On March 11, 2015, in Raymond James Financial Services, Inc. v. Fenyk, the US Court of Appeals for the First Circuit reversed a district court’s decision to vacate an arbitration award, finding that although the arbitrators' decision may have been incorrect as a matter of law, it was not beyond the scope of the panel's authority (No. 14-1252, (1st Cir. Mar. 11, 2015)).

The appellant, Robert Fenyk, was associated with Raymond James Financial Services (RJFS) as a securities broker. RJFS is based in Florida and the agreement that Fenyk signed stated that Florida law would govern disputes between the parties. Fenyk also signed another agreement with RJFS in which he agreed to arbitrate any conflict arising out of the independent contractor relationship. In 2009, Fenyk was terminated from his position.

Two years later, Fenyk filed a complaint in Vermont state court. Once RJFS alerted Fenyk of the obligation to arbitrate, Fenyk dismissed his complaint and brought an arbitration proceeding before the Financial Industry Regulatory Authority (FINRA). Fenyk's FINRA Statement of Claim alleged that he was improperly fired based on his sexual orientation and alcoholism, both violations of Vermont law.

In 2013, a hearing was held before the panel of arbitrators. Fenyk moved to amend his Statement of Claim, adding, among other things, disability discrimination claims under Florida law. The panel denied Fenyk's motion to amend his Statement of Claims finding that the request was untimely and that there were no special circumstances to justify the relief. At the same time, the panel granted what it described as a request from both parties that Florida law be applied to the proceedings. The panel later ruled for Fenyk and awarded him, among other things, $600,000 in back pay for disability discrimination.

Following the arbitration decision, RJFS moved in the US District Court for the District of Massachusetts to vacate the arbitration award because the arbitrators exceeded their powers by, in part, awarding damages on a violation of the Florida Civil Rights Act (FCRA) that Fenyk never submitted for review. The district court agreed and vacated the award. The district court also noted that even if Florida law applied, the arbitrators ignored Florida's one-year statute of limitations for civil rights claims. Fenyk appealed.

The First Circuit reversed the district court's decision and remanded the case with an order to confirm the arbitration award. The court held that even though Fenyk did not bring any claims under the FCRA and the panel's reliance on the FCRA may have been erroneous, the arbitration award did not exceed the arbitrators' authority. The First Circuit noted that even "serious error" by arbitrators will not invalidate an award, and questioned whether the "manifest disregard of the law" standard was still available to vacate arbitration awards after the US Supreme Court's decision in Hall Street Assoc., L.L.C. v. Mattel, Inc. (552 U.S. 576, 584 (2008)). While the court did not resolve that question, it found that, even if the manifest disregard standard was still available, the arbitration decision did not demonstrate the wilful flouting of the applicable law needed to vacate.

Practitioners should be aware that judicial review of arbitration decisions are extremely narrow and exceedingly deferential, and even decisions that may be incorrect as a matter of law may be upheld on appeal.