                                                              United States Court of Appeals
                                                                       Fifth Circuit
                                                                      F I L E D
                           REVISED JULY 16, 2004
                                                                       June 28, 2004
                IN THE UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT                   Charles R. Fulbruge III
                                                                        Clerk


                                 No. 03-60679




     THOMAS McDOWELL BRABHAM, Individually and as custodian of
     the account of Thomas McDowell Brabham III, a minor, and
     Erika Laine Brabham, a minor,
                                   Plaintiff-Appellee,

     versus


     A.G. EDWARDS & SONS INCORPORATED, ET AL.,
                                   Defendants,
     A.G. EDWARDS & SONS INCORPORATED,
                                   Defendant-Appellant.

                        --------------------
            Appeal from the United States District Court
              for the Southern District of Mississippi
                        --------------------

Before DAVIS, BENAVIDES, and PRADO, Circuit Judges.

BENAVIDES, Circuit Judge:

     This interlocutory appeal requires us to consider when a

district court may vacate an arbitration award. Plaintiff-Appellee

Thomas    Brabham    and   Defendant-Appellant       A.G.   Edwards     &   Sons

submitted a dispute to arbitration.              The arbitrators awarded

damages   to   Brabham,    but    he   sought   to   vacate   the     award   as

insufficient.       The district court refused to vacate the award on

the ground that the arbitrators manifestly disregarded the law but

did vacate the award as arbitrary and capricious.
     We agree with the district court that the arbitrators did not

manifestly disregard the law. However, the district court erred in

identifying arbitrariness and capriciousness as an independent

ground for vacatur and in vacating the award on that ground.

Therefore, we reverse the order of vacatur and remand this case to

the district court.

                             I. Background

     In 1996, Thomas Brabham opened several investment accounts,

including accounts for his two children, through A.G. Edwards. The

broker managing Brabham’s account, who was addicted to drugs and

alcohol,   failed   to   follow   Brabham’s   instructions,   purchased

speculative stocks, and made unauthorized trades.        Nonetheless,

Brabham’s accounts were profitable, though not as profitable as

Brabham might have hoped given the stock market’s meteoric rise

during the late 1990s.

     After the addiction and mismanagement came to light, Brabham

filed a federal suit alleging that A.G. Edwards had negligently

hired and failed to supervise the errant broker.         A.G. Edwards

invoked an arbitration provision in Brabham’s investment contract,

and the district court compelled arbitration in accordance with the

Federal Arbitration Act (“FAA”), 9 U.S.C.A. §§ 1-16 (West 1999 &

Supp. 2004).

     Brabham argued to the three-member arbitration panel that he

should receive a damage award commensurate with the gains his



                                    2
accounts would have earned had the broker invested them in index

funds that track the Dow Jones Industrial Average and the Standard

and Poor’s 500.    According to Brabham’s expert, this method of

damage calculation would yield an award between $529,711.34 and

$867,009.20. A.G. Edwards countered that the panel should award no

damages because Brabham’s accounts had been profitable and because

A.G. Edwards had apprised Brabham of the broker’s actions through

monthly statements.      After hearing from several witnesses and

reviewing numerous documents, the panel found for Brabham and

awarded him $124,809.64 in actual damages.       The arbitration panel

also ordered A.G. Edwards to pay Brabham $14,356.17 for expenses

and to bear the costs of arbitration.          The panel did not give

reasons for its award.

     Dissatisfied, Brabham sought to have the district court vacate

the award as arbitrary and capricious and in manifest disregard of

the law.   Brabham v. A.G. Edwards & Sons, 265 F. Supp. 2d 720 (S.D.

Miss. 2003).   The district court held that Fifth Circuit precedent

allows vacatur on either ground.        Id. at 724-25.   Addressing each

ground in turn, the court concluded that the arbitration panel did

not manifestly disregard the law but found no rational basis for

the award and therefore vacated it as arbitrary and capricious.

The court then remanded the case to the original arbitration panel

for reconsideration of damages.        Id. at 725-26.




                                   3
       A.G. Edwards then requested permission to seek interlocutory

review of the vacatur pursuant to 28 U.S.C. § 1292(b) (West 1993).1

The district     court   granted    this   request,    and   we   granted   the

petition for interlocutory appeal.2

                               II. Discussion

       We review de novo an order vacating an arbitration award.

