In an unusual case, a court has refused to enforce an arbitration award as “completely irrational.” The plaintiff employee sued the defendant for disability benefits under the parties’ employment agreement. She was awarded disability benefits by the court, but the parties reserved certain other disputes for submission to a FINRA arbitration. The FINRA panel held that plaintiff owed defendant repayment of a substantial portion – more than $700,000 – of a contingent signing bonus, including for the duration of time not worked due to plaintiff’s disability. Plaintiff moved to vacate the award, arguing that the panel’s decision was not rationally derived from a reading of the employment agreement or from the parties’ submissions to the arbitrators. The court agreed, finding the plaintiff met the high burden of proving the panel decision was “completely irrational.” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Schwarzwaelder, Case No. 11-0107 (USDC W.D. Pa. May 17, 2011).
This post written by John Pitblado.