At Stake: Allocation of $28M in Attorney’s Fees Among Plaintiffs’ Attorneys in Wal-Mart Wage and Hour Litigation
The scenario: Plaintiffs’ class counsel prosecute wage and hour class action against Wal-Mart, plaintiffs’ counsel quarrel concerning proper allocation of $28M fee award, and the fee dispute is submitted to “binding, non-appealable arbitration” before an eminent arbitrator, the Hon. Layn Phillips (Ret.).
“This appeal presents a question of first impression in this circuit,” writes the author of the Ninth Circuit opinion, Judge Milan Smith. “Is a non-appealability clause in an arbitration agreement that eliminates all federal court review of arbitration awards, including review under section 10 of the FAA, enforceable?” The conclusion: it is not. In re: Wal-Mart, Case No. 11-17718 (9th Cir. Dec. 17, 2013).
To be sure, the grounds of review are quite limited – those enumerated in section 10 of the Federal Arbitration Act (just as the grounds for vacatur in California are limited in Cal. Code of Civ. Proc. section 1286.2). The grounds for vacatur under the FAA are serious indeed, such as “where the award was produced by corruption, fraud, or undue means.” Permitting parties to contractually eliminate all judicial review of arbitration awards would “frustrate Congress’s attempt to ensure a minimum level of due process for parties to an arbitration.”
Having found in a published opinion that it had jurisdiction to review, the Court in an unpublished Memorandum then concluded that the district court properly confirmed the award.