Michael H. LeRoy, Professor of Labor and Industrial Relations and Law at the University of Illinois College of Law, recently published a law review article entitled Are Arbitrators Above the Law? The ‘Manifest Disregard of the Law’ Standard, Boston College Law Review, Vol. 52, No. 1, p. 137, 2011; Illinois Program in Law, Behavior and Social Science Paper. In his article, Professor LeRoy examines the effect Hall Street Associates v. Mattel, Inc., 552 U.S. 576 (2008), has had on the “manifest disregard of the law” standard across federal Circuit Courts. Here is the abstract: Arbitration is supposed to be final and binding. But federal and state laws, and judicial doctrines, allow courts to vacate arbitrator awards. This study contemplates the role of courts when they review awards that “manifestly disregard the law” – a term that means the arbitrator knew the law but chose to ignore it. Given the norm of arbitral finality, should courts vacate these rulings? Hall Street Associates v. Mattel, Inc., 552 U.S. 576 (2008), failed to answer this question. The parties asked a court to review their award for errors of law. This standard is not in the Federal Arbitration Act (FAA). Hall Street ruled that courts cannot review awards beyond the FAA’s express terms. The parties’ standard prompted Hall Street to ask whether courts may apply “manifest disregard of the law,” even though it is not in the FAA. Inscrutably, Hall Street answered: “Maybe the term ‘manifest disregard’ was meant to name a new ground for review, but maybe it merely referred to the [FAA’s] § 10 grounds collectively, rather than adding to them.” I analyze “manifest disregard” by using historical and empirical methods. Common law courts vacated awards for “fraud,” “corruption,” “partiality,” or if arbitrators “exceeded powers.” The FAA enumerates these as grounds to vacate awards. In the same sequence with these terms, nineteenth century courts vacated awards for “manifest mistake” or “palpable mistake” of the law. I contend that Congress inadvertently omitted “manifest disregard” from the FAA. To answer Hall Street’s equivocation: “Manifest disregard of the law” is part of the FAA. This sets the stage for my empirical question: Has Hall Street led courts to confirm more awards, thus promoting finality? The answer is yes. In 46.4% of federal cases and 21.8% of state cases, parties in my database argued that an award manifestly disregarded the law. Still, state appellate courts confirmed more employment awards after Hall Street was decided on March 3, 2008 – 88.9% (16/18), compared to 70.9% (73/103) from 1975 until Hall Street. Federal district courts confirmed 93.7% of awards (164/175) before Hall Street, and 90.9% (30/33) after. Federal appeals courts confirmed awards at a high rate before and after Hall Street (87.8% and 85.7%). Unfortunately, Hall Street’s muddled analysis has split federal circuits. The Fifth and Eleventh Circuits ruled that Hall Street ended “manifest disregard,” but the Second, Sixth, and Ninth Circuits still treat it as part of the FAA. The First, Third, Fourth, and Tenth Circuits avoided ruling on the standard. In addition, state courts have differed in their reactions to Hall Street. This fractured approach implies that the Supreme Court may reconsider its vague treatment of “manifest disregard.” The Court should affirm this standard. My findings show that review for “manifest disregard” does not erode finality. The standard translates to nanoscale review of awards. As one court put it: “There is…a way to understand ‘manifest disregard of the law’ that preserves the established relation between court and arbitrator…It is this: an arbitrator may not direct the parties to violate the law.” Judges have applied this concept for two centuries to ensure that private tribunals conform to the laws. This rationale is particularly relevant because so much arbitration has changed from a voluntary to mandatory process. Judicial review must be allowed to correct an arbitrator’s intentional flouting of the law. If “manifest disregard” is eliminated, arbitral finality will rise above the crowning principle of the American constitutional system: “No man in this country is so high that he is above the law.” (U.S. v. Lee, 106 U.S. 196, 220 (1882)). The article may be downloaded (without charge) from Social Science Research Network. What are your thoughts? Technorati Tags: law, ADR, arbitration, manifest disregard of the law
