Kiran Dewan, CPA, P.A. v. Arun Walia

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2175
KIRAN M. DEWAN, CPA, P.A., a Maryland close corporation;
KIRAN MOOLCHAND DEWAN, a citizen of Maryland,
Plaintiffs-Appellants,
v.
ARUN WALIA, a non-resident alien, citizen of Canada,
Defendant-Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Richard D. Bennett, District Judge.
(1:11-cv-02195-RDB)
Argued: September 18, 2013 Decided: October 28, 2013
Before DAVIS, WYNN, and DIAZ, Circuit Judges.
Vacated and remanded by unpublished per curiam opinion. Judge
Wynn wrote a dissenting opinion.
ARGUED: Paul Steven Schleifman, SCHLEIFMAN AND KOMIS PLLC,
Arlington, Virginia, for Appellants. Mark G. Chalpin, MARK G.
CHALPIN, ESQUIRE, Gaithersburg, Maryland, for Appellee. ON
BRIEF: Ramesh Khurana, THE KHURANA LAW FIRM, LLC, Rockville,
Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Kiran Dewan and his close corporation, Kiran M. Dewan, CPA,
P.A. (“the Company”) (collectively, “Appellants”), appeal from
the district court’s confirmation of an arbitral award in favor
of the Company’s former employee, Appellee Arun Walia. Walia
came to the United States from Canada in 2003 on an employment
visa to work for the Company as an accountant. 1 By 2009, the
parties agreed to a parting of the ways, in connection with
which Walia executed a broadly worded Release Agreement (“the
Release”) in consideration for the Company’s payment of $7,000.
The parting proved less than amicable. In January 2010,
Appellants filed a demand for arbitration against Walia,
alleging that Walia breached the noncompetition/nonsolicitation
provisions in his employment agreement. Despite the Release,
Walia asserted numerous counterclaims in the arbitral forum,
primarily alleging that the Company had underpaid him during his
employment and that Appellants had run afoul of federal
immigration law attendant to the visa program. The Arbitrator
found in favor of Walia on Appellants’ original claims. She also
1
Appellant Kiran M. Dewan is an attorney as well as a CPA,
and he represented Walia in connection with the application and
processing of the latter’s non-immigrant work visa. In Spring
2013 Dewan was named with others in an indictment filed in the
District of Maryland charging conspiracy to bribe an immigration
official in order to obtain lawful permanent residence,
employment authorization documents, and green cards.
2
concluded, however, that the Release was valid and enforceable,
but nevertheless made a substantial monetary award in Walia’s
favor, holding Appellants jointly and severally liable.
In due course, the parties filed opposing petitions to
vacate and to confirm/enforce the award in federal district
court. The district court confirmed the award and granted
Walia’s motion for attorney’s fees and costs.
For the reasons that follow, we hold that the award in
favor of Walia is the product of a manifest disregard of the law
by the Arbitrator. Accordingly, we vacate the judgment and
remand to the district court with instructions to vacate the
award.
I.
A.
Walia, a Canadian national, came to the United States in
2003 on an employment visa to work for the Company as an
accountant. He entered into a three-year employment agreement.
In 2006, Walia and the Company entered into a second three-year
employment agreement (“the 2006 Employment Agreement”) extending
through March 23, 2009. The 2006 Employment Agreement included
nonsolicitation and noncompetition provisions, as well as a
broad arbitration provision. Dewan signed it in his capacity as
president of the Company.
3
In February and March 2009, Walia underwent treatment for
thyroid cancer. On approximately March 14, 2009 (as the
termination date for the 2006 Employment Agreement approached),
the Company’s office manager, Veena Sindwani (who was also
Dewan’s wife), went to the intensive care unit to see Walia. The
parties dispute the events occurring in the hospital. Walia
contended (and the Arbitrator later found) that Sindwani
presented him with a new employment agreement, which he signed.
Appellants contended that no such agreement existed.
