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You Only Get One Shot at Vacatur: The Fourth Circuit Adopts the “Impermissible Collateral Attack” Rule | Center for Excellence in Higher Educ., Inc. v. Accreditation Alliance of Career Schools & Colleges, _ F.4th _, No. 25-1372, slip op. (4th Cir. Feb. 5, 2026)

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Introduction

The Fourth Circuit formally adopted a rule several circuits already apply: if an “independent” lawsuit is really an attempt to undo an arbitration outcome, it is an impermissible collateral attack on the award and will be dismissed. That decision reinforces the exclusivity and finality of the Federal Arbitration Act (“FAA”)’s confirmation, vacatur, and modification regime.

Separately, the Court made a practical point concerning Section 10(a)(3) prejudicial, procedural misconduct: an arbitrator does not commit “misconduct” by refusing to hear evidence when the arbitration agreement itself limits what is considered the evidentiary record and bars adversarial discovery. The same may be true when, as was the case before the Court, the arbitrator’s standard of review is deferential, and the proffered evidence is not material to the narrow question before the arbitrator.

The Fourth Circuit’s Adoption of the Impermissible Collateral Attack Rule: What Transpired?

The Center for Excellence in Higher Education (CEHE) ran schools accredited by the Accreditation Alliance of Career Schools and Colleges (the Alliance). After years of below-benchmark graduation and employment outcomes, CEHE’s system was placed on probation and repeatedly warned about losing accreditation. The Alliance withdrew accreditation.

CEHE appealed internally, then demanded binding arbitration as contemplated by the parties’ agreement. CEHE sought broad discovery and to introduce evidence outside of that deemed part of the internal appellate record, including information about how Alliance evaluated other schools for accreditation. The arbitration agreement limited arbitration to the record before the internal Appeals Panel and prohibited adversarial discovery. The arbitrator enforced those limits and made an award upholding the accreditation withdrawal.

The Alliance’s accreditation decisions were subject to deferential review only. That, in combination with the FAA, meant two tiers of deference were owed: The arbitrator had to review the Alliance’s decisions deferentially and, as is always the case under Section 10 of the FAA, a court reviewing the arbitrator’s award had to defer to the already deferential award.

CEHE filed in federal court: (i) a motion to vacate and, as part of the same filing, (ii) a complaint alleging due process violations and tortious interference. CEHE sought, in substance, to reverse the withdrawal of accreditation and recover damages flowing from it.

The district court denied vacatur and, as respects the complaint, granted judgment on the pleadings, treating the submission of those papers as an impermissible collateral attack on the award. The U.S. Court of Appeals for the Fourth Circuit affirmed in Center for Excellence in Higher Educ. v. Accreditation Alliance of Career Schs. & Colleges, __ F.4th ___, 25-1372 , slip op. at 2 (4th Cir. Feb 05, 2026)

Principal Issues Addressed

The Fourth Circuit’s decision focused on two issues. First, the scope of relief for arbitrator prejudicial procedural misconduct under Section 10(a)(3) in cases where the arbitration agreement limits what comprises the record, forecloses adversarial discovery, or the arbitrator’s standard of review is deferential. (Read more about Section 10(a)(3) here, here, and here.)

Second, when is a post-award lawsuit not a genuinely independent claim but an impermissible collateral attack on the award, that is, an end-run around FAA Sections 10–11?

Contractual Limits on Record Content, Evidence, and Discovery, or a Deferential Standard of Review Imposed on the Arbitrator, Can Foreclose FAA Section 10(a)(3) Prejudicial Procedural Misconduct Claims

CEHE’s motion to vacate asserted the arbitrator denied CEHE a fair opportunity to present “pertinent and material” evidence material evidence by refusing discovery and excluding comparative-accreditation evidence. Center for Excellence, slip op. at 9; 9 U.S.C. § 10(a)(3).

The Fourth Circuit rejected that argument for two reasons. First, the excluded “other schools” material was not “pertinent and material” to the arbitrator’s task. The arbitration was not a free-ranging arbitration featuring de novo review of the Alliance’s decision making. The arbitrator was tasked with determining whether the record adequately supported the Alliance’s accreditation decision, and in making that determination the arbitrator determined that Fourth Circuit precedent required the arbitrator to defer to the Alliance’s decision. Center for Excellence, slip op. at 12-15 (citation omitted). So even assuming evidence about other schools’ accreditation experiences might have rhetorical force or evidentiary value in the context of a different dispute resolution framework, the Court concluded that, considering the deferential standard of review, evidence about other Alliance accreditation decisions was irrelevant. Center for Excellence, slip op. at 10-11, 14-15.

Second, the agreement itself foreclosed the arbitrator from considering the evidence the school argued the arbitrator had to hear or from permitting the adversarial discovery the school argued was required. Center for Excellence, slip op. at 11. This is a key doctrinal point practitioners should note: Evidence cannot be “pertinent and material to the controversy” under Section 10(a)(3) if the arbitration agreement itself prohibits the arbitrator from considering that evidence. While the Court did not address this point, if the school wanted to challenge those limitations it should have attempted an FAA Section 2 pre-arbitration unconscionability challenge prior to the commencement of the arbitration. See 9 U.S.C. § 2; Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996) (under FAA Section 2, a party may challenge arbitration agreement on unconscionability grounds applicable to contracts generally). The author expresses no view on whether such a challenge might have succeeded.

The arbitration agreement expressly stated that the arbitrator could not consider evidence not in the Appeals Panel record and prohibited adversarial discovery. An arbitrator who enforces those terms is not “refusing to hear” evidence in the procedural misconduct sense; he or she is doing what the parties contracted for. That’s the arbitrator’s job.

This is a recurring theme in FAA jurisprudence: the FAA regulates egregious process breakdowns, but—apart from leaving the door open to a party seeking judicial reformation of an arbitration agreement under Section 2 in an appropriate case—it does not authorize a court to rewrite the parties’ arbitration agreement simply because one side is, after the fact, unhappy with the bargain it struck. See Aviall, Inc. v. Ryder System, Inc., 110 F.3d 892, 895-97 (2d Cir. 1997).

The Big Development: the Fourth Circuit Adopts the “Impermissible Collateral Attack” Rule

The more consequential arbitration-law holding was the Fourth Circuit’s adoption of the impermissible collateral attack rule.

The Premise: FAA §§ 10–11 Provide the Exclusive Route to Overturn or Undo an Award

The court treated it as common ground that a litigant seeking to vacate or modify an award must proceed under the FAA’s narrow vacatur/modification framework—principally §§ 10 and 11. FAA exclusivity and finality has a practical purpose: binding arbitration is designed to resolve the parties’ dispute expeditiously and conclusively.

The Court found adoption of the “impermissible collateral attack rule” necessary to preserve that presumed exclusivity and finality. Allowing disappointed parties to repackage vacatur theories as “independent” tort or constitutional claims would destroy finality, which could make arbitration a less attractive and more expensive alternative to court litigation.

How to Spot a Collateral Attack: Look at Wrongdoing, Harm, and Requested Relief

The Fourth Circuit adopted a functional test used by other circuits, focusing on:

The Alleged Wrongdoing. Is it the type of defect that would support vacatur under Section 10 (or modification under Section 11)?
The Harm. Does it flow from the award’s effect?
The Requested Relief. Is it, in essence, the relief vacatur would provide?

Applied to CEHE, each of the three supported application of the “impermissible collateral attack” rule:

The alleged wrongdoing was essentially “the decisionmaker refused to consider evidence”—classic § 10(a)(3) territory.
The harms (lost students, reputational damage, financial losses) flowed from the accreditation loss the arbitrator upheld and CEHE sought to overturn.
The requested relief—especially injunctive relief reversing the withdrawal—tracked what vacatur would accomplish.

The court also emphasized that a party cannot sanitize an impermissible collateral attack by tweaking remedies. A damages label does not save a claim when the theory of injury is an allegedly defective arbitration process.

The Punchline: If it’s a Collateral Attack, the Whole Complaint is Tossed

Because the complaint was treated as a collateral attack, it was dismissed in toto, including tortious interference claims that at a cursory glance might appear “independent.”

The breadth of that remedy is significant. It signals that courts will not allow plaintiffs to proceed count-by-count where the thrust of the lawsuit is to overturn the arbitration outcome.

Doctrinal Implications of the Fourth Circuit’s Adoption of the Impermissible Collateral Attack Rule

Center for Excellence does more than announce a new label for a familiar concept. By adopting an “impermissible collateral attack” rule, the Fourth Circuit has supplied a doctrinal framework for defining when post-award litigation concerning claims allegedly independent from a Section 10 or 11 challenge is, in practical effect, an attempt to unwind the award that has already been or would be barred by Sections 9-11 of the FAA. The decision’s implications extend beyond accreditation disputes and are likely to influence how parties plead, defend, and adjudicate post-award claims in the Fourth Circuit and perhaps elsewhere.

FAA Exclusivity, Finality, and the “Functional” Inquiry

The Court’s central move is to treat FAA Sections 10–11 as the exclusive doctrinal avenue for judicial relief that would set aside, modify, or otherwise negate an arbitral award. That premise is hardly novel, but Center for Excellence gives it operational content by insisting on substance over form. Courts are instructed to look past pleading labels and ask whether the alleged wrong, the asserted injury, and the requested relief are, in substance, a bid to obtain what vacatur or modification would provide (or would have provided had vacatur or modification been granted).

