Carolyn Burton v. Class Counsel and Party to Arb
737 F.3d 1262
| 9th Cir. | 2013Background
- Fee dispute among plaintiffs’ counsel in the Wal‑Mart MDL after a $28 million attorneys’ fee award; settlement provided fee‑allocation disputes be resolved by the Hon. Layn R. Phillips via “binding, non‑appealable arbitration.”
- Arbitrator issued allocation awarding portions to Bonsignore, the Burton Group, and LaPlant; Burton Group sought vacatur in district court under FAA § 10(a); Bonsignore moved to confirm.
- District court confirmed the arbitrator’s award and denied vacatur; Burton Group appealed to the Ninth Circuit.
- Bonsignore argued the appellate court lacked jurisdiction because the settlement’s non‑appealability clause eliminated all federal court review of the arbitration award.
- Ninth Circuit framed a question of first impression in the circuit: whether a contractual clause eliminating all federal judicial review (including FAA § 10 vacatur) is enforceable.
- Court concluded that parties may not contractually waive or eliminate the FAA’s statutory grounds for vacatur and therefore exercised appellate jurisdiction; it affirmed the district court’s confirmation on the merits.
Issues
| Issue | Plaintiff's Argument (Burton) | Defendant's Argument (Bonsignore) | Held |
|---|---|---|---|
| Whether a contractual “non‑appealable” arbitration clause that eliminates all federal court review (including FAA § 10) is enforceable | § 22.9 is binding; parties agreed to eliminate review so appellate court lacks jurisdiction | The clause bars all federal court review of the arbitrator’s allocation, so appellate court lacks jurisdiction | Unenforceable; parties may not waive/eliminate § 10(a) review; appellate court has jurisdiction |
| Whether the district court erred in denying vacatur under FAA § 10(a) | Arbitrator’s award should be vacated (various asserted defects) | No statutory basis for vacatur exists here | Affirmed confirmation: district court correctly found no grounds to vacate |
| Whether contractual limits on judicial review can expand or contract FAA standards | Parties can contractually define arbitration procedures, but not eliminate statutory review | Parties’ agreement should control scope of review, including elimination | FAA’s § 10(a) grounds are exclusive and non‑waivable; contractual elimination is invalid |
| Whether appellate waiver as to only merits vs. all review matters | Ambiguity resolved in favor of preserving FAA review | Clause intended to eliminate all federal review | Court held clause ambiguous but resolved by law: cannot eliminate § 10(a) review |
Key Cases Cited
- Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (statutory FAA grounds for vacatur/modification are exclusive; contract cannot expand them)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (arbitration agreements are enforceable as contracts under national policy favoring arbitration)
- Hoeft v. MVL Group, Inc., 343 F.3d 57 (2d Cir. 2003) (upholding that contract attempting to foreclose all judicial review is unenforceable)
- MACTEC, Inc. v. Gorelick, 427 F.3d 821 (10th Cir. 2005) (non‑appealability clause that preserves district court review upheld where clause only barred appellate review)
- Kyocera Corp. v. Prudential‑Bache Trade Services, Inc., 341 F.3d 987 (9th Cir. 2003) (parties cannot amend statutorily prescribed standards for federal review by contract)
- Bosack v. Soward, 586 F.3d 1096 (9th Cir. 2009) (FAA limits on judicial review of arbitration awards are narrow and statutory)
- Tabas v. Tabas, 47 F.3d 1280 (3d Cir. 1995) (contractual non‑appealability construed as waiver of appellate merits review only)
- Aerojet‑General Corp. v. American Arbitration Ass’n, 478 F.2d 248 (9th Cir. 1973) (dicta suggesting parties could eliminate court review; not followed here)