(CN) - The 9th Circuit denied a move by some of the attorneys who negotiated a settlement in a multidistrict labor action against Wal-Mart to vacate a $28 million arbitration award for attorneys' fees.
In doing so the federal appeals court in San Francisco found that a non-appealability clause in an arbitration agreement cannot bar all federal court review.
Attorneys Carolyn Burton and Robert Bonsignore, among others, represented the plaintiffs in a wage-and-hour class action against the retailer that was settled for some $85 million in 2008.
Later, the Las Vegas District Court awarded $28 million in attorneys fees, but Burton and Bonsignore disagreed as to how the money should be allocated. They eventually agreed to submit to "binding, non-appealable arbitration", and in 2011 the arbitrator gave about $6 million to Burton and more than $11 million to Bonsignore, according to the ruling.
Burton moved to vacate the award, but U.S. District Judge Phillip Pro declined. The 9th Circuit affirmed on Tuesday, while also addressing a question of first impression in Bonsignore's argument that the award was not appealable.
Bonsignore had challenged the appellate court's jurisdiction to even consider the request for vacatur, citing the non-appealability clause in the parties' arbitration agreement.
A three-judge panel disagreed, finding that allowing parties to "contractually eliminate all judicial review of arbitration awards" would go against the Federal Arbitration Act (FAA) and congressional intent.
"Congress impressed limited, but critical, safeguards onto this process, ones that respected the importance and flexibility of private dispute resolution mechanisms, but at the same time barred federal courts from confirming awards tainted by partiality, a lack of elementary procedural fairness, corruption, or similar misconduct," wrote Judge Milan Smith for the unanimous panel.. "If parties could contract around this section of the FAA, the balance Congress intended would be disrupted, and parties would be left without any safeguards against arbitral abuse."
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