The Eighth Circuit has overturned an arbitration award in favor of a software developer who took up the $5 million challenge of MyPillow founder, Mike Lindell, to “Prove Mike Wrong” about his claims the 2020 presidential election was stolen. The dispute went to arbitration per the boilerplate predispute terms in Mr. Lindell’s contest rules. The arbitrators heard the evidence, gave reasons for their decisions, and decided in favor of the software developer. The software developer then used the Federal Arbitration Act, which requires federal courts to confirm an arbitration award (making them enforceable as a court judgment).

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The Eighth Circuit overturned the lower court’s decision to confirm the award, citing provisions of the same law that say a federal court can refuse to confirm an arbitration award where “the arbitrators exceeded their powers.” The court reasoned that the contract was unambiguous, and the arbitrators had “exceeded” their authority by applying standards that were not in the contract. The arbitrators also thought the contract language was unambiguous and thought those standards were the relevant ones. It is difficult to see the opinion as anything more than just the Eighth Circuit substituting its judgment for the arbitrators, which it is decidedly not to supposed to do. Three arbitrators and a district judge saw the “unambiguous language” differently.

The use of predispute arbitration clauses to deny everyday consumers their day in court has been documented extensively including on this blog. Courts routinely enforce those clauses to the letter. Despite my misgivings about the Eighth Circuit’s decision under current law, it would be fantastic if the decision signaled a greater willingness of the federal courts to police arbitral awards. Something tells me, however, that might not be the case in a more routine consumer dispute.

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