This substance over form approach is significant because it diminishes the viability of a common post-award strategy: coupling a narrow FAA vacatur motion with broader common-law or constitutional claims that seek to re-create, in a new procedural posture, the merits contest that the arbitration ended. Under Center for Excellence, it will be harder to argue that merely changing the cause of action (for example, to tortious interference or due process theories) changes the essential character of the relief sought where the litigation’s gravitational center remains the arbitral outcome.

Collateral Attack Doctrine as Distinct from Claim and Issue Preclusion

The impermissible collateral attack rule overlaps conceptually with res judicata and collateral estoppel, but it is not simply a repackaging of those doctrines. Preclusion asks whether a claim could have been or an issue was litigated and resolved in a prior adjudication. The impermissible collateral attack rule asks a different question: whether the new lawsuit is an improper vehicle for challenging the arbitral award at all, given the FAA’s exclusive remedial structure.

That distinction has practical doctrinal consequences. Preclusion analysis can be fact-intensive (identity of parties, privity, finality, opportunity to litigate, and so forth), and it sometimes requires careful attention to what the arbitral tribunal actually decided. The collateral attack rule can, in appropriate cases, be applied earlier, more categorically, and perhaps with greater ease, because it turns on the nature of the alleged wrong and the relief sought. Center for Excellence therefore provides defendants with an additional—and sometimes simpler—path to dismissal independent of conventional preclusion defenses.

Pleading-Stage Tool that Reinforces the FAA’s Narrow Review

The Fourth Circuit’s approach also matters procedurally: it confirms that a court may identify an impermissible collateral attack at the pleadings stage, without permitting the case to proceed into discovery and merits motion practice. That is consistent with the FAA, which favors speed and finality in award enforcement and sharply limits post-award judicial review. See 9 U.S.C. §§ 6, 9-11.

In that respect, the decision is likely to influence motion practice. Where a complaint is tethered to the award—because the harm is framed as the consequences of the award’s effects and the relief is framed to reverse, enjoin, or effectively nullify those effects—courts have a doctrinal basis to terminate the litigation quickly and early. Conversely, plaintiffs seeking to survive dismissal will need to plead with care, demonstrating that the asserted injury and requested remedy do not depend on re-litigating the arbitral dispute or undercutting the award’s finality.

The Substance of the Remedy Sought Will Often Be Decisive

Center for Excellence highlights that focusing on substance and practicality can drive effective arbitration-law (and other legal) doctrine. Injunctive or declaratory relief that would “reverse” the practical effects of an award is, predictably, the easiest target for a collateral attack defense. But the Court made clear that damages claims are not immune from scrutiny. Where the damages theory is that the arbitration process was defective and the plaintiff’s economic losses flow from the award’s operation, a damages label will not transform the lawsuit into an independent claim.

That focus on the practical effects of the remedies sought will likely shape how plaintiffs draft complaints and how defendants frame dismissal motions. If the requested relief would require the court to adjudicate—directly or indirectly—the propriety of the arbitral process or the correctness of the arbitral outcome, the collateral attack doctrine supplies a doctrinal basis for dismissal even where traditional preclusion doctrines might require more granular analysis.

Interaction with FAA Section 10(a)(3) and Contractually “Closed” Records

Finally, the decision’s Section 10(a)(3) discussion complements the collateral attack holding. The Court treated the arbitration agreement’s limits on discovery and the evidentiary record as materially shaping what can qualify as “pertinent and material evidence” for procedural misconduct purposes. Where parties contract for a closed record (or for review limited to an internal administrative record), an arbitrator’s enforcement of those limits will generally not supply a Section 10(a)(3) hook for vacatur. The same is true when the standard of review governing the arbitrator’s decision making is deferential, as it was here.

Taken together, these strands of the opinion underscore a consistent doctrinal theme: parties who bargain for procedural limits on arbitration—or arguably for deferential review by the arbitrator—should expect courts to enforce the bargain, both by (i) declining to expand Section 10(a)(3) into a vehicle for reengineering the agreed process and (ii) rejecting attempts to achieve the same end through post-award litigation framed as something other than an FAA vacatur or modification proceeding.

Conclusion

Center for Excellence is a clean Fourth Circuit adoption of a rule that arbitration practitioners often assume exists everywhere—but which has not been formally embraced by all other circuits. The rule strengthens award finality by closing a common loophole: a collateral attack on an award that is disguised as something else.

Contacting the Author

If you have any questions about this article, arbitration, arbitration-law, or arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094. PJL1@LoreeLawFirm.com.

Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has 35 years of experience representing a wide variety of corporate, other entity, and individual clients in matters arising under the Federal Arbitration Act, as well as in insurance- or reinsurance-related, and other, matters.

ATTORNEY ADVERTISING NOTICE: Prior results do not guarantee a similar outcome.

Photo Acknowledgment

The photo featured in this post was licensed from Yay Images and is subject to copyright protection under applicable law.

Hot Topics in Appellate Arbitration: Supreme Court Review, Jurisdictional Fault Lines, and a Look Ahead to 2026

appellate arbitration-law developments In late 2025, the International Institute for Conflict Prevention and Resolution (“CPR”) presented a CPR Speaks YouTube program entitled “Hot Topics: Year-End Wrap-Up, and 2026 Look-Ahead, on Appellate Arbitration Cases.” Moderated by our friend and colleague, Russ Bleemer, Editor of Alternatives to the High Cost of Litigation, Newsletter of CPR (“CPR Alternatives”), the program brought together a panel of highly experienced arbitration practitioners to discuss recent appellate arbitration developments and to assess issues likely to command attention in the current 2025 Supreme Court Term and beyond.

The panel included Professor Angela Downes, University of North Texas-Dallas College of Law(“UNTD”) Professor of Practice, UNTD Assistant Director of Experiential Education, and JAMS Neutral (arbitrator and mediator); Richard D. Faulkner, veteran arbitration and appellate practitioner, arbitrator, mediator, former trial judge, prosecutor, and law professor; and the author, Philip J. Loree Jr., principal of The Loree Law Firm; founder, author, and editor of the Arbitration Law Forum; and former BigLaw partner, who focuses his practice on arbitration and appellate and trial-court arbitration litigation.

You can review the video of the presentation here. This was the 17th arbitration-related, CPR-sponsored video presentation in which Mr. Loree and other members of the panel have participated. Russ is to be thanked profusely not only for hosting and moderating the program, but also posting links and citation references to blog posts, articles and cases relevant to the matters discussed.

While the discussion canvassed a wide range of cases, the panel placed particular emphasis on two matters in which the United States Supreme Court (“SCOTUS”) has granted certiorari: Jules v. Andre Balazs Properties, No. 25-83 (U.S.) and Flowers Foods, Inc. v. Brock, No. 24-935 (U.S.). Together, those cases underscore the Court’s renewed engagement with arbitration-related procedural and jurisdictional questions under the Federal Arbitration Act (the “FAA”).

This post summarizes the panel’s discussion of these important appellate arbitration developments, focusing primarily on Jules and Flowers and the issues they present. It then turns to other appellate decisions that have recently shaped the arbitration-law landscape.

Appellate Arbitration Developments: Supreme Court Certiorari as the Organizing Principle

A central premise of the CPR program was that Supreme Court certiorari activity is itself a critically important signal indicating the direction in which arbitration law is trending at the appellate level. . Even where arbitration doctrine appears settled, the Court’s willingness to take certain cases—and its refusal to take others—often reveals where doctrinal fault lines have emerged or are emerging.

In this respect, Jules and Flowers Foods are especially significant. Both cases present issues that go to the scope and operation of the FAA, but neither involves a frontal assault on arbitration enforceability. To be sure, their outcomes will in Flowers determine whether, under the facts, Section 1 of the FAA exempts from the FAA certain end-point workers who transport goods without crossing borders, and in Jules, whether an FAA-governed arbitration award must be confirmed in a state, rather than federal, forum. Instead, they raise jurisdictional questions that can determine whether arbitration-related disputes are heard in federal court at all (Jules) or in any court under the FAA (Flowers).

Key Appellate Arbitration-Law Development I: Jules v. Andre Balazs Properties—Continuing or Anchor Subject Matter Jurisdiction Following a Section 3 Stay and a Section 4 Motion to Compel

In Jules, the Supreme Court granted certiorari to address whether a federal court that stays an action pending arbitration under FAA § 3, and compels arbitration under Section 4, retains subject-matter jurisdiction to adjudicate post-arbitration applications to confirm or vacate the award under FAA §§ 9 or 10.

Although narrow in formulation, the question is complex and has sweeping practical consequences, particularly in light of the Court’s 2022 decision in Badgerow v. Walters, 596 U.S. 1 (2022), which sharply limited federal courts’ ability to exercise so-called “look-through” jurisdiction over post-arbitration proceedings.

As the panel emphasized, Jules sits at the intersection of two doctrinal developments in appellate arbitration law:

Mandatory stays under FAA § 3, increasingly reinforced by Supreme Court precedent, which apply only when a party requests the stay and a court finds referable to arbitration a claim that is the subject or part of a pending federal-court lawsuit on the merits; and
Following Badgerow, restricted federal jurisdiction over pre- or post-award arbitration enforcement proceedings, at least where those proceedings are standalone, independent proceedings that do not arise out of a preexisting but stayed federal-court lawsuit.

If a federal court in a lawsuit on the merits of a dispute compels arbitration, and if a party requests a stay of the federal lawsuit pending arbitration, then under Smith v. Spizzirri, 144 S. Ct. 1173 (2024), the federal court must grant the stay. But if the same court lacks jurisdiction to confirm or vacate the resulting award, the practical utility of the initially selected and stayed federal forum is substantially diminished, and serious questions arise about whether Congress intended the FAA to permit such a result.