In any event, Walia continued to work for the Company
through at least August 21, 2009. The parties vigorously dispute
the circumstances surrounding the termination of Walia’s
employment. This much is undisputed: Though no termination
letter was ever sent to Walia, on November 3, 2009, Walia
executed the Release, which “release[d] and discharge[d]”
Appellants from claims related to Walia’s employment in exchange
for $7,000. J.A. 250-52. 2 The Release provided for “binding
arbitration” should a dispute arise concerning the Release or
its performance. J.A. 251. As with the 2006 Employment
Agreement, Dewan signed it in his capacity as president of the
Company.
B.
2
The text of the Release is set forth infra pages 15-16.
4
Less than three months after Walia executed the Release, on
January 29, 2010, Dewan initiated arbitration proceedings
against Walia with the American Arbitration Association. Dewan
asserted that Walia “breached an employment agreement by
competing with and soliciting the clients of the employer,” and
“breached a settlement and release agreement by making various
claims against the Employer (Claimant).” J.A. 21. 3
Walia asserted several counterclaims. He alleged, among
other things, that (1) based on his years of accounting
experience he was underpaid (in apparent violation of the
relevant immigrant work visa regulations) during his time at the
Company; (2) the Company breached the profit-sharing terms of
the 2006 Employment Agreement; and (3) Dewan, Walia’s
immigration attorney of record, fraudulently sought to withdraw
Walia’s employment authorization.
The Arbitrator conducted four days of hearings in 2011 and
issued a so-called interim award (“the Interim Award”) in
Walia’s favor. The Arbitrator found, among other things, that
(1) no cognizable claims survived the employment
agreements from 2003 and 2006 based on the applicable
statute of limitations;
3
Walia had filed an administrative complaint with the
United States Department of Labor asserting that he was not paid
the appropriate “required wage” as mandated by the non-immigrant
employment visa program. See 8 U.S.C. §§ 1182(a)(5)(A), 1182(n);
20 C.F.R. §§ 655.731, 655.731(a)(1) and (a)(2).
5
(2) “there [was] a viable Employment Agreement drafted
by [Dewan] and signed by [Walia] on March 14, 2009
[during the hospital visit],” which Dewan had simply
refused to produce;
(3) “NO termination letter was ever sent” by Dewan,
and therefore the employment relationship continued
through the date of the arbitration proceedings;
(4) Dewan’s claims that Walia solicited the Company’s
clients and used the Company’s confidential materials
in an unauthorized manner were “baseless”;
(5) Walia “voluntarily” signed the Release and
thereafter negotiated checks totaling the $7,000 paid
by Dewan for the Release, and Walia was therefore
“legally bound” by the Release to the extent that it
barred “all tort and contractual claims in federal or
state courts as well as attorney’s fees”;
(6) the continuing “employment relationship” allowed
for an award of compensatory damages stretching back
to 2003 despite the bar of the statute of limitations;
(7) punitive damages were justified because Dewan
“purposefully harmed” Walia’s immigration interest by
failing to tell Walia prior to withdrawing the
Company’s sponsorship of him as required by federal
law, and because Walia “had to defend himself” against
Appellants’ “baseless claims”;
(8) tax returns that Dewan provided in discovery were
significantly different than those Dewan submitted to
the U.S. Department of Labor (“the DOL”);
(9) the statutory remedies for failure to pay
prevailing wages under the Immigration and Nationality
Act (“INA”) were not exclusive, and the Arbitrator
could order damages based on a violation of the INA;
and
(10) the Arbitrator had given the award “interim”
status to “await . . . guidance in this case from
DOL’s investigation” of Appellants.
J.A. 60-69.
6
On November 18, 2011, the Arbitrator issued a final award
(“the Final Award”). The Arbitrator first recounted a series of
developments since the Interim Award. These included a finding
that Dewan “was a party to fraud” based on the differences
between documents obtained by Walia through FOIA requests and
documents provided in discovery. J.A. 189. The Arbitrator then
awarded Walia $387,108.20 in compensatory damages and $70,000 in
punitive damages, and found that Dewan and the Company were
jointly and severally liable for the combined $457,108.20.
On December 16, 2012, Appellants filed an amended complaint
in their previously filed federal court action challenging the
Final Award. 4 Eventually thereafter, Walia filed a petition to
confirm and enforce the Final Award.
