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In an employment discrimination case where the employees prevailed at arbitration, the Sixth Circuit Court of Appeals held that the arbitrators did not exceed their powers by failing to issue findings of fact and conclusions of law. It was crucial to the Court's holding that the parties did not agree to submit the dispute to arbitration until after the alleged statutory violations had occurred.
In Electronic Data Systems Corp. v. Donelson, Nos. 06-1211, 06-1478, 2007 WL 108280 (6th Cir. Jan. 18, 2007), Donelson and Lotts sued Electronic Data Systems (EDS), their former employer, for alleged discrimination. After the lawsuits were filed, the parties agreed to submit the dispute to arbitration. The parties further agreed that the three-member arbitration panel would render a decision within two weeks of final briefing.
At the start of the hearing, EDS' attorney requested that the arbitration award include findings of fact and conclusions of law. The panel took the request under advisement. After the hearing, the parties agreed to extend the briefing deadline by a month and a half.
Six weeks after the extended briefing deadline, the arbitration panel rendered its decision and awarded damages to both Donelson and Lotts. The arbitration award did not include any findings of fact or conclusions of law.
EDS argued that the award should be vacated because the arbitrators exceeded their powers by failing to set forth findings of fact and conclusions of law. In support of its argument, EDS cited Rembert v. Ryan's Family Steak Houses, Inc., 596 N.W.2d 208 (Mich. Ct. App. 1999), in which the court held that a predispute agreement to arbitrate statutory discrimination claims raises policy concerns which require that resultant awards be subject to judicial review for material or substantial error. As a "corollary" requirement, the court held that such awards "must be in writing and contain findings of fact and conclusions of law."
The Court found that EDS' reliance on Rembert was misplaced because EDS and its former employees did not enter into the arbitration agreement until after the alleged statutory violations had already occurred. In other words, Rembert does not apply to post-dispute arbitration agreements.
EDS also argued that the arbitrators exceeded their powers by failing to render a decision within two weeks of final briefing. The Court rejected this argument because extension of the briefing deadline demonstrated "that time was not of the essence." Accordingly, the Court concluded that EDS waived the time limitations set forth in the arbitration agreement.
Arbitration awards are enforceable as summary awards or as reasoned awards with findings and conclusions. The agreement of the parties to the arbitration generally determines the type of award issued. As this case indicates, findings of fact and conclusions of law shed light on an arbitrator's reasoning and thus facilitate legally sound decision making.
Under Rule 37H of the National Arbitration Forum Code of Procedure (the Code) , a party can request findings of fact and conclusions of law. This provision not only ensures a reasoned award but also functions as a safeguard of arbitrator neutrality. See, e.g., Marsh v. First USA Bank, N.A., 103 F.Supp.2d 909, 925 (N.D. Tex. 2000) (noting that the Code safeguards fairness by allowing parties to "request a written opinion of the arbitrator's ruling").
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