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Cases Interpreting NRS 38.241; Vacatur of Arbitration Award—A Digest

In General

Mere error in the application of the law is not grounds to vacate an arbitration award.  Bohlmann v. Byron John Printz and Ash, Inc., 96 P.3d 1155, 120 Nev. 543 (2004).

An arbitrator manifestly disregards the law, so as to require vacation of arbitration award, when he or she recognizes that the law absolutely requires a given result and nonetheless refuses to apply the law correctly.  Bohlmann v. Byron John Printz and Ash, Inc., 96 P.3d 1155, 120 Nev. 543 (2004).

Arbitrator’s manifest disregard of the law, so as to require vacation of arbitration award, is something beyond and different from a misinterpretation or error in applying the law.   Bohlmann v. Byron John Printz and Ash, Inc., 96 P.3d 1155, 120 Nev. 543 (2004).

An arbitration award may be vacated if it is arbitrary, capricious, or unsupported by the agreement or when an arbitrator has manifestly disregarded the law, and this standard is much more restrictive than the standards used on appellate court review.   Bohlmann v. Byron John Printz and Ash, Inc., 96 P.3d 1155, 120 Nev. 543 (2004).

Construction and Application

Despite the limited judicial review available in arbitration cases, the district court nonetheless has the authority and obligation to review the award before rubber-stamping it.  Casey v. Wells Fargo Bank, N.A., 290 P.3d 265, 128 Nev. 713 (2012).

It is for the district court to decide the merits of the motion to vacate, correct, or modify an arbitration award in the first instance.   Casey v. Wells Fargo Bank, N.A., 290 P.3d 265, 128 Nev. 713 (2012).

Because the collective bargaining agreement’s (CBA) express language limited arbitration rights to the union, police officer was not a “party” to the arbitration proceeding between his union and his employer for purposes of appealing the arbitration decision pursuant to Nevada’s Uniform Arbitration Act (UAA); neither UAA nor the CBA between union and city defined “party” to include individual union members.  Ruiz v. City of North Las Vegas, 255 P.3d 216, 127 Nev. 254 (2011), rehearing denied, on remand (2013).

Presumptions and Burden of Proof

Borrower did not satisfy his burden to have arbitration award vacated under statute that required court to vacate an arbitration award if it was procured by corruption, fraud, or other undue means in lender’s action for breach of contract and judicial foreclosure, even if lender was incorrect in its representation that witness was unavailable for arbitration hearing, where borrower did not proffer any specific evidence that lender’s conduct was intentional, witness’s availability to testify was discoverable through due diligence, and borrower did not show a causal connection between the award and the alleged misconduct.  Sylver v. Regents Bank, N.A., 300 P.3d 718, 129 Nev. 282 (2013).

Arbitrator in contract dispute between pharmaceutical provider and health maintenance organization (HMO) did not exceed his authority by stating that HMO had a duty to mentor pharmaceutical provider, and thus, confirmation of arbitration award to provider based on HMO’s denial of a capitation rate increase under the agreement was warranted; the arbitrator discussed the mentoring concept to the extent that HMO knew it was contracting with a novice firm with no pharmaceutical provider experience and that the problems HMO experienced with provider were anticipated and cured.  Health Plan of Nevada, Inc. v. Rainbow Medical, LLC,  100 P.3d 172, 120 Nev. 689 (2004).

Allegations that an arbitrator misinterpreted the agreement or made factual or legal errors do not support vacating an award as being in excess of the arbitrator’s powers; arbitrators do not exceed their powers if their interpretation of an agreement, even if erroneous, is rationally grounded in the agreement.  Health Plan of Nevada, Inc. v. Rainbow Medical, LLC, 100 P.3d 172, 120 Nev. 689 (2004).

Parties moving to vacate an award on the ground that an arbitrator exceeded his or her authority have the burden of demonstrating by clear and convincing evidence how the arbitrator exceeded that authority; absent such a showing, courts will assume that the arbitrator acted within the scope of his or her authority and confirm the award.   Health Plan of Nevada, Inc. v. Rainbow Medical, LLC, 100 P.3d 172, 120 Nev. 689 (2004).

Arbitrator Exceeding Powers

Arbitrator did not exceed his authority in affirming county school district’s decision to terminate elementary school principal due to principal’s repeated inappropriate use of student activity funds (SAF), although collective bargaining agreement (CBA) indicated that punishment for school employees should have been progressive; CBA did not prohibit the school district from terminating an employee for a first offense, arbitrator’s decision did not contradict the express language of the CBA, and there was colorable justification for principal’s termination.  Washoe County School District v. White, 396 P.3d 834 (2017).

