A federal district court in New York held that in light of the U.S. Supreme Court's recent decision in Hall Street v. Mattel, the "manifest disregard of the law" standard is no longer a basis for vacating arbitration awards in the Second Circuit.

In Robert Lewis Rosen Associates, Ltd. v. Webb, No. 07 Civ. 11403, 2008 WL 2662015 (S.D.N.Y. July 7, 2008), Robert Lewis Rosen Associates (RLR) contracted with Webb to represent Webb and manage his career as a director of televised sporting events. A dispute arose between the parties, and Webb refused to pay RLR's fees, so RLR commenced arbitration against Webb.

The arbitrator issued an award in favor of RLR for its unpaid fees in 2003. Webb subsequently refused to pay the award, but after approximately twelve adjudicative proceedings in three states, RLR was finally able to enforce the award, and Webb paid it. RLR then commenced another arbitration seeking recovery of its legal fees incurred while enforcing the 2003 award.

The arbitrator dismissed RLR's claims for several reasons, two of which were based on an interpretation of the parties' original management contract, and found in favor of Webb. The arbitrator interpreted the provision in the parties' contract to mean that the prevailing party could be entitled to legal fees incurred in the original arbitration, but not for legal fees incurred in attempts to enforce the award. RLR then moved to vacate the award, arguing that the arbitrator manifestly disregarded the law.

The Court rejected RLR's arguments and confirmed the arbitration award. The Court held that although the Second Circuit did previously recognize the "manifest disregard of the law" standard as an independent basis for vacatur, it did so based on dicta from Wilko v. Swan, 346 U.S. 427 (1953). The Court then noted that in Hall Street Associates, Ltd. v. Mattel, Inc., 128 S.Ct. 1396 (2008), the Supreme Court held that the Federal Arbitration Act's narrow statutory grounds for vacatur are exclusive.

In light of Hall Street, the Court held that the Supreme Court has never endorsed manifest disregard as an independent basis for vacating arbitration awards. As a result, the Court held that the manifest disregard of the law standard is no longer good law.

The Court then held that even assuming arguendo that the manifest disregard standard was still good law, it still would have confirmed the arbitration award. The Court held that because the arbitrator's decision not to award attorney fees was based on a plausible interpretation of the parties' contract, the arbitrator did not manifestly disregard the law. As the Court stated, "[t]the Court cannot simply override the arbitrator's use of his broad powers to interpret the scope of the arbitration agreement."