Folkways Music Publishers, Inc. v. Weiss
989 F.2d 108 (1993)
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Rule of Law:
A court may only vacate an arbitration award for 'manifest disregard of the law' if it finds the arbitrators knew of a well-defined, explicit, and clearly applicable governing legal principle yet refused to apply it or ignored it altogether; a mere error or misunderstanding of the law is insufficient grounds for vacatur.
Facts:
- Solomon Linda composed a song called 'Mbube' and in 1952 assigned his rights to Gallo Africa, Ltd.; the renewal rights were later assigned to Folkways Music Publishers, Inc. ('Folkways').
- In 1951, Pete Seeger created a new arrangement of 'Mbube' titled 'Wimoweh' and assigned all copyright interests to Folkways.
- In 1961, George David Weiss, June Peretti, and Luigi Creatore (the 'Songwriters') wrote 'The Lion Sleeps Tonight,' another version of 'Wimoweh.'
- On October 31, 1961, Folkways claimed that 'The Lion Sleeps Tonight' infringed its copyright in 'Wimoweh.'
- To resolve the infringement claim, on November 6, 1961, the Songwriters signed a 'Standard Popular Songwriter Contract' which assigned all their rights in 'The Lion Sleeps Tonight' to Folkways for the initial copyright term and included a broad clause requiring arbitration for 'any and all differences, disputes or controversies arising out of this contract.'
- In October 1989, as the initial copyright term was expiring, the Songwriters notified Folkways of their intent to exercise their renewal rights in 'The Lion Sleeps Tonight,' a claim which Folkways refused to recognize.
Procedural Posture:
- The Songwriters filed a demand for arbitration against Folkways pursuant to their 1961 contract.
- In response, Folkways filed a copyright infringement lawsuit against the Songwriters in the U.S. District Court for the Southern District of New York and moved to stay or limit the arbitration.
- The district court denied Folkways' motion and compelled the parties to proceed with arbitration on all issues.
- The arbitration panel issued an award in favor of the Songwriters, declaring them the owners of the renewal copyright term free of any claims from Folkways.
- Folkways moved the district court to vacate, modify, or correct the arbitration award.
- The district court denied Folkways' motion, confirmed the arbitration award, and granted summary judgment to the Songwriters.
- Folkways, as the appellant, appealed the district court's decision to the U.S. Court of Appeals for the Second Circuit, with the Songwriters as appellees.
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Issue:
Did the arbitrators exceed their authority or act in manifest disregard of the law by awarding the Songwriters full rights to 'The Lion Sleeps Tonight' for the renewal copyright term, free from any infringement claims by Folkways based on its rights in the underlying musical works?
Opinions:
Majority - Oakes, Circuit Judge
No, the arbitrators did not exceed their authority or act in manifest disregard of the law. Judicial review of arbitration awards is severely limited to uphold the goals of arbitration, which are to settle disputes efficiently and avoid costly litigation. The arbitrators did not exceed their powers because the arbitration clause in the 1961 agreement was extremely broad, covering 'any and all differences, disputes or controversies,' which granted them the authority to decide on all aspects of the dispute, including the rights related to the underlying works. Furthermore, the arbitrators did not act in manifest disregard of the law. To meet this high standard, the challenging party must prove that the arbitrators knew of a well-defined, explicit, and clearly applicable law and deliberately ignored it. Folkways failed to produce any evidence of such willful disregard, and an erroneous interpretation of law is not grounds to vacate an award. The arbitrators' decision to grant the Songwriters the right to exploit the song 'free of any and all claims from Folkways' was a conclusive resolution of the issues submitted to them.
Analysis:
This decision strongly reinforces the principle of judicial deference to arbitration. It clarifies that the 'manifest disregard of the law' standard is a very high bar, requiring proof of intentional and willful ignorance of clear legal principles, not just a simple legal or factual error. The ruling makes it exceptionally difficult for a losing party in arbitration to have the award overturned in federal court on substantive legal grounds. This precedent strengthens the finality of arbitration awards and encourages parties to fully litigate their issues within the arbitral forum, as recourse to the courts is extremely limited.
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