SDNY Judge Denies ex-Seller's Petition to Vacate Arbitration Award in Amazon’s Favor

U.S. District Judge Jessica Clarke for Southern New York denied the petition of former Amazon third-party seller Jiakeshu Technology to vacate an arbitration award in Amazon’s favor and granted Amazon’s cross-motion to confirm that award, said Clarke’s signed opinion and order Wednesday (docket 1:22-cv-10119). In light of Clarke's ruling, a clerk's judgment Wednesday decreed that the case is closed.

Arbitrator Billie Colombaro, a retired 3rd Circuit appellate judge from Louisiana, ruled in August 2022 that Amazon could freeze $50,000 in Jiakeshu sales proceeds after it deactivated the third-party store for paying customers to submit fake positive reviews, in violation of the parties’ business solutions agreement (BSA) (see 2307190030). Amazon argued that Jiakeshu fell short of establishing any basis for vacatur under the Federal Arbitration Act, and the judge agreed.

Jiakeshu’s vacatur petition argued that arbitrator Colombaro "manifestly disregarded" the law in ruling Section 2 of the BSA enforceable and that it was “completely irrational” to find Section 2 enforceable. The petition also argued that enforcing sections 2 and 18 of the BSA violates the public policy of the state of Washington.

But Jiakeshu’s arguments are “without merit,” said Clarke’s opinion and order. Jiakeshu hasn’t shown that Colombaro acted in manifest disregard of the law in finding that Section 2 of the BSA is enforceable, it said. It also hasn’t shown that the arbitrator “ignored clearly governing legal principles,” it said.

That Jiakeshu doesn’t agree with the arbitrator’s assessment of the record is no basis to vacate an arbitration award, said the opinion and order. As other courts in the Southern District of New York have recently held in rejecting the same argument, that the arbitrator disagreed with the petitioner’s argument doesn’t mean that the arbitrator manifestly disregarded the law, it said. Jiakeshu additionally argues that other arbitrators have found Section 2 of the BSA to be unconscionable, but that also doesn’t “justify” vacatur of the award, it said.

Jiakeshu next argues that the award must be vacated for “complete irrationality,” but the 2nd Circuit has declined to recognize “complete irrationality” as a ground for vacatur under the FAA, said the opinion and order. Clarke is “similarly unconvinced” by Jiakeshu’s argument that the award violates Washington public policy and should therefore be vacated, it said. Jiakeshu didn’t raise that argument during the arbitration proceedings or in its petition seeking to vacate the award, so Clark can’t address that issue, it said.

Jiakeshu next claims that the mandatory arbitration clause in Section 18 of the BSA violates public policy “and forms part of Amazon’s strategy to control and mistreat sellers,” said the opinion and order. But Jiakeshu “failed to raise any objection to arbitrability or the enforcement of Section 18" before the arbitrator, it said. “By such conduct,” Jiakeshu “has waived this argument,” it said.