4
Curiously, Appellants did not simply file a petition to
vacate the award, but instead filed a civil complaint asserting
ten “claims” in separately numbered “counts” pursuant to the
Maryland Uniform Arbitration Act (“the MUAA”), Md. Code Ann.,
Cts. & Jud. Proc. § 3-201 et seq.: (1) the Arbitrator lacked
authority to order Dewan personally liable because no
arbitration agreement existed between Dewan and Walia; (2) the
Arbitrator exceeded her powers and reached an irrational result
by ordering damages despite finding the Release enforceable; (3)
the Arbitrator’s award was the product of “undue means” because
of its alleged irrationality; (4) the Arbitrator showed
partiality to Walia and demonstrated misconduct prejudicing
Appellants’ rights; (5) the Arbitrator refused to hear evidence
material to the controversy; (6) the Arbitrator was not
permitted to award attorney’s fees in the form of punitive
damages; (7) the Arbitrator unlawfully asserted “continuing
jurisdiction” over the controversy; (8) there was no 2009
employment agreement, and therefore no agreement to arbitrate
claims arising from Walia’s employment after the three-year
(Continued)
7
The district court first denied Appellants’ petition to
vacate the Final Award. Kiran M. Dewan, CPA, P.A. v. Walia, 2012
WL 3156839 (D. Md. Aug. 3, 2012). The court noted its severely
circumscribed role in reviewing an arbitration award, and the
limited grounds for vacating such an award. The court stated
that Appellants’ federal-court claims “are almost identical to
the ones presented before the arbitration tribunal,” and that in
bringing the claims Appellants “[e]ssentially . . . have asked
[the court] to second-guess the well-reasoned award . . . .” Id.
at *9. The court concluded that there was “substantial support
for the decisions made by the arbitrator, that the arbitrator
did not go beyond the scope of the submissions, and that the
arbitrator’s determinations were not arbitrary.” Id. at *10. The
court further concluded that Appellants did not “meet their
heavy burden of proof with respect to any of the applicable
grounds to vacate an arbitration award under the MUAA.” Id.Appellants filed a motion for reconsideration. The district
court issued a memorandum order denying that motion and granting
period of the 2006 Employment Agreement; (9) the Arbitrator was
prohibited from awarding punitive damages because the 2006
Employment Agreement’s arbitration provision did not expressly
provide for arbitration of punitive damages; and (10) by filing
a DOL action against the Company for unpaid wages, wage
shortfalls, and other allegedly unlawful employment conditions,
Walia waived any right to arbitrate those claims. J.A. 126-54.
8
Walia’s petition to confirm and enforce the award. Kiran M.
Dewan, CPA, P.A. v. Walia, 2012 WL 4356783 (D. Md. Sept. 21,
2012). On October 16, 2012, the court granted Walia’s motion for
attorney’s fees and costs. Kiran M. Dewan, CPA, P.A. v. Walia,
2012 WL 4963827 (D. Md. Oct. 16, 2012).
Appellants timely noticed this appeal.
II.
A.
On appeal from the district court’s evaluation of an
arbitral award, “[w]e review the district court’s findings of
fact for clear error and its conclusions of law, including its
decision to vacate [or confirm] an arbitration award, de novo.”
Raymond James Fin. Servs., Inc. v. Bishop, 596 F.3d 183, 190
(4th Cir. 2010).
B.
As an initial matter, we must determine what body of law
controls the resolution of this appeal. The parties’ arguments
are all based on the MUAA, Maryland’s analogue to the Federal
Arbitration Act (“the FAA”), 9 U.S.C. § 1 et seq. The district
court acquiesced in the parties’ invocation of the MUAA. At oral
argument before us, however, the parties were unable to explain
why the FAA should not control.
The FAA “supplies not simply a procedural framework
applicable in federal courts; it also calls for the application,
9
in state as well as federal courts, of federal substantive law
regarding arbitration.” Preston v. Ferrer, 552 U.S. 346, 349
(2008). Under § 2 of the FAA, “[a] written provision in . . . a
contract evidencing a transaction involving commerce to settle
by arbitration a controversy thereafter arising out of such
contract or transaction . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract.” 9 U.S.C. § 2.
