Finding that some of its previous pronouncements were leading district court judges astray, the Ninth Circuit clarified its precedent regarding the scope of review of labor arbitration awards. “We conclude that it is time for us to retire the use of ‘plausibility’ as a term to describe the courts’ role in reviewing labor arbitration awards.” Southwest Regional Council of Carpenters v. Drywall Dynamics, Inc., 2016 WL 2909241 (9th Cir. May 19, 2016).

In Drywall Dynamics, the district court had vacated the arbitration award for two reasons. It found the arbitration panel’s interpretation of the labor contracts was not “plausible”, and it found the award violated a clear public policy. The Ninth Circuit un-vacated the arbitration award, and took the occasion to clarify the limited bases for vacating labor arbitration awards.

First, the court tackled its precedent. Although there are “a long line of” cases that required an arbitrator’s decision to be based on a “plausible interpretation of the contract,” the court found that was “in sharp contrast to the judicial ‘hands off’ approach long required in labor arbitration cases.” Therefore, the court took the opportunity to make clear that the only relevant inquiry on the merits of the award is whether “the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority.”

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