Fifth Circuit Upholds Arbitrator’s Decision in Employment Dispute

The United States Fifth Circuit Court of Appeals has affirmed a lower court’s order to confirm an arbitrator’s decision in an employment dispute. In Haag v. Infrasource Services, Inc., No. 12-60159, (5th Cir. February 20, 2013), an employee, Fred Haag, was terminated from his position with Infrasource Services, Inc. for alleged gross misconduct. Following his termination, Haag filed a lawsuit in the Southern District of Mississippi and the company compelled the dispute to arbitration pursuant to Haag’s employment contract. After an arbitrator dismissed Haag’s claims and determined that Haag improperly accepted reimbursements for expenses Haag should have known he was not entitled to receive, the district court confirmed the arbitral decision. Haag then appealed the matter to the Fifth Circuit.

First, the Appellate Court stated that the grounds for vacating and modifying an arbitral award rendered pursuant to the Federal Arbitration Act are extremely limited. Next, the Fifth Circuit dismissed Haag’s argument that the arbitrator’s award should be vacated because the arbitrator committed a material mistake. According to Haag, the arbitrator incorrectly found that Haag submitted false housing reimbursement claims because the housing reimbursements were automatically deposited into his account. The Court, however, found that Haag’s misconduct was demonstrated by his failure to stop the deposits. The Fifth Circuit said although Haag did not technically submit the housing claims, there was no indication the arbitrator made a distinction between improperly submitted claims and Haag’s failure to stop the reimbursements. The court then added, “There was neither an unambiguous factual mistake by the arbitrator about submission of claims, nor strong or material reliance on any mistaken understanding of those facts.”

Finally, the Fifth Circuit affirmed the lower court’s decision by stating, “The arbitrator’s finding is not inconsistent with the determination of “cause,” which under the employment agreement only required a finding of “willful engaging . . . in gross misconduct materially and demonstrably injurious to the Company.”