Friday, March 25, 2011

2011 WY 54

Summary of Decision March 25, 2011

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Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name: Worman v. BP America Production Company

Citation: 2011 WY 54

Docket Number: S-10-0162


Appeal from the District Court of Carbon County, Honorable Wade W. Waldrip, Judge

Representing Appellants (Plaintiffs): Larry B. Jones and William L. Simpson, Burg, Simpson, Eldredge, Hersh & Jardine, Cody, Wyoming; Aaron J. Vincent and John R. Vincent, Vincent & Rutzick, Riverton, Wyoming

Representing Appellee (Defendant): John A. Coppede, John M. Walker, and Robert J. Walker, Hickey and Evans, Cheyenne, Wyoming

Date of Decision: March 25, 2011

Facts: An arbitrator denied Appellant’s claims against Appellee finding that that Appellee would be liable for its “man on site’s” injurious actions only if they were “within the scope of employment or apparent scope of authority.” She concluded that the actions constituted “horseplay” that was “motivated by personal reasons” and “outside the scope of his authority.” On that basis, she ruled that BP was not liable to Appellant. Appellant asked the district court to vacate the arbitrator’s decision, asserting that it reflected a “manifest mistake of Wyoming law.” The district court concluded that manifest mistake of law is not one of the grounds available for vacating this arbitration award, but even if it were, the Arbitrator had not made a manifest mistake of Wyoming law. the arbitrator’s decision. The district court denied the Appellant’s motion to vacate the arbitrator’s decision.

Issues: Whether the arbitrator’s decision must be vacated because it shows “a manifest mistake of fact and law.”

Holdings: Pursuant to the parties’ agreements, this arbitration was governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16. Grounds for vacating an arbitration award under the Federal Arbitration Act are limited. “Manifest mistake of law,” sometimes termed “manifest disregard of law,” has been recognized as a judicially-created or “common law” basis for vacating an arbitration award. However, manifest mistake of law is not explicitly listed in 9 U.S.C. 10(a) which provides the grounds for vacating an arbitration award, and it is unclear whether judicially-created grounds for vacatur survive after Hall Street Associates, L.L.C. v. Mattel, Inc. , 552 U.S. 576 (2008) stated that 9 U.S.C. 10-11 provide the exclusive grounds for expedited vacatur and modification of an arbitration decision. There is a split in the federal circuits with the First, Fifth, Sixth, Eighth, and Eleventh Circuits as having “decided that manifest disregard of the law is no longer an independent ground for vacating arbitration awards under the FAA,” while the Second and Ninth Circuits maintain that manifest disregard “remains a valid ground for vacatur.”

Having relied on an argument that the Arbitrator made a “manifest mistake of Wyoming law,” Appellant has provided no grounds upon which the court could apply § 10 or § 11 of the FAA to vacate or modify the Arbitrator’s denial of an award to him. However, since there remains a distinct split of federal authority on this issue and since the United States Supreme Court recently declined to determine the issue in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., ___ U.S. ___, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010) (“We do not decide whether ‘manifest disregard’ survives our decision in Hall Street Associates . . . as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10.”). The court was willing to concede that there is some room for Appellant’s argument” that manifest mistake of law remains a valid basis for vacating an arbitration award under the Federal Arbitration Act. And consider the merits of Appellant’s position. .

To show that the arbitrator’s award could be vacated for a manifest mistake of law, Appellant cannot rely on mere legal error. The standard is much higher than that, and has been characterized as “highly deferential.” The “manifest disregard” standard can be characterized as willful inattentiveness to the governing law. Manifest disregard of the law “clearly means more than error or misunderstanding with respect to the law.

Under the respondeat superior theory, an employer is liable for the negligence of an employee acting within the scope of his employment. The conduct of an employee is within the scope of his employment only if it is of the kind he is employed to perform; it occurs substantially within the authorized time and space limits; and it is actuated, at least in part, by a purpose to serve the master As described by the district court, the arbitrator in Appellant’s case found that the employee who injured Appellant “was not performing the kind of work that he was hired to perform when he intentionally placed Appellant in a headlock.” To the contrary, his actions “interfered with the efficient and safe operation of the drilling rig.” These findings underpinned the arbitrator’s conclusion: “No reasonable inference could be made that the employee was acting within the scope of his agency when he engaged in the prohibited act of horseplay.”
At the time of the headlock, he might well have been on the premises for work-related activities but he certainly was not employed to engage in horseplay and the horseplay was not actuated by any purpose to serve Appellee but were motivated solely by personal reasons.

The arbitrator made no manifest mistake of law in determining that Appellant was not entitled to an award. The district court’s decision is affirmed.

J. Burke delivered the opinion for the court.

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