Jottings By An Employer's Lawyer

Saturday, January 03, 2004

Review of Arbitration Decisions - Statutorily Limited or the Parties Discretion?


An article in the New York Law Journal focuses on two decisions by the 2nd and 9th Circuits, which from different perspectives, each hold that the courts are bound by the strict rules of the FAA in reviewing arbitration decisions, rather than by party imposed terms. Although neither of these is an employment decision, since many employers have opted for mandatory arbitration as a condition of employment, how this issue is ultimately determined could impact those programs. Particularly where employers have hoped for the best of both worlds, non-jury trials, but full judicial review. Such a program is currently clearly enforceable in the 5th Circuit and others, but not in the 9th Circuit. The 9th Circuit had earlier been frequently cited as allowing such expanded review, but reversed its position in a second ruling in the same case. Kyocera Corp. v. Prudential-Bache Trade Services, Inc., 341 F.3d 987 (9th Cir. 2003).

Given the split in the circuit courts, it seems inevitable that this ultimately will have to be sorted out by the Supreme Court. How and when should be on the watch list for employers.

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