Daniel Olson (“Olson”) appealed his arbitration award in an employment action to the United States Court of Appeals for the Ninth Circuit, arguing that the award must be vacated “on the basis that the arbitrator failed to issue a ‘reasoned opinion,’ as agreed to by the parties and failed to rule on all of the evidentiary issues and claims submitted.” Daniel C. Olson v. Harland Clarke Corporation, 2017 WL 541913. In an opinion that upheld the distinctions between arbitration awards and judicial opinions, the Ninth Circuit upheld the district court’s denial of both of Olson’s claims.
The court noted that although its review of the district court’s decision confirming the arbitration award is de novo, when a court reviews an arbitration award it does it on very limited grounds. Bosack v. Soward, 586 F.3d 1096, 1102 (9th Cir. 2009). Vacatur is provided for in 9 U.S.C. §10(a)(4) “where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” The Court stated that “[a]rbitrators exceed their powers when they express a ‘manifest disregard of law,’ or when they issue an award that is ‘completely irrational.’” Bosack, 586 F.3d at 1104. The Court defined completely irrational as “only where the arbitration decision fails to draw its essence from the agreement.” Id. At 1106.
Olson’s first claim centered around his assertion that the parties had agreed to “an arbitration award in the form of a ‘reasoned opinion,’” and that the award failed to provide sufficient reasoning. Therefore, Olson argued, the award should be vacated.
The Ninth Circuit disagreed, citing Stead Motors of Walnut Creek v. Automotive Machinists Lodge No. 1173, Int’l Ass’n of Machinists and Aerospace Workers, 886 F.2d 1200, 1206 (9th Cir. 1989), for the proposition that “’Arbitrators have no obligation . . . to give their reasons for an award.’” The court further stated that even if the court agreed that the parties had requested a “reasoned opinion”, the parties’ request was met by the award itself, which “included two bases for the arbitrator’s determination that Harland Clarke was the prevailing party, [and] provides enough of the arbitrator’s reasoning to facilitate the limited review available under the FAA. See Biller, 688 F.3d at 666 (the award was ‘sufficient to permit limited judicial review to enforce or vacate the arbitration award because it provided enough reasoning to determine ‘whether the Arbitrator manifestly disregarded the law or made an irrational decision’).”
The Ninth Circuit dismissed Olson’s second claim that the arbitrator “failed to rule on all of the evidentiary issues and claims submitted” both on the basis of Stead Motors of Walnut Creek v. Automotive Machinists Lodge No. 1173, Int’l Ass’n of Machinists and Aerospace Workers, 886 F.2d at 1206, which held that “’[a]rbitrators’ awards are not judicial opinions…. The proceedings the arbitrator conducts are generally informal, lacking most of the fixed rules of procedure and evidence….”, and on the basis of the award itself, which stated that “[a]ll claims not expressly granted herein are hereby denied.”
To conclude, Daniel C. Olson v. Harland Clarke Corp. preserves key distinctions between arbitration awards and judicial opinions: first by affirming the proposition that arbitrators are not required to include reasons for the award (while also stating that the parties’ request for a “reasoned opinion” to accompany an arbitration award is met when the arbitrator includes in the award “enough reasoning [for a court] to determine ‘whether the Arbitrator manifestly disregarded the law or made an irrational decision.’”): and second, by emphasizing the more informal procedural and evidentiary nature of arbitration awards and proceedings.