Brook v. Peak Int’l, Ltd., 294 F.3d 668, 672 (5th Cir. 2002).               Our

review of the award itself, however, is exceedingly deferential.

See Glover v. IBP, Inc., 334 F.3d 471, 473 (5th Cir. 2003).             We can

permit vacatur of an arbitration award only on very narrow grounds,

see id. at 473-74.



  1
      Section 1292(b) provides for interlocutory review when a district court’s
non-final order “involves a controlling question of law as to which there is
substantial ground for difference of opinion and . . . an immediate appeal from
the order may materially advance the ultimate termination of the litigation.”
28 U.S.C.A. § 1292(b).
   2
      The district court specified two questions:
            (1) whether the Fifth Circuit has adopted an arbitrary
            and capricious standard for vacating arbitration awards
            in all contexts; and
            (2) if so, whether the arbitrary and capricious standard
            was applied properly in this case, i.e., whether the
            arbitrators’ damages award, which [the district court]
            found had no factual basis in the record, was arbitrary
            and capricious.
Brabham v. A.G. Edwards & Sons, No. 2:98-CV-280PG (S.D. Miss. July 11, 2003)
(order granting permission to pursue interlocutory appeal).
      Because § 1292(b) provides for review of an order rather than review of a
particular question, we are not restricted to the questions specified by the
district court but “may address any issue fairly included within the certified
order.” Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199, 205 (1996). The
issue of manifest disregard, which could theoretically provide an alternative
basis for affirming the district court’s order of vacatur, is fairly included
within the certified order. Cf. Harley-Davidson, Inc. v. Minstar, Inc., 41 F.3d
341, 344 (7th Cir. 1994); Angle v. United States, 709 F.2d 570, 573 (9th Cir.
1983). Moreover, addressing the manifest-disregard standard in this opinion will
most expeditiously resolve this litigation.      Therefore, we address manifest
disregard as part of this interlocutory appeal.

                                       4
       The parties dispute just what those narrow grounds for vacatur

include. A.G. Edwards contends that a district court may vacate an

arbitration award only on grounds explicitly listed in section 10

of    the   FAA,   9   U.S.C.A.          §   10(a)   (West    Supp.       2004).    These

“statutory” grounds include situations

             (1)   where   the  award   was   procured   by
             corruption, fraud, or undue means;
             (2) where there was evident partiality or
             corruption in the arbitrators, or either of
             them;
             (3) where the arbitrators were guilty of
             misconduct in refusing to postpone the
             hearing, upon sufficient cause shown, or in
             refusing to hear evidence pertinent and
             material to the controversy; or of any other
             misbehavior by which the rights of any party
             have been prejudiced; or
             (4) where the arbitrators exceeded their
             powers, or so imperfectly executed them that a
             mutual, final, and definite award upon the
             subject matter submitted was not made.

Id.    Section 10 does not explicitly provide for vacatur when the

arbitrators manifestly disregard the statute or act arbitrarily and

capriciously.          See   id.         Therefore,    A.G.       Edwards    argues,   the

district court improperly vacated the award based on a judicially-

created “nonstatutory” ground.                  In the alternative, A.G. Edwards

argues that even if a district court could vacate an award on

nonstatutory       grounds,        the       arbitrators     in    this     case   neither

manifestly     disregarded          the       law    nor   acted      arbitrarily      and

capriciously.       Brabham responds that the district court properly

recognized manifest disregard and arbitrariness and capriciousness




                                                5
as two nonstatutory grounds for vacating an award and that the

award can be vacated on either ground.

                         A. Manifest Disregard

     We agree with the district court that manifest disregard is an

accepted nonstatutory ground for vacatur and that the arbitrators

in this case did not manifestly disregard the law.

     Contrary to A.G. Edwards’ contention, an arbitration award may

be vacated if the arbitrators manifestly disregard the law.             For

many years, section 10 of the FAA “describe[d] the only grounds on

which a reviewing court [could] vacate an arbitration award.”

