IN A DISPUTE INVOLVING THE TELECAST RIGHTS FOR TWO MAJOR LEAGUE BASEBALL TEAMS, THE ARBITRATOR EXCEEDED ITS POWERS, WHICH WERE SPELLED OUT IN THE SETTLEMENT AGREEMENT, BY IMPOSING A MONEY JUDGMENT; THE ARBITRATOR’S RULING WAS AFFIRMED BUT THE MONEY JUDGMENT WAS VACATED (CT APP).
The Court of Appeals, in a full-fledged opinion by Justice Singas, determined that the settlement agreement controlled the limits of the arbitrator’s powers in this dispute between two major league baseball team and their co-owned sports network about the value of telecast rights. Pursuant to the settlement agreement the arbitrator had the power to decide the fees associated with the telecast rights, but did not have the power to impose a money judgment:
New York’s well-established rules of contract law, which apply to arbitration agreements, provide that courts will enforce a commercial contract between sophisticated and counseled parties according to the contract’s terms. In this case, two Major League Baseball (MLB) teams and their co-owned regional sports network are in a dispute regarding the fair market value of certain telecast rights. By affirming the confirmation of the second arbitration award and directing that the money judgment be vacated, we hold the highly sophisticated parties to the terms of their agreement. * * *
Although the courts below correctly confirmed the second arbitration award, the order appealed from must be modified because Supreme Court erred by awarding the Nationals prejudgment interest and rendering a money judgment in the Nationals’ favor. The settlement agreement grants the RSDC [the arbitrator] the power only to determine “the fair market value” of the telecast rights fees. The parties did not agree that the RSDC could resolve disputes over nonpayment of such fees. Instead, remedies for … nonpayment of those fees are governed by a different provision of the settlement agreement, which sets forth certain requirements, including a cure period. Only after that cure period expires do the Nationals “have a right to seek money damages.” Further, disputes over nonpayment of the fees appear to be governed by the settlement agreement’s more general dispute resolution provisions. Matter of TCR Sports Broadcasting Holding, LLP v WN Partner, LLC, 2023 NY Slip Op 02090, CtApp 4-25-23
Practice Point: Sophisticated parties (here major league baseball teams and a regional sports network) must be held to the terms of the underlying commercial contract. The arbitrator exceeded its powers by imposing a money judgment after deciding the fee dispute. The settlement agreement did not empower the arbitrator to impose the money judgment.