Worman v. Bp Am. Prod. Co.

• Decision Date: 25 March 2011
• Docket Number: No. S–10–0162.,S–10–0162.
• Citation: 248 P.3d 644,2011 WY 54
• Parties: Ronald Lee WORMAN and Sherri Lynne Worman, Deceased, Appellants (Plaintiffs),v.BP AMERICA PRODUCTION COMPANY, Appellee (Defendant).
• Court: Wyoming Supreme Court

248 P.3d 644

2011 WY 54

Ronald Lee WORMAN and Sherri Lynne Worman, Deceased, Appellants (Plaintiffs),

v.BP AMERICA PRODUCTION COMPANY, Appellee (Defendant).

No. S–10–0162.

Supreme Court of Wyoming.

March 25, 2011.

Representing Appellants: Larry B. Jones and William L. Simpson, Burg, Simpson, Eldredge, Hersh & Jardine, PC, Cody, Wyoming; Aaron J. Vincent and John R. Vincent, Vincent & Rutzick, Riverton, Wyoming. Argument by Mr. Jones.Representing Appellee: John A. Coppede, John M. Walker, and Robert J. Walker, Hickey and Evans, LLP, Cheyenne, Wyoming. Argument by Mr. Robert J. Walker.Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.BURKE, Justice.

[¶ 1] An arbitrator denied Ronald Worman's claims against BP America Production Company. In the district court, Mr. Worman sought to vacate the arbitrator's decision. The district court denied the motion, and Mr. Worman appealed. We will affirm the district court.

ISSUE

[¶ 2] Mr. Worman contends that the arbitrator's decision must be vacated because it shows “a manifest mistake of fact and law.”

FACTS

[¶ 3] On August 23, 2006, Mr. Worman was working for Nabors Drilling Company on an oil rig in Carbon County, Wyoming. The well site was owned and operated by BP, and Wayne Sanford was BP's “company man” on site.¹ According to Mr. Worman, Mr. Sanford, “[w]ithout warning, provocation, or any cause,” grabbed Mr. Worman and placed him in a “head lock” and squeezed. Mr. Worman felt a “popping sensation in his neck, and immediately experienced significant and severe pain.” A few minutes later, Mr. Sanford put his hands around Mr. Worman's neck and began choking him. Mr. Worman filed suit against Mr. Sanford, BP, and two co-workers, claiming he had sustained serious and permanent injury to his neck as a result of Mr. Sanford's actions.²

[¶ 4] BP filed a motion with the district court seeking to compel arbitration of the claims, asserting that arbitration was required pursuant to agreements among BP, Nabors Drilling, and the employees of Nabors. The district court stayed the litigation and ordered the parties to submit to arbitration. At some point, Mr. Worman reached settlement agreements with the other defendants, and arbitration proceeded only on his claims against BP. The arbitrator ruled that BP was liable for Sanford's actions only if they were “within the scope of employment or apparent scope of authority.” She concluded that Mr. Sanford's 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 Mr. Worman.

[¶ 5] Mr. Worman 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. It denied Mr. Worman's motion, and Mr. Worman perfected this appeal.

STANDARD OF REVIEW

[¶ 6] We review de novo a district court's decision to confirm, vacate, or modify an arbitration award. “When reviewing the district court's order after an arbitration, we ‘undertake a full review of the record without deference to the views of the trial court.’ ” Welty v. Brady, 2005 WY 157, ¶ 12, 123 P.3d 920, 924 (Wyo.2005), quoting JBC of Wyoming Corp. v. City of Cheyenne, 843 P.2d 1190, 1194 (Wyo.1992), quoting Inter–Mountain Threading, Inc. v. Baker Hughes Tubular Servs., Inc., 812 P.2d 555, 558 (Wyo.1991). At the same time, this Court, like the district court, shows substantial deference to the decision of the arbitrator.

In reviewing the record below, we are mindful that the grounds for vacating or modifying an arbitrator's award remain narrow in scope. Because of its voluntary, informal nature, awards made in arbitration are subject to less intensive scrutiny than are, for example, the orders of administrative agencies. The reviewing court must observe the principle that arbitrators are free to fashion forms of relief which could not be ordered by a court in law or equity. Furthermore, we are reluctant to disturb an arbitrator's just solution to a controversy, even if it differs from the resolution we might have chosen, had we been in the arbitrator's place. As a voluntary method for resolution of disputes, arbitration is embedded in the public policy of Wyoming and is favored by this court.

