Shapiro, Lifschitz & Schram

“Unlike other law firms, we are clients and friends all on a first-name basis, and even though not a significant client, I still receive first-class attention.”

Bart Eisner – President and Owner, The Eisner Companies

No-appeal clause in arbitration agreement is unenforceable

In a December 17, 2013, opinion, In Re: Wal-Mart Wage and Hour Employment Practices Litig.,[1] the Ninth Circuit held that parties cannot contractually restrict Section 10 of the Federal Arbitration Act (FAA) by providing for “binding, non-appealable arbitration.” The issue, one of first impression for the circuit, related to a dispute among the successful counsel for plaintiffs in an underlying employment suit. The attorneys had been awarded $28 million in attorneys’ fees, but could not agree on how to divide the award among the various firms involved in the case.  They had an agreement calling for “binding, non-appealable arbitration” and arbitrated the fee dispute.

The arbitrator issued an award splitting up fees. However, not everyone was satisfied with the decision and the unsatisfied attorneys moved to vacate the award. The district court confirmed the award and the unsatisfied attorneys appealed.

On appeal, the attorneys who wanted to sustain the arbitrators’ award argued that the Ninth Circuit lacked jurisdiction to hear the dispute, because the parties had contractually agreed that the arbitration would not be appealable. The Ninth Circuit disagreed for two reasons. First, using an analysis similar to the Supreme Court’s holding in Hall St. Assocs., L.L.C. v. Mattel, Inc.,[2] the court found that the statutory language in the FAA “carries no hint of flexibility.” Second, allowing parties to opt out of Section 10 review “would [] frustrate Congress’s attempt to ensure a minimum level of due process for parties to an arbitration.”

This decision is significant in that it protects parties in the Ninth Circuit from arbitration agreements that eliminate even the very limited appeal bases under Section 10 of the FAA.  However, in doing so, the decision clashes somewhat with the oft-cited purpose of the FAA – i.e., to enforce arbitration agreements. 

 


[1] __ F.3d __, 2013 WL 6605350 (9th Cir. Dec. 17, 2013).

[2] 552 U.S. 576 (2008).

 

Did You Know . . .

Members of the SLS trial group have tried in excess of 50 jury trials and 75 bench trials?

The SLS construction group has worked on sports stadiums across the country including Orioles Park in Baltimore and Paul Brown Stadium in Cincinnati?

The SLS construction group has worked on power plant projects across the country?

In 2007 SLS was selected for an Honorable Mention as one of the Best Places To Work in Washington DC?

Ron Shapiro, Steve Schram and Judd Lifschitz have all been selected as SuperLawyers by Law and Politics?

The SLS office building is an historic townhouse constructed in the late 1800s?

SLS has been selected by Martindale-Hubbell as a Preeminent Law Firm?

SLS trial lawyers have argued appeals in the U.S. Circuit Courts of Appeal for the 4th, 5th, 9th, D.C. and Federal Circuit?

SLS trial lawyers have been lead trial counsel in cases in Arizona, California, District of Columbia, Florida, Louisiana, Maryland, New Jersey, New York, North Carolina, Oregon, Texas, and Virginia, - to name just a few?

Virtually all the cases that SLS trial lawyers mediated have been favorably settled at mediation?

The transactional group at SLS was lead counsel on one of the largest, most complex mixed-use projects in downtown Washington, DC involving 4 lenders and 6 property owners?

In appreciation for the outstanding efforts of each of its employees during 2007, SLS gave everyone (attorneys, paralegals, and staff) a 4 day/3 night expense paid trip to Key West, Florida?

The transactional group at SLS has represented tenants in more than 200 retail leases in the Mid-Atlantic region?

Every attorney in the transactional group at SLS has at least 15 years experience?

The transactional group at SLS has represented developers in the purchase, construction, financing and/or sale of more than 75 multi-family apartment projects?

The transactional group at SLS has represented real estate investors and developers with respect to property in Pennsylvania, West Virginia, Delaware, Maryland, the District of Columbia, Virginia, North Carolina, South Carolina, Georgia, Florida, Texas, Tennessee, Michigan and the U.S. Virginia Islands?

Attorneys in the transactional group at SLS have represented eight national banks in commercial real estate loans?

Attorneys in the transactional group at SLS have represented the FDIC, the Resolution Trust Corporation and several banking institutions in loan workout transactions throughout the Mid-Atlantic region?

The transactional group at SLS has represented homebuilders and commercial real estate developers in work-outs of individual loans and also for work-outs of large portfolios involving dozens of properties in several states?

The trial lawyers of SLS have numerous reported decisions to their credit?