In In re Wal-Mart Wage and Hour Employment Practices Litigation, (Ninth Cir.; December 17, 2013) (Case No. 11-17718) the class action plaintiffs’ attorneys quarreled over how to allocate a $28 million fee and agreed to submit the dispute to “binding, non-appealable arbitration.” After the arbitrator rendered his award, some of the attorneys remained dissatisfied and moved to vacate the award. The District Court denied the motion to vacate. The dissatisfied attorneys appealed. Their adversaries argued that the parties’ agreement declaring any arbitration award to be non-appealable and therefore deprived the courts of jurisdiction. The Ninth Circuit concluded that it had jurisdiction. It noted that in Hall Street Associates LLC v. Mattel, Inc., (2008) 552 U.S. 576, [128 S.Ct. 1396, 170 L.Ed.2d 254] the Supreme Court refused to enforce an arbitration clause that expanded the scope of judicial review set forth in Section 10 of the Federal Arbitration Act (FAA) because those grounds were “exclusive.” If the grounds for vacatur of an arbitration award cannot be supplemented, it compels the conclusion that these grounds are not waivable or subject to elimination by contract. The FAA requires as a matter of mandatory federal law that a federal court “must” confirm an arbitration award unless, among other things, it is vacated under Section 10. This language contains no hint of flexibility. By contrast, other provisions in the FAA expressly permit modification by contract, e.g., Section 5 provides rules for appointing an arbitrator that apply “if no method [is] provided [in the arbitration agreement].” If the text of the statute trumps a contractual arrangement to expand review beyond the statute, then it follows that the statute forecloses a contractual agreement to eliminate review. The Court then determined, in an accompanying memorandum opinion, that there were no grounds for vacating the award and affirmed the District Court opinion.
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