Affirmation of Narrow Judicial Review and Supremacy of Final Arbitration Awards under the FAA

Introduction

Leviathan Group LLC v. Delco LLC is a Sixth Circuit decision issued March 21, 2025, addressing the scope of judicial review under the Federal Arbitration Act (FAA) and the interplay between partial and final arbitration awards. The dispute arose from a marketing contract under which Leviathan agreed to publicize Delco’s products for $100,000 per month. When disagreements over performance and payment developed, the parties submitted their conflicts to binding arbitration before Sheri B. Cataldo under American Arbitration Association rules. After a “Partial Final Award” on liability and deliverables, and a “Final Award” including damages and attorney’s fees, Leviathan sought confirmation in state court. Delco removed to federal court and moved to vacate or modify. The district court confirmed the award, and Delco appealed.

Key issues on appeal were:

Does the Final Award supersede any obligations in the Partial Final Award regarding deliverables?
Did the arbitrator exceed her authority or commit legal error in awarding attorney’s fees under Michigan law?
Is the arbitrator’s decision so one-sided or implausible that it falls outside the parties’ agreement to arbitrate?

Summary of the Judgment

The Sixth Circuit affirmed the district court’s confirmation of the arbitration award. The panel applied the FAA’s strong presumption in favor of enforcement and held that:

The Final Award, by its unambiguous language, superseded the Partial Final Award, resolving any question about outstanding deliverables.
An arbitrator’s legal errors—even under governing state law—do not justify vacatur unless they demonstrate she acted outside her authority or refused to interpret the contract.
There was no evidence of fraud, partiality, or deciding matters beyond the arbitration clause’s scope, so judicial intervention was unwarranted.

Analysis

Precedents Cited

Adell v. Cellco P’ship (6th Cir. 2022): Standard of review—clear error for facts, de novo for law.
Uhl v. Komatsu Forklift (6th Cir. 2008): FAA presumption in favor of confirmation.
Mich. Fam. Res. v. SEIU Local 517M (6th Cir. en banc 2007): FAA vacatur grounds limited to authority, fraud, or contract refusal.
Zeon Chemicals v. UFCW Local 72D (6th Cir. 2020): Review focuses on process, tolerates substantive errors.
In re Romanzi (6th Cir. 2022): Lack of explanation does not itself require vacatur absent a contractual demand.
Thomas Kinkade Co. v. White (6th Cir. 2013): Sequential awards discrepancies—context for partial vs final awards.
Petterman v. Haverhill Farms (Mich. Ct. App. 1983): Michigan requirement that fee awards rest on more than bare billing entries.
Smith v. Khouri (Mich. 2008) & Pirgu v. USAA (Mich. 2016): Advise courts to articulate fee-reasonableness factors.
Rudnicki v. Ateek (Mich. Ct. App. 2016): Detailed billing records plus affidavit may suffice under Michigan law.

Legal Reasoning

The court structured its de novo review around the FAA’s vacatur grounds: whether the arbitrator acted outside her authority, engaged in fraud or partiality, or refused to apply the contract. On each argument by Delco:

Partial vs. Final Award: The Final Award expressly settles “all claims and counterclaims,” denying all not granted. It omits deliverable language, showing the arbitrator’s ultimate view that no outstanding deliverables remained. Thus the district court correctly confirmed the superseding final decision.
Attorney’s Fees: Delco argued Michigan law required more than an itemized bill. The court noted the arbitrator held a hearing, considered State Bar rate guidelines, and awarded less than requested—indications she applied reasonableness principles. Even if a legal mistake occurred, it does not void an award unless the arbitrator exceeded her contracting authority.
One-Sided Outcome: Delco contended the award strayed from contract expectations. But any interpretive error within the contract’s scope is insufficient for vacatur. There was no allegation of bias, and sparse reasoning is permitted absent an agreement for detailed findings.

Potential Impact

This decision reinforces several critical points for arbitration practitioners and litigants:

Arbitrators’ final awards supersede earlier interim rulings when they explicitly resolve all disputes.
Courts will not probe legal errors by arbitrators so long as they act “arguably” within their contractually delegated authority.
Parties seeking detailed reasoned awards must expressly require them in their arbitration agreements; otherwise, the FAA presumption favors enforcement.
Michigan practitioners should ensure fee petitions before arbitrators are supported by evidentiary hearings or affidavits plus market-rate documentation.

Complex Concepts Simplified

Federal Arbitration Act (FAA) Presumption: Courts assume arbitration awards should be confirmed unless specific statutory vacatur grounds are met.
Vacatur Grounds (9 U.S.C. § 10): Limited to (1) arbitrator exceeding authority, (2) corruption/fraud, or (3) refusal to interpret/apply the contract.
“Arguable” Construction: An arbitrator need only plausibly interpret the contract—substantive mistakes do not alone justify vacatur.
Partial vs Final Awards: Interim awards resolve certain issues but may be superseded by a final award that settles “all claims and counterclaims.”
Reasoned Awards: Absent contractual requirements, arbitrators need not provide detailed legal analysis or factor-by-factor explanations.

Conclusion

Leviathan Group LLC v. Delco LLC stands as a clear reaffirmation of the FAA’s narrow scope for judicial review: final arbitration awards are presumptively confirmed so long as arbitrators act within their delegated authority, even if they err in law or offer sparse reasoning. The decision underscores the supremacy of unambiguous final awards over earlier partial rulings and reminds contracting parties that any desire for deeper judicial scrutiny or detailed explanatory opinions must be built into their arbitration agreements. In the broader legal context, this opinion strengthens the enforceability of arbitration clauses and clarifies Michigan fee-award practice within the arbitral forum.