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Broker awarded $1.1 million for wrongful termination

Virginia Lawyers Weekly//March 8, 2022

Broker awarded $1.1 million for wrongful termination

Virginia Lawyers Weekly//March 8, 2022

Where an arbitration panel awarded a broker over $1.1 million for wrongful termination without cause, the district court erred by refusing to enforce the award. Although the employer argued that North Carolina does not recognize a claim for wrongful termination without cause, because there were decisions suggesting that such a claim could arise in these circumstances the employer couldn’t show the panel manifestly disregarded the law.


James Warfield, a securities broker, contended before an arbitration panel that his former employer, ICON Advisers Inc., and a related corporation, ICON Distributors Inc., wrongfully terminated him without just cause. The panel awarded him $1,186,975.

The district court refused to enforce the award, holding that North Carolina is an “at-will” employment state that does not recognize a cause of action for wrongful termination without just cause. The court determined that the arbitrators manifestly disregarded the law in finding to the contrary and vacated the award on that basis.


To establish manifest disregard, a party must demonstrate: “(1) the disputed legal principle is clearly defined and is not subject to reasonable debate; and (2) the arbitrator refused to apply that legal principle.”

First, ICON asserts that because North Carolina is an at-will employment state, a state court would necessarily reject Warfield’s asserted wrongful termination without just cause claim. ICON cites a series of cases holding that North Carolina has a strong presumption of at-will employment. The problem for ICON is that Warfield has cited Paine Webber, Inc. v. Agron, 49 F.3d 347 (8th Cir. 1995), and Shearson Hayden Stone, Inc. v. Liang, 653 F.2d 310 (7th Cir. 1981), as holding that the presence of an arbitrability clause governing an employment dispute implies for-cause termination protections, notwithstanding a state law at-will doctrine to the contrary.

This court expresses no opinion on the persuasiveness of these decisions; the point is that they exist, and Warfield presented them to the arbitrators. ICON has not cited, either to the arbitrators or to this court, any North Carolina case rejecting the specific proposition that the arbitrability of an employment relationship implies for-cause protections. This court has previously explained that in the absence of clearly on-point and controlling precedent, the fact that courts disagree on a particular legal question weighs against second-guessing an arbitrator’s award.

In the manifest disregard context, it is not this court’s role to predict whether North Carolina courts would reject the theory embraced in these decisions that arbitrability implies for-cause protection. The fact is that to date, they have not. And therefore, North Carolina’s at-will doctrine cannot provide the “binding precedent requiring a contrary result” necessary to demonstrate that the arbitrators manifestly disregarded the law.

ICON also argues that this court’s decision in Raymond James Financial Services, Inc. v. Bishop, 596 F.3d 183 (4th Cir. 2010), affirmatively rejected the decisions relied upon by Warfield, such that the arbitrators disregarded clearly established controlling law. Even assuming that a federal court could theoretically establish controlling precedent on state law for purposes of the manifest disregard inquiry, Raymond James was not such a holding.

Moreover, even if ICON established to this court’s satisfaction that, under North Carolina law, courts would not recognize Warfield’s wrongful termination without just cause claim, this prong of the manifest disregard analysis requires something more than merely establishing that the arbitrators misapplied the law; instead, it requires evidence that they knowingly rejected a controlling precedent.

In this case, ICON did make the arbitrators aware of North Carolina’s presumption of at-will employment and of Raymond James. But if there is a North Carolina case rejecting the AgronLiang theory, ICON never cited that precedent to the arbitrators (or to this court, for that matter). ICON therefore cannot establish manifest disregard because even if it made the arbitrators aware of the “general[] [employment at-will] defense,” it did “not present[] any evidence” on the “specific[]” point at issue.

Moreover, the award contained no explanation of how the arbitrators determined that Warfield could bring a claim for wrongful termination without just cause. As ICON acknowledged, the parties could have requested an explained decision from the arbitrators but apparently did not do so. Of course, “arbitrators are not required to explain their reasoning.” But when arbitrators do not provide any explanation, the court cannot simply impute manifest disregard.


Warfield v. ICON Advisors Inc., Case No. 20-1690, Feb. 24, 2022. 4th Cir. (Motz), from WDNC at Charlotte (Mullen). Christopher S. Edwards for Appellant. Jonathan Woodward Yarbrough for Appellee. VLW 022-2-052. 13 pp.

VLW 022-2-052

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