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Fourth Circuit Revives At-Will Employee’s Arbitration Award

James Warfield worked as a securities broker for ICON advisors for less than a year when ICON terminated his employment. Warfield and ICON disagreed as to the basis of his termination. However, the parties agreed that Warfield’s employment fell under the Financial Industry Regulatory Authority (FINRA), requiring the use of arbitration to resolve any employment disputes. Warfield pursued his claim through arbitration, asserting “wrongful termination without just cause.” Warfield argued the requirement that he resolve any disputes regarding his employment relationship through arbitration implied “he could only be fired for cause.” The arbitrators agreed with Warfield and awarded him $1,186,975.00 in compensatory damages for his termination “without just cause.”

Warfield asked the district court to enforce the arbitrator's award. ICON asked the district court to vacate the monetary award. The federal district court granted ICON’s motion and denied Warfield’s motion to enforce the award. The district court concluded the law in North Carolina and the Fourth Circuit prevented Warfield’s termination without just cause claim.

The Fourth Circuit Court of Appeals reversed the district court’s decision, pointing out that the scope of review for an arbitration decision “is among the narrowest know at law because to allow full scrutiny of such awards would frustrate the purpose of having arbitration at all.” A district court may vacate an arbitral award that reflects a “manifest disregard” of the law. ICON argued that “because North Carolina is an at-will state,” a state court would reject a claim requiring just cause. Warfield cited cases holding that arbitrability clause implies for-cause termination, and there are no North Carolina cases rejecting that theory. The court concluded it was not the “binding precedent” needed to equal manifest disregard of the law.