This is especially so since finding jurisdiction based on the preexisting jurisdiction of the federal lawsuit does not implicate any concerns about “looking through” to the underlying arbitration proceeding. As long as jurisdiction is based on the jurisdiction of the Court in the underlying lawsuit, then there is no “look through”—it’s really just “look at”—if there was subject matter jurisdiction over the stayed lawsuit, then there should presumably be subject matter jurisdiction over a motion made in that stayed lawsuit for relief under the FAA relating to the subject matter of that stayed lawsuit. See Badgerow, 596 U.S. at 15 (“Jurisdiction to decide the case includes jurisdiction to decide the motion; there is no need to “look through” the motion in search of a jurisdictional basis outside the court.”) The tension associated with all of this is what Jules brings to the fore.

CPR’s discussion of the case highlights how lower courts have divided on this issue and why the Supreme Court guidance is required. (See CPR’s analysis of Jules here.)

SmartSky Networks v. DAG Wireless: Context for the Jules Question

Against that backdrop, the panel discussed SmartSky Networks LLC v. DAG Wireless Ltd., 70 F.4th 615 (4th Cir. 2023), a Fourth Circuit decision addressing whether a federal court that compelled arbitration, and stayed proceedings pending arbitration, retained jurisdiction to confirm or vacate the resulting award. The U.S. Court of Appeals for the Second Circuit ruled in Jules that the district court, which had federal question jurisdiction over a lawsuit on the merits, had continuing subject matter or anchor jurisdiction over post-award enforcement proceedings because it had granted a Section 3 stay and a Section 4 motion to compel arbitration. In SmartSky, however, the U.S. Court of Appeals for the Fourth Circuit reached the diametrically opposite conclusion in a case involving essentially the same material facts as Jules.

Importantly, as the panel made clear, SmartSky was not discussed as an end in itself. Rather, it served as a concrete illustration of the jurisdictional problem now before the U.S. Supreme Court in Jules. The resolution of Jules will most likely determine whether SmartSky is a good law, a very important question to appellate and trial-court arbitration law practitioners.

SmartSky, unlike Jules, concluded that the district court lacked jurisdiction over post-arbitration proceedings, notwithstanding the Section 3 stay. That approach reflects a strict reading of Badgerow and highlights the risk that federal courts may become jurisdictionally stranded after compelling arbitration. That would leave a significant amount of additional FAA litigation to the state courts, who would be expected to apply the FAA to substantive matters but be free to apply state arbitration law to procedural matters.

The panel discussed how courts have taken different approaches, creating uncertainty for practitioners and litigants alike. These divergent outcomes underscore why Supreme Court review is warranted.

As CPR’s year-end materials explain, SmartSky and Jules, taken together, demonstrate the kind of materially different approaches to the same important issue that often prompt a grant of certiorari. (See CPR’s overview here.)

Key Appellate Arbitration-Law Development II: Flowers Foods, Inc. v. Brock— FAA § 1 and the Scope of the Transportation Worker Exemption

The panel also discussed Flowers Foods, Inc. v. Brock, No. 25-121 (U.S.), the other case in which the Supreme Court has granted certiorari. Flowers Foods concerns the scope of the FAA § 1 exemption for certain “transportation workers” and the criteria courts should apply in determining whether that exemption applies.

The question before the Court is: “[a]re workers who deliver locally goods that travel in interstate commerce—but who do
not transport the goods across borders nor interact with vehicles that cross borders—’transportation workers’ ‘engaged in foreign or interstate commerce’ for purposes of the Federal Arbitration Act’s § 1 exemption?”

Continuing Uncertainty Under FAA § 1

Although the Supreme Court has addressed FAA § 1 in recent years, the panel noted that lower courts continue to struggle with its application, particularly in cases involving workers who perform mixed or indirect transportation-related functions, or where (as here) a bona fide question arises concerning whether the workers are engaged in interstate commerce within the meaning of FAA § 1.

Flowers Foods presents an opportunity for the Court to clarify how broadly—or narrowly—the exemption should be construed, with significant implications for employment arbitration and independent contractor agreements.

The panel emphasized that FAA § 1 litigation has become one of the most active areas of appellate arbitration law, making the Court’s intervention both timely and consequential.

Other Appellate Developments Discussed

With the cert-granted-recently Supreme Court cases as the anchor, the panel surveyed several additional appellate decisions that illustrate broader trends:

International arbitration and sovereign immunity, including the U.S. Supreme Court’s decision in CC/Devas (Mauritius) Ltd. v. Antrix Corp. Ltd., 145 S.Ct. 1572 (2025), addressing a Foreign Sovereign Immunities Act of 1976 (“FSIA”), 28 U.S.C. §§ 1330, 1602 et seq., personal jurisdiction issue arising out of an award enforcement matter.
FAA preemption of State Law, as reflected in Hohenshelt v. Superior Court, 18 Cal.5th 310 (2025) (finding no preemption of state law concerning prompt payment of arbitrator fees).
Consumer arbitration and unconscionability, including Live Nation v. Heckman, 69 F.4th 1257 (9th Cir. 2023).
Severability of illegal arbitration agreement provisions and contract enforcement, discussed through Mungo Homes LLC v. Huskins, 379 S.C. 199, 665 S.E.2d 590 (S.C. 2023). (For a discussion of Mungo Homes, see here.)
FAA §3 stays and procedural consequences, as discussed in Smith v. Spizzirri, 144 S. Ct. 1173 (2024). (For a discussion of Spizzirri, see here.)
Flores v. New York Football Giants, Inc.,104 F.4th 205 (2d Cir. 2024), in which the U.S. Court of Appeals for the Second Circuit refused to enforce an arbitration agreement that required disputes to be arbitrated by an arbitrator who lacked independence from the parties. (For a discussion of Flores, see here.)

Practical Implications for Arbitration Practitioners

The panel’s discussion yielded several practical takeaways, including:

Arbitration law disputes increasingly turn on procedural and jurisdictional mechanics rather than on arbitration’s legitimacy as a dispute resolution mechanism.
At least until the Supreme Court decides Jules, federal subject matter jurisdiction based on an “anchor” or “continuing jurisdiction” theory cannot be assumed simply because the court has compelled arbitration and stayed litigation pending arbitration.
Strategic decisions at the motion-to-compel stage may determine whether other FAA litigation will proceed in state, rather than federal court.
Arbitration clause drafting should account for jurisdictional endgames—including vertical (state vs. federal) choice of law—not just enforceability generally.

Looking Ahead to 2026

As the panel concluded, the Supreme Court’s decisions in Jules and Flowers Foods are likely to shape arbitration practice well beyond the this 2025 Term, and the Court’s 2026 Term, which starts later next year. Together, they reflect a Court that is less concerned with whether arbitration is favored, and more concerned with how arbitration fits within the text of the FAA concerning subject matter jurisdiction and exemptions to FAA applicability.

For arbitration practitioners, staying attuned to these developments is critical. Programs like CPR’s year-end “Hot Topics” discussion provide an invaluable forum for understanding not just where arbitration law has been—but where it is heading.

Contacting the Author

If you have any questions about this article, arbitration, arbitration-law, or arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094 or PJL1@LoreeLawFirm.com.

Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and trial court and appellate arbitration-related litigation. A former BigLaw partner, he has 35 years of experience representing a wide variety of corporate, other entity, and individual clients in matters arising under the Federal Arbitration Act, as well as in insurance- or reinsurance-related, and other, matters.

This blog features links to several arbitration-related videos and webinars in which Mr. Loree appears.

ATTORNEY ADVERTISING NOTICE: Prior results do not guarantee a similar outcome.

Photo Acknowledgment

The photo featured in this post was licensed from Yay Images and is subject to copyright protection under applicable law.

New York’s Highest Court Rules that Arbitrator’s Statutory Treble Damages Award against Town Should have been Vacated

April 7th, 2025 Appellate Jurisdiction, Appellate Practice, Application to Confirm, Application to Vacate, Arbitrability, Arbitration Agreements, Arbitration Law, Arbitration Practice and Procedure, Authority of Arbitrators, Award Vacated, Challenging Arbitration Awards, CPLR Article 75, Enforcing Arbitration Agreements, New York Appellate Division, New York Court of Appeals, New York State Courts, Petition to Vacate Award, Policy, Public Policy, Punitive Damages, Questions of Arbitrability, Remedies, Sovereign Immunity, Substantive Arbitrability, Treble Damages, Uncategorized, Vacate, Vacate Award | Arbitrability, Vacate Award | Exceeding Powers, Vacate Award | Public Policy Comments Off

Introduction

Under New York law, can an arbitrator lawfully award statutory treble damages against the State or its political subdivisions?

New York prohibits punitive damage awards in suits against the State and its political subdivisions, including of course, towns. See Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 N.Y.2d 382, 386 (1987). Public funds are available only to compensate for damages suffered because the key “justifications for punitive damages—punishment and deterrence—are hardly advanced when applied to a governmental unit.” Sharapata v Town of Islip, 56 N.Y.2d 332, 338 (1982).

This prohibition on punitive damage awards is also based on the precept that the sovereign’s liability extends no farther than its waiver of immunity. As the New York Court of Appeals—New York’s highest Court—said in Sharapata, “we hold today that the waiver of sovereign immunity effected by section 8 of the Court of Claims Act does not permit punitive damages to be assessed against the State or its political subdivisions.” 56 N.Y.2d at 334.