The Supreme Court has
interpreted the term “involving commerce” in the FAA
as the functional equivalent of the more familiar term
“affecting commerce”--words of art that ordinarily
signal the broadest permissible exercise of Congress’
Commerce Clause power. Because the statute provides
for “the enforcement of arbitration agreements within
the full reach of the Commerce Clause,”. . . it is
perfectly clear that the FAA encompasses a wider range
of transactions than those actually “in commerce”--
that is, “within the flow of interstate commerce.”
Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003)
(internal citations omitted). Commerce includes foreign
commerce. See Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01
(4th Cir. 2002) (noting that a litigant can compel arbitration
under the FAA if able to demonstrate, among other things, “the
relationship of the transaction . . . to interstate or foreign
commerce . . . .”). The relevant transactions here are the non-
immigrant employment application process leading to, and the
ultimate execution by the parties of, the 2003 and 2006
10
employment contracts, and, as well, the execution in 2009 of the
Release by Walia, a Canadian national. Subject matter
jurisdiction plainly exists because Walia is a Canadian
national, but “diversity of citizenship--or lack thereof--is not
by itself enough to determine the nature of a transaction . . .
.” Rota-McLarty v. Santander Consumer USA, Inc., 700 F.3d 690,
697 (4th Cir. 2012). Here, though, the transactions involving
the employment of a Canadian national by an American company
pursuant to federal immigration law clearly involved foreign
commerce.
The Release states that it “shall be construed and enforced
in accordance with the laws of the State of Maryland,” J.A. 251,
and the 2006 Employment Agreement states that it “shall be
governed by and construed according to the laws of the State of
Maryland applicable to agreements to be wholly performed
therein,” J.A. 248. But “a contract’s general choice-of-law
provision does not displace federal arbitration law if the
contract involves interstate [or foreign] commerce.” Rota-
McLarty, 700 F.3d at 698 n.7; see also Porter Hayden Co. v.
Century Indem. Co., 136 F.3d 380, 383 (4th Cir. 1998) (finding
that a similar choice-of-law provision could “reasonably be read
merely as specifying that Maryland substantive law be applied to
resolve disputes arising out of the contractual relationship,”
and “absent a clearer expression of the parties’ intent to
11
invoke state arbitration law, we will presume that the parties
intended federal arbitration law to govern the construction of
the Agreement’s arbitration clause”). The term “evidencing a
transaction” in § 2 of the FAA “requires only that the
transaction in fact involved interstate commerce, not that the
parties contemplated it as such at the time of the agreement.”
Rota-McLarty, 700 F.3d at 697.
In short, because the employment contracts and the Release
evidence and arise out of transactions involving foreign
commerce, we hold that the FAA controls.
III.
Appellants argue, among other things, that the arbitration
award must be vacated because it is the product of the
Arbitrator’s manifest disregard of the law. Specifically, they
contend that the Arbitrator could not find the Release valid and
enforceable but nevertheless make an award to Walia on claims
arising out of his employment with the Company. We are
constrained to agree.
“Judicial review of an arbitration award in federal court
is ‘substantially circumscribed.’” Three S Del., Inc. v.
DataQuick Info. Sys., Inc., 492 F.3d 520, 527 (4th Cir. 2007)
(citation omitted). In fact, “‘the scope of judicial review for
an arbitrator’s decision is among the narrowest known at law
because to allow full scrutiny of such awards would frustrate
12
the purpose of having arbitration at all--the quick resolution
of disputes and the avoidance of the expense and delay
associated with litigation.’” MCI Constructors, LLC v. City Of
Greensboro, 610 F.3d 849, 857 (4th Cir. 2010) (quoting Three S
Del., 492 F.3d at 527). “In order for a reviewing court to
vacate an arbitration award, the moving party must sustain the
heavy burden of showing one of the grounds specified in the
[FAA] or one of certain limited common law grounds.” Id.The grounds specified in the FAA are: “(1) where the award
was procured by corruption, fraud, or undue means; (2) where
there was evident partiality or corruption in the arbitrators,
or either of them; (3) where the arbitrators were guilty of
misconduct . . . ; or (4) where the arbitrators exceeded their
powers, or so imperfectly executed them that a mutual, final,
and definite award upon the subject matter submitted was not
made.” 9 U.S.C. § 10(a).
