Right to Appeal Arbitrator’s Decision May Not Be Waived

January 27, 2014 by Vishtasp Soroushian

A federal court of appeals has struck down an arbitration agreement that prohibits any appeal from the arbitrator’s decision, protecting the right of appeal established by Federal Arbitration Act (FAA). The decision related to the high interest employment law case involving Wal-Mart wage and hour litigation.  In this Beeson, Tayer and Bodine (BT&B) summary you will see the issue was related to the fees allocated to attorneys.  This ruling will likely be applied as well to employees and unions as employment practice settlements may not contain a provision that prevents appeal of the arbitrator’s decision.

In In re Wal-Mart Wage and Hour Employment Practices Litigation, the Ninth Circuit Court of Appeals held that a non-appealability clause in an arbitration agreement that eliminates all federal court review of arbitration awards, including review under the FAA was unenforceable.

This case concerned a dispute between plaintiffs’ attorneys over a fee award arising out of the settlement of wage and hour claims against Wal-Mart.  The wage-and-hour settlement included a clause that provided that any disputes over allocation of attorneys fees would be arbitrated via “binding, non-appealable arbitration.”  The district court approved the settlement and awarded plaintiffs’ attorneys approximately $28 million in attorneys’ fees.  The attorneys then disagreed over the proper allocation of the fee award and submitted the dispute to arbitration.  The attorneys then took the arbitrator’s award to district court for review, and the district court affirmed the arbitrator’s award and found no legal basis for vacating it.

On review, the Ninth Circuit held that it had jurisdiction to review the district court’s order confirming the award despite the non-appealability clause in the settlement.  The court ruled that the FAA right of appeal cannot be waived.  Thus, the court concluded, a district court is required to confirm an arbitration award unless it can be vacated pursuant to one of the specific grounds delineated in the FAA.

Employment practices litigation can be very complex and must consider recent as well as long standing legal case law.  BT&B’s law practice has the capacity to represent unions and/or employees in cases that are far reaching as well as individuals who think their employment rights have been violated.  You can find more information on our labor and employment law blog.  Please contact us in one of our Northern California locations if you have employment problems at work.

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