In Royal Bank America v. Kirkpatrick, involving an arbitration under an individual employment agreement, the District Court for the Eastern District of Philadelphia refused to set aside an arbitration award claimed by the employer to require it to violate TARP.
Royal Bank and Kirkpatrick were parties to an agreement which provided that the bank could terminate Kirkpatrick’s employment without cause on ninety days written notice. Notwithstanding this language, the bank terminated his employment after only eight days written notice. In an arbitration pursuant to the parties’ agreement the arbitrator awarded Kirkpatrick lost pay for the remainder of the ninety day period.
Rejecting the bank’s action to set aside the award, the court noted that, at least in the absence a finding of “manifest disregard” of federal law, it was without jurisdiction in what was essentially a state court claim. Noting that there was a significant question of whether the ‘manifest disregard” standard was still good law, the court noted that, even assuming this was the correct standard for assertion of federal jurisdiction, the award did not rise to that level. The court noted the arbitrator concluded that the award fell within an exception for “payments for services performed or benefits accrued” and was therefore not a “golden parachute” payment, prohibited by TARP.
Without deciding whether that analysis was correct, the court determined the arbitrator clearly considered, rather than “disregarded” federal law and therefore remanded the case to state court.