FLOOR SOLUTIONS, LLC, аn Oregon limited liability company, Plaintiff-Appellant, v. Patrick JOHNSON, an individual, Defendant-Respondent.
19CV53363; A175297
Multnomah County Circuit Court
October 19, 2022
322 Or App 417 (2022); 520 P3d 902
Leslie G. Bottomly, Judge.
Argued and submitted March 31, affirmed October 19, 2022
Plaintiff appeals from a general judgment and supplemental judgment confirming an arbitration award. Plaintiff assigns error to the trial court‘s conclusion that the аrbitration panel did not exceed its powers under
Affirmed.
Darlene Pasieczny argued the cause for appellant. Also on the briefs were Timothy J. Resch and Samuels Yoelin Kantor LLP.
Cody Hoesly argued the cause for respondent. Also on the brief were Larkins Vacura Kayser LLP, and Grant T. Engrav and Engrav Law Office, LLP.
Before Ortega, Presiding Judge, and Powers, Judge, and Hellman, Judge.
HELLMAN, J.
Affirmed.
Plaintiff appeals from a general judgment and supplemental judgment confirming an arbitrаtion award. On appeal, plaintiff assigns error to the trial court‘s conclusion that the arbitration panel did not exceed its powers under
The following facts are undisputed. Plaintiff initially hired defendant as a salesperson and eventually prоmoted him to president and CEO. When plaintiff promoted defendant to president, the parties entered into an employment agreement setting forth the terms of defendant‘s employment. As relevant here, the employment agreement included аn arbitration provision that stated:
“Any dispute or claim that arises out of or that relates to this Agreement, or that relates to the breach of this Agreement, or to the existence, scope, or validity of this Agreement or the arbitration agreеment, or that arises out of or that is based upon the employment relationship (including any wage claim, any claim for wrongful termination,
or any claim based upon any statute, regulation, or law) *** shall be resolved by arbitration *** and judgment upon the awаrd rendered pursuant to such arbitration may be entered in any court having jurisdiction thereof.”
In June 2019, plaintiff terminated defendant‘s employment. Plaintiff represented that defendant committed theft and misconduct, misappropriated plaintiff‘s property, and breached his fiduciary duties to plaintiff. In December 2019, plaintiff filed a complaint in circuit court seeking a preliminary injunction enjoining defendant from competing with plaintiff, soliciting its customers, or disclosing its confidential information. Plaintiff also аsserted breach of contract, breach of duty, and promissory estoppel claims. The trial court denied plaintiff‘s motion for preliminary injunction and granted the parties’ stipulated motion to abate and transfer the matter to arbitratiоn.
After a two-day arbitration, a three-member panel issued a Preliminary Arbitration Award for defendant. The panel concluded that plaintiff failed to prove that defendant had breached the employment agreement and that plaintiff willfully withheld wаges and made wrongful deductions from defendant‘s final paycheck. Plaintiff filed a Motion to Correct Miscalculation Regarding Penalty Wage and a Motion to Reconsider. Specifically, plaintiff disputed the panel‘s conclusions conсerning the alleged breaches and the compensation, penalty wage, and attorney fee awards. The panel unanimously denied both motions and issued a final award confirming the preliminary award.
Plaintiff submitted a petition to the trial court tо vacate the arbitration award under
On appeal, plaintiff argues that the trial court erred in concluding that the panel did not exceed its powers within the meaning of
We review a court‘s confirmation of an arbitrator‘s award and whether an arbitrator exceeded its powers for legal error. Nieto v. City of Talent, 295 Or App 625, 629, 436 P3d 82 (2019).
Here, neither party disputes that the issues the panel arbitrated were included in the employment agreement‘s provisions. Normally that would be the end of the inquiry under
The majority of federal circuit courts of appeals recognize manifest disregard of the law as a nonstatutory ground for vacating commercial arbitration awards. See Revised Uniform Arbitration Act (RUAA) § 23(a) comment C2 (so explaining). An arbitration panel manifestly disregards the law when it commits gross legal error that is appаrent on the face of the award and a court concludes that the panel knew the correct law but chose to ignore it. Id. Plaintiff argues that, despite Oregon law limiting the review of arbitration awards, what the arbitration panel did here rises to the level of manifest disregard of the law such that the panel exceeded its authority.
Whether the Oregon legislature intended to include “manifest disregard of the law” within the meaning of
Plaintiff‘s primary source for the principle of “manifest disregard of the law” is the commentary to the RUAA. The Oregon legislature adopted the RUAA itself in 2003. Or Laws 2003, ch 598; Snider v. Production Chemical Manufacturing, Inc., 348 Or 257, 267-68, 230 P3d 1 (2010). RUAA § 23(a) and
When the drafters of a model act are “aware” of different approaches to a statutory scheme and select one approach, we may conclude that the drafters “deliberatеly chose” to omit the others from the statute. Elk Creek Management Co. v. Gilbert, 353 Or 565, 579, 303 P3d 929 (2013). Here, we conclude that the RUAA drafters “deliberately chose” to omit the “manifest disregard of the law” standard as a basis to vacate arbitration awards. In that commentary, the drafters explicitly rеcognized the existence of the standard. RUAA § 23 comment C2. However, rather than leaving it open, they identified several problems with the standard. The drafters acknowledged that the Federal Arbitration Act (FAA) omitted the standard, creating a “significant questiоn of possible FAA preemption of such a provision.” RUAA § 23 comment C5. They also noted that case law interpreting the “manifest disregard” standard “is not just unsettled but also is conflicting and indicates further evolution in the courts.” Id. Indeed, when presented with the opportunity to include the “manifest disregard” standard in the model act, the committee rejected it. See id. (“A motion to include the ground of ‘manifest disregard’ in Section 23(a) was defeated by the Committee of the Whole ***“).
One final point needs addressing. Both the Supreme Court and our court have recognized a narrow exception to the bar on trial court review of issues that were covered in the arbitration agreement. That exception exists when the arbitrator or arbitration panel makes “certain legal or factual errors [that are] so egrеgious so as to be said to ‘exceed [] the arbitrator‘s powers,‘” and those errors are “so grossly erroneous as to strike at the heart of the decision-making process.” 3000 Investment Corp. v. Teed, 313 Or App 619, 620, 494 P3d 378 (2021) (quoting Brewer, 248 Or at 561-62 (brackets in original)). Neither our court, nor the Supreme Court, has yet bеen presented with a situation in which we have concluded that that standard was met. Instead, our caselaw has addressed the broad scope of what does not qualify under that standard. Native Sun v. L & H Development, Inc., 149 Or App 623, 629-30, 944 P2d 995 (1997), rev den, 327 Or 82 (1998). And our caselaw has explicitly established а principle of limiting judicial control of arbitration awards “to the strictest possible limits.” Brewer, 248 Or at 562.
Plaintiff does not argue that the grossly erroneous exception applies in this case, only that the presence of that exception in our caselaw suggests that “manifest disregard of the law” is also available in Oregon. We disagree. As we explained above, whether “manifest disregard of the law” is incorporated into
In sum,
Affirmed.