OPINION
Respondents-Appellees Milton Donelson (“Donelson”) and Cortez Lotts (“Lotts”) (collectively, “Appellees”) claimed that their former employer, Petitioner-Appellant Electronic Data Systems Corporation (“EDS”), discriminated against them in violation of Michigan law. The parties executed an arbitration agreement, and, after a hearing, a panel of three arbitrators awarded damages, attorney fees, and costs to both Donelson and Lotts. EDS subsequently petitioned the United States District Court for the Eastern District of Michigan for an order vacating the arbitration award. The district court denied the petition, and EDS now appeals. For the reasons set forth below, we AFFIRM the decision of the district court.
I. BACKGROUND
Donelson and Lotts, both of whom are African-American, each worked for EDS for approximately five months in 2001. In May 2001, both were assigned to work under the supervision of Anne Hoffmaster (“Hoffmaster”), a Caucasian, who had recently returned to work after a maternity leave. During the next several months, Hoffmaster issued multiple disciplinary notices to both Donelson (for performance deficiencies) and Lotts (for chronic tardi
Donelson and Lotts filed separate suits against EDS in early 2002 (Donelson in February and Lotts in March), alleging that their terminations were the result of racial (with regard to both Donelson and Lotts) and disability (with regard to Do-nelson) discrimination, in violation of the Elliott-Larsen Civil Rights Act (“EL-CRA”), Mich. Comp. Laws § § 37.2101 et seq., and the Persons with Disabilities Civil Rights Act (“PDCRA”), Mich. Comp. Laws § § 37.1101 et seq. On February 26, 2003, the parties reached an agreement to arbitrate the disputes, pursuant to which Donelson and Lotts dismissed their claims against EDS. The agreement provided for a two-day hearing before a panel of three arbitrators, followed by briefing to be submitted within two weeks of the hearing and a panel decision to be rendered within two weeks of the completion of briefing.
The arbitration hearing, of which no record was made, took place on September 28 and 29, 2004. At the inception of the hearing, counsel for EDS requested that the arbitrators set forth, in their award, findings of fact and conclusions of law, pursuant to the rule set forth in
Rembert v. Ryan’s Family Steak Houses, Inc.,
On January 3, 2005, counsel for EDS submitted a written objection to the panel, arguing that, because the arbitration panel had not issued a decision within two weeks of the completion of briefing, as required by the arbitration agreement, the panel no longer possessed the power to do so. Notwithstanding EDS’s letter, on January 19, 2005, the panel awarded damages to Do-nelson in the amount of $95,000 and to Lotts in the amount of $35,000. Neither award set forth findings of fact or conclusions of law, but each included a request for additional briefing on the proper amount of attorney fees to be awarded. Approximately one month later, Donelson and Lotts submitted the requested briefs, to which EDS objected on the grounds that the arbitrators lacked the authority to award attorney fees and that, in any event, no evidence concerning fees had been timely submitted.
On April 21, 2005, EDS filed an application in the United States District Court for the Eastern District of Michigan to vacate the arbitration awards. Subsequently, on May 10, 2005, the arbitration panel awarded attorney fees and costs to Donelson in the amount of $39,506 plus interest and to Lotts in the amount of $20,696 plus interest. On December 9, 2005, the district court denied EDS’s application to vacate, and EDS now appeals.
II. ANALYSIS
A. Standard of Review
“The standard of appellate review of a district court’s decision whether to
[T]here is no special standard governing [the] review of a district court’s decision in these circumstances. Rather, review of, for example, a district court decision confirming an arbitration award on the ground that the parties agreed to submit their dispute to arbitration, should proceed like review of any other district court decision finding an agreement between parties, e.g., accepting findings of fact that are not “clearly erroneous” but deciding questions of law de novo.
