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The following information has just arrived via the LII's
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HALL STREET ASSOCIATES, L.L.C. v. MATTEL, INC. (06-989 Syllabus)
http://www.law.cornell.edu/supct/html/06-989.ZS.html
MEDELLIN v. TEXAS (06-984 Syllabus)
http://www.law.cornell.edu/supct/html/06-984.ZS.html
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HALL STREET ASSOCIATES, L.L.C. v. MATTEL, INC. (No. 06-989)
Web-accessible at:
http://www.law.cornell.edu/supct/html/06-989.ZS.html
Argued: November 7, 2007 -- Decided: March 25, 2008
Opinion author: Souter
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The Federal Arbitration Act (FAA), 9 U. S. C. sec.sec.9-11,
provides expedited judicial review to confirm, vacate,
or modify arbitration awards. Under sec.9, a court "must"
confirm an award "unless" it is vacated, modified, or corrected
"as prescribed" in sec.sec.10 and 11. Section 10 lists
grounds for vacating an award, including where the award
was procured by "corruption," "fraud," or "undue means,"
and where the arbitrators were "guilty of misconduct,"
or "exceeded their powers." Under sec.11, the grounds for
modifying or correcting an award include "evident material
miscalculation," "evident material mistake," and "imperfect[ions]
in [a] matter of form not affecting the merits."
After a bench trial sustained respondent tenant's (Mattel)
right to terminate its lease with petitioner landlord (Hall
Street), the parties proposed to arbitrate Hall Street's
claim for indemnification of the costs of cleaning up the
lease site. The District Court approved, and entered as
an order, the parties' arbitration agreement, which, inter
alia, required the court to vacate, modify, or correct
any award if the arbitrator's conclusions of law were erroneous.
The arbitrator decided for Mattel, but the District Court
vacated the award for legal error, expressly invoking the
agreement's legal-error review standard and citing the
Ninth Circuit's LaPine decision for the proposition that
the FAA allows parties to draft a contract dictating an
alternative review standard. On remand, the arbitrator
ruled for Hall Street, and the District Court largely upheld
the award, again applying the parties' stipulated review
standard. The Ninth Circuit reversed, holding the case
controlled by its Kyocera decision, which had overruled
LaPine on the ground that arbitration-agreement terms fixing
the mode of judicial review are unenforceable, given the
exclusive grounds for vacatur and modification provided
by FAA sec.sec.10 and 11.
Held:
1. The FAA's grounds for prompt vacatur and modification
of awards are exclusive for parties seeking expedited review
under the FAA. The Court rejects Hall Street's two arguments
to the contrary. First, Hall Street submits that expandable
judicial review has been accepted as the law since Wilko
v. Swan, 346 U. S. 427 . Although a Wilko statement--"the
interpretations of the law by the arbitrators in contrast
to manifest disregard are not subject, in the federal courts,
to judicial review for error in interpretation," id., at
436-437 (emphasis added)--arguably favors Hall Street's
position, arguable is as far as it goes. Quite apart from
the leap from a supposed judicial expansion by interpretation
to a private expansion by contract, Hall Street overlooks
the fact that the Wilko statement expressly rejects just
what Hall Street asks for here, general review for an arbitrator's
legal errors. Moreover, Wilko's phrasing is too vague to
support Hall Street's interpretation, since "manifest disregard"
can be read as merely referring to the sec.10 grounds collectively,
rather than adding to them, see, e.g., Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614 ,
or as shorthand for the sec.10 subsections authorizing
vacatur when arbitrators were "guilty of misconduct" or
"exceeded their powers." Second, Hall Street says that
the agreement to review for legal error ought to prevail
simply because arbitration is a creature of contract, and
the FAA is motivated by a congressional desire to enforce
such agreements. Dean Witter Reynolds Inc. v. Byrd, 470
U. S. 213 . This argument comes up short because, although
there may be a general policy favoring arbitration, the
FAA has textual features at odds with enforcing a contract
to expand judicial review once the arbitration is over.
Even assuming sec.sec.10 and 11 could be supplemented to
some extent, it would stretch basic interpretive principles
to expand their uniformly narrow stated grounds to the
point of legal review generally. But sec.9 makes evident
that expanding sec.10's and sec.11's detailed categories
at all would rub too much against the grain: sec.9 carries
no hint of flexibility in unequivocally telling courts
that they "must" confirm an arbitral award, "unless" it
is vacated or modified "as prescribed" by sec.sec.10 and
11. Instead of fighting the text, it makes more sense to
see sec.sec.9-11 as the substance of a national policy
favoring arbitration with just the limited review needed
to maintain arbitration's essential virtue of resolving
disputes straightaway. Dean Witter, supra, at 217, 219,
distinguished. Pp. 7-12.
2. In holding the sec.10 and sec.11 grounds exclusive with
regard to enforcement under the FAA's expedited judicial
review mechanisms, this Court decides nothing about other
possible avenues for judicial enforcement of awards. Accordingly,
this case must be remanded for consideration of independent
issues. Because the arbitration agreement was entered into
during litigation, was submitted to the District Court
as a request to deviate from the standard sequence of litigation
procedure, and was adopted by the court as an order, there
is some question whether it should be treated as an exercise
of the District Court's authority to manage its cases under
Federal Rule of Civil Procedure 16. This Court ordered
supplemental briefing on the issue, but the parties' supplemental
arguments implicate issues that have not been considered
previously in this litigation and could not be well addressed
for the first time here. Thus, the Court expresses no opinion
on these matters beyond leaving them open for Hall Street
to press on remand. Pp. 13-15.
196 Fed. Appx. 476, vacated and remanded.
Souter, J., delivered the opinion of the Court, in which
Roberts, C. J., and Thomas, Ginsburg, and Alito, JJ., joined,
and in which Scalia, J., joined as to all but footnote
7. Stevens, J., filed a dissenting opinion, in which Kennedy,
J., joined. Breyer, J., filed a dissenting opinion.
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