Reinsurance Focus

Dealer Computer demanded arbitration of a contract dispute, and sought to arbitrate on a class basis. The arbitration panel issued a “Clause Construction Award,” which permitted the matter to proceed on a class basis. Respondent, DCS, moved to vacate the award as being in excess of the powers of the panel and in manifest disregard of law. The district court denied the motion, and DCS appealed. Rather than reach the merits of the appeal, the appellate court vacated the district court’s order and remanded with instructions to dismiss for lack of jurisdiction on ripeness grounds. The court determined that, because the attempt at class certification could ultimately fail, the potential harm to plaintiff might never occur. Moreover, even if a class were certified, plaintiff could still obtain judicial review of the certification decision through an interlocutory procedure permitted by the arbitration rules (the AAA Supplementary Rules for Class Arbitrations). Although it thus did not reach the merits, in what appears to be dicta, the Sixth Circuit stated in a footnote that a court “may also vacate an award on non-statutory grounds if the arbitration panel demonstrates a ‘manifest disregard of the law,’” citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), but also citing Hall Street Associates v. Mattel, Inc., 128 S. Ct. 1396 (2008), as contrary authority. Dealer Computer Services, Inc. v. Dub Herring Ford, Case No. 07-1819 (6th Cir. Nov. 18, 2008).

This post written by Brian Perryman.