Fourth Circuit Affirms Denial of Vacatur of Arbitration Award, Finding No Deprivation of a Fair Hearing or Manifest Disregard of the Law

A former vice president of a division within Oracle Corp. filed a demand for arbitration against Oracle, claiming that he was owed additional bonus compensation under the terms of his employment contract and the Maryland Wage Payment and Collection Law (MWPCL). After the parties conducted discovery and filed the equivalent of cross-motions for summary judgment briefing and oral argument in arbitration, the arbitrator ruled that the plaintiff was not due any additional compensation. The arbitrator determined that there were no material facts in dispute that would require a hearing on the merits, Oracle did not breach the parties’ compensation plan by its decision not to pay a larger bonus, and Oracle did not violate the MWPCL. The arbitrator ruled that the compensation plan gave Oracle the right to correct “administrative errors” and that, although the compensation plan omitted a cap on the plaintiff’s potential bonus compensation, it was an “administrative error” that Oracle had the right to rectify. The plaintiff then filed a petition to vacate the award in a Maryland state court, which Oracle then removed to the District of Maryland.

In the district court, the plaintiff argued that the arbitrator ignored the essence of the compensation plan, that the arbitrator deprived him of a fundamentally fair hearing, and that the arbitrator manifestly disregarded the MWPCL. The district court, however, denied the plaintiff’s petition to vacate the award, ruling that there was undisputed evidence that the failure to insert a cap into the plan was, indeed, an “administrative error,” which Oracle was entitled to correct. The court also ruled that the arbitrator had the discretion to decide the case like a summary judgment proceeding and that the arbitrator afforded a full and fair hearing that included discovery, the presentation of evidence, ample briefing, and oral argument. Regarding the MWPCL, the court ruled that the award was not made in manifest disregard of that statute, since the arbitrator had identified and used controlling legal principles to analyze the plaintiff’s claim.

On appeal, the Fourth Circuit affirmed, explaining that the review of an arbitration award is limited and that the district court properly disposed of the issues.

Balch v. Oracle Corp., No. 19-2433 (4th Cir. Feb. 17, 2021).