“The permissible common law grounds for vacating such an
award ‘include those circumstances where an award fails to draw
its essence from the contract, or the award evidences a manifest
disregard of the law.’” MCI Constructors, 610 F.3d at 857(citation omitted). 5 “Under our precedent, a manifest disregard
5
In the wake of the Supreme Court’s decision in Hall Street
Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (2008), this court
has recognized that considerable uncertainty exists “as to the
(Continued)
13
of the law is established only where the ‘arbitrator[ ]
understand[s] and correctly state[s] the law, but proceed[s] to
disregard the same.’” Patten v. Signator Ins. Agency, Inc., 441
F.3d 230, 235 (4th Cir. 2006) (citation omitted). Merely
misinterpreting contract language does not constitute a manifest
disregard of the law. Id. An arbitrator may not, however,
disregard or modify unambiguous contract provisions. Id.“Moreover, an award fails to draw its essence from the agreement
if an arbitrator has ‘based his award on his own personal
notions of right and wrong.’ . . . In such circumstances, a
federal court has ‘no choice but to refuse enforcement of the
award.’” Id. (citations omitted).
Here, Walia agreed to “release and discharge” Appellants
from claims related to Walia’s employment in exchange for
$7,000. J.A. 250-52. The expansive breadth and scope of the
Release are plainly reflected in its plain language, which we
set forth in full:
continuing viability of extra-statutory grounds for vacating
arbitration awards.” Raymond James, 596 F.3d at 193 n.13.
Nevertheless, we have recognized that “manifest disregard
continues to exist” as a basis for vacating an arbitration
award, either as “an independent ground for review or as a
judicial gloss” on the enumerated grounds for vacatur set forth
in the FAA. Wachovia Secs., LLC v. Brand, 671 F.3d 472, 483 (4th
Cir. 2012).
14
3. Release. EMPLOYEE, on behalf of himself and his
representatives, spouse, agents, heirs and assigns
releases and discharges COMPANY and COMPANY’S former,
current or future officers, employees,
representatives, agents, fiduciaries, attorneys,
directors, shareholders, insurers, predecessors,
parents, affiliates, benefit plans, successors, heirs,
and assigns from any and all claims, liabilities,
causes of action, damages, losses, demands or
obligations of every kind and nature, whether now
known or unknown, suspected or unsuspected, which
EMPLOYEE ever had, now has, or hereafter can, shall or
may have for, upon or by reason of any act,
transaction, practice, conduct, matter, cause or thing
or any kind whatsoever, relating to or based upon, in
whole or in part, any act, transaction, practice or
conduct prior to the date hereof, including but not
limited to matters dealing with EMPLOYEE’S employment
or termination of employment with the COMPANY, or
which relate in any way to injuries or damages
suffered by EMPLOYEE (knowingly or unknowingly). This
release and discharge includes, but is not limited to,
claims arising under federal, state and local
statutory or common law, including, but not limited
to, the Age Discrimination in Employment Act (“ADEA”),
Title VII of the Civil Rights Act of 1964, claims for
wrongful discharge under any public policy or any
policy of the COMPANY, claims for breach of fiduciary
duty, and the laws of contract and tort; and any claim
for attorney’s fees. EMPLOYEE promises never to file a
lawsuit or assist in or commence any action asserting
any claims, losses, liabilities, demands, or
obligations released hereunder.
4. Known or Unknown Claims. The parties understand
and expressly agree that this AGREEMENT extends to
all claims of every nature and kind, known or
unknown, suspected or unsuspected, past, present,
or future, arising from or attributable to any
conduct of the COMPANY and its successors,
subsidiaries, and affiliates, and all their
employees, owners, shareholders, agents, officers,
directors, predecessors, assigns, agents,
representatives, and attorneys, whether known by
EMPLOYEE or whether or not EMPLOYEE believes he
may have any claims and that any and all
rights granted to EMPLOYEE under the Annotated Code
15
of Maryland or any analogous state law or federal
law or regulations, are hereby expressly WAIVED.
