Originally from World Arbitration And Mediation Review (WAMR)

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SECOND CIRCUIT VACATES ARBITRAL

AWARD AFTER FINDINGMANIFEST
DISREGARD OF THE LAW

In Porzig v. Dresdner,1 the United States Court of Appeals for the
Second Circuit reaffirmed its policy of affording arbitration tribunals
significant judicial deference with respect to arbitral awards, but it
nevertheless ruled that such awards will be vacated if rendered in manifest
disregard of the law.

Porzig was the Vice President of a subsidiary of the company Dresdner
Bank from December 1995 until January 1998. As a condition of
employment, Porzig was required to “arbitrate any dispute, claim, or
controversy that may arise between [himself] and [his] firm … [in
accordance with] the rules, constitutions, or by-laws of the NASD”, the
industry self-regulatory organization.2 Subsequent to his termination, Porzig
brought suit against Dresdner Bank and Dresdner Kleinwort, Benson, North
America LLC (“Dresdner”) in the Southern District of New York, alleging
age discrimination under the Age Discrimination in Employment Act
(“ADEA”).

The district court granted Dresdner’s motion to stay the action pending
the outcome of arbitration per the employment contract. The arbitration
panel (“Panel”) ruled in favor of Porzig and awarded him (U.S.) $220,079 in
compensatory and punitive damages plus interest. Contrary to the clear
mandate of the ADEA (which included a fee-shifting provision), however,
the Panel refused to grant Porzig’s attorney fees or costs and assessed (U.S.)
$13,840 against Porzig in forum, filing, and arbitrator’s fees. Porzig then
appealed to district court seeking to vacate or modify the Panel’s award.

The district court initially denied Porzig’s motion as to the costs. As for the
attorney’s fees, however, the district court ultimately held that the Panel’s
decision was made in manifest disregard of the law. As a result, the district
court reconsidered its decision as to the cost issue to conclude that the Panel
had “in fact disregarded the law” in this respect as well.3 The district court
therefore vacated the award and remanded the case to the Panel to calculate
attorney’s fees due to Porzig and to assess the (U.S.) $13,840 against the
defendants rather than Porzig.