McIlroy v. Painewebber, Inc., 989 F.2d 817, 820 (5th Cir. 1993)

(per curiam).     A district court could not vacate an award for

manifest disregard.      See R.M. Perez & Assocs. v. Welch, 960 F.2d

534, 539-40 (5th Cir. 1992).           Subsequently, however, a panel of

this Circuit held that “clear approval of the ‘manifest disregard’

of the law standard in the review of arbitration awards under the

FAA was signaled by the Supreme Court’s statement in First Options

that ‘parties [are] bound by [an] arbitrator’s decision not in

“manifest disregard” of the law.’” Williams v. Cigna Fin. Advisors

Inc., 197 F.3d 752, 759 (5th Cir. 1999) (quoting First Options of

Chicago,   Inc.   v.   Kaplan,   514    U.S.   938,   942   (1995)).   Since

Williams, we have noted the potential applicability of manifest

disregard in a number of contexts.         See, e.g., Bridas S.A.P.I.C. v.

Government of Turkmenistan, 345 F.3d 347, 363 (5th Cir. 2003),


                                       6
cert. denied, 124 S. Ct. 1660 (2004) (international petroleum

operations); Glover, 334 F.3d at 474 (workers’ compensation);

Prestige Ford v. Ford Dealer Computer Servs., 324 F.3d 391, 395

(5th Cir.), cert. denied, 124 S. Ct. 281 (2003) (sales and service

contract).      Thus, this Circuit has already accepted manifest

disregard as a ground for vacating an arbitration award.3

      In this case, however, the arbitrators did not manifestly

disregard the law.        Manifest disregard “means more than error or

misunderstanding with respect to the law.” Prestige Ford, 324 F.3d

at 395 (quoting Merrill Lynch, Pierce, Fenner & Smith, Inc. v.

Bobker, 808 F.2d 930, 933 (2d Cir. 1986)).            The arbitrators must

have “appreciate[d] the existence of a clearly governing principle

but   decided    to   ignore   or    pay   no   attention    to    it.”    Id.

Furthermore, “the governing law ignored by the arbitrators must be

well defined, explicit, and clearly applicable.”                  Id. (quoting

Merrill Lynch, 808 F.2d at 934).

      Brabham    claims     that    the    arbitration    panel     manifestly

disregarded Miley v. Oppenheimer & Co., which discusses the measure

of an investor’s damages in cases of broker misconduct.               637 F.2d


  3
      Brook v. Peak International, a case decided after Williams, reiterated our
Circuit’s prior rule that section 10 of the FAA lists the only grounds on which
an award may be vacated. See Brook, 294 F.3d at 672. We must follow Williams,
not Brook.    A prior panel opinion controls until explicitly or implicitly
overruled by the Supreme Court or the Fifth Circuit sitting en banc. United
States v. Mask, 330 F.3d 330, 334 (5th Cir. 2003). Williams interprets the
Supreme Court as implicitly overruling our prior statements denying all
nonstatutory grounds for vacatur, see 197 F.3d at 759, and therefore requires
that we accept manifest disregard as a nonstatutory ground.

                                       7
318, 326-29 (5th Cir. 1981).          In Miley, we instructed district

courts    to   measure   damages    according    to   “how   the    investor’s

portfolio would have fared in the absence of the such [sic]

misconduct.”     Id. at 328.     We also stated that “in the absence of

either a specialized portfolio or a showing by either party that a

different method is more accurate,” it would be “preferable” for

district courts to use “the average percentage of performance of

the Dow Jones Industrials or the Standard & Poor’s Index during the

relevant period as the indicia of how a given portfolio would have

performed in the absence of the broker’s misconduct.”              Id.   Brabham

points out that his expert used the Dow Jones and S&P to estimate

damages and contends that A.G. Edwards offered no evidence in

rebuttal.      Therefore, Brabham argues, the panel could only have

departed from his expert’s estimates by disregarding Miley.4

       The district court properly rejected this argument.                   As

Brabham admits, Miley did not impose a procrustean measure for use

in every case of broker misconduct.          Because there are “countless

legitimate ways” to manage a portfolio, “it is impossible to

compute the exact amount of trading losses” after the fact.               Id. at

327.     A number of factors, including the instructions given the

broker or the nature of the portfolio at issue, may affect the

   4
      Brabham also points to an exchange during the arbitration hearing in which
one of the three arbitrators expressed doubt concerning the expert’s damage
calculations and Brabham’s application of Miley. The arbitrator explicitly noted
that he was not prejudging the application of Miley to Brabham’s case, so we
cannot infer from these comments that the arbitrators chose to depart from any
settled legal rules.