But assuming treble damages are punitive in nature, can an arbitrator’s award imposing punitive damages be vacated because it violates New York public policy? Recently before the Court, in Matter of Rosbaugh v. Town of Lodi, 2025 NY Slip Op 01406 at *1 (N.Y. Mar. 13, 2025), was the question whether an arbitrator’s treble damages award against the Town of Lodi (the “Town”), made under New York Real Property Actions and Proceedings Law (“RPAPL”) § 861, was punitive in nature and thus contrary to New York public policy. The Court said the answer is yes and held the award must be vacated.

One might expect that Rosbaugh would have discussed briefly New York arbitration law authorizing vacatur of awards that violate public policy but it did not. The focus of the decision was instead on whether the Court could, without violating New York public policy, impose on and enforce against the Town any judgment imposing an RPAPL 861 treble damage remedy, irrespective of whether the judgment resulted or would result from: (a) a plenary, judicial trial on the merits; or (b) a summary proceeding to enter judgment on an arbitration award imposing that remedy. Because the prohibition applies to any suit against the state or its subdivisions, whether on the merits or to confirm an arbitration award, it was arbitration neutral and it did not necessarily require a meaningful discussion of arbitration law to hold that the award had to be vacated.

But perhaps the Court downplayed the arbitration law aspects of the decision because it thought doing otherwise might inadvertently encourage more public-policy challenges to the confirmation of arbitration awards than the law warrants. The line between what may be an egregious mistake of law—which is ordinarily not subject to New York Civ. Prac. L. & R. (“CPLR”) Article 75 review—and a violation of an important New York public policy—which can be a basis for vacatur of an award, see Associated Teachers of Huntington, Inc. v. Bd. of Educ., 33 N.Y.2d 229, 235-36 (1973)— can sometimes be blurry. The Court may have wanted to downplay arbitration law to avoid encouraging award challengers from unnecessarily, and erroneously, seeking vacatur of awards based on unreviewable legal errors which, while serious, do not amount to violations of “so strong a public policy as to require vacating an award. . . .” 33 N.Y.2d at 231-32.

Also left undiscussed was how New York arbitration law provided an independent, alternative ground on which the courts might have vacated the award. Under New York arbitration law—but not the Federal Arbitration Act—arbitrators to not have the power, and cannot be empowered by agreement, to award punitive damages. See Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 357, 359-60 (1976); see also Mastrobuono v. Shearson Lehman Hutton Inc., 514 U.S. 52, 62-64 (1995) (discussing difference between New York law and the FAA concerning arbitrability of punitive damages).

In Rosbaugh, the party who challenged the treble damage award was a municipality, which had a strong, sovereign-immunity-based public policy argument against the assessment of punitive damages. But had the Town been a private person, then it would, it seems to the author, have had at least a basis to argue that for the reasons explained by the Court in Rosbaugh, the treble-damage award had to be vacated under Garrity because of its punitive nature.

Background and Procedural History

Plaintiffs were landowners who owned land abutting one side of a dirt road in upstate New York. They had trees on their property, some of which apparently overhung the road, which was owned and maintained by the Town. The Town claimed that the trees were interfering with the right-of-way.

Presumably concluding that the trees were within the right-of-way, the Town proceeded to hire a tree service company to remove or trim them The company trimmed or cut down 55 trees that were on the plaintiff’s property. Plaintiff sued the Town and the company seeking, among other remedies, treble damages under RPAPL 861(1).

Ultimately the parties agreed to submit their dispute to arbitration. The arbitrator found for the plaintiffs, awarding three-times the “‘stumpage value’ of the damaged or destroyed trees.” 2025 NY Slip Op 01406 at *1 (quotations in original). The trial court upheld the award and a divided panel of the Appellate Division, Fourth Department, affirmed.

New York’s highest court said “[t]he sole issue on appeal is whether treble damages under RPAPL 861 are punitive in nature , making them unavailable in a suit against a municipality.” 2025 NY Slip Op 01406 at *1. It concluded that they were punitive and that the award had to be vacated. See 2025 NY Slip Op 01406 at *3.

Whether Statutory Treble Damages are Punitive Depends on the Intent of the Legislature

As a general rule, treble damages are considered to be punitive but the Continue Reading »

Transfer of Venue under 28 U.S.C. Section 1404(a) in an Arbitration Conducted Virtually: An Arbitration Award is Made at the Arbitral Seat, Which is Determined by the Parties’ Agreement

January 9th, 2025 1404(a) Transfer of Venue, Application to Confirm, Application to Vacate, Arbitral Seat, Arbitration Law, Arbitration Practice and Procedure, Arbitration Situs, Awards, Confirmation of Awards, Consent to Confirmation, FAA Chapter 1, FAA Section 9, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 9, Federal Courts, Federal Rules of Civil Procedure, Federal Subject Matter Jurisdiction, Petition or Application to Confirm Award, Petition to Vacate Award, Section 9, United States Court of Appeals for the Second Circuit, United States District Court for the Southern District of New York, Venue 2 Comments »

1404(a) transfer of venue; virtual hearings Questions about venue transfer under 28 U.S.C. Section 1404(a) of Section 9 or 10 petitions to confirm or vacate arbitration awards may require determination of where the award was made.

Particularly in today’s world of virtual hearings, determining where an arbitration award is made can raise questions. In Citizens Bank v. Magleby, 24 Civ. 4827 (AKH), slip op. at 4 (S.D.N.Y. Jan. 6, 2025), the Court, following existing precedent, held that an award is made at the location where the parties agree the arbitration will take place, even if the arbitration hearings are held in another place or virtually. That rule may not be perfect but it simplifies resolution of what otherwise could be a vexing question.

Background

In Citizen’s Bank, the question arose on a 28 U.S.C. § 1404(a) motion to transfer a petition to confirm an arbitration award from the Southern District of New York to Las Vegas, Nevada. The Continue Reading »

Overturning Arbitration Awards based on Clear Mistakes of Historical Fact or Conceded Nonfacts: Some Further Thoughts (Part IV): Will the Seventh Circuit Reverse the UpHealth District Court?

November 14th, 2024 Appellate Practice, Application to Vacate, Arbitration Agreements, Authority of Arbitrators, Award Fails to Draw Essence from the Agreement, Award Vacated, Awards, Challenging Arbitration Awards, Exceeding Powers, FAA Section 10, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 10, Judicial Review of Arbitration Awards, Manifest Disregard of the Agreement, Manifest Disregard of the Law, Outcome Review, Petition to Vacate Award, Post-Award Federal Arbitration Act Litigation, Practice and Procedure, Standard of Review, United States Court of Appeals for the Seventh Circuit, United States District Court for the Northern District of Illinois, United States Supreme Court, Vacate, Vacate Award | 10(a)(4), Vacate Award | Manifest Disregard of the Law, Vacatur for Conceded Nonfact or Clear Mistake of Historical Fact Comments Off

Will the Seventh Circuit reverse the judgment in the UpHealth case?

In our October 7, 2024, post, “Can a Court under Section 10(a)(4) Overturn an Award Because it was Based on a Clear Mistake of Historical Fact or a Conceded Nonfact?”, we discudssed UpHealth Holdings, Inc. v. Glocal Healthcare Sys. PVT, No. 24-cv-3778, slip op. (N.D. Ill. Sept. 24, 2024), which granted partial vacatur of an arbitration award because it was, said the Court, based on a “nonfact.” Our October 18, 2024 post, Overturning Arbitration Awards based on Clear Mistakes of Historical Fact or Conceded Nonfacts: Some Further Thoughts (Part I), identified five questions relating to UpHealth designed to shed further light on the case and the arbitration award vacatur standard on which the Court relied.

The first four of those questions were answered in our October 18, October 21, and November 12, 2024, posts. This November 14, 2024, post answers the fifth question: “If there is a [United States Court of Appeals for the] Seventh Circuit appeal of the UpHealth decision, is it likely the decision will be overturned on appeal, and if so, on what grounds?”

We explained in our November 12, 2024, post that UpHealth has appealed the district court decision to the Seventh Circuit. And if you’ve been reading our prior UpHealth posts, then you’ve probably already guessed that the answer is “yes,” it seems likely the Seventh Circuit will reverse the UpHealth decision.

In terms of the grounds, for such a reversal, we think the Seventh Circuit will probably conclude that the only forms of outcome review the Seventh Circuit recognizes is manifest disregard of the contract and violation of public policy, and that UpHealth involves neither of those grounds. That is all the more so where, as here, there is no agreement or concession concerning the allegedly mistaken fact. (See November 12, 2024, post.)

We think the Seventh Circuit may also conclude that recognizing vacatur based on a clear mistake of historical fact or a conceded nonfact would embroil courts in review of the arbitrator’s fact findings, including the sufficiency of evidence. Under Seventh Circuit and U.S. Supreme Court authority, the FAA does not authorize such review. Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 566-70 (2013); Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 671-72, 676-77 (2010). Major League Baseball Players Assoc. v. Garvey, 532 U.S. 504, 509-10, 511 (2001); Hill v. Norfolk & Western Ry., 814 F.2d 1192, 1194-95 (7th Cir. 1987) (citations omitted) (Posner, J.); American Zurich Ins. Co. v. Sun Holdings, Inc., 103 F.4th 475, 477-78 (7th Cir. 2024) (Easterbrook, J.); Affymax, Inc. v. Ortho-McNeil-Janssen Pharms., Inc., 660 F.3d 281, 284 (7th Cir. 2011) (citing George Watts & Son, Inc. v. Tiffany & Co., 248 F.3d 577 (7th Cir.2001); Eljer Mfg., Inc. v. Kowin Development Corp., 14 F.3d 1250, 1254, 1256 (7th Cir. 1994).

