Case Title: RONALD LEE WORMAN and SHERRI LYNNE WORMAN, deceased v. BP AMERICA PRODUCTION COMPANY

Citation: 

Docket Number: S-10-0162

State: wyoming

Court: Wyoming Supreme Court

Date: 2011-03-25T00:00:00Z

Document:
RONALD LEE WORMAN and SHERRI LYNNE WORMAN, deceased v. BP AMERICA PRODUCTION COMPANY2011 WY 54Case Number: No. S-10-0162Decided: 03/25/2011NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2010

RONALD LEE WORMAN and 
SHERRI LYNNE WORMAN, Deceased,

Appellants 
(Plaintiffs),

 
 
v.

 
 
BP AMERICA PRODUCTION 
COMPANY,

Appellee 
(Defendant).

 
 
Appeal 
from the District Court of Carbon County

The 
Honorable Wade E. Waldrip, Judge

 

Representing 
Appellants:

Larry B. Jones and 
William L. Simpson, Burg, Simpson, Eldredge, Hersh & Jardine, PC, Cody, 
Wyoming; Aaron J. Vincent and John R. Vincent, Vincent & Rutzick, Riverton, 
Wyoming.  Argument by Mr. 
Jones.

 
 
Representing 
Appellee:

John A. Coppede, John 
M. Walker, and Robert J. Walker, Hickey and Evans, LLP, Cheyenne, Wyoming.  Argument by Mr. Robert J. 
Walker.

 
 
Before KITE, C.J., 
and GOLDEN, HILL, VOIGT, and BURKE, JJ.

 
 
BURKE, 
Justice.

 
 

[¶1]        
An arbitrator denied 
Ronald Worman's claims against BP America Production Company.  In the district court, Mr. Worman sought 
to vacate the arbitrator's decision.  
The district court denied the motion, and Mr. Worman appealed.  We will affirm the district 
court.

 
 
ISSUE

 
 

[¶2]      
Mr. Worman contends 
that the arbitrator's decision must be vacated because it shows "a manifest 
mistake of fact and law." 

 
 
FACTS

 
 

[¶3]        
On August 23, 2006, 
Mr. Worman was working for Nabors Drilling Company on an oil rig in Carbon 
County, Wyoming.  The well site was 
owned and operated by BP, and Wayne Sanford was BP's "company man" on site.1  According to Mr. Worman, 
Mr. Sanford, "[w]ithout warning, provocation, or any cause," grabbed Mr. 
Worman and placed him in a "head lock" and squeezed.  Mr. Worman felt a "popping sensation in 
his neck, and immediately experienced significant and severe pain."  A few minutes later, Mr. Sanford 
put his hands around Mr. Worman's neck and began choking him.  Mr. Worman filed suit against Mr. 
Sanford, BP, and two co-workers, claiming he had sustained serious and permanent 
injury to his neck as a result of Mr. Sanford's actions.2

 
 

[¶4]        
BP filed a motion 
with the district court seeking to compel arbitration of the claims, asserting 
that arbitration was required pursuant to agreements among BP, Nabors Drilling, 
and the employees of Nabors.  The 
district court stayed the litigation and ordered the parties to submit to 
arbitration.  At some point, Mr. 
Worman reached settlement agreements with the other defendants, and arbitration 
proceeded only on his claims against BP.  
The arbitrator ruled that BP was liable for Sanford's actions only if 
they were "within the scope of employment or apparent scope of authority."  She concluded that Mr. Sanford's actions 
constituted "horseplay" that was "motivated by personal reasons" and "outside 
the scope of his authority."  On 
that basis, she ruled that BP was not liable to Mr. Worman.  

 
 

[¶5]        
Mr. Worman asked 
the district court to vacate the arbitrator's decision, asserting that it 
reflected a "manifest mistake of Wyoming law."  The district court concluded that 
manifest mistake of law is not one of the grounds available for vacating this 
arbitration award, but even if it were, the Arbitrator had not made a manifest 
mistake of Wyoming law.  It denied 
Mr. Worman's motion, and Mr. Worman perfected this appeal.

 
 
STANDARD OF 
REVIEW

 
 

[¶6]        
We review de novo a district court's decision to 
confirm, vacate, or modify an arbitration award.  "When reviewing the district court's 
order after an arbitration, we undertake a full review of the record without 
deference to the views of the trial court.'"  Welty v. Brady, 2005 WY 157, ¶ 12, 123 P.3d 920, 924 (Wyo. 2005), 
quoting JBC of Wyoming Corp. v. City of 
Cheyenne, 843 P.2d 1190, 
1194 (Wyo. 1992), quoting Inter-Mountain 
Threading, Inc. v. Baker Hughes Tubular Servs., Inc., 812 P.2d 555, 558 (Wyo. 1991). 
 At the same time, this Court, like 
the district court, shows substantial deference to the decision of the 
arbitrator.  