Kaplan,
B. Legal Standard
A court’s power to vacate an arbitration award is limited in scope. Specifically, we have held that
[a] court may vacate an arbitration award in the following situations: (1) where the award was procured by fraud, (2) where the arbitrators were evidently partial or corrupt, (3) where the arbitrators misbehaved so that a party’s rights were prejudiced, or (4) where the arbitrators exceeded their powers or executed them so that a final, definite award was not made. In addition, a reviewing court may vacate an award where the arbitrators have manifestly disregarded the law.
Dawahare v. Spencer,
C. The Panel Did Not Exceed Its Powers
“Arbitrators exceed their power when they ‘act beyond the material terms of the contract from which they primarily draw their authority, or in contravention of controlling principles of law.’ ”
Saveski v. Tiseo Architects, Inc.,
1. The Form of the Awards
Although the ELCRA itself does not mention arbitration, “the overwhelming majority of federal and ... state courts have held that ... agreements [to arbitrate statutory civil-rights claims] are enforceable,
provided that the arbitration procedures are fair....” Rembert,
The limited scope of the Rembert holding is consistent with that court’s discussion of the public-policy interests implicated by the arbitration of statutory employment-discrimination claims:
Opponents of arbitration in this case, as elsewhere, generally acknowledge the public policy favoring arbitration, but claim that it ought not apply to claims arising under public interest statutes such as civil rights statutes. They argue that the public policy advanced by the statutes would be undermined if these disputes were addressed in the relatively private forum of arbitration. These very arguments were thoroughly considered and rejected by the United States Supreme Court in a trio of cases known as the Mitsubishi trilogy and, later, in Gilmer v. Interstate/Johnson Lane Corp.,500 U.S. 20 ,111 S.Ct. 1647 ,114 L.Ed.2d 26 (1991). Although initially reluctant to endorse predispute arbitration agreements of statutory claims, federal law has long since strongly endorsed arbitration of statutory claims.
Wilko v. Swan,346 U.S. 427 ,74 S.Ct. 182 ,98 L.Ed. 168 (1953), is representative of the initial skepticism toward arbitration. There, the United States Supreme Court held that predispute agreements to arbitrate claims arising under the Securities Act of 1933 were void under § 14 of the Securities Act, which nullified stipulations to waive compliance with the Securities Act. Like the opponents of arbitration here, the Court in Wilko equated a waiver of a judicial forum with a waiver of compliance with the substantive provisions of the statute.
Wilko has since been overruled, and its entire rationale has been thoroughly discredited and unequivocally rendered obsolete by the Mitsubishi trilogy. In this trilogy, the Supreme Court repudiated its former characterization of arbitration as a second-rate forum in which statutory rights are necessarily diminished. Instead, the Court recognized arbitration as an efficacious means for parties to enforce their statutory rights and held that parties who had agreed to arbitrate would be bound by those agreements.
The quoted language indicates that the
Rembert
court was concerned with protecting employees who prospectively waive their right to a judicial forum as a condition of employment.
See also id.
at 224 n. 25 (“[W]e agree with the reasoning in
[EEOC v. Frank’s Nursery & Crafts, Inc.,
Donelson’s and Lotts’s claims are not, however, of the type contemplated by the
Rembert
court, and it is not for us to extend that court’s holding. The arbitration agreements at issue here were not executed until
after
the alleged statutory violations had already taken place and, thus, could not possibly have constituted waivers of statutory compliance. Moreover, there is little reason for concern regarding coercion in this case, as Donelson
EDS points out that the Michigan Court of Appeals applied
Rembert
to a post-dispute arbitration agreement in
Biram v. City of Detroit,
No. 256131,
A court opinion must be published if it:
(1) establishes a new rule of law;
(2) construes a provision of a constitution, statute, ordinance, or court rule;
(3) alters or modifies an existing rule of law or extends it to a new factual context
(5) involves a legal issue of continuing public interest; [or]....
(7) creates or resolves an apparent conflict of authority....
mich.App. R. 7.215(B) (emphasis added). The failure of the Biram court to publish its opinion, which — at the very least — applies the Rembert standard to a “new factual context,” id., is, thus, puzzling.
