A refinery operator ("Wulfe"), sued his former employer alleging several employment related claims, including a claim under the California Private Attorneys General Act (PAGA). The court compelled arbitration, and the arbitrator ordered Wulfe to proceed with his PAGA claim on an individual basis. While that decision was pending on appeal before the Ninth Circuit, the California Supreme Court and the Ninth Circuit issued opinions (Iskanian and Sakkab, respectively) holding that agreements to waive the right to bring a representative PAGA claim are unenforceable. The Ninth Circuit then remanded this case to the district court to consider the intervening case law, directing "the district court to consider in the first instance Wulfe's argument that, in light of those subsequent decisions, the arbitrator's award should be vacated because she exceeded her powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made." The district court subsequently declined to vacate the award.
On appeal, the Ninth Circuit affirmed the district court's decision to let the award stand. The Ninth Circuit found that the arbitrator had not exceeded her powers by committing a "manifest disregard of the law." The Ninth Circuit explained that "the issue is not whether, with perfect hindsight, we can conclude that the arbitrator erred. Rather, the issue is whether the arbitrator recognized the applicable law and then ignored it." Because at the time the arbitrator ordered the PAGA claim to proceed on an individual basis the law was unsettled, there could have been no manifest disregard of the law. A failure "to correctly predict future judicial decisions" does not meet the test for "manifest disregard." Wulfe v. Valero Refining Co., Case No. 16-55824 (9th Cir. Apr. 19, 2017).
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