 
 
In 
reviewing the record below, we are mindful that the grounds for vacating or 
modifying an arbitrator's award remain narrow in scope.  Because of its voluntary, informal 
nature, awards made in arbitration are subject to less intensive scrutiny than 
are, for example, the orders of administrative agencies.  The reviewing court must observe the 
principle that arbitrators are free to fashion forms of relief which could not 
be ordered by a court in law or equity.  Furthermore, we are reluctant to disturb 
an arbitrator's just solution to a controversy, even if it differs from the 
resolution we might have chosen, had we been in the arbitrator's place.  As a voluntary method for resolution of 
disputes, arbitration is embedded in the public policy of Wyoming and is favored 
by this court.

 
 

JBC, 
843 P.2d  at 1194 (internal citations omitted).

 
 
DISCUSSION

 
 

[¶7]        
Pursuant to the 
parties' agreements, this arbitration was governed by the Federal Arbitration 
Act, 9 U.S.C. §§ 1-16.  The 
United States Supreme Court has held that the grounds for vacating an 
arbitration award under the Federal Arbitration Act are 
limited.

 
 
Congress enacted the 
FAA to replace judicial indisposition to arbitration with a "national policy 
favoring [it] and plac[ing] arbitration agreements on equal footing with all 
other contracts."  Buckeye Check Cashing, Inc. v. Cardegna, 
546 U.S. 440, 443, 126 S. Ct. 1204, [1207,] 163 L. Ed. 2d 1038 
(2006). . . .  The 
Act also supplies mechanisms for enforcing arbitration awards:  a judicial decree confirming an award, 
an order vacating it, or an order modifying or correcting it.  [9 U.S.C.] §§ 9-11.  An application for any of these orders 
will get streamlined treatment as a motion, obviating the separate contract 
action that would usually be necessary to enforce or tinker with an arbitral 
award in court.  Under the terms of 
§ 9, a court "must" confirm an arbitration award "unless" it is vacated, 
modified, or corrected "as prescribed" in §§ 10 and 11.  Section 10 lists grounds for vacating an 
award, while § 11 names those for modifying or correcting 
one.

 
 
The Courts of Appeals 
have split over the exclusiveness of these statutory grounds when parties take 
the FAA shortcut to confirm, vacate, or modify an award, with some saying the 
recitations are exclusive, and others regarding them as mere threshold 
provisions open to expansion by agreement. . . .  We now hold that §§ 10 and 11 
respectively provide the FAA's exclusive grounds for expedited vacatur and 
modification.

 
 

Hall Street 
Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 
581-84, 128 S. Ct. 1396, 1402-03, 170 L. Ed. 2d 254 (2008) (internal citation and 
footnotes omitted).  The statute 
provides that an arbitration award may be vacated:

 
 

(1)          
where the  award was procured by corruption, fraud, 
or undue means;

 
 

(2)          
where there was 
evident partiality or corruption in the arbitrators, or either of 
them;

 
 

(3)          
where the arbitrators 
were guilty of misconduct in refusing to postpone the hearing, upon sufficient 
cause shown, or in refusing to hear evidence pertinent and material to the 
controversy; or of any other misbehavior by which the rights of any party have 
been prejudiced; or

 
 

(4)          
where the arbitrators 
exceeded their powers, or so imperfectly executed them that a mutual, final, and 
definite award upon the subject matter submitted was not 
made.

 
 
9 U.S.C. 
§ 10(a).

 
 

[¶8]        
"Manifest mistake of 
law," sometimes termed "manifest disregard of law," has been recognized as a 
judicially-created or "common law" basis for vacating an arbitration award.  Welty, ¶ 11 n.2, 123 P.3d  at 924 
n.2.  However, manifest mistake of 
law is not explicitly listed in the federal statute quoted above, and it is 
unclear "whether judicially-created grounds for vacatur survive after Hall Street Associates."  Hicks v. Cadle Co., 355 Fed. Appx. 186, 
196 (10th Cir. 2009) (unpublished).3  In that case, the Tenth Circuit Court of 
Appeals listed the First, Fifth, Sixth, Eighth, and Eleventh Circuits as having 
"decided that manifest disregard of the law is no longer an independent ground 
for vacating arbitration awards under the FAA," while the Second and Ninth 
Circuits maintain that manifest disregard "remains a valid ground for 
vacatur."  Id. at 196-97.  But having discussed the split of 
authority, the Tenth Circuit found it unnecessary to reach the issue because no 
manifest disregard of the law was demonstrated in the case before 
it.

