The reports of the death of Section 10 of the FAA may have been greatly exaggerated.
Thursday, a majority of the Eleventh Circuit held in Nalco Co. LLC v. Bonday that an arbitration award was subject to vacatur under Section 10(a)(4) because the arbitrator exceeded her powers by awarding relief on an ERISA discrimination claim that the claimant never raised. In the arbitration, the claimant sought only one form of relief from his former employer Nalco: to follow the severance plan and award him severance pay. And while the claimant did reference two other employees who had received severance pay in support of his own claim, he “didn’t mention ERISA or discrimination anywhere in his arbitration demand, and he didn’t ask for damages as a result of any discrimination.” Therefore, an ERISA discrimination claim had not been submitted to the arbitrator, and the arbitrator exceeded her powers by purporting to award relief on this unsubmitted claim.
The majority ruling engendered a scathing 65-page dissent from Judge Tjoflat, which chided the majority’s ruling for “affirmin[ing] a trial court decision that cannot stand because it was handed down in defiance of the law” and would have instructed the district court to determine whether sanctions against Nalco’s attorneys were appropriate based on “misinform[ing] the Court as to the state of the relevant law[.]”