                                       8
proper measure of damages in a particular case.            Id. at 327-28.     We

find no indication that the arbitrators’ departure from the damage

calculations urged by Brabham resulted from a disregard of Miley’s

flexible rule rather than a tailoring of the damages to the

specific circumstances of this case.          The district court correctly

determined that the arbitrators did not manifestly disregard the

law.5

                       B. Arbitrary and Capricious

        Unlike manifest disregard, arbitrariness and capriciousness is

not an accepted nonstatutory ground for vacatur in FAA cases in

this Circuit.6


   5
      Because the arbitrators did not manifestly disregard the law, we do not
reach the second part of the manifest disregard test established in Williams,
i.e., whether the arbitrators’ disregard of the law resulted in “significant
injustice.” 197 F.3d at 762.
   6
      The other circuits are in disarray on this question. Cf. George Watts &
Son v. Tiffany & Co., 248 F.3d 577, 580 (7th Cir. 2001) (recounting confusion in
the Seventh Circuit and commenting that “[t]he law in other circuits is similarly
confused, doubtless because the Supreme Court has been opaque”). The Eleventh
Circuit has accepted that an award may be vacated as arbitrary and capricious.
See Lifecare Int’l, Inc. v. CD Med., Inc., 68 F.3d 429, 435 (11th Cir. 1995).
The Eleventh Circuit, however, stands alone. See Larry E. Edmondson, 1 Domke on
Commercial Arbitration § 39:10 (3d ed. 2003) (characterizing the idea that an
award may be vacated as arbitrary and capricious as a “construct of the Eleventh
Circuit”).
      The Fourth, Seventh, and Tenth Circuits have implicitly rejected the
Eleventh Circuit’s position by enunciating accepted grounds for vacatur and
rejecting all others. See, e.g., Sheldon v. Vermonty, 269 F.3d 1202, 1206 (10th
Cir. 2001); IDS Life Ins. Co. v. Royal Alliance Assocs., 266 F.3d 645, 650 (7th
Cir. 2001); Apex Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 193 (4th
Cir. 1998). (However, these three circuits do not agree on what those accepted
nonstatutory grounds for vacatur are. The Fourth Circuit accepts only manifest
disregard. Apex, 142 F.3d at 193. The Seventh Circuit accepts only a limited
version of manifest disregard. See IDS, 266 F.3d at 650. The Tenth Circuit
accepts manifest disregard, violation of public policy, and denial of a
fundamentally fair hearing. See Sheldon, 269 F.3d at 1206.)
      The First, Second, and D.C. Circuits have neither accepted nor rejected
arbitrariness and capriciousness but have emphasized that vacatur is available
                                                                  (continued...)

                                       9
       Our cases have recognized that a district court may vacate as

arbitrary and capricious an arbitration award that arises from the

terms of a collective bargaining agreement.            See, e.g., Oil, Chem.

& Atomic Workers, Int’l Union, Local No. 4-228 v. Union Oil Co. of

Cal., 818 F.2d 437, 440-41 (5th Cir. 1987); Teamsters Local Union

657 v. Stanley Structures, Inc., 735 F.2d 903, 905 (5th Cir. 1984);

Safeway Stores v. Am. Bakery & Confectionery Workers Int’l Union,

Local 111, 390 F.2d 79, 81 (5th Cir. 1968).                  Drawing on this

precedent, the court in Williams observed that “[p]anels of this

circuit have recognized . . . nonstatutory grounds for vacatur of

arbitration awards in [Labor-Management Relations Act] and FAA

cases,” including vacaturs of “arbitrary and capricious award[s].”

