In Warfield v. ICON Advisors, Inc., (4th Cir., No. 20-1690, 2/24/22), the Fourth Circuit Court of Appeals reversed the district court’s vacatur of an arbitration panel’s award, finding the defendant ICON had not established the panel’s award reflected manifest disregard of the law. The plaintiff Warfield was terminated from his employment with ICON, and filed a claim under the Financial Industry Regulatory Authority (“FINRA”) Rules for “wrongful termination without just cause”. Warfield argued that the mere fact his employment arbitration was covered by an arbitration agreement implied he could be fired only for just cause. After an 8-day hearing, the 3-member FINRA panel awarded $1,186,975.00 in compensatory damages on that claim.
The district court held North Carolina and Fourth Circuit precedent precluded Warfield’s wrongful termination without just cause claim. In reversing, the court of appeals held ICON had not made the required showing that (1) the disputed legal principle is clearly defined and not subject to reasonable debate; and (2) the arbitrator refused to apply that legal principle. As to the first issue, the court held there was authority from sister circuits which supported Warfield’s argument. Paine Webber Inc. v. Agron, 49 F.3d 347 (8th Cir. 1985) and Shearson Hayden Stone, Inc. v. Liang, 653 F.2d 310 (7th Cir. 1981). However, the court held that while there was a presumption of at-will employment in North Carolina, this arbitration argument had never been squarely addressed by North Carolina courts. ICON also made the argument that another case from the Fourth Circuit had criticized those rulings, but the court noted that case was not on point. As to the second factor, the court observed that the decision of the arbitration panel did not provide explanations for its analysis (although it could have been requested under FINRA rules). Accordingly, the court held while the arbitration panel was made aware of this argument, there was otherwise no evidence or explanation in the record to show the panel “refused to apply” the legal principle in question.