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The 5th Circuit Court of Appeals has upheld the confirmation of a $1.84 million award to an ophthalmologist's association despite the losing service company's allegation that the award was issued in "manifest disregard" of the law.
In American Laser Vision, P.A. v. Laser Vision Institute, L.L.C., No. 06-10260, 2007 WL 1430223 (5th Cir. May 16, 2007), American Laser Vision, P.A. (ALV) – originally an association of two eye doctors – sued Laser Vision Institute, L.L.C. (LVI) for breach of contract.
ALV had contracted with LVI to provide eye surgeons in exchange for LVI providing management, non-medical staff, and equipment in various service centers. The contract specifically prohibited LVI from interfering with the surgeons' professional judgment and care of patients. It also contained a broadly worded agreement to arbitrate.
One of the doctors (Selkin) quit performing surgeries at the LVI service centers, alleging interference by LVI. When Selkin subsequently acquired full ownership and control of ALV, he sued LVI for breach, seeking over four million dollars in damages. ALV prevailed in arbitration, and was awarded $1.84 million.
In attempting to have the award vacated, LVI claimed that the arbitrator had demonstrated "manifest disregard" of the law, first, in construing the contract as between LVI and Selkin personally, second, in ignoring the requirement for notice and cure, and finally by disregarding the mitigation of damages. To prevail on a claim of manifest disregard, the arbitrator must "appreciate[ ] the existence of a clearly governing principle but decide[ ] to ignore or pay no attention to it." Also, the award must result in a significant injustice.
The Court rejected each argument in turn, noting that the arbitrator was clearly aware of each issue raised, and that a plausible rationale existed for each decision made. Finally, the Court noted that the parties had contracted not to require explanations of decisions from the arbitrator. Because of the absence of any manifest disregard, the Court found that the award was properly confirmed, and that no need existed to "rewrite the contract and offer review the party contracted away."
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