197 F.3d at 758.




   6
    (...continued)
only in very limited circumstances. See, e.g., Greenberg v. Bear, Stearns & Co.,
220 F.3d 22, 27 (2d Cir. 2000); Morani v. Landenberger, 196 F.3d 9, 11 (1st Cir.
1999); Al-Harbi v. Citibank, N.A., 85 F.3d 680, 682 (D.C. Cir. 1996).
      The Third, Eighth, and Ninth Circuits have recognized that an award may be
vacated as completely irrational. See, e.g., Schoch v. InfoUSA, Inc., 341 F.3d
785, 788 (8th Cir. 2003), cert. denied, 124 S. Ct. 1414 (2004); G.C. & K.B. Invs.
v. Wilson, 326 F.3d 1096, 1105 (9th Cir. 2003), cert. dismissed, 124 S. Ct. 980
(2004); Roadway Package Sys., Inc. v. Kayser, 257 F.3d 287, 292 n.2 (3d Cir.
2001).   This test is “similar in nature in thrust to the ‘arbitrary and
capricious’ test of the Eleventh Circuit.” 1 Domke, supra, § 39:11. Some cases
from these Circuits, however, suggest that “complete irrationality” is simply a
subset of a statutory ground for vacatur.         See, e.g., Kyocera Corp. v.
Prudential-Bache Trade Servs., 341 F.3d 987, 997 (9th Cir. 2003) (en banc) (“We
have held that arbitrators ‘exceed their powers’ [under section 10(a)(4) of the
FAA] not when they merely interpret or apply the governing law incorrectly, but
when the award is ‘completely irrational’ or exhibits ‘manifest disregard of
law.’”) (internal citations omitted); Mut. Fire, Marine & Inland Ins. Co. v.
Norad Reinsurance Co., 868 F.2d 52, 56 (3d Cir. 1989) (considering in context of
challenge under § 10(a)(4) whether award was completely irrational).

                                       10
      But neither this observation nor the precedent underlying it

establishes that district courts may vacate an award as arbitrary

and   capricious    in   FAA   cases.     Previous    opinions    that   have

recognized review of awards for arbitrariness and capriciousness,

including the two opinions cited in Williams, reviewed awards

arising from collective bargaining agreements. See Manville Forest

Prods. Corp. v. United Paperworkers Int’l Union, 831 F.2d 72, 73-

74;7 Oil, Chem. & Atomic Workers, 818 F.2d at 440-43; Teamsters,

735 F.2d at 905; Int’l Ass’n of Machinists, Dist. No. 145 v. Modern

Air Transport, Inc., 495 F.2d 1241, 1244-45 (5th Cir. 1974); Bhd.

of R.R. Trainmen v. Cent. of Ga. Ry. Co., 415 F.2d 403, 411-12 (5th

Cir. 1969);    Safeway, 390 F.2d at 81-83.       Judicial review of labor

arbitration is not authorized by the FAA, but by section 301 of the

Labor-Management Relations Act (“LRMA”), 29 U.S.C.A. § 185 (West

1998). Brown v. Witco Corp., 340 F.3d 209, 217-18 (5th Cir. 2003).

As Williams itself recognizes, review under the LMRA and review

under the FAA, while often similar, are not interchangeable.              See

197 F.3d at 761; see also Witco Corp., 340 F.3d at 217-18 & n.8;

Int’l Chem. Workers Union v. Columbian Chems. Co., 331 F.3d 491,

494 (5th Cir. 2003).       Thus, our LMRA cases do not require that




  7
      Manville did not use the phrase “arbitrary and capricious,” but Williams
nonetheless cited Manville as an example of a case recognizing vacatur of
arbitrary and capricious awards.

                                     11
awards in FAA cases be subject to review for arbitrariness and

capriciousness.

       The district court found support for adoption of arbitrariness

and capriciousness as a separate ground in Valentine Sugars, Inc.

v. Donau Corp., 981 F.2d 210 (5th Cir. 1993).               In Valentine, an FAA

case, the court stated that “[i]f the award is rationally inferable

from the facts before the arbitrator, we must affirm the award.”

981 F.2d 210, 214 (5th Cir. 1993).                 This statement mirrors the

Eleventh Circuit’s holding that a decision may not be vacated as

arbitrary and capricious under the FAA “unless no ground for the

decision can be inferred from the facts,” Brown v. ITT Consumer

Fin. Corp., 211 F.3d 1217, 1223 (11th Cir. 2000).                 Based on this

similarity, the district court surmised that this Circuit has “in

effect stated an ‘arbitrary and capricious’ standard of review.”

