Court Opinion

ID: 9498756
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:27:23.326952+00
Date Added: 2024-06-11T17:59:03.279397
License: Public Domain

LUTTIG, Circuit Judge,
dissenting:
I agree with the majority that the arbitrator’s interpretation of the Management Agreement was clearly erroneous. I cannot join its opinion, however, because under our precedents, clear error alone is insufficient to vacate an arbitrator’s award. Accordingly, I would affirm the district court’s denial of appellant’s motion to vacate the arbitration award.
In Remmey v. PaineWebber, Inc., 32 F.3d 143, 149 (4th Cir.1994), we held that an arbitrator does not manifestly disregard the law unless he “understand^] and correctly state[s] the law, but proceed[s] to disregard the same,” see ante at 235. Although the majority quotes this standard, it neglects the critical explanation of this standard. In that critical explanation, we emphasized that the “appellant is required to show that the arbitrators were aware of the law, understood it correctly, found it applicable to the case before them, and yet chose to ignore it in propounding their decision.” Remmey, 32 F.3d at 149. It is obvious in this case that appellant has not even come close to meeting this standard. He cannot demonstrate, nor does anything in the arbitration ruling reflect, that the arbitrator was even aware that the Management Agreement included a clause superseding all previous agreements between the parties, let alone that the arbitrator knew the clause existed, recognized that it superseded the Mutual Agreement, and yet chose to ignore it and nevertheless interpret the Management Agreement in light of the Mutual Agreement. See J.A. 44-46.
The majority is similarly in error when it concludes that the arbitrator’s award failed to “draw its essence from the agreement” because the arbitrator “based his award on his own personal notions of right and wrong.” See ante at 235-36, 236; Upshur Coals Corp. v. United Mine Workers, Dist. 31, 933 F.2d 225, 229 (4th Cir.1991). Upshur Coals equated awards where “the arbitrator must have based his award on his own personal notions of right and wrong” with awards where the arbitrator was not “even arguably construing or applying the contract.” See 933 F.2d at 229. Appellant does not come close to meeting this standard either, because there is no doubt that the arbitrator was attempting to construe the Management Agreement. See J.A. 44-46. The arbitrator’s failure to notice the clause simply was not a bad faith abdication of his duty to ground the award in the Management Agreement prompted by an illicit desire to rule in favor of appellees.
At worst, because of a failure to notice the superseding clause, the arbitrator’s er*238ror arose because he believed that he had to render the two agreements consistent, which led him to imply a notice requirement into the Management Agreement even though no such requirement is expressed in that agreement. See J.A. 44-46. We have squarely held that “as a matter of law,” an award cannot be vacated merely on the basis of the “misinterpretation of a contract.” See Apex Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 193-94 (4th Cir.1998). Indeed, in Apex Plumbing, the party seeking to challenge the award made an unsuccessful argument that was almost identical to the one that Patten does in this case, claiming that “more than a mere ‘misinterpretation’ of the contract had transpired because the arbitrator’s valuation decision irrationally disregarded an unambiguous provision of the Agreement.” Id. at 194. Rejecting the argument, we held that “merely because an arbitrator’s decision is not based on an agreement’s express terms does not mean that it is not properly derived from the agreement; neither misapplication of principles of contractual interpretation nor erroneous interpretation of the agreement in question constitutes ground for vacating an award.” Id. Apex Plumbing confirms that the error made by the arbitrator in this case does not rise to the level that permits vacatur by this court.
The level of deference that this court has bestowed upon arbitrators is extraordinary. It may even be excessive. However, we are bound by this standard until such time as it is reconsidered by the court en banc. See United States v. Collins, 415 F.3d 304, 311 (4th Cir.2005). I would, concededly with some reluctance, apply this standard and affirm the district court’s refusal to vacate the arbitrator’s award.