mandatory language,” therefore, Choice was not required

to obtain these discounts for its franchisees. Id. Respondents called two experts to support their

position, but neither was able to establish that “these specific Claimants overpaid for particular

products they purchased for their Choice hotels.” Id.

Arbitrator Baron was unconvinced by Respondents’ arguments and evidence for the

volume discount issue, just as in the previously mentioned key money issue. Id. at 1, 10.

For an arbitral award to be vacated under 9 U.S.C. § 10(a)(2), the partiality must be

“evident,” meaning it “must be sufficiently obvious that a reasonable person would easily

recognize it.” Facta Health Inc. v. Pharmadent LLC, 2024 WL 4345299, at *7 (3d Cir. Sept. 30,

2024) (quoting Freeman, 709 F.3d at 253); see, e.g., Freeman, 709 F.3d at 254-55 (holding that

the arbitrator did not display evident partiality when she failed to disclose that she received

campaign funds from a minority owner of one of the parties where the funds were a matter of

public record and made up a relatively small percentage of money raised during the arbitrator’s

campaign). A claim for evident partiality needs more than appearance of bias alone. Bapu Corp.

v. Choice Hotels Intern., Inc., 371 F. App’x. 306, 310 (3d Cir. 2017) (citing Apperson v. Fleet

Carrier Corp., 879 F.2d 1344, 1358 (6th Cir. 1989)). The claim must include “proof of

circumstances powerfully suggestive of bias.” Karoon v. Nat’l. Sec. Corp., 2023 WL 2473371, at

*1 (3d Cir. Mar. 13, 2023) (quoting Kaplan v. First Options of Chi., Inc., 19 F.3d 1503, 1523 n.30

(3d Cir. 1994), aff'd, 514 U.S. 938 (1995)). Proof of circumstances powerfully suggestive of bias

is not found where a plaintiff merely alleges that that “only an arbitrator displaying evident

partiality could have ruled in favor of [Defendant].” Tonnelle N. Bergen, LLC v. SB-PB Victory,

L.P., 2023 WL 7412936, at *7 (E.D. Pa. Nov. 9, 2023).

In Andorra Servs. Inc., the court held that there was no evidence of bias to vacate the

arbitral award when the arbitrator refused to delay the proceedings so Respondents could receive

additional evidence. Andorra Servs. Inc. v. Venfleet, Ltd., 355 F. App’x. 622, 626 (3d Cir.

2009). The arbitrator justifiably relied on other evidence in reaching his conclusion and

determined that the evidence in question was “immaterial” to the overall dispute and not worth

delaying the proceedings over because it was not a key factor in his decision. Id. at 626-627. The

Court found that this conduct from the arbitrator was not “‘powerfully suggestive of bias’” and

“did not ‘so affect[] the rights of [appellants] that it may be said that [they were] deprived of a fair

hearing.” Id. at 627 (quoting Kaplan, 19 F.3d at 1523 n. 30) (quoting Teamsters Local 312 v.

Matlack, Inc., 118 F.3d 985, 995 (3d Cir. 1997)).

Similar to the arbitrator in Andorra, Arbitrator Baron relied on other evidence to support

his conclusion as to the key money issue. Arbitrator Baron relied on “Shemer’s testimony, the

documentary and other record evidence, and Cuomo’s affidavit” to conclude that Key money is

not apportioned to solicit or advertise to potential franchisees. ECF 31, at 17. Cuomo’s affidavit

merely confirmed Shemer’s testimony and explained that the Choice executives’ public statements

did not contradict Shemer’s testimony. Arbitrator Baron received and considered both parties’

briefs related to the public statements, but Arbitrator Baron was persuaded by Petitioners.

Shemer was Respondents’ witness. Respondents were given an adequate opportunity to

elicit testimony from him to support their claim that key money was used to solicit new

franchisees. Respondents were also given additional time to present their arguments and evidence

rebutting the key money issue, but they chose not to take advantage of that or call another witness

on the issue. Arbitrators are not required to let the parties present every single piece of evidence

or delay hearings and order additional evidence when the arbitrator deems such unnecessary. This

includes the parties not having an “absolute right” to cross-examination. This Court will not

reexamine the evidence or Arbitrator Baron’s factfinding on the key money issue when supporting

evidence beyond Cuomo’s affidavit is present.

