InterDigital Inc (IDCC)

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11th Circuit Reaffirms that Arbitrators May Award All Available Damages, Including Punitive Relief
March 1, 2006 | ADR Institute Editor
The 11th Circuit has upheld an arbitration panel's award of punitive damages, finding that the panel's decision was in no way a “manifest disregard of the law.”



In Rollins, Inc. v. Black, 2006 WL 355852 (11th Cir. 2006)(Unpublished), Black sued Orkin Exterminating Company over its failure to properly eradicate termites from Black's home. Pursuant to the parties' agreement, the case went to arbitration, and Black was awarded compensatory and punitive damages.



Orkin appealed, arguing that the arbitration panel showed a “manifest disregard of the law” by considering the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), which does not allow for punitive damages, in the punitive damages award. The District Court therefore vacated the punitive damages portion of the award.



On appeal, the Eleventh Circuit found that the law supported the actual and punitive damages awarded by the arbitrators and that the panel did not manifestly disregard any law.



To the contrary, the Court noted that the parties accurately represented the law of punitive damages with respect to the FDUTPA. But Black never conceded that this precluded him from getting punitive damages. Instead, Black argued for a punitive award under his negligence and fraud theories of liability. Additionally, realizing that they had mistakenly included the FDUTPA in its punitive damages award along with Black's negligence and fraud claims, the arbitration panel issued a supplemental award removing the FDUTPA reference.



This, the Court found, did not in any way show that the arbitration panel knew the law and chose to ignore it. At most, the arbitration panel misapplied or misinterpreted the law. But even in that case, the arbitration panel corrected itself by issuing the supplemental award.



This decision upholds the authority of arbitrators to provide parties with remedies including all available damages under the law. And, while this decision serves as a reminder that an arbitration award can be overturned for manifest disregard of the law, the Court's opinion makes clear that a corrected arbitration award will be confirmed.