Opinion ID: 796467
Heading Depth: 2
Heading Rank: 2

Heading: analysis

Text: 7 The standard of appellate review of a district court's decision whether to vacate or confirm an arbitration award is governed by First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Jaros, 70 F.3d 418, 420 (6th Cir.1995). 8 [T]here is no special standard governing [the] review of a district court's decision in these circumstances. Rather, review of, for example, a district court decision confirming an arbitration award on the ground that the parties agreed to submit their dispute to arbitration, should proceed like review of any other district court decision finding an agreement between parties, e.g., accepting findings of fact that are not clearly erroneous but deciding questions of law de novo. 9 Kaplan, 514 U.S. at 947-48, 115 S.Ct. 1920; see also Jaros, 70 F.3d at 420 (In light of Kaplan, it is clear that .... [f]indings of fact are reviewed for clear error and questions of law are reviewed de novo. ).
10 A court's power to vacate an arbitration award is limited in scope. Specifically, we have held that 11 [a] court may vacate an arbitration award in the following situations: (1) where the award was procured by fraud, (2) where the arbitrators were evidently partial or corrupt, (3) where the arbitrators misbehaved so that a party's rights were prejudiced, or (4) where the arbitrators exceeded their powers or executed them so that a final, definite award was not made. In addition, a reviewing court may vacate an award where the arbitrators have manifestly disregarded the law. 12 Dawahare v. Spencer, 210 F.3d 666, 669 (6th Cir.), cert. denied, 531 U.S. 878, 121 S.Ct. 187, 148 L.Ed.2d 130 (2000) (internal citation omitted); see also 9 U.S.C. § 10(a) (Federal Arbitration Act (FAA)). EDS contends that the arbitration panel in this case both exceeded its powers and manifestly disregarded the law.
13 Arbitrators exceed their power when they `act beyond the material terms of the contract from which they primarily draw their authority, or in contravention of controlling principles of law.' Saveski v. Tiseo Architects, Inc., 261 Mich.App. 553, 682 N.W.2d 542, 544 (2004) (quoting Detroit Auto. Inter-Ins. Exch. v. Gavin, 416 Mich. 407, 331 N.W.2d 418, 430 (1982)). In this case, EDS argues that the arbitrators exceeded their power by (1) failing to set forth findings of fact and conclusions of law, as required by the ELCRA, MICH. COMP. LAWS § 37.2101 et seq., and by the decision of the Michigan Court of Appeals in Rembert, 235 Mich.App. 118, 596 N.W.2d 208, and (2) awarding attorney fees and costs to both Donelson and Lotts despite the fact that the arbitration agreement provided only for an award of damages.
14 Although the ELCRA itself does not mention arbitration, the overwhelming majority of federal and . . . state courts have held that . . . agreements [to arbitrate statutory civil-rights claims] are enforceable, provided that the arbitration procedures are fair . . . . Rembert, 596 N.W.2d at 210 (emphasis added). The Rembert court imposed a requirement that arbitral awards include findings of fact and conclusions of law, as a necessary corollary to [its] holding regarding the standard of judicial review. Id. at 230. The holding regarding the standard of review, in turn, applies — by its own terms — only to predispute arbitration agreements: [W]e hold that a predispute agreement to arbitrate a statutory employment discrimination claim will be reviewed under the standard enunciated by our Supreme Court in Gavin. Id. (emphasis added). 15 The limited scope of the Rembert holding is consistent with that court's discussion of the public-policy interests implicated by the arbitration of statutory employment-discrimination claims: 16 Opponents of arbitration in this case, as elsewhere, generally acknowledge the public policy favoring arbitration, but claim that it ought not apply to claims arising under public interest statutes such as civil rights statutes. They argue that the public policy advanced by the statutes would be undermined if these disputes were addressed in the relatively private forum of arbitration. These very arguments were thoroughly considered and rejected by the United States Supreme Court in a trio of cases known as the Mitsubishi trilogy and, later, in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). Although initially reluctant to endorse predispute arbitration agreements of statutory claims, federal law has long since strongly endorsed arbitration of statutory claims. 