“Manifest Disregard Of The Law” Federal Standard For Vacating Award Worked To Employee’s Advantage Here.
Our next case involves arbitration issues addressed in three forums: a Labor Management Committee, state courts, and federal district court. Plaintiff/Petitioner Wawock petitioned for a writ of mandate, seeking an order directing the superior court to deny defendant CSI’s petition to confirm arbitration brought by CSI – and the Court of Appeal granted the petition. Wawock v. Superior Court (CSI Electrical Contractors, Inc., Real Party in Interest), No. B261315 (2/5 April 8, 2015) (Mosk, Kriegler, Goodman) (unpublished). Plaintiff Wawock was able to leverage a win on the issue of arbitrability in federal court to obtain the Court of Appeal’s order directing the superior court to deny CSI’s petition to confirm arbitration. The opinion is a scant 7 pages, but the case is procedurally gnarly and interesting.
Wawock filed a class action complaint against CSI alleging failure to pay wages to electricians for time spent attending mandatory training classes. CSI successfully petitioned to compel arbitration pursuant to a collective bargaining agreement. The superior court committed the threshold issue of arbitrability to the “Labor Management Committee.” Wawock petitioned for review, and the Court of Appeal, in an earlier 2013 case, agreed that the parties intended to commit the question of arbitrability to the Labor Management Committee. Critically, back then, the court did not decide the question of arbitrability –important later on, when CSI argued that the issue of arbitrability had been decided and collateral estoppel applied.
Wawock then invoked federal question jurisdiction, and sued in federal district court to vacate the adverse arbitration award on the ground that the Labor Management Committee “manifestly disregarded federal law” in finding his statutory claims arbitrable. The federal court agreed, and granted granted Wawock’s request to vacate the award.
CSI then petitioned in state court to confirm the award, but the superior court stayed the matter, and Wawock filed his petition for writ of mandate.
Because “full faith and credit must be given to a final order or judgment of a federal court”, the superior court was held to be bound by collateral estoppel and the order of the federal court vacating the arbitration award. Therefore, the superior court could not confirm the arbitration award. Nor could CSI rely on “law of the case”, because rather than deciding the issue of arbitrability, the trial court and court of appeal had simply directed the issue of arbitrability to the Labor Management Committee.
COMMENT: The key to the outcome here is that in federal district court, the judge was able to apply the “manifest disregard of the law” standard to vacate the arbitration award. That standard does not apply in state court, where an arbitrator’s mistakes of law or fact generally do not provide a basis for vacating the award. See Siegel v. Prudential Insurance Company of America, 67 Cal.App.4th 1270 (1999). Plaintiff’s attorney showed tenacity in seeking the federal forum.