J.A. 250-51. As noted above, the Release provided for “binding
arbitration” should a dispute arise concerning the Release or
its performance. J.A. 251.
In the Interim Award, the Arbitrator rejected Walia’s
argument that the Release was unconscionable. She then found
that Walia
knew he was signing a release and chose to sign it.
However, he did not know the legal consequences nor
the significance of his signature. However, he
voluntarily signed it but without consulting an
attorney and is now legally bound. Accordingly, all
[Walia’s] rights for all tort and contractual claims
in federal or state courts as well as attorney’s fees
are now waived.
J.A. 66. The Arbitrator also found that Walia had negotiated the
checks “for the composite amount of the Release . . . .” J.A.
66; see also J.A. 69 (“All claims involving Solicitation,
Covenant not to Compete and unauthorized release of Confidential
Data from the Claimant’s CPA firm are dismissed except for the
valid execution of the Release (2009) based on Maryland law.
Accordingly, [Walia] is precluded from bringing all tort and
contractual claims in state and federal courts as well as being
precluded from receiving attorney’s fees.”); J.A. 190 (same, in
Final Award).
In sum, the Arbitrator appears to have concluded that the
Release sufficed to extinguish Walia’s common law and state and
16
federal statutory claims if they were brought in state or
federal court, but did not extinguish some or all of such claims
if they were brought in an arbitral forum. We find untenable the
Arbitrator’s attempt to parse the language of the Release so
finely.
We agree with Appellants that in purporting to construe
“the release and waiver provision to apply only to tort and
contractual claims Walia might file in federal or state court,”
the Arbitrator “rewr[ote] the release, which expressly
‘includes, but is not limited to, claims arising under federal,
state and local statutory or common law,’ and imposes no
qualifications whatsoever concerning the forum in which those
released claims could have been brought.” Appellants’ Br. at 37.
We have no doubt that Maryland law accords with Appellants’
contentions. See Herget v. Herget, 573 A.2d 798, 801 (Md. 1990)
(stating that a broad settlement agreement purporting to release
all claims, whether known or unknown, is enforceable); Bernstein
v. Kapneck, 430 A.2d 602, 606 (Md. 1981). 6
6
Marcus v. Rapid Advance, LLC, 2013 WL 2458347, at *6 (E.D.
Pa. June 7, 2013), succinctly summarized Maryland courts’
approach to the interpretation of broad releases:
Under Maryland law, releases are contracts that
are read and interpreted under ordinary contract
principles--including, inter alia, the parol evidence
rule. Bernstein v. Kapneck, 290 Md. 452, 458–59, 430
A.2d 602 (1981). In Bernstein, the Maryland Court of
(Continued)
17
The Arbitrator’s finding that the Release was valid and
enforceable forecloses all of Walia’s arguments on appeal that
the Release was unconscionable. 7 We do not know how the
Arbitrator reached her interpretation of the Release. However,
it is clear to us that neither linguistic gymnastics, nor a
selective reading of Maryland contract law, could support her
conclusion that the Release was enforceable but that Walia’s
claims were arbitrable anyway.
Appeals set out three principles that underlie this
conclusion: (1) in the absence of legal barriers,
“parties are privileged to make their own agreement
and thus designate the extent of the peace being
purchased;” (2) in a time of “burgeoning litigation,”
private settlement of disputes is to be encouraged,
and “a release evidencing accord and satisfaction is a
jural act of exhalted significance which without
binding durability would render the compromise of
disputes superfluous, and accordingly unlikely,” and
(3) according to conventional rules of construction,
when a release is stated in clear and unambiguous
language, the words should be given their ordinary
meaning. Id. at 459–60, 430 A.2d 602. Accordingly, the
Court of Appeals instructs that courts interpret
releases based on their clear, objective language.
7
These arguments include that (1) the payment of $7,000
violated Maryland law “by paying Walia much less than he was
owed at the alleged termination of his employment in August
2009”; (2) “Dewan failed to advise Walia to seek independent
counsel before signing” the Release; and (3) Dewan engaged in
“fraudulent and malicious actions both in coercing Walia to sign
the Release Agreement and then in presenting evidence in
arbitration in seeking to enforce the Release Agreement without
paying Walia wages owed him.” Appellee’s Br. at 34-35.