17 Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953), is representative of the initial skepticism toward arbitration. There, the United States Supreme Court held that predispute agreements to arbitrate claims arising under the Securities Act of 1933 were void under § 14 of the Securities Act, which nullified stipulations to waive compliance with the Securities Act. Like the opponents of arbitration here, the Court in Wilko equated a waiver of a judicial forum with a waiver of compliance with the substantive provisions of the statute. 18 Wilko has since been overruled, and its entire rationale has been thoroughly discredited and unequivocally rendered obsolete by the Mitsubishi trilogy. In this trilogy, the Supreme Court repudiated its former characterization of arbitration as a second-rate forum in which statutory rights are necessarily diminished. Instead, the Court recognized arbitration as an efficacious means for parties to enforce their statutory rights and held that parties who had agreed to arbitrate would be bound by those agreements. 19 596 N.W.2d at 216 (emphases added) (internal citations and footnotes omitted). 20 The quoted language indicates that the Rembert court was concerned with protecting employees who prospectively waive their right to a judicial forum as a condition of employment. See also id. at 224 n. 25 ([W]e agree with the reasoning in [ EEOC v. Frank's Nursery & Crafts, Inc., 966 F.Supp. 500, 503 (E.D.Mich.1997), rev'd on other grounds, 177 F.3d 448 (6th Cir.1999)], which concluded that `a prospective, voluntary agreement to proceed to arbitration' is not the sort of coercive action that the 1991 legislative history cautioned against. (emphasis added)). In order to minimize the danger that such waivers will eviscerate substantive statutory protections, Rembert requires arbitrators in cases involving predispute arbitration agreements to set forth the reasoning underlying their decisions. 21 Donelson's and Lotts's claims are not, however, of the type contemplated by the Rembert court, and it is not for us to extend that court's holding. The arbitration agreements at issue here were not executed until after the alleged statutory violations had already taken place and, thus, could not possibly have constituted waivers of statutory compliance. Moreover, there is little reason for concern regarding coercion in this case, as Donelson and Lotts signed the agreements not as prerequisites for employment but, rather, after they had already been discharged and — importantly — after they had retained counsel and had filed lawsuits. 2 22 EDS points out that the Michigan Court of Appeals applied Rembert to a post-dispute arbitration agreement in Biram v. City of Detroit, No. 256131, 2006 WL 171508, at  & n. 1 (Mich.Ct.App. Jan.24, 2006). The Biram opinion is, however, unpublished, and the local rules of the Michigan Court of Appeals provide that unpublished opinions constitute persuasive, but not binding, precedent. MICH.APP.R. 7.215(C)(1). Indeed, those very rules also provide that: A court opinion must be published if it: 23
24
25 (3) alters or modifies an existing rule of law or extends it to a new factual context 26 . . . . 27 (5) involves a legal issue of continuing public interest; [or] .... 28 (7) creates or resolves an apparent conflict of authority.... 29 MICH.APP. R. 7.215(B) (emphasis added). The failure of the Biram court to publish its opinion, which — at the very least — applies the Rembert standard to a new factual context, id., is, thus, puzzling. 30 Absent a statutory mandate, [the Michigan] Supreme Court ... recognized, [in Gavin ] ... that `[t]here is no requirement that a verbatim record be made of private arbitration proceedings, there are no formal requirements of procedure and practice beyond those assuring impartiality, and no findings of fact or conclusions of law are required.' Saveski, 682 N.W.2d at 544 (quoting Gavin, 331 N.W.2d at 428). In light of Biram's dearth of reasoning, its apparent inconsistency with the rationale underlying Rembert, 3 and its status as a non-binding precedent issued by the Michigan Court of Appeals, we decline to rely upon it as an indicator that the Michigan Supreme Court would apply the special Rembert requirement, rather than the ordinary Gavin rule, in the circumstances of this case. Accordingly, because the panel awards were not required to include findings of fact or conclusions of law, and because the Court in Gavin clearly held that ... a reviewing court should not use the lack of a clear record as an impediment to its confirmation of an arbitration award, Saveski, 682 N.W.2d at 544, we AFFIRM the district court's determination that the arbitration awards did not exceed the arbitration panel's powers.
