Court Opinion

ID: 9493977
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:25:15.837336+00
Date Added: 2024-06-11T17:56:08.682087
License: Public Domain

WILLIAMS, Circuit Judge,
concurring in the judgment.
The question of the continuing justification for and the proper interpretation of the manifest disregard of the law doctrine is not squarely before this court. Indeed, with little effort we may dispose of Watts’ claim under the manifest disregard doctrine as it presently exists. I would therefore reserve for another day — when the question is more definitively placed before this court — whether we need to make any substantial change in the manifest disregard doctrine. Accordingly, I concur only in the judgment.
I
Because the majority has effectively rejected the manifest disregard doctrine, I will briefly express my concern with that holding. It should be noted that the doctrine of manifest disregard has been substantively uniform in the federal courts, requiring that (1) the arbitrator knew of a *582governing legal principle yet refused to apply it or ignored it altogether, and (2) the law ignored by the arbitrator was well-defined, explicit and clearly applicable to the case. E.g., Greenberg v. Bear, Stearns & Co., 220 F.3d 22, 28 (2d Cir.2000), cert. denied, — U.S. -, 121 S.Ct. 770, 148 L.Ed.2d 669 (2001); Health Servs. Mgmt. Corp. v. Hughes, 975 F.2d 1253, 1267 (7th Cir.1992). Every court of appeals, including our own, has held that a court may review the decision of an arbitrator for “manifest disregard of the law,” and has adopted, in substance, that very definition.1 Moreover, the words in the doctrine itself are more in accord with such an interpretation. See Montes v. Shearson Lehman Bros., Inc., 128 F.3d 1456, 1461-62 (11th Cir.1997) (defining the words of the doctrine). The majority’s holding conflicts with that precedent, and leaves the doctrine internally inconsistent and effectively impotent.
The reasons the majority offer for rejecting manifest disregard do not appear to me so compelling as to require such a significant change in the law. They hold that manifest disregard should mean only that “an arbitrator may not direct the parties to violate the law,” ante, at 580, which the arbitrator could not do anyway, see Hill v. Norfolk & Western Ry. Co., 814 F.2d 1192, 1195 (7th Cir.1987). In so holding, the majority ostensibly rests its interpretation on Eastern Associated Coal Corp. v. United Mine Workers of America, District 17, 531 U.S. 57, 121 S.Ct. 462, 148 L.Ed.2d 354 (2000). But Eastern Associated Coal is not a manifest disregard case, and its holding, or its dicta, does not support the majority’s new interpretation of the manifest disregard doctrine. In that case, the arbitrator interpreted a collective bargaining agreement in accord with the authority actually granted to him by the parties, and provided an award under the agreement. Id. at 466-67. The Court therefore treated the arbitral award “as if it represented an agreement between Eastern and the union,” for purposes of determining whether enforcement of that contract (like any other) violated public policy. Id. at 467 (citing W.R. drace & Co. v. Rubber Workers, Local 759, 461 U.S. 757, 766, 103 S.Ct. 2177, 76 L.Ed.2d 298 (1983)). Defining the public policy exception, the Court reiterated that review under the doctrine applies to violations of public norms (but not exclusively positive law), which is what “public policy” means. Id. at 467.
Eastern Associated Coal does not support the broad proposition that “an arbitrator acts as the parties’ agent and as their delegate may do anything the parties *583may do directly,” as the majority appears to contend. Ante, at 580. Rather, Eastern Associated Coal holds that because the parties authorized the arbitrator to interpret the contract and the arbitrator acted within the scope of his authority in interpreting the contract, we must treat the contract as one between the parties. Id. at 466-67. That rationale, if anything, stands contrary to the conclusion of the majority, because when an arbitrator acts in manifest disregard of the law, he acts outside the scope of his authority. When a claim arises under specific statutory law, the arbitrator is bound to follow the law in the absence of a valid and legal agreement not to do so. See Montes, 128 F.3d at 1459 (citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991)).
To review, the question before us in an arbitral contract interpretation case is not “whether the arbitrator or arbitrators erred in interpreting the contract; it is not whether they clearly erred in interpreting the contract; it is not whether they grossly erred in interpreting the contract; it is whether they interpreted the contract.” Hill, 814 F.2d at 1194-95. And, when an arbitrator interprets statutory law, we require “something beyond and different from mere error in law or failure on the part of the arbitrators to understand or apply the law.” Health Servs., 975 F.2d at 1267. We ask whether she affirmatively disregarded what she knew to be the law. Id. The rules that govern review of arbi-tral contract interpretation and review of arbitral statutory interpretation do not create tension in the law. The standards are nearly identical, and they complement each other rather well.
The apparent conflict the majority finds in this circuit’s precedent, see ante, at 579-580, is not really conflict at all, as much as it is two separate lines of cases that together illustrate the difficulty for parties seeking to challenge an arbitral award under the manifest disregard doctrine. It is a difficulty recognized by other circuits, see, e.g., Dawahare, 210 F.3d at 669 (“Arbitrators 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.”), but that difficulty has not always precluded a finding that an arbitrator manifestly disregarded the law, see Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 204 (2d Cir.1998) (“We merely observe that where a reviewing court is inclined to find that arbitrators manifestly disregarded the law or the evidence and that an explanation, if given, would have strained credulity, the absence of explanation may reinforce the reviewing court’s confidence that the arbitrators engaged in manifest disregard.”), and no courts have taken the step of discarding the entire doctrine because of this difficulty.
As a final note, mandatory arbitration clauses are prevalent in a broad collection of contracts, forcing parties to accept the arbitral rather than judicial forum to adjudicate their rights. Recognizing this concern, the Supreme Court has admonished that “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). Even if we were to adopt the agency model advanced by the majority, no one expects that the parties intended to vest in that agent the power to ignore statutory law willy-nilly and decide the fate of the parties at her whim or caprice. Indeed, we do not accept an arbitrator’s decision to ignore completely a contract, although under the agency model arguably we should, because the parties *584could rescind their contract entirely and fashion a completely new agreement. But the agency fiction falls apart. The arbitrator is not the parties, and, in truth, she is not their agent; therefore when the arbitrator acts in manifest disregard of statutory law, there is no compelling reason that we should not intervene and protect the statutory rights of the parties — otherwise the parties would be better off flipping a coin. With all deference to the majority, I would preserve this important question for a case in which it truly matters.
II
Turning then to the case before us, Watts has failed to demonstrate that the arbitrator manifestly disregarded the law. Watts cannot establish, as it must, that the Wisconsin Fair Dealership Law (“WFDL”), or Wisconsin case law, is “well-defined” and “explicit” in requiring a mandatory award of attorney fees to every successful litigant under the statute.2 The statute states that “[i]f any grantor violates this chapter, a dealer may bring an action against such grantor in any court of competent jurisdiction for damages sustained by the dealer as a consequence of the grantor’s violation, together with the actual costs of the action, including reasonable actual attorney fees.” Wis. Stat. § 135.06. The plain language of this statute clearly allows for the recovery of attorney fees, but it does not go so far as to state that such recovery is mandatory.
Perhaps recognizing the weakness of an appeal to statutory language, Watts also relies upon several cases in support of its theory that attorney fees are mandatory. The best case cited by Watts, Siegel v. Leer, Inc., 156 Wis.2d 621, 457 N.W.2d 533 (1990), characterized the attorney fees provision as an “express statutory right of a dealer to recover for a grantor’s violation of the WFDL,” stating in addition that the “failure to protect and enforce such a right would fly in the face of the statutory purpose.” Id. at 537. But Watts fails to put this quote in context. The court in that case distinguished the award of attorney fees from another ease in which a court-initiated fine, under analogous factual circumstances, was found to violate public policy. It was in that context, distinguishing the case upon which the defendant argued that attorney fees could violate public policy, that the court stated that the right to attorney fees was expressly provided by statute. It did not hold, however, that attorney fees are mandatory. See id. The other cases that characterize attorney fees as an “entitlement” under the statute, see, e.g., Esch v. Yazoo Mfg. Co., Inc., 510 F.Supp. 53, 58 (E.D.Wis.1981), are in themselves equally ambiguous.
Tiffany, on the other hand, relies upon a commentary reviewing Wisconsin law on the WFDL that concludes, “[t]he issue of whether an award is mandatory or discretionary is still open.” Andrew 0. Riteris & Susan R. Robertson, The Fair Dealership Law: Good Cause For Review, Wis. B. Bull., Mar. 1986, at 10. In the end, the WFDL may one day be interpreted to require mandatory award of attorney fees, *585but that is not for this court to decide today.
Because I cannot find that mandatory award of attorney fees under the WFDL is well-defined and explicit under the law, as required by the manifest disregard of the law doctrine, I must find that Watts has failed to make the requisite showing under that doctrine. I therefore concur in the judgment.

