Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-03-02997/USCOURTS-ca8-03-02997-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

______________________

Nos. 03-2997SI, 03-2998SI

_______________________

____________ *

*

No. 03-2997SI *

____________ *

*

Lincoln National Life Insurance *

Company; Lincoln Financial Advisors *

Corporation; *

 *

Appellants, * On Appeal from the United

 * States District Court

v. * for the Southern District

 * of Iowa.

Thomas W. Payne, *

 *

Appellee. *

 *

____________ *

 *

No. 03-2998SI *

____________ *

 * 

Mary Ann Burris, and Barbara Crosby, * 

 * 

Appellants, * 

 *

v. *

 *

Thomas W. Payne, *

 *

Appellee. *

Appellate Case: 03-2997 Page: 1 Date Filed: 07/08/2004 Entry ID: 1785648 
1

The Hon. Harold D. Vietor, United States District Judge for the Southern

District of Iowa.

-2-

___________

Submitted: April 12, 2004

Filed: July 8, 2004

___________

Before LOKEN, Chief Judge, RICHARD S. ARNOLD and FAGG, Circuit Judges.

___________

RICHARD S. ARNOLD, Circuit Judge.

Plaintiffs appeal from the District Court's1

 denial of their motions to vacate

arbitration awards entered against them. Plaintiffs allege that the arbitration panel

manifestly disregarded the law, and that the District Court erred by upholding the

panel's decision even though the panel refused to clarify its award in accordance with

the District Court's remand order. We review a district court's decision to confirm an

arbitration award de novo, Hoffman v. Cargill Inc., 236 F.3d 458, 461 (8th Cir. 2001).

Finding no error, we affirm.

"Judicial review of an arbitration award is extremely limited. Beyond the

grounds for vacation provided in the [Federal Arbitration Act], an award will only be

set aside where 'it is completely irrational or evidences a manifest disregard for the

law.' " Kiernan v. Piper Jaffray Companies, Inc., 137 F.3d 588, 594 (8th Cir. 1998)

(quoting Lee v. Chica, 983 F.2d 883, 885 (8th Cir. 1993)). 

Plaintiffs argue that the arbitrators manifestly disregarded the law. In this case,

neither the record nor the award convinces us that the arbitrators manifestly

disregarded the law. "We have been careful to distinguish[ ] an arbitrator's

Appellate Case: 03-2997 Page: 2 Date Filed: 07/08/2004 Entry ID: 1785648 
-3-

interpretation of the law, which is insulated from review, from an arbitrator's

disregard of the law, which may open the door for judicial scrutiny." Stroh Container

Co. v. Delphi Indus., Inc., 783 F.2d 743, 750 (8th Cir. 1986), citing Wilko v. Swan,

346 U.S. 427, 436-37 (1953). Any disregard "must 'be made clearly to appear' and

may be found 'when arbitrators understand and correctly state the law, but proceed

to disregard the same.' " Ibid. (quotations omitted). In Stroh, we held that the

terseness of an award is not grounds for finding that a panel of arbitrators disregarded

the law. Ibid. "Arbitrators are not required to elaborate their reasoning supporting

an award, and to allow a court to conclude that it may substitute its own judgment for

the arbitrator's whenever the arbitrator chooses not to explain the award would

improperly subvert the proper functioning of the arbitral process." Ibid. (quotations

omitted). Furthermore, there must be some evidence in the record, other than the

result, that the arbitrators were aware of the law and intentionally disregarded it. See

Marshall v. Green Giant Co., 942 F.3d 539, 550 (8th Cir. 1991). Manifest disregard

requires something more than a mere error of law. If an arbitrator, for example, stated

the law, acknowledged that he was rendering a decision contrary to law, and said that

he was doing so because he thought the law unfair, that would be an instance of

"manifest disregard." Nothing of the kind appears here. To require anything less

would threaten to subvert the arbitral process.

Although the plaintiffs argue that the arbitrators' decision was mistaken, and

perhaps it was, they have not convinced us that the arbitrators manifestly disregarded

the law. The panel was presented with voluminous evidence and held five weeks of

hearings in this case. Although plaintiffs' briefs attempt to characterize the facts of

the case in the light most favorable to themselves, the arbitrators were not bound to

accept the plaintiffs' version of the facts. Plaintiffs also argue that the arbitrators

misapplied the law, but these purported errors of law are not reviewable. Even if we

would have reached a different conclusion, we cannot substitute our judgment for that

of the arbitrators.

Appellate Case: 03-2997 Page: 3 Date Filed: 07/08/2004 Entry ID: 1785648 
-4-

Initially, the District Court remanded this case to the arbitrators, asking that

they clarify their award, and stating that clarification was necessary in order for the

Court to exercise its reviewing power properly. In the course of its order of remand,

the District Court stated that remand was "necessary and appropriate . . . for the

limited review allowed by the Federal Arbitration Act and the extra-statutory grounds

recognized in the Eighth Circuit." The arbitrators declined to follow this direction,

perhaps having in mind the doctrine of functus officio, under which, on occasion,

arbitration panels consider themselves powerless to amend or clarify an award.

According to plaintiffs, this action by the arbitration panel should have led the

District Court to vacate the award. We do not read the words "necessary and

appropriate" in the District Court's remand order so literally. Certainly the District

Court would have preferred clarification from the arbitration panel, but evidently the

Court, having received no clarification, considered itself able to exercise its reviewing

function. We agree with this decision.

The judgment of the District Court, confirming the arbitration award, is

affirmed.

______________________________

Appellate Case: 03-2997 Page: 4 Date Filed: 07/08/2004 Entry ID: 1785648