Allegations that an arbitrator misinterpreted the agreement or made factual or legal errors do not support vacating an award as being in excess of the arbitrator’s powers.   Washoe County School District v. White, 396 P.3d 834 (2017).

Arbitrators exceed their powers when they address issues or make awards outside the scope of the governing contract. Washoe County School District v. White, 396 P.3d 834 (2017).

Arbitrators do not exceed their powers if their interpretation of an agreement, even if erroneous, is rationally grounded in the agreement.   Washoe County School District v. White, 396 P.3d 834 (2017).

The question in determining whether an arbitrator exceeded his or her powers is whether the arbitrator had the authority under the agreement to decide an issue, not whether the issue was correctly decided.   Washoe County School District v. White, 396 P.3d 834 (2017).

A court shall vacate an arbitration award if the arbitrator exceeded his powers.   Washoe County School District v. White, 396 P.3d 834 (2017).

Arbitrators exceed their powers when they address issues or make awards outside the scope of the governing contract.   Health Plan of Nevada, Inc. v. Rainbow Medical, LLC, 100 P.3d 172, 120 Nev. 689 (2004).

Manifest Disregard of Law

Manifest disregard of the law by an arbitrator goes beyond whether the law was correctly interpreted, it encompasses a conscious disregard of applicable law.   Health Plan of Nevada, Inc. v. Rainbow Medical, LLC, 100 P.3d 172, 120 Nev. 689 (2004).

Arbitrator in contract dispute between pharmaceutical provider and health maintenance organization (HMO) did not manifestly disregard the law by stating that HMO had a duty to mentor pharmaceutical provider, and thus, confirmation of arbitration award to provider based on HMO’s denial of a capitation rate increase under the agreement was warranted; the arbitrator did not conclude that the law imposed a mentoring burden on HMO as a result of the contract, nor did he create a partnership in contravention of partnership law, but rather he found that HMO was aware of provider’s inexperience in the field and was willing to work with provider and mentor it.   Health Plan of Nevada, Inc. v. Rainbow Medical, LLC, 100 P.3d 172, 120 Nev. 689 (2004).

Arbitrator’s reliance on relevant case law from other jurisdictions to support finding that employer’s failure to give employee detailed reasons for her termination was merely a technical deficiency and not a material breach of employment contract did not amount to manifest disregard of the law, as required to vacate arbitration award.  Fong v. MGM Mirage Intern. Marketing, Inc., 381 P.3d 612, 128 Nev. 896 (2012) (unreported).

Timeliness of Motions

Bank account holder had 90 days after receipt of arbitrator’s notice of award to file motion to vacate, modify, or correct award, and thus, trial court’s summary grant of bank’s motion to confirm award, without permitting account holder to file motion to modify or correct award before expiration of order, and without reviewing arbitration record before confirming award, was reversible error.  Casey v. Wells Fargo Bank, N.A., 290 P.3d 265, 128 Nev. 713 (2012).

Account holder had ten days from date bank filed motion to confirm arbitration award to respond to motion.  Casey v. Wells Fargo Bank, N.A., 290 P.3d 265, 128 Nev. 713 (2012).

Disqualification of Arbiter

Arbitrator was not disqualified from hearing employment dispute even though he had previously represented one of employer’s potential witnesses, where arbitrator disclosed his relationship with witness, and employer agreed to remove any evidence relating to the potential witness.   Fong v. MGM Mirage Intern. Marketing, Inc., 381 P.3d 612, 128 Nev. 896 (2012) (unreported).

Standard of Review

Judicial review of arbitrator’s decision is limited to inquiring only whether a petitioner has proven, clearly and convincingly, that one of the following is true: the arbitrator’s actions were arbitrary, capricious, or unsupported by the agreement, the arbitrator manifestly disregarded the law, or one of the specific statutory grounds for vacating awards was met.  Knickmeyer v. State ex. rel. Eighth Judicial District Court, 408 P.3d 161 (2017).

 

About the Author

Jay Young is a Las Vegas, Nevada attorney. His practice focuses on business law, business litigation, and acting as an Arbitrator and Mediator.

Mr. Young can be reached at 702.667.4868 or at jay@h2law.com.