In this matter, a California district court confirmed an arbitration award in favor of D.A.R.E. America, and denied a motion to vacate the arbitration award by D.A.R.E. New Jersey, Inc. D.A.R.E. New Jersey, Inc. appealed to the Ninth Circuit.
In the arbitration, D.A.R.E. New Jersey attempted to amend its arbitration demand to include a new claim under the New Jersey Franchise Practices Act on the eve of the arbitration hearing. The Ninth Circuit found that the arbitrator did not manifestly disregard the law by refusing to allow D.A.R.E. New Jersey to arbitrate its New Jersey Franchise Practices Act claim, noting that “[t]o vacate an arbitration award on this ground, [i]t must be clear from the record that the arbitrator[] recognized the applicable law and then ignored it.” The Ninth Circuit also noted that “[t]he scope of the arbitrator’s jurisdiction extends to issues not only explicitly raised by the parties, but all issues implicit within” the arbitration demand, and that an arbitrator’s interpretation of the scope of her powers is given great deference. The Court noted that the arbitrator found that the determination that D.A.R.E. New Jersey materially breached the charter agreement was necessary to resolve the breach of contract claim. Finally, the Ninth Circuit noted that arbitration awards may be vacated on public policy grounds where an explicit, well defined, and dominant public policy exists and that the policy specifically militates against the relief ordered by the arbitration. It then found that D.A.R.E. New Jersey had not identified an explicit public policy that militates against the relief ordered by the arbitration. Thus, the Ninth Circuit affirmed the district court’s confirmation of the arbitration award. D.A.R.E. New Jersey, Inc. v. D.A.R.E. America, No. 2:12-cv-09805 (9th Cir. Jan. 17, 2017).
