Calif. Court Lacks Authority to Review Merits of Arbitration Award

By Joanne Deschenaux, J.D. Jun 12, 2017
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​A court can review the merits of an arbitration award only when the parties to the arbitration have agreed clearly, in writing, to such court review, the California Court of Appeals has ruled.

In January 2008, Scott Ehredt, an actor, was hired by Medieval Knights to perform at its dinner theater in Buena Park. He signed a release giving Medieval Knights the right to use any photo or recording of him for any reason with no monetary compensation. In September 2011, Medieval Knights and Ehredt entered into an agreement providing for the binding arbitration of any work-related claims.

In December 2011, an outside production company that Medieval Knights hired conducted a two-day film shoot to create advertising materials, including a TV commercial. Ehredt was cast in the role of the king in the commercial, a speaking part. He received no other compensation other than his normal hourly wage.

In July 2013, Medieval Knights fired Ehredt. On Dec. 12, 2013, he filed a complaint in the Los Angeles Superior Court against Medieval Knights, raising numerous claims, including an allegation that the company's use, without compensation, of footage containing Ehredt in advertising materials violated California law.

The parties participated in an arbitration, and the arbitrator in September 2015 found that the release Ehredt signed was valid and enforceable, that he consented to the use of his image, and that nothing in California law voided the release. The arbitrator awarded Medieval Knights attorney fees and costs.

Medieval Knights filed a petition in the superior court seeking confirmation of the arbitration award. Ehredt filed a petition to vacate the award. The superior court granted Medieval Knights' petition to confirm the arbitration award and denied Ehredt's petition to vacate. He appealed.

No Review of Merits of Arbitrator's Decision

Ehredt claimed that Medieval Knights acted illegally and in violation of public policy by requiring him, as a condition of employment, to "assign his valuable proprietary right of voice and likeness," in perpetuity and for no compensation, to lessen Medieval Knights' advertising expenses.

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He contended that the arbitrator erred in validating these actions. The appellate court concluded that it had no authority to review the merits of the arbitrator's decision.

The California Arbitration Act and the Federal Arbitration Act authorize a court to vacate an arbitration award when the arbitrator exceeds his or her powers. In addition, parties to an arbitration agreement may agree on an expanded scope of judicial review, but that agreement must be unequivocal and explicit. In the absence of such clear language, a court may not review the merits of the award, the appellate court ruled.

The court found no such language in the arbitration agreement. The contract did provide as follows: "If a party claims that in making any award the arbitrator acted in manifest disregard of the law or otherwise exceeded the arbitrator's powers, the arbitrator's award" shall be judicially reviewable.

But the court concluded that the phrase "manifest disregard of the law" did not provide a basis for reviewing the award for legal error, and it found no language in the agreement that could be reasonably construed to provide for review of the arbitration award on the merits.

Ehredt v. Medieval Knights, Calif. Ct. App., No. B275833 (May 15, 2017).

Professional Pointer: Although California courts sometimes seem to go to great lengths to find an arbitration agreement unenforceable, if the agreement is not challenged—and an arbitration is held and a decision is reached—the courts are unlikely to disturb the final award.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.

 

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