JBC, 843 P.2d at 1194 (internal citations omitted).

DISCUSSION

[¶ 7] Pursuant to the parties' agreements, this arbitration was governed by the Federal Arbitration Act, 9 U.S.C. §§ 1–16. The United States Supreme Court has held that the grounds for vacating an arbitration award under the Federal Arbitration Act are limited.

Congress enacted the FAA to replace judicial indisposition to arbitration with a “national policy favoring [it] and plac[ing] arbitration agreements on equal footing with all other contracts.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, [1207,] 163 L.Ed.2d 1038 (2006).... The Act also supplies mechanisms for enforcing arbitration awards: a judicial decree confirming an award, an order vacating it, or an order modifying or correcting it. [9 U.S.C.] §§ 9–11. An application for any of these orders will get streamlined treatment as a motion, obviating the separate contract action that would usually be necessary to enforce or tinker with an arbitral award in court. Under the terms of § 9, a court “must” confirm an arbitration award “unless” it is vacated, modified, or corrected “as prescribed” in §§ 10 and 11. Section 10 lists grounds for vacating an award, while § 11 names those for modifying or correcting one.

The Courts of Appeals have split over the exclusiveness of these statutory grounds when parties take the FAA shortcut to confirm, vacate, or modify an award, with some saying the recitations are exclusive, and others regarding them as mere threshold provisions open to expansion by agreement.... We now hold that §§ 10 and 11 respectively provide the FAA's exclusive grounds for expedited vacatur and modification.

Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 581–84, 128 S.Ct. 1396, 1402–03, 170 L.Ed.2d 254 (2008) (internal citation and footnotes omitted). The statute provides that an arbitration award may be vacated:

(1) where the award was procured by corruption, fraud, or undue means;

(2) where there was evident partiality or corruption in the arbitrators, or either of them;

(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or

(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

9 U.S.C. § 10(a).

[¶ 8] “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. Welty, ¶ 11 n. 2, 123 P.3d at 924 n. 2. However, manifest mistake of law is not explicitly listed in the federal statute quoted above, and it is unclear “whether judicially-created grounds for vacatur survive after Hall Street Associates.” Hicks v. Cadle Co., 355 Fed.Appx. 186, 196 (10th Cir.2009) (unpublished).³ In that case, the Tenth Circuit Court of Appeals listed 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.” Id. at 196–97. But having discussed the split of authority, the Tenth Circuit found it unnecessary to reach the issue because no manifest disregard of the law was demonstrated in the case before it.

[¶ 9] We have considered the various decisions listed by the Tenth Circuit, and are more persuaded by those ruling that manifest mistake of law is not one of the grounds for vacating an arbitration award under the Federal Arbitration Act. This is based in part on the language used by the United States Supreme Court in Hall Street Associates, stating that “§§ 10 and 11 respectively provide the FAA's exclusive grounds for expedited vacatur and modification.” We are inclined to interpret the statement literally. We are also mindful of the established principle that courts give great deference to arbitrators' decisions.

Once an arbitration award is entered, the finality that courts should afford the arbitration process weighs heavily in favor of the award, and courts must exercise great caution when asked to set aside an award. Because a primary purpose behind arbitration agreements is to avoid the expense and delay of court proceedings, it is well settled that judicial review of an arbitration award is very narrowly limited.

Foster v. Turley, 808 F.2d 38, 42 (10th Cir.1986) (internal citations omitted). In Hall Street Associates, the United States Supreme Court referred to

a national policy favoring arbitration with just the limited review needed to maintain arbitration's essential virtue of resolving disputes straightaway. Any other reading opens the door to the full-bore legal and evidentiary appeals that can “rende[r] informal arbitration merely a prelude to a more cumbersome and time-consuming judicial review process,” Kyocera [ Corp. v. Prudential–Bache Trade Services, Inc.], 341 F.3d [987,] 998 [ (9th Cir.2003) ]; cf. Ethyl Corp. v. United Steelworkers of America, 768 F.2d 180, 184 ( [7th Cir.] 1985), and bring arbitration theory to grief in postarbitration process.

552 U.S. at 588, 128 S.Ct. at 1405, 170 L.Ed.2d 254. Restricting the available grounds for vacating an...