FIRST CIRCUIT REINSTATES ARBITRAL AWARD DESPITE ARBITRATION PANEL’S POTENTIALLY ERRONEOUS CONCLUSIONS
The First Circuit Court of Appeals recently reversed the district court’s vacatur ruling and remanded the matter for entry of an order confirming an arbitration award. While the First Circuit found that several of the arbitration panel’s holdings may have been erroneous, the court held that “even serious error” by arbitrators will not invalidate an award and, further, “any error by the panel . . . does not rise to the level necessary to justify vacatur.” Plaintiff Robert Fenyk filed a complaint in Vermont state court alleging Raymond James Financial Services (RJFS) fired him because of his sexual orientation and his status as a recovering alcoholic in violation of Vermont employment laws. RJFS countered that Fenyk should not be afforded the protections of Vermont employment law because Fenyk was not an employee. RJFS also moved to compel arbitration pursuant to a previously signed agreement between the parties. Fenyk dismissed the suit and submitted his claims to arbitration.
In arbitration, Fenyk sought to amend his proceeding to bring additional claims under federal, New York, and Florida law. The arbitral panel denied Fenyk’s motion to amend but did award him $600,000 in back pay and $36,042.03 in attorney’s fees and costs. RJFS challenged the award in the district court, arguing that the arbitration panel had misapplied Florida law, the state where Raymond James is based. RJFS further argued that Fenyk’s claims were made beyond the one-year statute of limitations for civil rights cases, and therefore barred. The district court agreed with these positions and vacated Fenyk’s previous award, finding that the arbitrators had exceeded their authority.
A panel of three First Circuit judges unanimously reversed, remanding for the entry of an order confirming the arbitration award. The Court held that although there was uncertainty as to whether the arbitrators had correctly applied applicable law, even “serious error” of law is not a basis for invalidating an arbitration award, and the uncertainty did not establish that they had exceeded their authority under the arbitration provision. Raymond James Fin. Servs., Inc. v. Fenyk, 780 F.3d 59 (1st Cir. 2015) (No. 14-1252).
This post written by Whitney Fore, a law clerk at Carlton Fields Jorden Burt in Washington, DC.
