Despite no magic language, arbitration pact is enforceable

December 31, 2008

In Alexandria political consultant who breached his employment contract can’t overturn a $366,037 judgment against him by claiming the contract’s arbitration clause did not contain specific language required by a federal statute.

The Federal Arbitration Act calls for arbitration pacts to include a clause authorizing a court to enter judgment after an arbitrator reaches a decision. But the 4th U.S. Circuit Court of Appeals held Dec. 3 that having that language wasn’t necessary because the agreement said arbitration was the parties’ “exclusive” means to resolve their dispute.

The consultant, Christopher Wilson, had “expertise in research, polling and political consulting” and a “national reputation,” when he went to work for Qorvis Communications as a public affairs executive in 2001, according to the opinion in Qorvis Communications LLC v. Wilson.

At first, the parties’ arrangement allowed Wilson to continue outside employment for private clients. In 2003, Wilson and Qorvis entered into a new employment agreement calling for Wilson to work full-time for Qorvis, to protect company trade secrets and not to solicit the company’s clients, prospective clients or employees during his employment and for 18 months after Wilson left Qorvis.

The contract also said disagreements about Wilson’s employment would be “resolved exclusively by arbitration in Fairfax County, Virginia or Washington, D.C., … conducted in accordance with Employment Dispute Resolution Rules of JAMS,” Judicial Arbitration and Mediation Services Inc.

Wilson, however, continued to work independently and bill clients outside Qorvis’s system and to make plans to leave and form his own business, according to the court. Qorvis fired Wilson and sued him in 2004. The district court granted Wilson’s request for arbitration of claims other than a contract claim.

The arbitrator concluded Wilson had breached the employment agreement and his duty of loyalty to Qorvis by failing to devote his full time and attention to its business and by pursuing his own opportunities. After offsetting Wilson’s successful claim for unpaid expenses, the arbitrator awarded Qorvis $366,037, plus post-judgment interest.

Senior U.S. District Judge T.S. Ellis III entered judgment affirming the award. Wilson appealed.

Wilson argued the Alexandria federal court could not enforce the arbitration award against him because the arbitration clause in his employment contract did not provide for entry of an enforceable court order, as required by the Federal Arbitration Act.

But the contract said arbitration was the parties’ “exclusive” means for resolving disputes, and that meant Wilson had impliedly agreed to court enforcement of the award, the 4th Circuit panel said.

The FAA authorizes courts to enter judgments on arbitration awards if the parties agreed that a judgment “shall be entered upon the award.”

Although Wilson’s contract did not explicitly contain the language from 9 U.S.C. § 9, the contract clearly specified that arbitration, “in accordance with specified rules that authorize judicial enforcement, be the exclusive means of resolving disputes” related to Wilson’s employment.

That expression of intent, coupled with Wilson’s own pursuit of court-ordered arbitration, meant Wilson had agreed to entry of a judgment on the award, wrote Judge Paul V. Niemeyer for the panel.

Written by Deborah Elkins  |  Filed Under Dispute Resolution, Home Page Items, Weekly Update 

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