We discussed all of these shortcomings in the UpHealth Court’s analysis in our October 7, 18, 21, and November 12, 2024, posts. We believe that the Seventh Circuit will probably also conclude that the UpHealth court erred by vacating the award in part, particularly since the Seventh Circuit recognizes outcome review in extremely narrow circumstances only and none of those circumstances are present here—where the district court has, for intents and purposes, second-guessed the arbitrator’s fact finding.

It will be interesting to see how the appellee (Damodaran) attempts to square the district court’s decision with Seventh Circuit and Supreme Court authority. We will continue to watch the appeal and report on significant developments.

Contacting the Author

If you have any questions about this article, arbitration, arbitration-law, arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094 or PJL1@LoreeLawFirm.com.

Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has nearly 35 years of experience representing a wide variety of corporate, other entity, and individual clients in matters arising under the Federal Arbitration Act, as well as in insurance- or reinsurance-related, and other, matters.

ATTORNEY ADVERTISING NOTICE: Prior results do not guarantee a similar outcome.

Photo Acknowledgment

The image featured in this post was licensed from Yay Images and is subject to copyright protection under applicable law.

Overturning Arbitration Awards based on Clear Mistakes of Historical Fact or Conceded Nonfacts: Some Further Thoughts (Part III)

November 12th, 2024 Application to Confirm, Application to Vacate, Arbitrability, Arbitration Law, Arbitration Practice and Procedure, Authority of Arbitrators, Award Fails to Draw Essence from the Agreement, Award Vacated, Awards, Challenging Arbitration Awards, Confirmation of Awards, Exceeding Powers, FAA Chapter 1, FAA Section 10, FAA Section 9, Federal Arbitration Act Section 10, Federal Arbitration Act Section 9, Grounds for Vacatur, Petition to Vacate Award, Practice and Procedure, Section 10, Section 9, United States Court of Appeals for the Seventh Circuit, United States District Court for the Northern District of Illinois, Vacate, Vacate Award | 10(a)(4), Vacate Award | Arbitrability, Vacate Award | Exceeding Powers, Vacate Award | Excess of Powers, Vacatur for Conceded Nonfact or Clear Mistake of Historical Fact Comments Off

In our October 7, 2024, post, “Can a Court under Section 10(a)(4) Overturn an Award Because it was Based on a Clear Mistake of Historical Fact or a Conceded Nonfact?”, we discussed UpHealth Holdings, Inc. v. Glocal Healthcare Sys. PVT, No. 24-cv-3778, slip op. (N.D. Ill. Sept. 24, 2024), which granted partial vacatur of an arbitration award because it was based on a “nonfact.” Our October 18, 2024 post, Overturning Arbitration Awards based on Clear Mistakes of Historical Fact or Conceded Nonfacts: Some Further Thoughts (Part I), identified five questions relating to UpHealth, which were designed to shed further light on the case and the vacatur standard on which the Court relied.

We answered the first three of the five in our October 18 and 21, 2024, posts:

What is the difference, if any, between a “clear mistake of historical fact” and a “conceded nonfact?”
What is or should be required to establish a “clear mistake of historical fact” or a “conceded nonfact?”
Assuming Section 10(a)(4) authorizes courts to vacate awards based on a “clear mistake of historical fact” or a “conceded nonfact,” did the UpHealth district court err by holding that the award against Damodaran was based on a nonfact?

This post—which assumes familiarity with our October 7, 18, and 21, 2024 posts—answers the fourth question: “Assuming that the district correctly applied the “conceded nonfact” standard, does it comport with the FAA?”

We think the answer is no, unless the standard is construed to authorize vacatur in one of the two alternate situations only. First, where: (a) the parties clearly and unmistakably agree to the existence or nonexistence of a material fact, whether by stipulation or otherwise; (b) the arbitrator makes an award that clearly and unmistakably contravenes, or is otherwise inconsistent with, that agreement; and (c) the arbitrator does not even arguably interpret or apply the parties’ agreement about the existence or nonexistence of the material fact.
Second, and alternatively, where: (a) there is not even a barely colorable basis to conclude that the arbitrator’s material, mistaken finding of fact was based on ambiguous or disputed evidence; and (b) in making his or her award the arbitrator strongly relied on the clearly mistaken finding of fact. Of these two scenarios, we believe the first comports more closely with the FAA than the second.

The UpHealth Appeals to the Seventh Circuit

One brief update before we proceed: On October 24, 2024, UpHealth, not surprisingly, filed a notice of appeal from the order vacating the award. On November 6, 2024, Damodaran filed a notice of cross-appeal, appealing the district court’s order to the extent that that it remanded UpHealth’s claims against him to the arbitration panel, rather than terminating them.

Discussion: UpHealth

Assuming that the UpHealth District Correctly Applied the Clear Mistake of Historical Fact or Conceded Nonfact Standard, does it Comport with the FAA?

Our October 7, 18, and 21, 2024, posts pointed out a number of reasons why the clear mistake of historical fact or conceded nonfact standard, particularly as applied by UpHealth, violates, or may violate, the FAA. First, the FAA does not authorize courts to review an arbitrators’ findings of fact, no matter how “silly” or “improvident.” See, e.g., Major League Baseball Players Assoc. v. Garvey, 532 U.S. 504, 509-10, 511 (2001). The Second Circuit and certain other courts have rejected “manifest disregard of the facts” as a basis for vacating an arbitration award, see, e.g., Wallace v. Buttar, 378 F.3d 182, 191-93 (2d Cir. 2004) (discussing Halligan v. Piper Jaffray, Inc., 148 F.3d 197 (2d Cir. 1998)), and the Seventh Circuit (with a couple of narrow exceptions discussed in our October 7, 2024, post) has rejected even manifest disregard of the law as a ground for overturning an award. Affymax, Inc. v. Ortho-McNeil-Janssen Pharms., Inc., 660 F.3d 281, 284 (7th Cir. 2011) (citing George Watts & Son, Inc. v. Tiffany & Co., 248 F.3d 577 (7th Cir.2001)).

As we saw with respect to the UpHealth court’s application of the standard, when a Court purports to determine whether an arbitrator’s finding of fact is a clear mistake of historical fact—i.e., a fact finding that is contradicted by unambiguous or undisputed evidence to the contrary—the Court is required to review the arbitrator’s fact finding, and may inadvertently second-guess the arbitrator on a matter that is supposed to be within his or her discretionary ambit.
That is how the UpHealth court, in the author’s opinion, erred in applying the standard. (See October 21, 2024, post.) The Court made a determination about the ambiguity of evidence and its disputed or undisputed nature through the same lens as it would have made those determinations in cases that do not involve arbitration. (See October 21, 2024, post.)
Second, to the extent that the clear mistake of historical fact or conceded nonfact standard focuses on whether the arbitrator made a clear mistake of fact, and not on whether the arbitrator did or didn’t do his or her job by at least arguably interpreting the parties’ agreement or concessions about the facts, then it is not aligned with the only form of outcome review (other than public policy review) that has been authorized by the U.S. Supreme Court: manifest disregard of the agreement. See Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 566-70 (2013); Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 671-72, 676-77 (2010).

The principal purpose of the FAA, and certainly that animating FAA review of arbitration awards, is to enforce the parties’ agreement to arbitrate. Stolt-Nielsen, 559 U.S. at 682-83; Wise v. Wachovia Securities, LLC, 450 F. 3d 265, 269 (7th Cir. 2006). As the Seventh Circuit has aptly put it:

[T]he question for decision by a federal court asked to set aside an arbitration award . . . is not whether the arbitrator or arbitrators erred in interpreting the contract; it is not whether they clearly erred in interpreting the contract; it is not whether they grossly erred in interpreting the contract; it is whether they interpreted the contract. If they did, their interpretation is conclusive. By making a contract with an arbitration clause the parties agree to be bound by the arbitrators’ interpretation of the contract. A party can complain if the arbitrators don’t interpret the contract—that is, if they disregard the contract and implement their own notions of what is reasonable or fair. A party can complain if the arbitrators’ decision is infected by fraud or other corruption, or if it orders an illegal act. But a party will not be heard to complain merely because the arbitrators’ interpretation is a misinterpretation. Granted, the grosser the apparent misinterpretation, the likelier it is that the arbitrators weren’t interpreting the contract at all. But once the court is satisfied that they were interpreting the contract, judicial review is at an end, provided there is no fraud or corruption and the arbitrators haven’t ordered anyone to do an illegal act.

Hill v. Norfolk & Western Ry., 814 F.2d 1192, 1194-95 (7th Cir. 1987) (citations omitted) (Posner, J.); see, e.g., American Zurich Ins. Co. v. Sun Holdings, Inc., 103 F.4th 475, 477-78 (7th Cir. 2024) (Easterbrook, J.) (quoting Hill, 814 F.2d at 1194-95; citing Garvey, 532 U.S. at 509-10); Oxford, 569 U.S. at 571-73.

The same should be true of the clear mistake of historical fact or conceded nonfact standard. If there is to be vacatur of an award based on a mistake of historical fact or conceded nonfact it should be because the arbitrator did not do his or her job by at least arguably interpreting and applying the parties’ agreement or concessions concerning the facts.

In situations where the parties have agreed to, or conceded, facts that clearly evidence a clear mistake of historical fact, then that resolves both the problem associated with Courts purporting to review the arbitrators’ evidentiary findings as well as the problem associated with the vacatur standard of review not being grounded in the enforcement of the parties’ agreement. No judicial review of the sufficiency or existence of evidence supporting a fact finding is necessary or warranted when the issues are whether the parties agreed to that finding of fact and whether the arbitrators even arguably interpreted that agreement.