Respondents also show dissatisfaction with Arbitrator Baron’s decision regarding the issue

of volume discounts. Respondents attempt to argue Arbitrator Baron was partial in determining

that the there was no breach of contract or fraudulent or negligent misrepresentation by Petitioners

related to volume discounts. Arbitrator Baron was persuaded by Petitioners’ argument and

evidence over Respondents’, which he is within his authority to do. In his conclusion on volume

discounts, Arbitrator Baron did not only rely on witnesses presented by Petitioners; Arbitrator

Baron relied on the plain language of the franchise agreement as well as the lack of proof submitted

by Respondents, particularly Respondents not including how they did not receive discounts

themselves. ECF 1-3, at 5. When an arbitrator interprets a contract in good faith, as was done

here, a court will not overturn his decision, even if the court disagrees with the arbitrator’s

analysis. The Court will not disrupt the Arbitrator Baron’s conclusions.

Arbitrator Baron was within his authority to make credibility determinations, weigh the

evidence, and resolve the facts, and Arbitrator Baron did just that in deciding to credit Petitioners’

evidence on the key money issue and discredit Respondents’ evidence on the volume discount

issue. Respondents have provided no clear evidence to establish that his decisions were made

because of bias, they merely express disapproval of his decisions, which is insufficient to establish

evident impartiality. Tonnelle N. Bergen, LLC, 2023 WL 7412936, at *7.

Therefore, it is improper to order a vacatur of the award because Arbitrator Baron was not

partial as defined under the FAA.

c. Arbitrator Baron acted within the scope of his authority by arbitrating in accordance

with the contract.

Arbitrator Baron did not exceed his powers under 9 U.S.C. § 10(a)(4).

An arbitrator exceeds his powers “only if the arbitrator acts outside the scope of his

contractually delegated authority.” Transcon. Gas Pipe Line Co LLC v. Permanent Easement for

2.59 Acres, et al, 834 F. App’x. 752, 761 (3d Cir. 2020) (quoting Oxford Health Plans LLC v.

Sutter, 569 U.S. 564, 569 (2013)). This occurs when an arbitrator “decides an issue not submitted

to [it], grants relief in a form that cannot be rationally derived from the parties’ agreement and

submissions or issues an award that is so completely irrational that it lacks support

altogether.” Davidson Design & Dev., Inc. v. Scorza, 2025 WL 789546, at *1 (3d Cir. Mar. 12,

2025) (quoting Sutter v. Oxford Health Plans LLC, 675 F.3d 215, 219-220 (3d Cir. 2012)). Because

an arbitrator’s power comes from the agreement and submissions, an arbitrator can exceed his

powers when he “award[s] remedies barred by the agreement.” Davidson Design & Dev., Inc. v.

Scorza, 2023 WL 7283179 at *2 (W.D. Pa. Nov. 3, 2023) (citing Roadway Package Sys. Inc. v.

Kayser, 257 F.3d 287, 300-01 (3rd Cir. 2001)).

“Except where prohibited by the plain and express terms of the submission, an arbitrator is

empowered to grant any relief reasonably fitting and necessary to a final determination of the

matter submitted to him, including legal and equitable relief.” Sherrock Bros., Inc. v.

DaimlerChrysler Motors Co., LLC, 260 F. App’x. 497, 502 (3d Cir. 2008) (quoting Bd. of Educ.

of Dover Union Free School Dist. v. Dover–Wingdale, N.Y.S.2d 270 (N.Y. App. Div. 1983)); see

College Hall Fashions, Inc. v. Phila. Joint Bd. Amalgamated Clothing Workers of Am., 408 F.

Supp. 722, 728 (E.D. Pa. 1976)).

Arbitrator Baron issued the arbitral award on January 12, 2023. ECF No. 1-3, at 10.

Petitioners allege the award was issued only ten days past the deadline set forth in the Commercial

Arbitration Rules of the American Arbitration Association (“AAA”), which expired on January 2,

2022, thirty days after the reopened hearing was closed. ECF No. 31, at 28. Respondents allege

this award came eighty days late, arguing that the deadline for the award was October 23, 2022,

because all post-hearing briefing was due by September 23, 2022. ECF No. 16-1, at 27. However,

exhibits were still being sent to Arbitrator Baron as late as October 7, 2022. ECF No. 31, at 27.

Arbitrator Baron was determining if post-brief oral arguments were necessary and, after

determining that they were not, he closed the hearing on October 24, 2022. Id. Arbitrator Baron

then reopened the record on November 23, 2022, for the issue of attorneys’ fees and costs, which

required additional briefing. Id. All briefs were then submitted by December 2, 2022. Id.

