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Noncompete decision by arbitrators will stand

The Supreme Court of Virginia has declined to overturn an arbitration award that included resolution of a noncompete issue.

In Cotton Creek Circles LLC v. San Luis Valley Water Co., the high court looked at a case involving ranches and water rights in Colorado. Three businesses entered into an LLC; one of members, Boyce, also owned a cattle ranching company.

The LLC’s operating agreement included a provision that none of Boyce’s businesses would buy property within a certain area without approval of another party. When the ranching company did so, a group of the members demanded arbitration under the agreement’s broad arbitration clause.

An arbitation panel convened and reached a result the group didn’t like. They appealed to Richmond Circuit Court, where the judge upheld the award. The high court likewise said that the arbitration award, including interpretation of the noncompete, would stand.

Justice Barbara Milano Keenan noted in the opinion that even if the interpretation of noncompete law was wrong, it didn’t matter. The court’s review was limited, under the Federal Arbitration Act, to a look at whether the arbitrators exceeded their powers.

In making that observation, the court tweaked the plaintiffs for pursuing an appeal.

The Act doesn’t give a court the power to overturn an arbitration award merely because one of the party’s didn’t like the result. Quoting a 4th Circuit case, she wrote, “Parties may not seek a ‘second bite at the apple’ simply because they seek a different outcome.”

And that, in effect, is what the “plaintiffs have requested in this appeal,” she said.

- Paul Fletcher

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