Manifest Disregard Round-Up

Mike Wolgin of the Miami office of Jorden Burt, LLP has compiled a list of recent cases which address “manifest disregard” of the law in an arbitral context. They include:

• Paul Green School of Rock Music Franchising, LLC v. Smith, No. 09-2718 (3d Cir., Aug 2, 2010), affirmed a district court’s confirmation of an arbitration award and held that the award did not constitute a “manifest disregard” of the law. The Third Circuit declined to address whether “manifest disregard” is a valid ground for vacatur of an arbitral award under the Federal Arbitration Act (FAA). The case in not precedential, however.
• In The Burton Corp. v. Shanghai Viquest Precision Industries, Co., No. 10 Civ. 3163 (S.D.N.Y., August 3, 2010), the court denied a petition to vacate an arbitration award and granted a petition to confirm the award because it found the arbitrator did not exceed his authority and the award was not in “manifest disregard” of the law. The court cited a Second Circuit opinion which states “manifest disregard” of the law remains a valid ground for vacating an arbitration award.
• Kunz v. JHP Enterprises, LLC, No. 1:09CV115 (D. Utah, August 9, 2010), granted a motion to confirm a Financial Industry Regulatory Authority (FINRA) award and stated the panel did not exhibit “manifest disregard” of the law by concluding that Plaintiffs had a duty to disclose information. The court also noted that “the Tenth Circuit has acknowledged a judicially-created basis for vacating an arbitration award when the arbitrators acted in “manifest disregard” of the law.”
• In Ozormoor v. T-Mobile USA, Inc., No. 08-11717 (E.D. Mich., August 19, 2010), the court denied a motion to vacate an arbitral award and held the arbitrator did not exceed his authority. After noting that the Sixth Circuit has held that an arbitral “award maybe vacated if it was made in ‘manifest disregard of the law,’” the court declared the moving party failed to show that the arbitrator acted in “manifest disregard” of the law when he upheld a one-year limitation provision in the parties’ arbitration agreement.
• Westerlund v. Landmark Aviation, No. CV09-0686 (C.D. Cal., August 9, 2010), denied motions to vacate and modify an arbitral award and granted a motion to confirm the award. Additionally, because the award was not “completely irrational,” and nothing in the award demonstrated that the arbitrator engaged in “manifest disregard” of the law, the arbitrator did not exceed his powers. The court also stated even if “manifest disregard” of the law had taken place and vacatur were justified, “the appropriate remedy would be to remand the case to the arbitrator for further proceedings.”

Manifest Disregard and Overlapping Remedies Cases:

• Kaliroy Produce Co. v. Pacific Tomato Growers, Inc., No. Civ. 10-160 (D. Ariz., Aug. 4, 2010), denied a motion to vacate an arbitration award and granted a petition to confirm the award. The court held that the New York Convention’s remedies are not exclusive of remedies available under the FAA. Additionally, the court found the arbitral award did not “fail to draw its essence” from the arbitration agreement, violate public policy or demonstrate a “manifest disregard” of the law. The case is on Notice of Appeal to the Ninth Circuit.
• In F. Hoffmann-La Roche Ltd. v. Qiagen Gaithersburg, Inc., No. 09 Civ. 7326, 7396 (S.D.N.Y., Aug. 11, 2010), the court denied a motion to vacate an international arbitration award and granted a motion to confirm the award because the matter was “international” under the New York Convention although the FAA also applied. Additionally, the court found that the arbitrator did not exceed his authority and did not demonstrate a “manifest disregard” of the law.

Disputing has discussed “manifest disregard” of the law many times since the United States Supreme Court decision in Hall Street Associates, LLC v. Mattel, Inc., 128 S.Ct. 1396 (2008). Blogs on the subject may be viewed here, here and here.

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