LD 1218
pg. 80
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LR 468
Item 1

 
The continuing uncertainty as to the legal propriety and
enforceability of contractual opt-in provisions for judicial
review is best demonstrated by the opinion of the Ninth
Circuit Court of Appeals in LaPine Technology Corp. v.
Kyocera, 130 F.3d 884 (9th Cir. 1997). The majority opinion in
Kyocera framed the issue before the court to be: "Is federal
court review of an arbitration agreement necessarily limited
to the grounds set forth in the FAA or can the court apply
greater scrutiny, if the parties have so agreed?" The court
held that it was obliged to honor the parties' agreement that
the arbitrator's award would be subject to judicial review for
errors of fact or law. It based that holding on the
contractual view of arbitration articulated in Volt and Prima
Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S.
395, 404 n.12 (1967) and their progeny. In doing so it
observed that body of case law "makes it clear that the
primary purpose of the FAA is to ensure enforcement of private
agreements to arbitrate, in accordance with the agreement's
terms." The Ninth Circuit relied squarely on the opinion of
the Fifth Circuit in Gateway. The court rejected the
"jurisdictional" view of the FAA set out by the Seventh
Circuit in Chicago Typographical Union.

 
Caution should be exercised not to over-read the significance
of Kyocera. Judge Fernandez, who wrote the opinion of the
court, merely brushed aside any concerns pertaining to
contractual "creation" of jurisdiction for the federal courts.
See also Alan Scott Rau, Contracting Out of the Arbitration
Act, 8 American Rev. of Intern'l Arb. 225 (1997); Stephen J.
Ware, "Opt-In" for Judicial Review of Errors of Law under the
Revised Uniform Arbitration Act, 8 American Rev. of Intern'l
Arb. 263 (1997) (both articles refuting the argument that an
"opt-in" review clause is precluded on the grounds of creating
jurisdiction). Judge Kozinski, while concurring with Judge
Fernandez, expressed concern that Congress has not authorized
review of arbitral awards for errors of law or fact, but felt
it necessary to enforce this agreement. Judge Mayer, in a
dissent, cautioned that the Circuit Court had no authority to
review the award in just any manner in which the parties
contracted. The three opinions in Kyocera crystallize the true
nature of the debate as to the "jurisdictional" dimension of
the issue of expanded judicial review.

 
A final significant opinion in the federal Circuit Court of
Appeals is UHC Management Co. v. Computer Sciences Corp., 148
F.3d 992 (8th Cir. 1998). In UHC, the Eighth Circuit
determined whether the contract language clearly established
the parties' intent to contract for expanded judicial review.
The portion of the analysis relevant here is that which
concerns the propriety of contractual agreements providing for
expanded judicial
review beyond that contemplated by Sections 10 and 11 of the
FAA. The


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