Faced with a manifest disregard challenge in an employment dispute, a federal district court in Oregon confirmed a clause construction award whereby the arbitrator found that an earlier arbitration agreement governed the dispute and that a class waiver in the subsequent arbitration agreement was unenforceable under Oregon law.

In Labor Ready Northwest, Inc. v. Crawford, Civil No. 07-1060-HA, 2008 WL 1840749 (D. Or. Apr. 21, 2008), Crawford worked for two subsidiaries of Labor Ready: (1) Labor Ready Northwest (LRNW) and (2) Labor Ready Mid-Atlantic (LRMA). His arbitration agreement with LRNW, signed in 2001, was silent on the permissibility of class arbitration. His arbitration agreement with LRMA, signed in 2005, barred class arbitration.

In 2006, Crawford filed an arbitration claim against LRNW for alleged violations of Oregon labor law. He brought the claim both as an individual and on behalf of a proposed class. The arbitrator issued a clause construction award, finding that the 2001 arbitration agreement governed the dispute and that the class waiver in 2005 arbitration agreement was unenforceable under Oregon law.

LRNW filed a motion to vacate the award, arguing that the arbitrator erred in finding that the 2005 arbitration agreement was inapplicable and that the class waiver was unenforceable. The Court rejected these arguments because LRNW failed to demonstrate manifest disregard of the law as required for vacatur in this instance.

Specifically, according to the Court, the arbitrator applied principles of contract interpretation in finding that the 2001 agreement, rather than the 2005 agreement, governed the dispute, and the arbitrator provided a lengthy explanation for finding the class waiver unenforceable under Oregon law.

Since LRNW failed to demonstrate manifest disregard of the law, the Court denied the motion to vacate and confirmed the clause construction award.