Schwartz v. Merrill Lynch & Co.
665 F.3d 444
2d Cir.2011Background
- Schwartz appeals a district court decision denying her petition to vacate an arbitration award against Merrill Lynch for gender discrimination under Title VII.
- The award limited evidence and claims to events occurring after April 2, 2001, based on Schwartz's April 2, 2001 Settlement and Mutual Release.
- Cremin settlement (1998) created two dispute mechanisms (CRP and EDR) and required arbitral awards to follow applicable law and be FAA-reviewable.
- The Release broadly waived claims up to April 2, 2001, while expressly not releasing claims arising after that date.
- Arbitrators allowed evidence close to April 2, 2001 (up to six months prior) but barred older evidence; decision issued November 2008.
- Fair Pay Act of 2009 retroactively applying to pending claims post-May 28, 2007; district court held Act did not govern the award here, which predated the Act and did not rely on Ledbetter.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitrators’ evidentiary limit justifies vacatur | Schwartz argues pre‑April 2001 evidence was barred by Ledbetter retroactivity | Lynch asserts the Release bounds claims to post‑April 2, 2001 and no Ledbetter issue. | No vacatur; limitation grounded in the Release and timing. |
| Whether the Fair Pay Act retroactivity supports vacatur | Act retroactively applies to pending claims and revives pre‑period discrimination | Act cannot alter pre‑enactment arbitration result | No basis for vacatur based on retroactive Act. |
| Whether manifest disregard/public policy justify vacatur | Ledbetter reversal should vacate award | Panel did not disregard law; Act not applicable to pre‑award law | No manifest disregard or public policy basis for vacatur. |
| Whether the Release forecloses revived claims and limits evidence appropriately | Release language should not bar post‑release discrimination evidence | Panel correctly applied Release to limit to post‑Release period | Panel properly constrained evidence per Release; no vacatur. |
Key Cases Cited
- Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (U.S. 2007) (retroactivity and timing of discrimination claims)
- Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (whether manifest disregard survives as a basis for vacatur)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758 (U.S. 2010) (assessing scope of arbitration review post-Hall Street)
- T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329 (2d Cir. 2010) (affirming manifest disregard as a vacatur ground post-Hall Street)
- Bobker, Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930 (2d Cir. 1986) (clarifying scope of arbitrator's interpretation under FAA)
- W.R. Grace & Co. v. Local Union 759, 461 U.S. 757 (U.S. 1983) (public policy exception to arbitration award enforcement)
- Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys "R" Us, Inc., 126 F.3d 15 (2d Cir. 1997) (theory of manifest disregard of contract terms)
- Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (U.S. 1995) (constitutional constraints on retroactive judgments)