If an arbitration clause within a contract clearly and unmistakably states that the arbitration

will take place in a manner consistent with the AAA’s Commercial Arbitration Rules, as is the case

here, then those rules are incorporated into the contract. See HealthplanCRM, LLC v. AvMed, Inc.,

458 F.Supp.3d 308, 321-322 (W.D. Pa. 2020). The arbitration clause of the parties’ contract

explicitly maintains that they agree to be subject to final and binding arbitration “in accordance

with the Commercial Arbtiration Rules of the American Arbitration Association.” ECF No. 16-9

at 23. Rule 47 dictates, “[t]he award shall be made promptly by the arbitrator and, unless otherwise

agreed by the parties or specified by law, no later than 30 calendar days from the date of closing

the hearing, or, if oral hearings have been waived, from the due date set for receipt of the parties’

final statements and proofs.” Therefore, because there is no agreed upon deadline for the award

within the parties’ agreement, Arbitrator Baron was governed by the 30-day timeline set forth in

the Commercial Rules. However, the Commercial Rules do not proscribe the consequences for

issuing an award outside of this timeline. More specifically, the Commercial Rules do not go so

far as to say that an award is automatically invalid if issued late.

The Court is not aware of any cases where the Third Circuit addressed the issue of the

implications of an untimely arbitral award when there is a deadline in place. In the Sixth Circuit,

an appellant contended that because the arbitration board rendered its award after the fifteen-day

deadline set forth in the arbitration agreement, the award must be rendered null and void because

the board lost jurisdiction to issue such an award after the expiration of time. Jones v. St. Louis-

San Francisco RR Co., 728 F.2d 257, 264 (6th Cir. 1984). However, the Court found, “[s]ince the

agreement in the case at bar did not unequivocally state that jurisdiction would terminate on the

sixteenth day, we believe that the fifteen-day time period was a goal set to encourage prompt

determination of the arbitrable issue. Therefore, the jurisdiction of the arbitration board to resolve

this dispute did not expire until a reasonable time thereafter.” Id. at 265. However, the Court

ultimately concluded that the 14-month delay was not reasonale in light of persuasive authority

from the Rules of the Federal Mediation and Conciliation Sergice which encouraged the rendering

of awards no later than 60 days from the date of closing of the record. Id. at 264-65 (citing 29

C.F.R. § 1404.14). The Eleventh Circuit also upheld an untimely award, stating, “we shall not

overturn the arbitrator's award where the losing party failed to object immediately upon the

expiration of the deadline, especially where there has been no demonstration of any prejudice

arising from the delay.” Davis v. Producers Agr. Ins. Co., 762 F.3d. 1276, 1287 (11th Cir. 2014);

see see U.S. Airline Pilots Ass'n v. U.S. Airways, Inc., 25 F. Supp. 3d 758, 773-74 (W.D. Pa.

2014), aff'd, 604 F. App'x 142 (3d Cir. 2015) (declining to overturn an arbitrator’s award issued

42 months after the hearing where there was no time limit established in the agreement and noting,

“Plaintiff has not alleged that it complained about the delay prior to the Award being issued or that

it suffered prejudice from the delay and thus, even under the standard utilized in Jones, it would

not be able to state a claim.”). In deciding if an award should be vacated for untimeliness, the

Second Circuit determined that the relevant inquiry was whether the losing party could show

“actual harm”, or prejudice caused by the delay. Appel Corp. v. Katz, 217 F. App’x. 3, 5 (2d Cir.

2007).

Respondents argue the delay equates to Arbitrator Baron exceeding his powers. ECF No.

16-1 at 24. Furthermore, Respondents argue they were “highly prejudiced” by this delay. ECF

No. 16-1 at 28.

Regardless of whether the arbitral award was issued 80 days late, as per Respondents’

argument, or 10 days late, as per Petitioners’ argument, it does not impact the Court’s

conclusion. Although the contract invoked the Commercial Arbitration Rules, the contract

included no language indicating the consequences of an award issued after the AAA’s 30-day time

frame. ECF No. 16-1 at 9.

Furthermore, Arbitrator Baron did not extend the time for making his award arbitrarily or

without reason. 80 days is less than three times the period prescribed in the Commercial

Arbitration Rules, which is not a significant extension, especially given the fact that Arbitrator

Baron was still receiving hard copies of evidence, making determinations, and receiving

submissions long after the hearing had concluded. Arbitrator Baron was in the process of deciding

whether he needed oral arguments after the hearing to aid in his conclusion. ECF No. 31 at 7. The

Sixth Circuit would provide Arbitrator Baron with a “reasonable time thereafter” to issue his award

where prejudice was not shown. Given the time needed to review the briefing submitted in

preparation for oral arguments and on the issue of attorneys’ fees and costs, the Court finds that

the slight delay was warranted and reasonable. Even assuming that there was an 80-day delay in

issuing the award, that is not nearly as excessive as the 14-month delay in Jones.