Brabham, 265 F. Supp. 2d at 724.

       Valentine is part of a line of cases in which we have held

that an award must be affirmed unless it is rationally inferable

from   the    language   and     purpose      of   the   agreement    before   the

arbitrators,     see,    e.g.,    Glover,      334   F.3d   at   474;   Executone

Information Sys., Inc. v. Davis, 26 F.3d 1314, 1320 (5th Cir.

1994); Anderman/Smith Co. v. Tenn. Gas Pipeline Co., 918 F.2d 1215,

1218   (5th   Cir.   1990).       This     principle     explicates     the   rule,

sometimes called the “essence test,” that an arbitration decision

must “draw its essence” from the agreement it construes.                        See


                                         12
Executone,      26   F.3d     at      1324.         As    Valentine’s     citation    of

Anderman/Smith suggests, see Valentine, 981 F.2d at 214, the idea

that an award should be rationally inferable from the facts and the

idea that an award should be rationally inferable from the contract

are simply two sides of the same coin.                     Every arbitration award

results from an application of the contract to the facts before the

panel, so any award that is rationally inferable from the contract

will also be rationally inferable from the facts applied to the

contract.       Thus,      Valentine     does      not    support   the   adoption    of

arbitrariness and capriciousness as a separate and independent

ground    for   vacatur,      but     simply       restates   the   well-established

essence test.8

      As a matter of first impression, then, we reject arbitrariness

and   capriciousness        as   an    independent        nonstatutory     ground    for

vacatur    under     the    FAA.       Because       we   must   remain    exceedingly

   8
      The essence test originally sprang from our LMRA cases. See Executone, 26
F.3d at 1324-25 (tracing history of test). Perhaps for this reason, Williams
categorizes the essence test as a ground for vacatur independent of both the
“arbitrary and capricious” ground and section 10's statutory grounds.         See
Williams, 197 F.3d at 758. Lest our discussion of the essence test be viewed as
the endorsement of another independent nonstatutory ground for vacatur, we add
that this statement from Williams is arguably dictum and certainly debatable.
The history of the essence test does not suggest that we have adopted this test
as a nonstatutory ground for vacatur. Such an interpretation would have placed
Executone, Valentine, and Anderman/Smith in conflict with the then-controlling
rule that there were no nonstatutory grounds for vacatur, see McIlroy, 989 F.2d
at 820.   Rather, a close reading of Glover and Executone suggests that the
essence test is simply a facet of the statutory ground for vacatur established
by 9 U.S.C.A. § 10(a)(4), which permits vacatur when arbitrators exceed their
authority. See Glover, 334 F.3d at 474-75; Executone, 26 F.3d at 1320, 1329.
After all, an arbitrator derives her authority from the contract between the
disputing parties, so an award that cannot be rationally inferred from the
contract is necessarily beyond the arbitrator’s authority.      Cf. Bhd. of R.R.
Trainmen, 415 F.2d at 411-12 (LMRA case) (characterizing award that fails to draw
its essence from the contract as exceeding the authority of the arbitrators).

                                              13
deferential to arbitration, we can permit vacatur of an award only

on   very   narrow    grounds.      See      Glover,     334   F.3d    at   473-74.

Multiplying the grounds for vacatur would be inconsistent with the

deference we must accord an arbitrator’s decisions, see id. at 473.

Therefore,    courts    should    carve      out   new   grounds      for   vacatur

reluctantly and carefully.        See Westerbeke Corp. v. Daihatsu Motor

Co., 304 F.3d 200, 222 (2d Cir. 2002).

      We see no compelling reason to recognize arbitrariness and

capriciousness as an independent nonstatutory ground for vacatur.

Our established rules of deference foreclose all but the most

limited review.        Arbitrators need not give reasons for their

awards.     McIlroy, 989 F.2d at 821.              Even when arbitrators do

provide a rationale for their awards, courts may not review that

reasoning.    See Anderman/Smith, 918 F.3d at 1219 n.3.                Uncertainty

about arbitrators’ reasoning cannot justify vacatur, for a court

must resolve all doubts in favor of arbitration.               See Action Inds.,

Inc. v. U.S. Fid. & Guar. Co., 358 F.3d 337, 343 (5th Cir. 2004).

