780 F.3d 59
1st Cir.2015Background
- Fenyk, RJFS employee broker, was terminated for alleged ongoing alcohol problems; contract designated Florida law governing disputes.
- Fenyk initiated arbitration (FINRA) asserting Vermont disability and retaliation claims under state law; RJFS argued Vermont law did not apply and Fenyk was an independent contractor, not an employee.
- Arbitration panel granted back pay of $600,000 plus attorneys’ fees and expenses under Florida law, and denied other relief; panel applied Florida law despite Fenyk's denials and delay in amending the claim.
- District court vacated the award, holding the arbitrators exceeded their powers by awarding relief under Florida law despite Fenyk not submitting Florida-law claims and due to limitations issues.
- On appeal, the First Circuit reversed, holding the arbitrators were within their authority and that vacatur requires more than mere legal error; the award drew its essence from the contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the district court properly vacate the award for exceeding powers? | Fenyk argues district court should defer to arbitrators' good faith interpretation. | RJFS contends award relied on Florida law not submitted by Fenyk and exceeded arbitrators' powers. | No vacatur; panel's Florida-law-based remedy within contract scope. |
| Should Florida statutes of limitations void the Florida-law damages? | Fenyk faced Florida limitations; applying Florida law was appropriate as per panel. | RJFS asserts Florida limits bar the claims; panel erred in applying Florida law. | Not vacated; error, if any, insufficient to vacate under Hall Street/Stolt-Nielsen standards. |
| Did the absence of Florida-law claims defeat the Florida-law damages? | Arbitrators could apply Florida law and grant relief even if not expressly framed as Florida claims. | Damages awarded under Florida law without Florida claims undermines limits of authority. | Authority existed; application of Florida-law remedies within contract terms permissible. |
Key Cases Cited
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 () (arbitrators must adhere to contract; limits on power)
- Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013) (vacatur limits under FAA are narrow)
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (1995) (arbitration review limited; extraordinary grounds required)
- Misco, Inc. v. Nal, 484 U.S. 29 (1987) (arbitration review limited to contract interpretation)
- Doral Fin. Corp. v. García-Velez, 725 F.3d 27 (1st Cir. 2013) (narrow scope of review; vacatur grounds under FAA)
- Kashner Davidson Sec. Corp. v. Mscisz, 531 F.3d 68 (1st Cir. 2008) (arbitration award review; limits on overturning awards)
- Bangor Gas Co. v. H.Q. Energy Servs. (U.S.) Inc., 695 F.3d 181 (1st Cir. 2012) (manifest disregard doctrine; relation to Hall Street)
- Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (§ 10 exclusive grounds for vacatur under FAA)
- Raymond James Fin. Servs., Inc. v. Phillips, 126 So. 3d 186 (Fla. 2013) (Florida arbitration limitations apply to arbitrations)