Richey Revisited: Vacating an Arbitration Award Due to Error

By Joel M. Grossman

Joel M. Grossman is a mediator and arbitrator with JAMS in Los Angeles. He has been selected five times as one of the Top Neutrals in California by the Daily Journal. For more information, please visit www.grossmanmediation.com.

Three years ago, my article in this Law Review¹ summarized the court of appeal decision in Richey v. AutoNation, Inc.² This article updates the earlier one, as the California Supreme Court reversed the court of appeal’s decision in Richey, and a more recent court of appeal case further clarifies the limited circumstances in which a court may vacate an arbitration award due to the arbitrator’s error.

The California Supreme Court’s decision in Moncharsh v. Heily & Blasé provides that an arbitration award may not generally be vacated due to the arbitrator’s error of law.³ As the California Supreme Court said in Moncharsh, and as quoted in Richey, "Because the decision to arbitrate grievances evinces the parties’ intent to bypass the judicial system and thus avoid potential delays at the trial and appellate levels, arbitral finality is a core component of the parties’ agreement to submit to arbitration."⁴ Although an arbitration award may be set aside due to fraud or other limited grounds set forth in the Code of Civil Procedure,⁵ an arbitrator’s ruling will usually stand even if a reviewing court believes the arbitrator was wrong on the law.