Those issues concern whether the arbitrators’ award is at least arguably an interpretation of the parties’ agreement, limiting judicial review to the scope approved by the U.S. Supreme Court: did the arbitrators at least arguably interpret the parties’ agreement? See Oxford, 569 U.S. at 566-70.

Stolt-Nielsen lends support to the argument that the standard should be limited to situations where the historical fact or nonfact was the subject of party agreement or concession. The U.S. Supreme Court there determined that the arbitrators exceeded their powers by not giving effect to the parties’ stipulation that their agreement was silent on the issue of class arbitration. Instead of determining what default rule governs consent to class arbitration when the parties’ agreement is silent on that score, the arbitrators ruled that extracontractual considerations of public policy required class arbitration. See Stolt-Nielsen, 559 U.S. at 671-72, 676-77. (See October 18, 2024, post.)

Third, the way the UpHealth Court construed and applied the standard effectively allows the court, applying a de novo standard of review, to determine whether the facts establishing the mistake were unambiguous and undisputed. That is troublesome for essentially the same reasons: it invites judicial review of arbitral fact finding rather than limited judicial review of whether the parties agreed or conceded the existence of facts contrary to those found by the arbitrator and, if so, whether the arbitrator at least arguably did his or her job by interpreting and applying that agreement or concession.

Two Proposals for Aligning the Mistake of Historical Fact or Conceded Nonfact Standard with the FAA

There are at least two alternative ways that the historical fact/conceded nonfact standard can be modified so that it can be applied in a way that at least arguably comports with the FAA. The first of these could not have been applied to the UpHealth facts, while the second of these could have been applied to those facts, but its proper application to those facts would, we think, result in a different outcome in UpHealth: denial of Damodaran’s motion to vacate. Of the two, we think the first is more closely aligned with the FAA than the second.

Proposal 1: The Facts Showing the Mistake Must be Agreed or Conceded

The first proposal fully addresses each of the weaknesses inherent in UpHealth’s interpretation and application. It would authorize vacatur for clear mistake of fact or conceded nonfact only where: (a) the parties clearly and unmistakably agree to the existence or nonexistence of a material fact, whether by stipulation or otherwise; (b) the arbitrator makes an award that clearly and unmistakably contravenes, or is otherwise inconsistent with, that agreement; and (c) the arbitrator does not even arguably interpret or apply the parties’ agreement about the existence or nonexistence of the material fact.

This proposed standard removes the Court entirely from evaluating, even in a very deferential fashion, the basis for the arbitral fact finding at issue. It requires the court to determine, by clear and unmistakable evidence, that: (a) the parties have reached an agreement or concession about the existence or nonexistence of the fact claimed to be the subject of the arbitrator’s alleged, clear mistake, and (b) the award contravenes, or is otherwise inconsistent with, that agreement or concession. It then, as a safeguard, and consistent with the manifest disregard of the agreement standard, requires the Court to determine whether the arbitrator even arguably interpreted or construed the agreement or concession concerning the existence or nonexistence of the fact the challenging party claims the arbitrator mistook.

The standard therefore confines judicial review to the parties’ agreement and accords the same deference to interpretation and application of the agreement that courts faithfully following the manifest disregard of the agreement standard accord to arguable interpretations or applications of the parties’ agreement by the arbitrator.

It would, however, have had no application to the facts in UpHealth. In UpHealth, the parties did not agree to or concede the existence or nonexistence of any of the facts the challenging party claimed were the subject of the arbitrator’s alleged mistake. Therefore, a Court employing such a standard would conclude that there was no basis to vacate the UpHealth award based on an alleged mistake of historical fact or conceded nonfact.

Proposal 2: No Barely Colorable Basis to Conclude that the Arbitrator’s Clearly Mistaken Finding of Fact was Based on Ambiguous or Undisputed Evidence

Proposal 2 is slightly more forgiving than Proposal 1 because it permits some extremely deferential review of the question whether the arbitrator’s fact finding was contradicted by, or otherwise inconsistent with, unambiguous or undisputed evidence to the contrary. While it could have been applied to the facts of UpHealth, the outcome it would yield would have been denial of the motion to vacate. (See October 21, 2024 post.)

Proposal 2 would allow vacatur where: (a) there is not even a barely colorable basis to conclude that the arbitrator’s material, mistaken finding of fact was based on ambiguous or undisputed evidence; and (b) in making his or her award the arbitrator strongly relied on the clearly mistaken finding of fact. It therefore limits any review of the arbitrator’s fact finding to that necessary to determine whether there was even a barely colorable basis to conclude that the arbitrator based the mistaken finding fact on ambiguous or undisputed evidence. If there is a barely colorable basis on which to conclude that the arbitrator’s mistaken fact finding was based on ambiguous or undisputed evidence, then vacatur is not permitted. Like UpHealth’s articulation of the standard, it requires that the arbitrator strongly relied on the clearly mistaken finding of fact.

Proper application of Proposal 2 to the UpHealth facts would, the author believes, lead to denial of Damodaran’s motion to vacate. Even though the UpHealth Court concluded that there was no basis in the record for the Damodaran finding, the author believes that there was a barely colorable basis on which to conclude that the Damodaran finding was supported by ambiguous or disputed evidence.

As explained in the October 21, 2024 post, the arbitrators did not pull their finding about Damodaran out of a proverbial hat. As the Court explained, the arbitrators “based [their] findings on ‘[a witness’s] evidence that at [the] EGM the minority shareholders voted against the Claimant’s designees being appointed to the Board.’” Slip op. at 21 (quoting Award at ¶¶ 360-61). That witness, the Court said, “did not identify which minority shareholders were present. . . and noted that the vote was limited to ‘Glocal Healthcare shareholders in attendance’” at the meeting. Slip op. at 21 (quoting Dkt. 48-1, Ex. 2 at ¶ 121).

The witness further testified that the minority shareholders voted against the appointment of the designees and the minority shareholders in attendance voted. Damodaran was a minority shareholder. There was therefore at least an arguable or barely colorable basis for the arbitrators to have drawn the inference that Damodaran was among the minority shareholders who were present and voted.

The Court’s conclusion that it could “only surmise from the record that the Tribunal assumed Damodaran was present with the rest of the Respondents at the EGM without ever receiving evidence that he was in fact present[,]” slip op. at 21, would have been warranted and meaningful if the FAA required arbitrators to have direct and conclusive evidence to support each fact finding in their awards. But arbitration awards are not subject to that kind of exacting, rigorous standard of review.

The Court did not believe the evidence was sufficient here because: (a) the witness did not identify the minority shareholders that were present; and (b) the evidence left open the possibility that not all minority shareholders were present and voted. While the evidence on Damodaran was arguably equivocal, the arbitrators nevertheless drew the inference that Damodaran was present.

Arbitrators limitless (or nearly limitless) leeway in terms of their fact-finding ability, and who knows what other sources of information the arbitrators gleaned from the hearings that led them to draw the inference that Damodaran was present and voted at the meeting against the appointment of the designees. Under the circumstances, there was at least a barely colorable or arguable basis for the arbitrators to draw the inference that Damodaran was present and voted at the meeting against the appointment.

The evidence was therefore ambiguous in the sense that there was at least a barely colorable basis for interpreting it more than one way, and one of those ways was to conclude Damodaran was present at the meeting and voted against the appointment of designees. The arbitrators’ Damodaran fact finding was therefore not a clear mistake of historical fact or a conceded nonfact.

Contacting the Author

If you have any questions about this article, arbitration, arbitration-law, arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094 or PJL1@LoreeLawFirm.com.

ATTORNEY ADVERTISING NOTICE: Prior results do not guarantee a similar outcome.

Photo Acknowledgment

The photo featured in this post was licensed from Yay Images and is subject to copyright protection under applicable law.

Overturning Arbitration Awards based on Clear Mistakes of Historical Fact or Conceded Nonfacts: Some Further Thoughts (Part II)

October 21st, 2024 Application to Vacate, Arbitration Practice and Procedure, Authority of Arbitrators, Award Fails to Draw Essence from the Agreement, Award Vacated, Awards, Exceeding Powers, FAA Chapter 1, FAA Section 10, Federal Arbitration Act Section 10, Grounds for Vacatur, Judicial Review of Arbitration Awards, Manifest Disregard of the Agreement, Manifest Disregard of the Law, Petition to Vacate Award, Post-Award Federal Arbitration Act Litigation, Practice and Procedure, Section 10, United States Court of Appeals for the Seventh Circuit, United States District Court for the Northern District of Illinois, Vacate, Vacate Award | 10(a)(4), Vacate Award | Exceeding Powers, Vacate Award | Excess of Powers, Vacatur, Vacatur for Conceded Nonfact or Clear Mistake of Historical Fact Comments Off

In our October 7, 2024, post, “Can a Court under Section 10(a)(4) Overturn an Award Because it was Based on a Clear Mistake of Historical Fact or a Conceded Nonfact?”, we discussed UpHealth Holdings, Inc. v. Glocal Healthcare Sys. PVT, No. 24-cv-3778, slip op. (N.D. Ill. Sept. 24, 2024), which granted partial vacatur of an arbitration award because it was based on a “nonfact.” We promised to take a closer, analytical look at UpHealth and its “clear mistake of historical fact or conceded nonfact” vacatur standard, and, in our October 18, 2024 post, Overturning Arbitration Awards Based on Clear Mistakes of Historical Fact or Conceded Nonfacts: Some Further Thoughts (Part I), identified five questions relating to UpHealth that help shed further light on the case and the arbitration award vacatur standard on which it relied:

What is the difference, if any, between a “clear mistake of historical fact” and a “conceded nonfact?”
What is or should be required to establish a “clear mistake of historical fact” or a “conceded nonfact?”
Assuming Section 10(a)(4) authorizes courts to vacate awards based on a “clear mistake of historical fact” or a “conceded nonfact,” did the UpHealth district court err by holding that the award against Damodaran was based on a nonfact?
Assuming that the district correctly applied the “conceded nonfact” standard, does it comport with the FAA?
If there is a Seventh Circuit appeal of the UpHealth decision, is it likely the decision will be overturned on appeal, and if so, on what grounds?

