Wachovia Securities, LLC v. Frank J. Brand, II, Marvin Slaughter, Stephen N. Jones, and George W. Stukes

Summary

The Fourth Circuit affirmed the denial of Wachovia Securities’ motion to vacate a FINRA arbitration award that granted former employees approximately $1.1 million in attorneys’ fees under South Carolina’s Frivolous Civil Proceedings Act. The court held that the arbitration panel’s procedures did not violate § 10(a)(3) of the Federal Arbitration Act and that the panel had not manifestly disregarded the law.

Holdings

1. The arbitration panel was not compelled to follow the South Carolina Frivolous Civil Proceedings Act's procedural mandates merely because it relied on the Act's substantive provisions to award attorneys' fees.
2. The panel did not violate § 10(a)(3) because Wachovia failed to show intentional misconduct or prejudicial denial of a fundamentally fair hearing.
3. Manifest disregard survived Hall Street as either an independent ground for review or a judicial gloss on the statutory grounds for vacatur.
4. The panel did not manifestly disregard the law because the asserted requirement to import the Frivolous Civil Proceedings Act's procedural provisions into arbitration was not clearly defined and was subject to reasonable debate.

Questions Presented

1. Whether the arbitration panel committed misconduct under 9 U.S.C. § 10(a)(3) by failing to provide the procedural safeguards and separate hearing required by the South Carolina Frivolous Civil Proceedings Act before awarding attorneys' fees.
2. Whether the arbitration panel manifestly disregarded the law by applying the substantive provisions of the South Carolina Frivolous Civil Proceedings Act without importing its state-law procedural requirements into the arbitration.
3. Whether the district court properly denied Wachovia's motion to vacate the arbitration award.

Disposition

affirmed