In Jones v. Michaels Stores, Inc., (5th Cir., No. 20-30428, 3/15/2021), Jones invoked arbitration with her employer after she was fired, alleging violations of the company handbook. The arbitrator dismissed her claim based on Jones’ status as an employee-at-will. She then tried to sue the employer in federal court, challenging the same termination on a different theory – that it amounted to discrimination and retaliation in violation of Title VII. The lawsuit was stayed pending a second arbitration on that claim, and the second arbitrator ruled that res judicata barred the Title VII claims because they arose from the same transaction at issue in her first arbitration.
Jones then asked the trial court to vacate the arbitrator’s res judicata ruling, arguing the arbitrator manifestly disregarded Louisiana law in finding her new claim precluded. Assuming arguendo that manifest disregard of the law alone could allow a court to undo an arbitration award under the Federal Arbitration Act, the trial court held the arbitrator did not manifestly disregard state res judicata law.
On appeal, the 5th Circuit viewed this case as an opportunity to emphasize what the trial court had directly resolved, that “manifest disregard of the law as an independent, nonstatutory ground for setting aside an arbitration award must be abandoned and rejected.” Citing Citigroup Global. Mkts., Inc. v. Bacon, 562 F.3d 349, 358 (5th Cir. 2009). While recognizing the Supreme Court’s equivocation on whether manifest disregard of the law survives as an independent ground for vacatur in Stolt-Nielsen S.A. v. Animal Feeds Int’l Corp., 559 U.S. 662, 672 (2010), the court held its own precedent in Citigroup Global had concluded that issue had been firmly resolved. Thus, as Jones did not invoke any statutory ground for vacatur, her appeal could not overcome the court’s instruction that “arbitration awards under the FAA may be vacated only for reasons provided in Section 10” of the FAA.