That October 18, 2024 post went on to address questions 1 and 2. This Part II address the third question: “Assuming Section 10(a)(4) authorizes courts to vacate awards based on a “clear mistake of historical fact” or a “conceded nonfact,” did the UpHealth district court err by holding that the award against Damodaran was based on a nonfact?” The author thinks the answer is “yes.” One or more subsequent posts will answer questions 4 and 5.

Discussion

Assuming Section 10(a)(4) Authorizes Courts to Vacate Awards Based on a “Clear Mistake of Historical Fact” or a “Conceded Nonfact,” did the UpHealth District Court Err by Holding that the Award against Damodaran was Based on a Nonfact?

The UpHealth Court’s application of the “mistake of historical fact” or “conceded nonfact” standard raises serious questions about whether the Court substituted its judgment for that of the arbitrators. On balance, the author thinks it did for the reasons set forth below (which presume familiarity with our October 7, 2024, and our October 18, 2024, posts).

There are at least three flaws in the Court’s analysis: Continue Reading »

Can a Court under Section 10(a)(4) Overturn an Award Because it was Based on a Clear Mistake of Historical Fact or a Conceded Nonfact?

October 7th, 2024 Application to Confirm, Application to Vacate, Arbitration Law, Arbitration Practice and Procedure, Award Fails to Draw Essence from the Agreement, Award Irrational, Award Vacated, Awards, Exceeding Powers, FAA Chapter 1, FAA Section 10, Federal Arbitration Act Section 10, Grounds for Vacatur, Judicial Review of Arbitration Awards, Labor Arbitration, LMRA Section 301, Petition to Vacate Award, Practice and Procedure, Section 10, United States District Court for the Northern District of Illinois, Vacate, Vacate Award | 10(a)(4), Vacate Award | Exceeding Powers, Vacate Award | Excess of Powers, Vacate Award | Public Policy, Vacatur, Vacatur for Conceded Nonfact or Clear Mistake of Historical Fact 4 Comments »

nonfact | clear historical fact Can a court vacate an award because it was based on a clear mistake of historical fact or on a conceded nonfact? Some might consider asking that question to be akin to using fighting words, but it is one that the U.S. Court of Appeals for the Seventh Circuit may ultimately answer if an appeal of the UPHealth Holdings, Inc. v. Glocal Healthcare Sys. PVT, No. 24-cv-3778, slip op. (N.D. Ill. Sept. 24, 2024) is taken.

In vacating in part the award in that case the UpHealth district court took a rather bold step, albeit one that has support in two circuit court labor arbitration cases (decided in 1974 and 1985), Electronics Corp. of Am. v. International Union of Elec., Radio and Mach. Workers, 492 F.2d 1255 (1st Cir. 1974); National Post Office, Mailhandlers, Watchmen, Messengers & Grp. Leaders Div, Laborers Int’l Union of N. Am., AFL-CIO v. United States Postal Serv., 751 F.2d 834, 843 (6th Cir. 1985) (Stewart, Associate Justice (ret.), sitting by designation), and at least one district court case, decided under the Federal Arbitration Act (the “FAA”) in 2002, Mollison-Turner v. Lynch Auto Grp., No. 01 6340, 2002 WL 1046704, at *3 (N.D. Ill. May 23, 2002). It vacated in part an award because the Court determined the arbitrators strongly relied on a conceded nonfact. Whether UpHealth will withstand appellate review is unclear at this juncture, but at least for the time being, it provides award challengers with some additional support for vacating a very narrow class of questionable but rare awards that feature the kind of unusual circumstances present in UpHealth, Electronics Corp., National Post Office, and Mollison-Turner. Each of these cases presented a situation where an award was based on a clear mistake of historical fact, a conceded nonfact, or both.

This post reviews what transpired in UpHealth. In one or more later posts we shall subject the Court’s decision to analytical scrutiny and consider whether, and if so, to what extent, the notion that an award can be vacated based on a mistake of historical fact or a conceded nonfact will likely gain traction in future cases. We may also consider whether, and if so, to what extent, vacatur on that ground comports with Federal Arbitration Act (“FAA”) principles, and discuss in more detail Electronics Corp., National Post Office, and Mollison-Turner.

Legal Background: Outcome Review of Arbitration Awards

Manifest Disregard of the Agreement and Manifest Disregard of the Law

Under the Federal Arbitration Act (“FAA”), and in labor arbitration cases, courts can vacate Continue Reading »

Southern District of California Dismisses Petition to Vacate Arbitration Award for Lack of Subject Matter Jurisdiction

September 25th, 2024 Amount in Controversy, Application to Vacate, Arbitration Practice and Procedure, Awards, Challenging Arbitration Awards, FAA Chapter 1, FAA Section 10, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 10, Federal Courts, Federal Question, Federal Subject Matter Jurisdiction, Look Through, Petition to Vacate Award, Post-Award Federal Arbitration Act Litigation, Practice and Procedure, Section 10, United States Court of Appeals for the Ninth Circuit, United States District Court for the Southern District of California, Vacate, Vacatur Comments Off

vacate subject-matter jurisdiction We’ve repeatedly emphasized that—particularly since Badgerow v. Walters, 596 U.S. 1 (2022)—subject-matter jurisdiction issues arising out of petitions to confirm, vacate, modify, or correct arbitration awards present traps for the unwary. (See, e.g., posts here, , here , and here.) White v. U.S. Center For SafeSport, No. 22-cv-04468-JD, slip op. (C.D. Cal. Sept. 18, 2024), illustrates another subject- matter jurisdiction problem that arises, especially post-Badgerow: Is the amount-in-controversy requirement met when a petitioner seeks to vacate a “take nothing” award? The Court said the answer is “no,” at least in the circumstances of the case before it.

Petition to Vacate: Background

Respondent, United States Center for SafeSport (“SafeSport”) has been charged by Congress with “investigat[ing] and adjudicat[ing] allegations of sexual abuse and misconduct within U.S. Olympic and Paralympic organizations. Slip op. at 1 (citing 36 U.S.C. § 220541(a)). SafeSport investigated horse training and riding instructor Charles White (“White”) for allegedly engaging, over a period of three decades, in sexual misconduct against minors and adult females who participated in equestrian sports. Concluding those allegations had merit, SafeSport banned for life White from participating in in Olympic and Paralympic activities. Slip op. at 1.

SafeSport’s rules provided White with an option to submit to arbitration the question whether the lifetime ban was warranted. White pursued that option but the arbitrator made an award upholding the ban. Slip op. at 1-2.

White petitioned the District Court for the Southern District of California to vacate the award under Section 10 of the Federal Arbitration Act (“FAA”). He alleged diversity jurisdiction under 28 U.S.C. § 1332(a), which required him to show not only diversity of citizenship but also that the amount-in-controversy exceeded $75,000, exclusive of interests and costs. 28 U.S.C. § 1332(a).

The petition sought to: (a) vacate the award, which awarded neither him nor anyone else any monetary relief, and simply upheld the lifetime ban; or (b) remand the award for reconsideration. The petition was bereft of any allegations or evidence demonstrating that the amount-in-controversy requirement was met. Slip op. at 2 (citing 28 U.S.C. § 1332(a)).

The Court ordered White to show cause why the petition should not be dismissed on subject matter jurisdiction grounds. Initially, White submitted to the Court a declaration stating “he had lost more than $75,000 in income as a hay dealer and horse stable operator ‘as a direct result’ of the arbitration decision.” Slip op. at 2 (quoting Dkt. No. 44 ¶ 4). The Court dismissed the case because White did not amend his petition to make those allegations but granted leave for White “to ‘articulate the basis for his claim that the amount-in-controversy requirement is satisfied for purposes of diversity jurisdiction,’ among other possible amendments.” Slip op. at 2 (quoting Dkt. No. 47).

White’s amended petition “include[d] the hay dealer and stable operator losses mentioned in his declaration[,]” and “contend[ed] that the losses were ‘a direct result of [the arbitrator’s] decision, which upheld the sanction of lifetime ineligibility to participate in the sport.’” Slip op. at 2 (quoting Dkt. No. 48 ¶ 10).

Discussion: No Subject Matter Jurisdiction Over Petition to Vacate

Focusing on the allegation that the losses directly resulted from the arbitrator “upheld[ing]” the ban, the Court found White’s amended subject-matter jurisdiction allegations to be flawed. “Vacating the arbitration decision or remanding for new arbitration proceedings,” said the Court, “which is the sole relief White seeks in the amended petition, might start the arbitration process anew, but it would not overrule or otherwise reverse the ban imposed by SafeSport.” Slip op. at 2 (record citation omitted).

“The SafeSport ban[,]” explained the Court, “remains in full effect unless an arbitrator were to decide otherwise, which has not happened.” Slip op. at 2. Even if the Court vacated the award, that “would not restore to White the income he says he lost in his hay and stables businesses.” Slip op. at 2. White would not recover any of its losses because, even in the event of vacatur, the lifetime ban would remain effective. Slip op. at 3.