18
Objectively viewed, the language of the Release could not
be more expansive, clear, or unambiguous. The plain language of
the Release fatally undermines the suggestion that Walia
retained the right to bring any of his counterclaims in
arbitration. The Release waived all claims stemming from his
employment relationship with the Company, regardless of forum.
Accordingly, we hold that the Arbitrator manifestly disregarded
the law by holding the Release valid and enforceable but
nevertheless arbitrating Walia’s counterclaims arising out of
his employment with the Company. 8
8
Our disposition of this appeal renders it unnecessary for
us to determine whether our holding in Venkatraman v. REI
Systems, Inc., 417 F.3d 418, 422-24 (4th Cir. 2005), that a U.S.
citizen has no private cause of action against his former
employer under the INA, applies to a foreign national who is the
beneficiary of the visa program. Relatedly, we need not consider
whether, even if no such claim lies in a judicial forum, such a
claim might lie in an arbitral forum. We simply hold that under
the Arbitrator’s finding that the Release is valid and
enforceable, she acted in manifest disregard of controlling
Maryland law in carving out an exception for some claims that,
as she viewed the matter, were retained by Walia.
In any event, Walia concedes that he in fact fully pursued
his “required wage” claim before the DOL and that the agency
found “no violation” by the Company. See Appellee’s Br. at 27.
Accordingly, as Walia further concedes, “The compensatory
damages awarded by the Arbitrator are based on the agreements
between the parties . . . .” Id. at 33. In light of this
concession, the conclusion is inescapable that even though the
Arbitrator purported to adjudicate and award damages pursuant to
an ostensible statutory claim under the INA, it is clear that
she in fact awarded damages “based on the agreements between the
parties.” But as the Arbitrator earlier found, the contractual
(Continued)
19
IV.
For the reasons set forth, we vacate the judgment and
remand with instructions that the district court vacate the
award.
VACATED AND REMANDED
claims had been extinguished by the Release and could not
support an award of damages.
20
WYNN, Circuit Judge, dissenting:
Our review of an arbitrator’s award is so “severely
circumscribed” that it is “among the narrowest known at law.”
Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d
188, 193 (4th Cir. 1998) (footnote omitted). Not surprisingly,
then, even an “erroneous interpretation of the agreement in
question” cannot serve as a basis for vacating an arbitration
award. Id. at 194. Instead, “[a]s long as the arbitrator is
even arguably construing or applying the contract[,] a court may
not vacate the arbitrator’s judgment.” Upshur Coals Corp. v.
United Mine Workers of Am., Dist. 31, 933 F.2d 225, 229 (4th
Cir. 1991) (quotation marks omitted).
In this case, the arbitrator interpreted a release
agreement stating that Arun Walia promised “never to file a
lawsuit or assist in or commence any action” related to his
employment as applying to claims in courts but not to disputes
in arbitrations. J.A. 250-51, 66. Because the arbitrator’s
interpretation, which more than arguably applies the contract,
does not manifestly disregard the law, I cannot support
overthrowing the arbitrator’s award on that basis. Accordingly,
I must respectfully dissent.
I.
As the majority notes, Kiran Dewan employed Walia in 2003,
but they parted ways in 2009. At the time they parted, Dewan,
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an attorney, drafted a release agreement that Walia ultimately
signed. Under the agreement, Walia “release[d]” and
“discharge[d]” claims against Dewan, promising “never to file a
lawsuit or assist in or commence any action” relating to his
employment. J.A. 250-51. In exchange, Dewan paid Walia $7,000.
The arbitrator concluded that the release agreement was
“valid and enforceable” and “[a]ccordingly, all [Walia’s] rights
for all . . . claims in federal or state courts as well as
attorney’s fees are now waived.” J.A. 66. In other words, the
arbitrator concluded that the agreement released Dewan only as
to claims asserted in court, not disputes brought to an arbitral
forum.
II.