Absent a statutory mandate, “[the Michigan] Supreme Court ... recognized, [in
Gavin
] ... that ‘[t]here is no requirement that a verbatim record be made of private arbitration proceedings, there are no formal requirements of procedure and practice beyond those assuring impartiality, and no findings of fact or conclusions of law are required.’ ”
Saveski,
2. The Awards of Attorney Fees and Costs
Michigan law provides that “damages [under the ELCRA] ... includ[e]
The record indicates that EDS demonstrated, by requesting and conceding to numerous delays and extensions throughout the course of the arbitration proceedings, that time was not of the essence. In so doing, EDS waived the specific time limitations included in the agreement.
See Kennedy v. Brady,
D. The Arbitrators Did Not Manifestly Disregard the Law
Finally, EDS contends that the arbitration panel manifestly disregarded the law by refusing to require Donelson and Lotts to establish a prima facie case of discrimination under the ELCRA. “An
arbitration panel acts with manifest disregard if ‘(1) the applicable legal principle is clearly defined and not subject to reasonable debate; and (2) the arbitrators refused to heed that legal principle.’ ”
Dawahare,
Because “[a]rbitration, by its very nature, restricts meaningful legal review in the traditional sense,”
Gavin,
Moreover, “[a]rbitrators are not required to explain their decisions. If they choose not to do so, it is all but impossible to determine whether they acted with manifest disregard for the law.”
Dawahare,
As a general observation, courts will be reluctant to modify or vacate an award because of the difficulty or impossibility, without speculation, of determining what caused an arbitrator to rule as he did. The informal and sometimes unorthodox procedures of the arbitration hearings, combined with the absence of a verbatim record and formal findings of fact and conclusions of law, make it virtually impossible to discern the mental path leading to an award. Reviewing courts are usually left without a plainly recognizable basis for finding substantial legalerror. It is only the kind of legal error that is evident without scrutiny of intermediate mental indicia which remains reviewable.... In many cases the arbitrator’s alleged error will be as equally attributable to alleged “unwarranted” factfinding as to asserted “error of law.” In such cases the award should be upheld since the alleged error of law cannot be shown with the requisite certainty to have been the essential basis for the challenged award and the arbitrator’s findings of fact are unreviewable.
Gavin,
Because no record exists of the arbitration hearing held in this case, it is impossible to determine whether the evidence presented by Donelson and Lotts established a prima facie case under the ELCRA. Absent such a record, and in light of the undisputed facts that Hoffmaster’s cubicle contained a black-faced doll suspended by its neck and that Hoffmaster participated in the terminations of four African-American and no Caucasian employees during the period in which Donelson and Lotts were fired, we cannot determine that a “legal error ... is evident without scrutiny of intermediate mental indicia.” Id. at 428. Accordingly, we AFFIRM the district court’s determination that the arbitrators did not manifestly disregard the law.
III. CONCLUSION
We AFFIRM, for the reasons stated above, the district court’s judgment that the arbitration panel did not exceed its powers or manifestly disregard the law.
Notes
. It is not entirely clear from Donelson's and Lotts's filings whether they deny the alleged infractions for which the warnings were issued, but, in any event, they allege that the repeated disciplinary actions were not the true reasons for their terminations.
. An argument might be made that civil-rights statutes signify areas of particular legislative concern and implicate fundamental rights and, thus, that courts should strive to ensure procedural and substantive fairness in the arbitration of claims under such statutes. This argument proves too much, however, in that it suggests that statutory civil rights claims should be excluded altogether from the class of arbitrable claims — a contention that the
Rembert
court expressly rejected.
. In other recent decisions, the Michigan Court of Appeals has expressly characterized
Rembert
as applying to
predispute
agreements.
See, e.g., Breiteribeck v. Merillat Indus., L.L.C.,
No. 258135,