Kenneth R. Davis

THE NEW GES-STOLT: A PERSPECTIVE ON THE REVIEW OF ARBITRATION AWARDS AFTER STOLT-NIELSEN

Kenneth R. Davis — Fri, 19 Aug 2011 13:34:55 PDT

The New Ges-Stolt: A Perspective on the Review of Arbitration Awards After Stolt-Nielsen For over fifty years, the Supreme Court has declined to establish a standard of review for errors of law in arbitration awards. Decided in 1953, Wilko v. Swan confused the courts with a cryptic statement suggesting that a court could not vacate an award for errors “in the interpretations of the law by arbitrators” unless the arbitrator manifestly disregarded the law. Despite this statement’s ambiguity, the federal courts recognized the “manifest disregard” standard, which the courts interpreted to permit vacatur when the arbitrator knew the law and deliberately flouted it. Thirty-four years after Wilko, the Supreme Court in McMahon v. Shearson/Lehman suggested a broader scope of review to ensure that the requirements of federal statutory law were enforced. Nevertheless, the federal judiciary continued to apply the manifest disregard standard as if the high Court had never decided McMahon. In 2008, the Hall Street Associates v. Mattel decision heightened the confusion by offering several alternative interpretations of the dicta in Wilko, scrambling words like eggs in a skillet. The confusion reached its peak in 2010, when the Supreme Court in Stolt-Nielsen v. AnimalFeeds International seemed to apply de novo review to an arbitration award. This time of uncertainty provides an opportunity to discuss what the scope of judicial review of arbitral awards should be. That discussion should take into account the purposes of the FAA, its legislative history, the role of arbitration as a popular method of dispute resolution, and the rulings and policy statements expressed in Supreme Court decisions. Based on these considerations, this Article proposes a three-tier framework for the judicial review of arbitration awards. Tier I provides plenary review for errors of law in awards deciding federal statutory rights such as those conferred by securities law and civil rights law. Tier II provides review for clear errors of law in cases implicating substantial issues of federal concern. Tier III applies to all other cases, and it provides for no substantive review at all. This three-tier framework would align the scope of judicial review with federal arbitration policy and replace confusion with a sensible and workable framework.

Taking Stock -- Salary and Options Too: The Looting of Corporate America

Kenneth R. Davis — Fri, 09 Jul 2010 08:13:13 PDT

Abstract “Taking Stock – Salary and Options Too: The Looting of Corporate America” Executive compensation has come to mean corporate greed. CEO pay has soared to incomprehensible levels. Even during the current financial crisis, more CEOs saw pay increases than cuts. Public resentment to multi-million dollar paychecks swelled to outrage when AIG and Merrill Lynch used bailout funds to dispense enormous bonuses to executives. The looting of America’s corporations has led to numerous strategies to curb executive compensation. These strategies include heightened corporate disclosure requirements, tax incentives, say-on-pay, and shareholder input into the process for nominating directors. All these strategies have failed and will continue to fail to control executive pay because they do not grapple with the problem directly. This Article proposes a framework that will enable corporations to pass bylaws to establish Shareholder Compensation Committees. Such Committees would have the authority to review, and , if appropriate, to make counterproposals to the recommendations of the director compensation committee for compensation packages for the CEO, CFO, three next most highly paid executives, and the chairperson of the board. Both sets of proposals would appear on the company’s proxy materials. Shareholders would have a binding vote to decide between the competing proposals. This approach would prevent directors from supporting the greed of executives rather than the interests of the corporations they ostensibly serve. It would vest the decision to set pay levels where it belongs – with shareholders.

Wheel of Fortune: A Critique of the "Manifest Imbalance" Requirement for Race-Conscious Affirmative Action Under Title VII

Kenneth R. Davis — Tue, 30 Jun 2009 14:42:16 PDT

The Article criticizes the Supreme Court's requirement that a voluntary affirmative action plan must seek to eliminate "a manifest imbalance in traditionally segregated job categories." Although supposedly advancing the goals of Title VII, the manifest imbalance requirement interferes with achieving those goals. It prevents civically conscientious employers from instituting affirmative action, while it does nothing to promote the values of equal employment opportunity, meritocracy, or fairness to nonminority workers. For example, in Schurr v. Resorts International Hotel, Inc., 196 F.3d 486 (3d Cir. 1998), the hotel, located in Atlantic City, adopted a race-conscious affirmative action plan to combat minority unemployment in a city afflicted with urban blight. Despite the needs of Atlantic City’s beleaguered minority population, the Third Circuit invalidated the plan because the hotel could not show a history of discrimination in the casino industry. The manifest imbalance test operated like a wheel of fortune costing minority workers jobs. The Article concludes that the law should abandon the manifest imbalance requirement and encourage voluntary affirmative action plans as long as they adequately protect the rights of nonminority workers. Only when minority underemployment is eliminated nationwide should affirmative action end.