 
 

[¶9]        
We have considered 
the various decisions listed by the Tenth Circuit, and are more persuaded by 
those ruling that manifest mistake of law is not one of the grounds for vacating 
an arbitration award under the Federal Arbitration Act.  This is based in part on the language 
used by the United States Supreme Court in Hall Street Associates, stating that 
"§§ 10 and 11 respectively provide the FAA's exclusive grounds for 
expedited vacatur and modification."  
We are inclined to interpret the statement literally.  We are also mindful of the established 
principle that courts give great deference to arbitrators' 
decisions.

 
 
Once an arbitration 
award is entered, the finality that courts should afford the arbitration process 
weighs heavily in favor of the award, and courts must exercise great caution 
when asked to set aside an award. Because a primary purpose behind arbitration 
agreements is to avoid the expense and delay of court proceedings, it is well 
settled that judicial review of an arbitration award is very narrowly 
limited.

 
 

Foster 
v. Turley, 
808 F.2d 38, 42 (10th Cir. 1986) (internal citations omitted).  In Hall Street Associates, the United 
States Supreme Court referred to

 

a 
national policy favoring arbitration with just the limited review needed to 
maintain arbitration's essential virtue of resolving disputes straightaway. 
 Any other reading opens the door to 
the full-bore legal and evidentiary appeals that can "rende[r] informal 
arbitration merely a prelude to a more cumbersome and time-consuming judicial 
review process," Kyocera [Corp. v. Prudential-Bache T Services, 
Inc.], 341 F.3d [987,] 998 [(9th Cir. 
2003)]; cf. Ethyl Corp. v. United Steelworkers of 
America, 768 F.2d 180, 184 ([7th Cir.] 
1985), and bring arbitration theory to grief in postarbitration 
process.

 
 

552 U.S.  at 588, 
128 S. Ct.  at 1405, 170 L. Ed. 2d 254.  
Restricting the available grounds for vacating an arbitration award is 
consistent with this policy. 

 
 

[¶10]     
For these reasons, we 
are inclined to conclude that manifest mistake of law is no longer a valid basis 
for vacating an arbitration award under the Federal Arbitration Act.  We would therefore tend to affirm this 
decision by the district court:

 
 
Having relied on an 
argument that the Arbitrator made a "manifest mistake of Wyoming law," 
[Mr.] Worman has provided no grounds upon which [the district court] could 
apply § 10 or § 11 of the FAA to vacate or modify the Arbitrator's 
denial of an award to him.  
Accordingly, on those grounds alone, [the district court] must deny Plaintiffs' Petition to Vacate Arbitration 
Award.

 
 

[¶11]     
However, there 
remains a distinct split of federal authority on this issue.  Moreover, the United States Supreme 
Court recently declined to determine the issue.  Stolt-Nielsen S.A. v. AnimalFeeds 
International Corp., ___ U.S. ___, ___, 130 S. Ct. 1758, 1768 n.3, 176 L. Ed. 2d 605 (2010) ("We do not decide whether manifest disregard' survives our 
decision in Hall Street Associates . 
. . as an independent ground for review or as a judicial gloss on the enumerated 
grounds for vacatur set forth at 9 U.S.C. § 10.").  As noted above, the Tenth Circuit Court 
of Appeals has also declined to weigh in on the question.  Hicks, 355 Fed. Appx. at 197.  Given this uncertainty in the federal 
authority, the district court was "willing to concede that there is some room 
for [Mr.] Worman's argument" that manifest mistake of law remains a valid 
basis for vacating an arbitration award under the Federal Arbitration Act.  The district court, "in the interest of 
caution and full explanation," proceeded to consider the merits of 
Mr. Worman's position.  We will 
do the same.

 
 

[¶12]     
To show that the 
arbitrator's award could be vacated for a manifest mistake of law, Mr. Worman 
cannot rely on mere legal error.  
The standard is much higher than that, and has been characterized as 
"highly deferential."  ARW 
Exploration Corp. v. Aguirre, 
45 F.3d 1455, 1463 (10th Cir. 1995).

 
 
An 
arbitrator's erroneous interpretations or applications of law are not 
reversible.  Wilko v. Swan, 346 U.S. 427, 436-37, 98 L. Ed. 168, 74 S. Ct. 182 (1953).  
Only "manifest disregard" of the law is subject to reversal.  Id.  This Court has characterized the 
"manifest disregard" standard as "willful [in]attentiveness to the 
governing law."  Jenkins v. Prudential-Bache Sec., Inc., 
847 F.2d 631, 634 (10th Cir. 1988).  Manifest disregard of the law "clearly 
means more than error or misunderstanding with respect to the law."  Merrill Lynch, Pierce, Fenner & Smith, 
Inc. v. Bobker, 808 F.2d 930, 933 (2d Cir. 1986).