. See Greenberg v. Bear, Stearns & Co., 220 F.3d 22 (2d Cir.2000), cert. denied, - U.S. -, 121 S.Ct. 770, 148 L.Ed.2d 669 (2001); Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217 (11th Cir.2000); Dawahare v. Spencer, 210 F.3d 666 (6th Cir.), cert. denied, - U.S. -, 121 S.Ct. 187, 148 L.Ed.2d 130 (2000); Williams v. Cigna Fin. Advisors Inc., 197 F.3d 752 (5th Cir.1999), cert. denied, 529 U.S. 1099, 120 S.Ct. 1833, 146 L.Ed.2d 111 (2000); Koveleskie v. SBC Capital Mkts., Inc., 167 F.3d 361 (7th Cir.), cert. denied, 528 U.S. 811, 120 S.Ct. 44, 145 L.Ed.2d 40 (1999); Kiernan v. Piper Jaffray Cos., Inc., 137 F.3d 588 (8th Cir.1998); Barnes v. Logan, 122 F.3d 820 (9th Cir.1997), cert. denied, 523 U.S. 1059, 118 S.Ct. 1385, 140 L.Ed.2d 645 (1998); Cole v. Burns Int’l Security Servs., 105 F.3d 1465 (D.C.Cir.1997); Kaplan v. First Options of Chicago, Inc., 19 F.3d 1503 (3d Cir.1994), aff'd, First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct 1920, 131 L.Ed.2d 985 (1995); ARW Exploration Corp. v. Aguiire, 45 F.3d 1455 (10th Cir.1995), cert. denied, Armenis v. Aguirre, 525 U.S. 822, 119 S.Ct. 65, 142 L.Ed.2d 51 (1998); Remmey v. PaineWebber, Inc., 32 F.3d 143 (4th Cir.1994), cert. denied, 513 U.S. 1112, 115 S.Ct. 903, 130 L.Ed.2d 786 (1995); Advest, Inc. v. McCarthy, 914 F.2d 6 (1st Cir.1990); see also Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362 (Fed.Cir.2001).

. Tiffany argues as an initial matter that it is unclear whether the arbitrator decided the case under the WFDL. I find this position unpersuasive. This court need not strain credulity to support an arbitral award, simply because the arbitrator did not explicitly state the grounds for her decision. See Halligan, 148 F.3d at 204. There is ample evidence in the record showing that Watts abandoned its other contract claims, and that the only remaining basis under which the arbitrator could have decided this case was the WFDL. That the arbitrator may not have correctly applied the statute will not frustrate a court's review for manifest disregard of the law.