United States: Fourth Circuit Upholds Arbitration Award Involving Termination Of Employee

Affirming the trial court's ruling, the Fourth Circuit upheld the denial of a motion to vacate or modify an arbitration award involving the termination of an employee.

The first challenge to the award was that "the arbitrator impermissibly ruled on whether 3D systems breached the Agreement's manager terms – a matter not submitted to arbitration – and awarded damages based upon the breach." The Court declined to vacate the award on this ground because "even if the arbitrator erred in determining that 3D Systems breached the manager term, the damages award is sufficiently supported by the arbitrator's finding of three other breaches."

The second challenge to the award was that "the arbitrator awarded [the employee] all of the potential earn-out and the amended award violated AAA Commercial Rule 50 and the common law doctrine of functus officio." The Court declined to vacate the award on this ground, as the "district court did not err in refusing to modify the damages pursuant to 9 U.S.C. § 11(a) because 3D Systems failed to allege a mathematical error that appears on the face of the award." Moreover, the amended award did not violate functus officio or AAA Commercial Arbitration Rule 50 because it contained only minor changes for clarification purposes.

The third challenge to the award was that "the arbitrator failed to follow the parties' agreed-upon methodology or the Agreement's fee-sharing provision in calculating attorney's fees and costs" The Court again declined to vacate the award on this ground, as "3D Systems again fails to show [it is] entitled to modification of the award under 9 U.S.C. § 11(a)" and, moreover "the arbitrator's methodology followed the exact language of the unambiguous fee-sharing provision ... the arbitrator was not bound the parties' agreed-upon methodology."

Barranco, et al. v. 3D Systems Corp., et al., No. 17-1744 (4th Cir. May 31, 2018)

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