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A federal court in New York held that an arbitrator exceeded her powers by issuing an award of damages that exceeded the scope of an employment contract when the award was based on the employer's breach of that contract.
In FedEx Ground Package System, Inc. v. Keller, No. 06 Civ. 6446(DAB), 2007 WL 959298 (S.D.N.Y. Mar. 26, 2007), FedEx terminated Keller after he failed a random drug test. Keller initiated an arbitration alleging wrongful termination, and the arbitrator issued an award in Keller's favor.
The arbitrator had awarded Keller $23,000 to reflect the pay the he would have received under his contract had he not been terminated. In addition, the arbitrator awarded Keller an additional $55,200 in damages for a period extending almost a year after the expiration of Keller's contract with FedEx.
FedEx asked the Court to modify the award, arguing that the arbitrator exceeded her powers by awarding damages for a time period beyond the parties' contract. The Court agreed with FedEx and modified the arbitrator's award, vacating the $55,200 portion.
Since the arbitrator's award was based on FedEx's failure to comply with the terms of the parties' agreement, and because the arbitrator did not indicate why she awarded the additional damages for time beyond the scope of the contract, the Court held that the arbitrator "'awarded upon a matter not submitted' to her."
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