 
 

Id.

 
 

[¶13]     
The district court 
carefully evaluated the arbitrator's decision in light of applicable Wyoming 
law, and concluded that the arbitrator made no manifest mistake.  As stated in our discussion of the 
standard of review above, we do not defer to the views of the trial court in 
this case.  Welty, ¶ 12, 123 P.3d  at 924.  However, when we find a district court's 
decision completely persuasive, we are free to follow its 
lead.

 
 

[¶14]     
At the heart of the 
arbitrator's decision, the district court wrote, was the conclusion that Mr. 
Sanford was in legal effect an employee of BP, but was acting outside the scope 
and course of his employment when he injured Mr. Worman.  Mr. Worman contends that the 
arbitrator was mistaken about Wyoming law concerning whether on-the-job 
"horseplay" may be within the scope of employment.  He relies on State ex rel. Wyoming Workers' Compensation 
Div. v. Espinoza, 924 P.2d 979 (Wyo. 1996), in which Ms. Espinoza had been awarded 
workers' compensation benefits for an injury she sustained when "[h]er path was 
blocked by a young male co-employee.  
Horseplay between the two suddenly escalated and the co-employee punched 
[her], breaking her jaw."  Id. at 980.  The Division appealed, asserting that 
the injury did not arise out of and in the course of Ms. Espinoza's employment, 
because "momentary horseplay between two teenagers severed the requisite 
connection between [her] work and her injury."  Id. at 981.  We disagreed, noting that immediately 
before she was injured, Ms. Espinoza was retrieving a customer's 
order.  Her encounter with her 
co-worker "was not a frolic of her own but a condition of her employment  an 
obstacle in the path of her efforts to further her employer's business 
objectives by providing prompt customer service."  Id.  

 
 

[¶15]     
As the district court 
concluded, Espinoza is readily 
distinguished from Mr. Worman's case.  
In Espinoza, a workers' 
compensation case, the question was whether the injured worker was acting in the 
scope of her employment.  That could 
provide direct precedent in deciding, in Mr. Worman's case, whether 
Mr. Worman was acting in the scope of his employment when the horseplay 
occurred.  However, the question in 
Mr. Worman's respondeat superior case 
was whether Mr. Sanford, the person who caused the injury, was acting in 
the scope of his employment.  In the 
Espinoza case, there was no need to 
determine whether the "young male co-employee" who injured her was acting within 
the scope of his employment.  
Consequently, Espinoza 
provides little guidance in deciding Mr. Worman's claim that Mr. Sanford 
was acting within the scope of his employment.

 
 

[¶16]     
We have precedent 
much more directly applicable in respondeat superior 
cases:

 
 
Under 
the respondeat superior theory, an 
employer is liable for the negligence of an employee acting within the scope of 
his employment.  Hamilton [v. Natrona County Educ. Ass'n], 901 P.2d 
[381,] 385 [(Wyo. 1995)]; Combined Ins. 
Co. of America v. Sinclair, 584 P.2d 1034, 1042 (Wyo. 1978).  The conduct of an employee is within 
the scope of his employment "only if it is of the kind he is employed to 
perform; it occurs substantially within the authorized time and space limits; 
and it is actuated, at least in part, by a purpose to serve the master." Hamilton, 901 P.2d  at 385 (citing Miller v. Reiman-Wuerth Co., 598 P.2d 20, 22 (Wyo. 1979)); see also Restatement (Second) of Agency, 
§ 228 (1958).

 
 

Austin 
v. Kaness, 
950 P.2d 561, 563 (Wyo. 
1997).  See also Killian v. Caza Drilling, Inc., 
2006 WY 42, ¶ 7, 131 P.3d 975, 978-79 (Wyo. 2006); 
Eklund v. PRI Environmental, Inc., 2001 WY 55, ¶ 12, 25 P.3d 511, 515 (Wyo. 
2001).

 
 

[¶17]     
As described by the 
district court, the arbitrator in Mr. Worman's case found that Mr. Sanford "was 
not performing the kind of work that he was hired to perform when he 
intentionally placed Mr. Worman in a headlock."  To the contrary, his actions "interfered 
with the efficient and safe operation of the drilling rig."  These findings underpinned the 
arbitrator's conclusion:  "No 
reasonable inference could be made that [Mr.] Sanford was acting within the 
scope of his agency when he engaged in the prohibited act of horseplay." 

