In Wulfe v. Valero Refining Company, Plaintiff David Wulfe sued his former employer over employment related claims, including a claim under the California Private Attorneys General Act (“PAGA”). Around this time, the California Supreme Court and Ninth Circuit Appeal Court were deciding whether an appellant’s PAGA claim should be arbitrated on an individual basis, but a decision had not yet been made. In this case, the district court ordered arbitration of the case, and the arbitrator ordered Wulfe to proceed with his PAGA claim on an individual basis. After the arbitrator’s decision, the law regarding PAGA claims was passed by the California Supreme Court, such that the arbitrator incorrectly predicted the future judicial decision in permitting Wulfe to proceed with his PAGA claim on an individual basis.
Thus, Wulfe appealed his case on the basis that the arbitrator exhibited a “manifest disregard of law”, desiring an annulment of the arbitrator’s decision. The FAA only permits an annulment of an award by an arbitrator in unusual circumstances like when the arbitrator exceeds their power by granting an irrational award or clearly disregarding the law. The Ninth Circuit Court of Appeals thus found that the arbitrator did not recognize the law and ignore it; rather, the law was unsettled at the time of arbitration and she failed to properly predict a future judicial decision. Therefore, the arbitrator did not act in a way that exhibited a “manifest disregard of law,” and the court affirmed her award and decision for Wulfe to proceed with his PAGA claim on an individual basis.
Application: Overturning the decision by an arbitrator is rare and cannot be requested when subsequent laws have been passed that now side in the Plaintiff’s favor.