PA Court Affirms Arbitrator's Award to Halliburton Worker in Sex Harassment Suit

Holding:

The U.S. District Court for the Eastern District of Pennsylvania has affirmed an arbitrator's award in favor of a former Halliburton worker who claimed he was fired from a job in Iraq because of a sexual harassment complaint that the company did not actually investigate. The arbitrator awarded plaintiff Edward Harris the sum of $49,312, but denied the his requests for reinstatement and punitive damages. Here, defendants Kellogg Brown & Root technical Services, Inc. ("Kellogg") and Service Employees International, Inc. ("Service") argued that the sole issue before the arbitrator was whether the plaintiff’s termination was the result of racial discrimination and the arbitrator erred when he found that the employer had not discriminated against the plaintiff but, nevertheless, wrongfully fired him. But the district court rejected such argument, stating that the arbitrator acted within the scope of his powers and duties. He had the authority to determine this dispute, as he interpreted it, arising out of the employment relationship between the parties. Therefore, there was no reason to disturb his award.

Detailed Summary:

Invoking the Federal Arbitration Act, 9 U.S.C. §§ 1-10, plaintiff Harris asked for the confirmation of the arbitration award issued in an employment dispute with his former employer. The arbitration was conducted in accordance with the defendant employer’s Dispute Resolution Plan (“Plan”) mandated by the parties’ employment agreement. Opinion, p. 1.

Claiming that the arbitrator exceeded his authority in deciding an issue that had not been presented, defendants request that the award be vacated or modified. Defendants contended that the sole issue before the arbitrator was whether the plaintiff’s termination was the result of racial discrimination and the arbitrator erred when he found that the employer had not discriminated against the plaintiff but, nevertheless, wrongfully fired him.

The plaintiff previously worked at defendant Service, formerly a subsidiary of Kellogg, which at the time was a subsidiary of Halliburton. He was fired in May 2006, for allegedly violating the employer’s policy against sexual harassment. He filed a timely request for arbitration under the Halliburton Dispute Resolution Plan. In his demand for arbitration, he wrote “Wrongful Termination, By Breach of Contract.” Id., p. 2. citing Arbitration Award at 2.

In response to the arbitrator’s order that he specify his claims, plaintiff alleged that the employer ignored its rules and terminated him after an inadequate investigation into the false charges that he had sexually harassed a fellow female employee. In his response, he specifically cited two counts of racial discrimination, one under Title VII and the other under Texas law. Id.

The arbitrator concluded that the racial discrimination charges were unfounded. But, he concluded that the plaintiff was wrongfully terminated on the basis of a “seriously flawed” and unfair investigation. In the arbitrator’s words, “notwithstanding the finding that the company did not engage in racial discrimination, the inevitable conclusion is that the investigation that was purportedly undertaken was seriously flawed. Harris was apparently never told of the specific charges against him (or that he was even being accused of sexual harassment), nor was he allowed to tell his side of the story prior to his termination.” Id., citing Arbitration Award at 16.

The arbitrator awarded the plaintiff the sum of $49,312 to be paid within thirty days from the date of the award. At the same time, he denied the plaintiff’s requests for reinstatement and punitive damages.

In resolving the dispute in favor of plaintiff, the district court found that the arbitrator acted within the scope of his powers and duties. He had the authority to determine this dispute, as he interpreted it, arising out of the employment relationship between the parties. Therefore, there is no reason to disturb his award.

Specifically, the arbitrator, who was authorized to interpret the scope of his “powers and duties” and the issues submitted, correctly viewed the dispute as focused on whether the employer fired the plaintiff wrongfully. The arbitrator had correctly determined that the plaintiff had not been advised of the specific charge against him and was not given a fair opportunity to defend himself against the “flawed” investigation conducted by the employer.

In any event, the arbitrator’s ruling with respect to Texas law is beyond the scope of judicial review. A mistake of law is not one of the statutory grounds for disturbing an arbitration award under the FAA. Id., p. 6, citing Hall Street Associates, L.L.C. v. Mattel, Inc., ___ U.S. __, 128 S.Ct. 1396, 1404-05 (2008).

On the basis of the foregoing, the district court affirmed the award.

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