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The Michigan Court of Appeals held that an arbitration award was properly vacated because the arbitrator acted “in contravention of controlling principles of law,” which in Michigan has been interpreted to mean that the arbitrator exceeded his powers.
In DaimlerChrysler Corp. v. Porter, No. 270112, 2006 WL 3019682 (Mich. Ct. App. Oct. 24, 2006), Porter and DaimlerChrysler submitted an employment dispute to arbitration pursuant to an employee dispute resolution process (EDRP). The arbitrator found that DaimlerChrysler terminated Porter without just cause and subjected him to disparate treatment.
DaimlerChrysler filed a motion to vacate the award. The trial court granted the motion and vacated the award on the ground that the arbitrator exceeded his powers under Michigan state law by “ignoring controlling principles of law.”
On appeal, the Court cited the rule that “[a]n arbitrator exceeds his powers whenever he acts beyond the material terms of the contract from which his authority is derived, or in contravention of controlling principles of law.”
Applying that rule, the Court found that the arbitrator exceeded his powers by acting in contravention of controlling principles of law. Specifically, the Court rejected the arbitrator’s conclusion that the EDRP altered Porter’s status as an at-will employee, noting that “a promise of fairness, without more, is too vague to create a legitimate expectation of just-cause employment.” The Court also rejected the arbitrator’s conclusion that Porter was subject to disparate treatment, nothing that there is no unlawful discrimination when disparate treatment is not motivated by the employee’s protected status.
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