Fifth Circuit Denies Vacatur

In Quezada v. Bechtel OG & C Constr. Services, Inc., 946 F.3d 837 (5th Cir. 2020), the Fifth Circuit reminds us that vacatur under the Federal Arbitration Act (FAA) is a rare occurrence. 

In Quezada, Bechtel OG&C Construction Services (Bechtel) required its employees to participate in Bechtel’s Employee Dispute Resolution Program which provided that any employment dispute had to be arbitrated before the American Arbitration Association. Quezada and Bechtel jointly submitted their employment dispute to arbitration. Quezada alleged that Bechtel engaged in discrimination, failed to provide reasonable accommodations, and terminated her in retaliation for her complaints, all in violation of the Americans with Disabilities Act. After a three-day evidentiary hearing, the arbitrator issued an interim award finding that Bechtel had discriminated against Quezada by refusing to allow her to work overtime. However, the arbitrator found Quezada failed to show retaliatory termination because she accepted a voluntary layoff. The arbitrator awarded Quezada $500 in nominal damages for Bechtel’s denial of her overtime opportunities. 

Quezada moved for reconsideration of the interim award. The arbitrator granted reconsideration, stating that he had overlooked key evidence. In the final award, the arbitrator again found that Quezada had shown discrimination in Bechtel’s failure to accommodate her disability based on the denial of overtime, but that her termination did not violate the ADA. However, the arbitrator awarded Quezada $41,944 in back pay (pre-hearing earnings since termination), $50,440 in front pay (projected future earnings), $6,000 in compensatory damages for depression, anxiety, trouble sleeping and PTSD due to Bechtel’s treatment of her, $500 in nominal damages for denying her the opportunity to work overtime, $197,797.06 in prevailing party’s attorneys’ fees and costs, and $98,934.25 in pre- and post-judgment interest. The arbitrator’s final award totaled $395,615.31. 

Bechtel moved for vacatur, or in the alternative modification, of the award in the Southern District of Texas. It argued that the arbitrator exceeded its authority in awarding back and front pay, compensatory damages, and prevailing attorneys’ fees because the arbitrator found Quezada’s termination was not unlawful. Furthermore, Bechtel argued that the arbitrator’s reconsideration of the initial award exceeded his authority. 

Rejecting Bechtel’s arguments, the Fifth Circuit first found that the district court had authority under the FAA to resolve the parties’ motions to compel, confirm, or vacate the award. It held that Bechtel’s contention that the arbitrator failed to follow the law in deciding the underlying dispute was a claim of disregard for the law that could not support vacatur of an arbitration award. The Fifth Circuit also found that the arbitrator had the right to reconsider the original arbitration award as it did in this case. The Fifth Circuit rejected Bechtel’s argument that the arbitrator’s reconsideration warranted a vacatur because Bechtel’s dispute resolution program specifically allowed claimants to file motions to reconsider an award.

The decision by the Fifth Circuit demonstrates once again that vacatur of an arbitration award is rare. It also shows that, although reconsideration of an award is generally not allowed, the parties may agree to arbitration rules that permit it.