31 Michigan law provides that damages [under the ELCRA] . . . includ[e] reasonable attorney's fees. MICH. COMP. LAWS § 37.2801(3). EDS argues, however, that the arbitration panel was not empowered to consider an issue raised for the first time only in post-hearing briefing or to issue an award after the expiration of the two-week deadline set forth in the arbitration agreement. 32 The record indicates that EDS demonstrated, by requesting and conceding to numerous delays and extensions throughout the course of the arbitration proceedings, that time was not of the essence. In so doing, EDS waived the specific time limitations included in the agreement. See Kennedy v. Brady, 43 Mich. App. 760, 204 N.W.2d 779, 780-81 (1972), cited in Beaumont Corp. v. Slater, No. 237412, 2003 WL 1861300, at  (Mich.Ct. App. Apr.8, 2003). Where a stipulation for performance at a particular time has been waived, the party in whose favor the waiver operates is therefore bound only to perform within a reasonable time.... Kennedy, 204 N.W.2d at 781 (internal quotation marks omitted). Accordingly, because Appellees briefed the issue of attorney fees and costs as soon as was reasonably practicable, and because the arbitration panel rendered its decision within approximately six weeks of the conclusion of a lengthy post-hearing briefing period, we AFFIRM the district court's determination that that the arbitration panel did not exceed its powers by disregarding the specific time limits governing the submission of evidence and the filing of the award. 33
34 Finally, EDS contends that the arbitration panel manifestly disregarded the law by refusing to require Donelson and Lotts to establish a prima facie case of discrimination under the ELCRA. An arbitration panel acts with manifest disregard if `(1) the applicable legal principle is clearly defined and not subject to reasonable debate; and (2) the arbitrators refused to heed that legal principle.' Dawahare, 210 F.3d at 669 (quoting Jaros, 70 F.3d at 421). 35 Because [a]rbitration, by its very nature, restricts meaningful legal review in the traditional sense, Gavin, 331 N.W.2d at 428, [t]his court has emphasized that manifest disregard of the law is a very narrow standard of review, Jaros, 70 F.3d at 421. An arbitration decision `must fly in the face of established legal precedent' for us to find manifest disregard of the law. Dawahare, 210 F.3d at 669 (quoting Jaros, 70 F.3d at 421). If a court can find any line of argument that is legally plausible and supports the award then it must be confirmed. Only where no judge or group of judges could conceivably come to the same determination as the arbitrators must the award be set aside. Jaros, 70 F.3d at 421. 36 Moreover, [a]rbitrators are not required to explain their decisions. If they choose not to do so, it is all but impossible to determine whether they acted with manifest disregard for the law. Dawahare, 210 F.3d at 669. 37 As a general observation, courts will be reluctant to modify or vacate an award because of the difficulty or impossibility, without speculation, of determining what caused an arbitrator to rule as he did. The informal and sometimes unorthodox procedures of the arbitration hearings, combined with the absence of a verbatim record and formal findings of fact and conclusions of law, make it virtually impossible to discern the mental path leading to an award. Reviewing courts are usually left without a plainly recognizable basis for finding substantial legal error. It is only the kind of legal error that is evident without scrutiny of intermediate mental indicia which remains reviewable. . . . In many cases the arbitrator's alleged error will be as equally attributable to alleged unwarranted factfinding as to asserted error of law. In such cases the award should be upheld since the alleged error of law cannot be shown with the requisite certainty to have been the essential basis for the challenged award and the arbitrator's findings of fact are unreviewable. 38 Gavin, 331 N.W.2d at 428. 39 Because no record exists of the arbitration hearing held in this case, it is impossible to determine whether the evidence presented by Donelson and Lotts established a prima facie case under the ELCRA. Absent such a record, and in light of the undisputed facts that Hoffmaster's cubicle contained a black-faced doll suspended by its neck and that Hoffmaster participated in the terminations of four African-American and no Caucasian employees during the period in which Donelson and Lotts were fired, we cannot determine that a legal error . . . is evident without scrutiny of intermediate mental indicia. Id. at 428. Accordingly, we AFFIRM the district court's determination that the arbitrators did not manifestly disregard the law.