In Re: Wal-Mart

Non-appealability clauses that eliminate all potential federal court review of arbitration awards, including review under § 10 of the Federal Arbitration Act, are not enforceable.

This appeal arose out of a dispute over the attorneys’ fees awarded as part of the settlement agreement in the Wal-Mart wage and hour multidistrict litigation. The arbitrator allocated the $28 million in fees among plaintiffs’ counsel, granting over $6 million to Carolyn Burton, Robert Mills, the Mills Law Firm, and Carol LaPlant (collectively, “the Burton Group”); over $11 million to Robert Bonsignore, one of plaintiffs’ lead counsel; and over $730,000 to Carol LaPlant, the named liaison counsel. After Bonsignore moved to confirm the award, the Burton Group filed a motion to vacate the award. The district court found no legal basis for vacating the award, and the Burton Group appealed. Bonsignore argued that the Ninth Circuit lacked jurisdiction to review the arbitrator’s award due to the non-appealability clause in the parties’ settlement agreement. The issue, which was of first impression, was whether or not the statutory grounds for vacatur in the Federal Arbitration Act (“FAA”) may be waived or eliminated by contract. The panel relied on precedent to conclude that because the text of the FAA does not provide for supplementation for the grounds for vacatur of an arbitration award, it also leads to the conclusion that the grounds are not subject to elimination by contract. In addition, other sections of the FAA show flexibility and expressly permit modification, while 9 U.S.C. § 10(a), the statutory grounds for vacatur, does not. In drawing this conclusion about 9 U.S.C. § 10, the panel also took into consideration the Congressional goal of ensuring a minimum level of due process for parties to an arbitration. The panel concluded that allowing contractual elimination of all judicial review of arbitration awards would frustrate this goal. AFFIRMED.