Given these constraints, judicial review of an award’s rationality

must be confined to situations in which the party challenging the

award can     prove    that   clearly   applicable       law   or     the   parties’

contract indisputably dictates a contrary result.9

   9
      Thus,   aside from its misstep in recognizing arbitrariness and
capriciousness as a ground for vacatur, the district court erred in vacating the
award simply because it could not ascertain how the panel reached its conclusion,
see Brabham, 265 F. Supp. 2d at 726. The district court should have resolved any
doubt or uncertainty in favor of upholding the award. See Action Inds., 358 F.3d
                                                                   (continued...)

                                        14
      In this Circuit, such situations trigger existing grounds for

vacatur.    If, based on the facts before the arbitrator, an award

indisputably runs contrary to clearly applicable law known to the

arbitrators, then the district court can vacate the award as

manifestly disregarding the law.            See Prestige Ford, 324 F.3d at

395-96.    If an award clearly and indisputably runs contrary to the

parties’ contract, such as when the panel invalidates the very

contract from which it derives its authority or acts contrary to an

express contractual provision, then the district court can vacate

the award under the essence test.           See Executone, 26 F.3d at 1325.

Thus,     establishing    arbitrariness       and   capriciousness        as    an

additional ground for vacatur would simply duplicate existing

grounds.

      As the development of our arbitration jurisprudence indicates,

the mutability of legal terminology would allow courts to describe

an award that manifestly disregarded the law or failed to draw its

essence from the contract as “arbitrary and capricious.”                       For

instance, it is in the context of the essence test that our LMRA

cases   mention    arbitrariness      and   capriciousness.        See,    e.g.,

Teamsters, 735 F.2d at 905 (quoting Bhd. of R.R. Trainmen, 415 F.2d


   9
     (...continued)
at 343.
       Even so, we do not share the district court’s perplexity. The award is
rationally inferable from the facts and contract before the arbitrators. The
arbitrators might have concluded that Brabham should have supervised his accounts
better and discounted the award accordingly. Or the arbitrators might have
determined that the securities held by Brabham would not have appreciated as
substantially as Brabham’s expert believed.

                                       15
at 412).    In the interest of establishing clear and deferential

standards of review, however, we must avoid hashing the existing

grounds for vacatur into analytical bits, only to see those bits

take on a life of their own and inexorably overwhelm the deference

accorded arbitration awards.           Cf. Johann Wolfgang von Goethe,

Goethe’s Poems & Aphorisms (Friedrich Burns ed., Oxford Univ. Press

1982)   (recounting     the    fable   of   the   Sorcerer’s     Apprentice).

Arbitrariness and capriciousness is not an independent ground for

vacatur in this Circuit, and the district court should not have

vacated the award on that ground.10

                               III. Conclusion

      The district court properly recognized manifest disregard as

a ground for vacating an arbitration award and correctly refused to

vacate the award on that ground. However, the district court erred

in vacating the award as arbitrary and capricious.              Therefore, we

reverse the district court’s order vacating the award and remand

this case for further proceedings.

REVERSED and REMANDED.


   10
      Although our holding today forecloses arbitrariness and capriciousness as
a ground for vacating an arbitration award in an FAA case, Brabham would not
prevail even were we to embrace the Eleventh Circuit’s standard for arbitrariness
and capriciousness. In the Eleventh Circuit, if an arbitration panel gives no
reason for a lump-sum award, then the party seeking vacatur bears the burden of
refuting every rational basis on which the panel could have relied. See Brown
v. Rauscher Pierce Refsnes, Inc., 994 F.2d 775, 779, 780 n.4 (11th Cir. 1993).
The court must uphold the award if a plaintiff’s success on her claims “would not
inevitably result in one, undisputed measure of damages from which the
arbitrators could not stray.” Raiford v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 903 F.2d 1410, 1413 (11th Cir. 1990).       Brabham has not proved that a
different award was inevitable, so his argument for vacatur fails even under the
standard he promotes.

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