Continue reading...Last Thursday, the Texas Supreme Court heard oral argument in CMH Homes, Inc. et al. v. Perez, No. 10-0688. At issue in this case of first impression is an interlocutory appeal from an arbitration order filed pursuant to Section 51.016 of the Texas Civil Practice and Remedies Code. Section 51.016 is a recent addition to Code and became effective on September 1, 2009. Section 51.016 states: Sec. 51.016. APPEAL ARISING UNDER FEDERAL ARBITRATION ACT. In a matter subject to the Federal Arbitration Act (9 U.S.C. Section 1 et seq.), a person may take an appeal or writ of error to the court of appeals from the judgment or interlocutory order of a district court, county court at law, or county court under the same circumstances that an appeal from a federal district court’s order or decision would be permitted by 9 U.S.C. Section 16. CMH Homes filed a petition for review with the Supreme Court of Texas after the San Antonio Appeals Court dismissed the company’s interlocutory appeal for lack of jurisdiction (No. 04-10-00259-CV). A video webcast of the oral argument is currently available for download through St. Mary’s University School of Law. Once available, the Supreme Court of Texas will post audio transcripts of the oral argument here. Last month, Disputing discussed CMH Homes, Inc. in more detail here. Technorati Tags: ADR, law, arbitration, Texas Supreme Court
Continue reading...by Holly Hayes After voting to repeal national health reform law on January 19th, House Republicans introduced medical liability reform legislation that would cap damage awards. The Help Efficient, Accessible, Low-cost, Timely Health Care (HEALTH) Act of 2011 “would limit noneconomic damages to $250,000, and punitive damages to the greater of $250,000 or twice the amount of economic damages. It would not preempt state laws that establish higher or lower damage limits.” Read more here. Bill sponsor, Rep. Phil Gingrey, MD (R, Ga.), an obstetrician-gynecologist, said the legislation would reduce defensive medicine and save billions of taxpayer dollars. American Medical News provided additional details about the legislation: The HEALTH Act also would set a statute of limitations on filing health care lawsuits of one year after a patient discovers — or should have discovered — an injury, or three years after the injury, whichever occurs first. The bill is modeled on liability reforms that have been on the books in California since 1975. The House has adopted previous versions of the measure numerous times during the past decade, but the Senate has never followed suit. The American Medical Association and 100 other medical organizations support the bill, according to a Jan. 25 joint letter to Dr. Gingrey. AMA Board of Trustees Chair Ardis Dee Hoven, MD, said total medical liability premiums in the U.S. grew by nearly 950% between 1976 and 2009, but premiums in California grew by just 261%. “Every dollar that goes toward medical liability costs is a dollar that does not go to patients who need care.” But the president of a national organization representing trial lawyers said the bill is “beyond extreme” because of the scope of its damage caps. “By removing legal accountability, attention to safety will go down and more people will suffer injuries and death from negligent care,” said American Assn. for Justice President C. Gibson Vance. Let us hear your comments on the HEALTH Act medical liability legislation. Technorati Tags: Mediation, Medical Liability Reform Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at holly@karlbayer.com.
Continue reading...Philip J. Loree Jr., a partner in the Manhasset, New York based firm of Loree & Loree and contributor to this blog, recently published an interesting article entitled Should States Regulate the Mediation Profession? The article was published in the Winter 2010-2011 edition of NE-ACR News, the newsletter of the New England Chapter of the Association for Conflict Resolution. In the article, Mr. Loree argues “proponents of state licensure [of mediators] should be careful what they wish for,” and that state licensure of mediators would likely target non-lawyer members of the profession. Mr. Loree also discusses three reasons why he believes state licensure would harm both the public and the mediation profession. Additionally, his article expands upon and refines some of the arguments Mr. Loree made in a July 30, 2009 post on his firm’s blog, the Loree Reinsurance and Arbitration Law Forum, entitled Should the States Certify and Regulate Mediators? The article is available here. What are your thoughts? Should states regulate the mediation profession? Technorati Tags: Mediation
Continue reading...Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.
Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.