Labor & Employment Law

Arbitrator's manifest disregard of the law - a dying doctrine

Scenario: An individual employee and her employer agree to arbitrate the employee's claim against the employer. Perhaps Title VII, ADA, ADEA, whatever. They go to arbitration, and the arbitrator makes a decision. The loser reads the decision and sees a clear error in legal reasoning.

Can the loser in arbitration get the arbitrator's award vacated on the ground that the arbitrator acted in "manifest disregard of the law"?

It would seem that the answer has to be "no" even though many courts have said "yes." The answer has to be "no" because the Federal Arbitration Act contains an exclusive list of legal grounds for overturning arbitration awards. And the US Supreme Court in Hall Street Associates, L.L.C. v. Mattel, Inc., 128 S.Ct. 1396 (2008) repeatedly stated that the statutory grounds are exclusive. That means non-statutory grounds such as "manifest disregard of the law" cannot be used.

Citigroup Global Markets v. Debra Bacon (5th Cir 03/05/2009) squarely holds:

Hall Street Associates, L.L.C. v. Mattel, Inc., 128 S.Ct. 1396, 1403 (2008) "restricts the grounds for vacatur to those set forth in § 10 of the Federal Arbitration Act (FAA or Act), 9 U.S.C. § 1 et seq., and consequently, manifest disregard of the law is no longer an independent ground for vacating arbitration awards under the FAA."

But wait. Maybe you can wrap "manifest disregard of the law" up in new clothes, and jam it into the list of statutory grounds. As I have said previously [Hall Street: Non-statutory grounds for review],

The Supreme Court has never said (and I believe never will say) that "manifest disregard" exists as a ground separate from the FAA. In Hall Street the Court referred to the concept as "a supposed judicial expansion by interpretation," and mused that it might refer to the §10 grounds collectively, or might be "shorthand" for §10(a)(3) (?guilty of misconduct?) or §10(a)(4) (?exceeded their powers").

And so, when the 5th Circuit remanded the Citigroup Global Markets case, it should be an invitation to the lawyers to make the facts fit the statute.

Other comments on the 5th Circuit case:

5th Circuit Nixes Manifest Disregard as Ground for Vacatur of Arbitration Awards

"Manifest Disregard of Law" Now History in 5th Circuit

Full post as published by Arbitration Blog on March 17, 2009 (boomark / email).