The Court explained that where, as here, an action seeks “nonmonetary relief, ‘the amount in controversy is measured by the value of the object of the litigation.’” Slip op. at 3 (quoting Maine Community Health Options v. Albertsons Cos., Inc., 993 F.3d 720, 723 (9^th Cir. 2021))(quotation and citation omitted).

The Court concluded that White had failed to satisfy his burden to show that the amount in controversy requirement had been met “because a remand for further arbitration proceedings would not terminate or reverse the SafeSport ban, and would not restore the lost income White alleges. . . .” Slip op. at 3 (citations omitted).

White argued that Badgerow’s requirement that “the determination of subject matter jurisdiction over petitions to vacate under the FAA looks only to ‘the face of the application itself[,]’” Badgerow, 596 U.S. at 9, was inapplicable. According to White, that requirement applied only when the basis for the petition was federal question, as it was in Badgerow. Slip op. at 3. But the Court said “there is no good reason why an FAA petition based on diversity jurisdiction should be treated any differently[]” from one falling under federal question jurisdiction, and White offered none. Slip op. at 3.

But the Court did not decide whether or not White’s argument might have merit “because, as discussed, White’s petition comes up short under established principles of diversity jurisdiction.” Slip op. at 3.

The Court also pointed out that White’s reliance on Theis Research, Inc. v. Brown & Bain, 400 F.3d 659 (9th Cir. 2005), was misplaced. Theis was a legal malpractice case in which the arbitrator awarded no monetary relief to either side. The client plaintiff filed in federal court a notice of motion to vacate, an application to vacate and a complaint seeking more than $200 million in damages. The defendant law firm moved to confirm the award. The Court denied the motion to vacate, granted the motion to confirm and entered summary judgment for the law firm on the complaint.

The Ninth Circuit determined that the district court had subject matter jurisdiction based on “‘the amount at stake in the underlying litigation.’” Slip op. at 4 (quoting 400 F.3d at 662-65.) “Because[,]” said the Court, the [Theis] plaintiff ‘sought to obtain by its district court complaint substantially what it had sought to obtain in the arbitration,’ the circuit court had no trouble concluding that the prayer for more than $200 million in damages established the required amount in controversy.” Slip op. at 4 (quoting 400 F.3d at 662-65).

The Court said the circumstances here were completely different in that there were no damages claims before the arbitrator, and that, in any event, “[i]t is also not clear that Theis survives Badgerow and its rejection of the ‘look-through’ approach to subject matter jurisdiction.” Slip op. at 4 (citing Badgerow, 596 U.S. at 9). We are not sure that is necessarily so because Theis involved a claim seeking more than $200 million damages, and the amount in controversy was not solely based (and did not have to be based) on the amount in controversy in the arbitration but on the $200 million-plus amount the complaint sought.

The Court found that granting further leave to amend was unwarranted and “dismissed [the case] on jurisdictional grounds without prejudice to a vacatur proceeding in state court, as circumstances might permit.” Slip op. at 4.

Contacting the Author

If you have any questions about this article, arbitration, arbitration-law, arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094 or PJL1@LoreeLawFirm.com.

Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has nearly 35 years of experience representing a wide variety of corporate, other entity, and individual clients in matters arising under the Federal Arbitration Act or state arbitration law, as well as in insurance or reinsurance-related and other matters.

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Ineffective Objections and Untimely Filings Lead to FAA Forfeiture: Sivanesan v. YBF, LLC, _ A.D. 3d _, 2024 N.Y. Slip Op. 4327 (2d Dep’t 2024)

September 4th, 2024 Applicability of Federal Arbitration Act, Application to Confirm, Application to Vacate, Arbitrability, Arbitrability - Nonsignatories, Arbitrability | Clear and Unmistakable Rule, Arbitrability | Existence of Arbitration Agreement, Arbitration Agreements, Arbitration as a Matter of Consent, Arbitration Law, Arbitration Practice and Procedure, Authority of Arbitrators, Award Confirmed, Challenging Arbitration Awards, Clear and Unmistakable Rule, Confirm Award | Exceeding Powers, Confirmation of Awards, Delegation Agreements, Enforcing Arbitration Agreements, Existence of Arbitration Agreement, FAA Chapter 1, FAA Section 10, FAA Section 11, FAA Section 9, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 10, Federal Arbitration Act Section 11, Federal Arbitration Act Section 9, First Department, First Options Reverse Presumption of Arbitrability, First Principle - Consent not Coercion, Formation of Arbitration Agreement, Grounds for Vacatur, Modify or Correct Award, New York Arbitration Law (CPLR Article 75), Petition or Application to Confirm Award, Petition to Vacate Award, Post-Award Federal Arbitration Act Litigation, Practice and Procedure, Procedural Arbitrability, Questions of Arbitrability, Rights and Obligations of Nonsignatories, Second Department, Section 10, Section 11, Section 9, Service of Process, State Arbitration Law, Time Limit for Vacating, Modifying, or Correcting Award, Vacate Award | 10(a)(4), Vacate Award | Arbitrability, Vacate Award | Excess of Powers, Vacate Award | Existence of Arbitration Agreement Comments Off

A good chunk of FAA practice and procedure —including FAA practice and procedure in state court—involves knowing when, how, and why to make timely and effective objections and filings in arbitration enforcement litigation. Sivanesan v. YBF, LLC, ___ A.D. 3d ___, 2024 N.Y. Slip Op. 4327 (2d Dep’t 2024), which New York’s Appellate Division, Second Department, decided on August 28, 2024, illustrates this point well.

Appellants were not signatories to the arbitration agreement, did not agree to arbitrate any matters, and did not clearly and unmistakably agree to arbitrate questions of arbitrability. But the Court found that they participated in the arbitration without lodging adequate objections to the arbitrator’s jurisdiction and did not timely file in the confirmation litigation their petition to vacate the awards at issue. Accordingly, the Appellants were—by their participation in the arbitration without effective objections to the arbitrator’s jurisdiction—deemed to have impliedly consented to arbitrate all issues before the arbitrator, including whether they were bound by the contract and arbitration agreement as successors-in-interest. Not a happy place to be.

Background

The transactions pertinent to Sivanesan began in 2008 when YBF, LLC (“YBF”) sold to Cosmetics Specialties, East LLC (“CSE”) an exclusive license to Continue Reading »

Archive for the ‘Petition to Vacate Award’ Category

Introduction

The Fourth Circuit’s Adoption of the Impermissible Collateral Attack Rule: What Transpired?

Principal Issues Addressed

Contractual Limits on Record Content, Evidence, and Discovery, or a Deferential Standard of Review Imposed on the Arbitrator, Can Foreclose FAA Section 10(a)(3) Prejudicial Procedural Misconduct Claims

The Big Development: the Fourth Circuit Adopts the “Impermissible Collateral Attack” Rule

The Premise: FAA §§ 10–11 Provide the Exclusive Route to Overturn or Undo an Award

How to Spot a Collateral Attack: Look at Wrongdoing, Harm, and Requested Relief

The Punchline: If it’s a Collateral Attack, the Whole Complaint is Tossed

Doctrinal Implications of the Fourth Circuit’s Adoption of the Impermissible Collateral Attack Rule

FAA Exclusivity, Finality, and the “Functional” Inquiry

Collateral Attack Doctrine as Distinct from Claim and Issue Preclusion

Pleading-Stage Tool that Reinforces the FAA’s Narrow Review

The Substance of the Remedy Sought Will Often Be Decisive

Interaction with FAA Section 10(a)(3) and Contractually “Closed” Records

Conclusion

Contacting the Author

Photo Acknowledgment

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Appellate Arbitration Developments: Supreme Court Certiorari as the Organizing Principle

Key Appellate Arbitration-Law Development I: Jules v. Andre Balazs Properties—Continuing or Anchor Subject Matter Jurisdiction Following a Section 3 Stay and a Section 4 Motion to Compel

SmartSky Networks v. DAG Wireless: Context for the Jules Question

Key Appellate Arbitration-Law Development II: Flowers Foods, Inc. v. Brock— FAA § 1 and the Scope of the Transportation Worker Exemption

Continuing Uncertainty Under FAA § 1

Other Appellate Developments Discussed

Practical Implications for Arbitration Practitioners

Looking Ahead to 2026

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Introduction

Background and Procedural History

Whether Statutory Treble Damages are Punitive Depends on the Intent of the Legislature

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Contacting the Author

Photo Acknowledgment

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The UpHealth Appeals to the Seventh Circuit

Discussion: UpHealth

Assuming that the UpHealth District Correctly Applied the Clear Mistake of Historical Fact or Conceded Nonfact Standard, does it Comport with the FAA?

Two Proposals for Aligning the Mistake of Historical Fact or Conceded Nonfact Standard with the FAA

Proposal 1: The Facts Showing the Mistake Must be Agreed or Conceded

Proposal 2: No Barely Colorable Basis to Conclude that the Arbitrator’s Clearly Mistaken Finding of Fact was Based on Ambiguous or Undisputed Evidence

Contacting the Author

Photo Acknowledgment

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Discussion

Assuming Section 10(a)(4) Authorizes Courts to Vacate Awards Based on a “Clear Mistake of Historical Fact” or a “Conceded Nonfact,” did the UpHealth District Court Err by Holding that the Award against Damodaran was Based on a Nonfact?

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Legal Background: Outcome Review of Arbitration Awards

Manifest Disregard of the Agreement and Manifest Disregard of the Law

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Petition to Vacate: Background

Discussion: No Subject Matter Jurisdiction Over Petition to Vacate

Contacting the Author

Photo Acknowledgment

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Background

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