PHILADELPHIA - A federal court continued the practice of deferring to arbitration rulings when it affirmed an arbitrator’s decision in a wrongful termination lawsuit involving the Philadelphia Union soccer team, a New York attorney says.
“They give extreme deference to arbitration decisions,” said Jeanne Kohler, a shareholder at Carlton Fields. “There are very narrow grounds in order for someone to challenge an arbitration award,”
Former Union coach Piotr Nowak had filed a suit alleging that the team violated his contractual rights when it fired him in 2012. After arbitrator Margaret Bronson decided in favor of the team, Nowak alleged that the she was biased and filed a motion in Philadelphia federal court to have the decision vacated.
The final award, issued Nov 5, directed Nowak to pay attorney fees and costs for the team.In his analysis, Judge Mark Kearney stated that the court can only vacate arbitration awards in specific circumstances.
For guidance, Kearney pointed to Section 10 of the Federal Arbitration Act, which outlines the circumstances under which an award may be vacated. According to the Act, awards can only be vacated if they have been procured by corruption, if the arbiter is corrupt or guilty of misconduct, or if the arbiter succeeded her powers.
“Mere disagreement with the arbitrator’s decision or belief the arbitrator committed error is insufficient to vacate or modify the award,” the court stated.
Nowak alleged that Brogan relied on hearsay to make unjustified applications of the law and that she exceeded her powers because the award was not rationally derived.
Kearney ruled that alleged factual or legal errors were not a valid basis for vacating an award. Further, he stated that Brogan did not misapply the law or apply prejudicial treatment. He also stated that any error or inconsistency that might be present in the arbitration was not sufficient to vacate.
“He was trying to vacate it, the court denied it and granted the confirmation of it, because unless there’s something pretty egregious, they usually confirm them,” Kohler said.
In 2009, Nowak signed an employment agreement with the Philadelphia Union professional soccer team, owned by Pennsylvania Professional Soccer, LLC and Keystone Sports and Entertainment. In June, 2012 the team terminated Nowak based on behavior that it alleged violated the terms of the agreement.
In response, Nowak filed an action alleging that Philadelphia Union lacked contractual grounds to end his employment. Judge Mary A. McLaughlin remanded the case to arbitration as laid out in the employment agreement.
In the conclusion of the ruling, the court issued a word of warning to organizations and individuals entering into arbitration agreements.
“While we encourage private settlements, this case, and many like it, should remind parties and counsel of the risks in cavalierly agreeing to mandatory arbitration when they should know, from experience, of a need to often ask a judicial officer to vacate findings from a private forum and the judge's deference to the private forum,” Kearney wrote.
No appeal has been filed.