Accenture LLP v. Spreng

Issue Discussed: “Interim” v. “Final” Decisions

Submitted by Aluyah I. Imoisili, H. Josh Ji*

Date Promulgated: May 27, 2011

Accenture LLP v. Spreng, 647 F.3d 72 (2d Cir. 2011)

Court: United States Court of Appeals, Second Circuit

Issues Decided: Whether an “interim procedural ruling” denying leave to amend an arbitral claim is a final award.

Key Holding

Accenture acquired companies from Jim Spreng, and hired him as an employee and offering a performance bonus if the companies met certain revenue targets.  After the acquired companies failed to meet the specified targets, Accenture terminated Spreng.  Spreng demanded AAA arbitration for wrongful termination and breach of contract.  After Spreng discovered that Accenture may have padded revenues during the acquisition, he moved for leave to amend his statement of claims to include fraud in the inducement, which was denied (the “October Order”).  Spreng then filed a new demand for arbitration (this time, including the fraud claim) and withdrew his first demand “without prejudice.” which the AAA accepted.  Accenture asked the arbitrator to deem the withdrawal of the first claim “with prejudice,” but the arbitrator refused because the AAA had already accepted the withdrawal and rendered the arbitrator “without jurisdiction or authority” to grant Accenture’s request.  Accenture then sought to enforce the October Order denying Spreng’s leave to amend.  Accenture argued the October Order was reviewable as a final award.  The district court disagreed.

The Second Circuit affirmed the district court’s decision.  The Second Circuit held that the October Order was not a final award because it did not dispose of Spreng’s fraud claim on the merits based on substance; rather, it was a ruling based on procedure.  Thus, the October Order was an “interim procedural ruling,” not a final award subject to judicial review.

Key Takeaways

Arbitral rulings on procedural issues are not final awards under the FAA.  In order to be a final award, the arbitrator must conclusively dispose of all claims on the substantive merits.

* Aluyah I. Imoisili is a Partner and H. Josh Ji is an Associate at Greenberg Gross LLP, where they specialize in commercial litigation and arbitration.