“As we have made clear repeatedly: Judicial review of an
arbitration award in federal court is substantially
circumscribed.” Raymond James Fin. Servs., Inc. v. Bishop, 596
F.3d 183, 190 (4th Cir. 2010) (quotation marks and omitted).
Indeed, “the scope of judicial review for an arbitrator’s
decision is among the narrowest known at law because to allow
full scrutiny of such awards would frustrate the purpose of
having arbitration at all-the quick resolution of disputes and
the avoidance of the expense and delay associated with
litigation.” Id. (quotation marks omitted).
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We have consistently emphasized that, in reviewing an
arbitration award, “a district or appellate court is limited to
determine whether the arbitrators did the job they were told to
do-not whether they did it well, or correctly, or reasonably,
but simply whether they did it.” Id. (quotation marks omitted).
Thus, in reviewing an arbitrator’s contract interpretation, a
court “must uphold it so long as it draws its essence from the
agreement.” Upshur Coals Corp., 933 F.2d at 229 (quotation
marks omitted). Stated differently, “[a]s long as the
arbitrator is even arguably construing or applying the
contract[,]” the reviewing court’s conviction that the
arbitrator committed “serious error does not suffice to overturn
his decision.” Long John Silver’s Rests., Inc. v. Cole, 514
F.3d 345, 349 (4th Cir. 2008) (quotation marks omitted).
III.
In this case, the arbitrator reasonably interpreted the
agreement to release suits in court but not disputes in
arbitration. The release agreement specifically barred
“lawsuits” and “actions.” J.A. 250-51. Neither term is defined
in the release agreement. However, both terms are generally
understood to mean proceedings in a judicial forum, not
arbitration. See UBS Fin. Servs., Inc. v. Carilion Clinic, 706
F.3d 319, 329-30 (4th Cir. 2013) (noting that the phrase
“actions and proceedings” is generally construed as a judicial
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proceeding and does not encompass arbitration); see also Black’s
Law Dictionary 32, 1572 (9th ed. 2009) (defining “action” as
“[a] civil or criminal judicial proceeding” and “lawsuit” as
“[a]ny proceeding by a party or parties against another in a
court of law”). Nowhere did the release agreement state that it
barred arbitration. I cannot agree with the majority that
interpreting the agreement as releasing suits in court but not
arbitration requires “linguistic gymnastics,” ante at 19, or an
“untenable” attempt to “finely” “parse” the release. Ante at
17.
In contrast to the arbitrator, the majority interprets the
agreement as releasing all claims regardless of forum. This
interpretation, too, is reasonable and arguably “may be the more
logical one.” Atalla v. Abdul-Baki, 976 F.2d 189, 194 (4th Cir.
1992) (concluding that a settlement agreement read as a whole
did not unambiguously release the plaintiff’s claims, despite
inclusion of “an all-encompassing release clause,” id. at 193).
But it is not the only one. Cf. id. at 193-94. The arbitrator
thus did not “disregard or modify unambiguous contract
provisions,” ante at 14, and vacatur on that basis is thus
unjustified.
Further, I cannot agree with the majority’s statement that
the release agreement “could not be more expansive, clear, or
unambiguous.” Ante at 19. Indeed, the release agreement could
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have “release[d]” and “discharge[d]” all claims and disputes not
just in the form of “lawsuit[s]” or “actions” but “in any and
all forms and in any and all fora.” J.A. 250-51. Or it could
have made clear that Walia “promised never to file a lawsuit, or
assist in or commence any action or arbitration or any other
form of dispute for adjudication in any forum whatsoever.” But
it did not.
Because the arbitrator unquestionably construed the release
agreement at issue, we are not at liberty to substitute our
preferred interpretation for the arbitrator’s. Upshur Coals
Corp., 933 F.2d at 229 (“As long as the arbitrator is even
arguably construing or applying the contract[,] a court may not
vacate the arbitrator’s judgment.” (quotation marks omitted)).
“[V]acatur of an arbitration award is, and must be, a rare
occurrence . . . .” Raymond James Fin. Servs., Inc., 596 F.3d
at 184. The contract interpretation dispute here simply does
not present that rare circumstance justifying our overthrowing
an arbitration award. Consequently, I respectfully dissent.
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