New Federal Court Decision: Arbitration Clauses can Preclude Appellate Review of Arbitration Decisions

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In an issue of first impression, on April 8, 2021, a three-judge panel of the Fourth Circuit Court of Appeals unanimously ruled that an arbitration clause in an employment contract that waives appellate review is enforceable.

At issue in Beckley Oncology Assoc., Inc. v. Abumashah was an arbitration provision that required the parties to arbitrate "all disputes, controversies, and disagreements" regarding the employment relationship. Moreover, while any arbitration award was reviewable by a district court, the parties specifically contracted that the arbitrator's decision "shall be final and conclusive and enforceable in any court of competent jurisdiction without any right of judicial review or appeal."

After being unsatisfied with the arbitrator's award, the employer sought review from the district court who summarily granted Abumashah's motion to dismiss based on the existence of a validly issued decision from the arbitrator. When the employer sought an appeal, the Fourth Circuit denied that appeal finding the appellate waiver in the employment contract enforceable.

This case demonstrates how powerful an arbitration provision can be. The benefit (or the downside depending on your vantage) to arbitration provisions is that they generally receive minimal judicial review. With states like Virginia implementing new, far-reaching employment laws that significantly expand state court jurisdiction over employment-related claims and greatly expand the potential causes of action, employers are incentivized now more than ever to consider implementing arbitration agreement for their employees. Employers interested in implementing arbitration agreements should contact counsel.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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