 
 

[¶18]     
Mr. Worman, however, 
relies on the point, as quoted above, that the employee's actions must be 
"actuated, at least in part, by a purpose to serve the master."  He argues that we should not focus on 
Mr. Sanford's specific short-term behavior, but instead consider "whether 
the employee's general activities surrounding the tort were serving the 
principal's purposes."  (Emphasis 
omitted.)  Because Mr. Sanford was 
"on the clock" at the time of the incident, and at the well site serving as BP's 
company man and observing the ongoing drilling operations, Mr. Worman 
argues that Mr. Sanford was generally engaged in activities within the 
scope of his employment.  

 
 

[¶19]     
The district court 
wrote that the "cases upon which [Mr.] Worman relies are helpful in addressing 
his contentions, but not for [Mr.] Worman."  In Sage Club v. Hunt, 638 P.2d 161 (Wyo. 1981), a 
bartender was held to be acting within the scope of his employment when he 
assaulted a bar patron.  We noted 
that the bartender's duties "included collecting money for drinks, and he lost 
his temper over that matter.  His 
duties also included keeping order in the bar and removing disruptive customers, 
which [he] apparently tried to do by pushing appellee down the stairs."  Id. at 163.  He also had "authority to act as a 
bouncer . . . and his employment was of such a nature as to contemplate the use 
of force."  Id.  Based on these facts, we determined that 
the bartender's assault of a patron "was motivated, at least partially, by a 
desire to serve The Sage Club."  Id.

 
 

[¶20]     
The district court 
applied the concepts from Sage Club 
to the facts of Mr. Worman's case, and concluded that the arbitrator was 
justified in finding 

 
 
that [Mr.] Sanford 
was not engaged in the scope of [his] employment.  At the time of the headlock, he might 
well have been on the premises for work-related activities but he certainly was 
not employed to engage in horseplay and the horseplay was not actuated by any 
purpose to serve BP.

 
 
We also note the 
arbitrator's specific finding that Mr. "Sanford's testimony that he was just 
trying to promote camaraderie [is] not credible," and her finding "[b]y a 
preponderance of the evidence" that Mr. Sanford's actions were motivated solely 
by personal reasons.  Unlike the 
bartender in Sage Club, Mr. Sanford 
was not, in any way, performing duties within the scope of his employment when 
he grabbed and choked Mr. Worman.

 
 

[¶21]     
The district court 
also analyzed Condict v. Condict, 664 P.2d 131, 134-35 (Wyo. 1983), in which the employer was found liable when his 
employee rammed the ranch truck into another rancher's vehicle.  The ranch employee's actions were taken, 
at least in part, to serve his employer's interest in being able to cross the 
bridge that was blocked by the other rancher's pickup.  In contrast, as the district court 
stated, "no part of [Mr.] Sanford's engaging in horseplay was directed at 
any intention to serve BP.  [He] was 
not, even in part, furthering BP's interests when he intentionally placed 
[Mr.] Worman in a headlock."

 
 

[¶22]     
Based on this 
analysis, the district court concluded that the arbitrator made no manifest 
mistake of law in determining that Mr. Worman was not entitled to an award.  We agree, and affirm the district 
court's decision.

 
 
FOOTNOTES

 
 

1BP contended that Mr. 
Sanford was an independent contractor, not a BP employee.  Mr. Worman contended, based on the 
degree to which BP controlled and directed his work, he should be treated as a 
BP employee.  The arbitrator 
concluded that Mr. Sanford had an "apparent agency relationship" with BP, 
and accordingly, BP was potentially liable for Mr. Sanford's actions under the 
doctrine of respondeat superior.  This conclusion is not at issue in this 
appeal.

 
 

2Mr. Worman's wife, 
Sherri Lynne Worman, is also a named plaintiff in this litigation.  In a footnote to his brief, Mr. Worman 
informs us that 

 
 
Sherri Worman died 
unexpectedly between the arbitration hearing and the Award.  Although the Arbitrator was made aware 
of her death, no formal proceedings were undertaken to substitute her estate 
since the award denied any recovery.  
Should this Court reverse and remand to the Arbitrator for 
reconsideration and an award of damages, Appellants submit that at that time it 
would be appropriate to have the Arbitrator formally consider the effect of Mrs. 
Worman's death.

 
 
Because we do not 
reverse and remand, it will be unnecessary to substitute her estate as a 
plaintiff.

 
 

3We recognize that 
this unpublished decision is non-precedential, but find its discussion of the 
split of authority among the Circuit Courts of Appeal to be helpful.