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A Massachusetts state court held that an arbitration award granting a corporate executive the lavish compensation and benefits outlined in his employment agreement after a finding that he was terminated without cause did not violate any clearly defined and dominant public policy.
In Massachusetts Mutual Life Insurance Co. v. O'Connell, No. 064379BLS1, 2007 WL 756505 (Mass. Super. Jan. 2, 2007), O'Connell, the former CEO of Mass Mutual, requested arbitration to determine whether Mass Mutual had adequate grounds to support terminating him for cause.
An arbitration panel found that O'Connell should not have been terminated for cause and therefore awarded him a host of benefits that he was entitled to under his Employment Agreement with Mass Mutual.
Mass Mutual then argued that the arbitration award should be vacated as against public policy. For a court to vacate an arbitration award as against public policy, "the public policy in question must be well defined and dominant and must be ascertained by reference to laws and legal precedents and not from general considerations of supposed public interest." City of Boston v. Boston Police Patrolmen's Ass'n, 443 Mass. 813, 818 (2005).
In this case, the Court found that the arbitration award did not violate a clearly defined and dominant public policy. Mass Mutual failed to point to any clearly defined and dominant public policy against the lavish compensation and lifestyles granted to corporate executives that would justified vacatur of the arbitrator's award.
Additionally, the Court noted that the arbitration panel's findings regarding whether O'Connell breached his fiduciary duties was not subject to review by the court, and none of O'Connell's actions described in the award amounted to a breach of public policy.
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