Regardless, Respondents have failed to prove that Arbitrator Baron’s delay was prejudicial

to them. Respondents generally argue, “the briefing of attorneys’ fees prior to the issuance of an

award was highly prejudicial to Respondents. Respondents were required to have its counsel draft

an attorneys’ fees brief on fees it would never recover and incurred more fees by doing so.” ECF

No. 16-1 at 28. However, they have provided no evidence, including the amount incurred in

additional fees for submitting this briefing, nor an explanation as to how the time spent briefing

the request for attorneys’ fees was harmful to them. There is no indication that either party objected

to the briefing ordered by Arbitrator Baron. Moreover, there is no express provision in their

contract nor the Commercial Arbitration Rules that says the issue of attorneys’ fees and costs

should be addressed after the issuance of an award, so Arbitrator Baron was within his right to

request briefing on that matter when he did. Stone, 872 F.Supp.2d at 451-452 (“Third, several

courts, including the Third Circuit, have recognized that ‘harmless’ or ‘trivial’ instances of an

arbitrator overstepping his or her authority do not justify vacatur under Section 10(a)(4).”);

Brentwood Med. Associates v. United Mine Workers of Am., 396 F.3d 237, 243 (3d Cir. 2005), as

amended (Mar. 17, 2005) (“Consequently, the arbitrator's error was harmless, since he would have

arrived at the conclusion he reached here, even absent the discussion of the aberrant language.”)

On top of the fact that the delay was de minimus and Respondents have failed to articulate

how they were unduly prejudiced by it, Petitioners should not be penalized for Arbitrator Baron’s

delay which they played no part in. Tomczak v. Erie Ins. Exch., 268 F. Supp. 185, 189-90 (W.D.

Pa. 1967) (“If the two-week delay is deemed an irregularity, it was de minimus, and to accede to

defendant's demand to return the case to the AAA for another arbitration proceeding would visit a

harsh and unwarranted penalty upon the plaintiff who was not in any way to blame.”); Davis, 762

F.3d. at 1287 (quoting Lodge No. 725, Int’l. Ass’n of Machinists v. Mooney Aircraft, Inc., 410 F.2d

681, 683 (5th Cir.1969)) (“‘We would be extremely loath to penalize the beneficiary of the award

because of the lapse of time over which he had no possible control. This is especially true because

of the extreme shortness of the period.’”). “[T]he considerable time and effort expended which

culminated in the award should not be for naught except for compelling reasons.” Tomczak, 268 F.

Supp. at 189. All deadlines set by Arbitrator Baron were met by both parties who put considerable

effort and time into this case. Dates allotted for the hearing as well as due dates for briefs and

replies were adhered to. The issuance of the award later than the timeline set forth in the

Commercial Arbitration Rules does not change the outcome of the substantive award.

Considering of the absence of controlling Third Circit precedent on the issue of untimely

arbitration awards and the highly deferential standard in favor of affirming arbitration awards, this

Court finds it would be inappropriate to vacate the entire arbitral award for the slight delay.

Therefore, it is improper to order a vacatur of the award because Arbitrator Baron did not

exceed his powers as defined under the FAA.

d. The Court will confirm the arbitral award in its entirety because there is no basis

to vacate the award on any issue.

There is no basis to vacate the arbitral award.

Unless a court vacates an arbitral award as outlined in 9 U.S.C. §10(a)(1-4) or modifies the

award under 9 U.S.C. §11, an application to confirm an award “must” be granted. See 9 U.S.C.

§9; Teamsters Local 177 v. UPS, 966 F.3d 245, 248, 256 (3d Cir. 2020).

As outlined above, none of Respondents’ claims meet the high legal standard required for

vacatur.

Therefore, the entire arbitral award must and will be confirmed.

V. CONCLUSION

For the reasons stated above, the Court grants Petitioners’ Application for Confirmation of

Arbitral Award (ECF No. 1) and denies Respondents’ Motion to Vacate the Arbitral Award (ECF

No. 16).

BY THE COURT:

/s/ John M. Gallagher

JOHN M. GALLAGHER

United States District Court Judge