“MANIFEST DISREGARD OF THE LAW” ALIVE AND WELL IN THE NINTH CIRCUIT
A court in the Ninth Circuit recently considered whether an arbitration award in an employment dispute was a “manifest disregard of the law” under the Federal Arbitration Act. The case stemmed from the employer’s termination of its CEO under an employment agreement that deemed a termination “for cause” if the officer committed a “willful” illegal act. After the CEO was indicted for securities fraud and pleaded guilty to “willfully” making false and misleading statements in connection with the same conduct that led to his termination, the employer argued that the CEO made a “judicial admission” that precluded him from disputing that his conduct was “willful.” The arbitrator, however, disagreed and found that “willful” meant “something different in the context of a securities fraud violation as opposed to under the Agreement.” The court found no “manifest disregard” in the arbitrator’s determination, finding that the decision was “a reasonable construction” of the law and was “not clearly irrational.” Electro Scientific Industries, Inc. v. Dooley, Case No. 10-CV-1564 (USDC D. Or. May 17, 2011).
This post written by Michael Wolgin.
