Fee-Log “Perjury” and Contract-Interpretation Deference: Narrowing FAA Vacatur Under §§ 10(a)(1) and 10(a)(4)

1. Introduction

This appeal arises from a partnership termination dispute arbitrated under an agreement permitting BDO’s Board of Directors to terminate a partner’s interest “for cause,” with “cause” defined in § 11.5 to include various forms of misconduct and failure of performance. Kashyap Bakhai, a certified public accountant serving high-net-worth clients, was terminated after the Board unanimously found “cause” based on two asserted events: (1) an alleged leak of confidential client information later used against BDO in litigation, and (2) an alleged intentional failure to disengage a client who sexually harassed a firm employee.

Bakhai initiated arbitration for breach of contract, denying the allegations and contending BDO acted in bad faith and denied him sufficient process—especially regarding the disengagement issue. BDO defended on the merits and argued that Delaware’s business judgment rule required deference to the Board’s “cause” determination.

After a six-day hearing, a three-member arbitration panel ruled 2–1 for Bakhai, finding breach of contract and awarding, among other relief, attorney’s fees. BDO sought vacatur in federal court, principally arguing (i) “fraud” under 9 U.S.C. § 10(a)(1) based on allegedly false testimony by Bakhai’s client-witness, Desiree Perez, and (ii) excess of arbitral powers under § 10(a)(4) based on claimed disregard of contract language and an “irrational” award. The district court confirmed; BDO appealed; the Eleventh Circuit affirmed.

2. Summary of the Opinion

The Eleventh Circuit rejected both vacatur theories.

• § 10(a)(1) (fraud/perjury): Even accepting that Perez’s testimony about pre-deposition communications was false, the district court did not clearly err in finding no clear and convincing proof she intentionally lied. The fee records were ambiguous and did not establish purposeful perjury. The court also agreed the alleged falsity was not material to the award because the panel’s decision rested on multiple evidentiary bases (including testimony from Alex Spiro and the panel’s finding of inadequate process).
• § 10(a)(4) (exceeded powers): The court held the arbitrators did not “ignore” the contract. They expressly analyzed whether the agreement gave the Board near-absolute discretion akin to business-judgment deference and concluded it did not because it lacked “final and binding”/“sole discretion” type language. That is quintessential contract interpretation, insulated from judicial second-guessing under the FAA. The claimed “capricious” inconsistency (BDO would have terminated Bakhai later as an at-will employee) was irrelevant to whether BDO had contractual “cause” at the time to terminate his partnership interest.

3. Analysis

3.1. Precedents Cited

Standard of review and the fraud test

The court began by grounding its review framework in NuVasive, Inc. v. Absolute Med., LLC, 71 F.4th 861 (11th Cir. 2023), which sets the appellate standards when reviewing confirmation/vacatur: factual findings for clear error and legal conclusions de novo. NuVasive also restates the Eleventh Circuit’s three-part fraud test for vacatur under § 10(a)(1), originally articulated in Bonar v. Dean Witter Reynolds, Inc., 835 F.2d 1378 (11th Cir. 1988).

From Bonar, the panel applied three requirements:

• Clear and convincing proof of fraud;
• Non-discoverability of the fraud through due diligence during arbitration; and
• Material relation of the fraud to an issue in arbitration.

Importantly, Bonar also supplies a functional materiality lens: the challenger need not prove the result “would have been different,” but must show the perjury prevented the losing party from “fully and fairly presenting” its case.

Deference to district court fact-finding

On the intent-to-lie question, the court relied on the clear-error principle described in Cooper v. Harris, 581 U.S. 285 (2017): if the district court’s finding is “plausible in light of the full record,” it stands even if another view is as plausible or more so. This precedent mattered because BDO’s appellate theory depended on reweighing inferences from billing entries—precisely the kind of record-based inference the clear-error standard protects.

Evidentiary hearings in vacatur litigation

In rejecting BDO’s fraud showing, the court noted BDO never sought an evidentiary hearing, citing Univ. Commons-Urbana, Ltd. v. Universal Constructors Inc., 304 F.3d 1331 (11th Cir. 2002), for the proposition that some arbitration-challenge motions may require evidentiary hearings. While the Eleventh Circuit did not impose a hearing requirement, the citation underscores a practical point: a party alleging perjury may need to build a credibility-focused record rather than rely on ambiguous documents.

Limits of “manifest disregard” and the exclusivity of FAA grounds

The opinion acknowledged that BDO’s “manifestly disregarded the law” argument was foreclosed by binding precedent, citing S. Commc'ns Servs., Inc. v. Thomas, 720 F.3d 1352 (11th Cir. 2013). This reflects the Eleventh Circuit’s continued adherence to the view that “manifest disregard” is not an independent, freestanding basis for vacatur beyond the FAA’s enumerated grounds.

§ 10(a)(4) and the breadth of arbitral authority

The court framed the “exceeded powers” inquiry through a line of Eleventh Circuit authority emphasizing extraordinary deference:

• Wiregrass Metal Trades Council AFL-CIO v. Shaw Env't & Infrastructure, Inc., 837 F.3d 1083 (11th Cir. 2016): few awards are vacated under § 10(a)(4) because arbitrators’ authority is broad.
• Reach Air Med. Servs. LLC v. Kaiser Found. Health Plan Inc., 160 F.4th 1110 (11th Cir. 2025): vacatur lies only when an arbitrator abandons interpretation/application and dispenses “his own brand of industrial justice”; serious legal error is not enough; and courts ask only whether the arbitrator “(even arguably)” performed the assigned task.

These cases collectively guided the court’s treatment of BDO’s claim that the arbitrators “ignored” the phrase “in the determination of the Board of Directors.” The panel treated that dispute as a quintessential interpretive question, not an excess-of-power scenario.

“Arbitrary and capricious” as a narrow non-enforcement concept

Addressing BDO’s “contradictory award”/irrationality theme, the court cited Ainsworth v. Skurnick, 960 F.2d 939 (11th Cir. 1992), which states that an award may be refused if “arbitrary or capricious,” defined narrowly: only when no ground for the decision can be inferred from the case facts. The court applied Ainsworth to reject BDO’s theory because the “at-will termination later” point did not speak to the contract’s “cause” requirement at the time of partnership termination.

3.2. Legal Reasoning

A. Fraud/perjury under § 10(a)(1): fee entries are not clear and convincing proof of intentional perjury

The court assumed arguendo the testimony was false but focused on the first Bonar element: BDO did not show, by clear and convincing evidence, that Perez purposefully lied.

The opinion’s reasoning is notable for how it treats “paper contradictions” (billing entries versus deposition answers):

• Ambiguity of billing records: The fee application did not unequivocally show that multiple substantive conversations occurred. For example, an entry described a “Call with Mr. Schwiep re: witness Desiree Perez,” which is consistent with attorney-to-attorney discussion, not witness preparation.
• Lack of detail and attribution: The billing entries did not identify which attorneys spoke to Perez, or the substance of any calls. Without that, the inference of intentional perjury remained speculative.
• Alternative explanations: The court emphasized ordinary possibilities—mistake, forgetfulness, misunderstanding of the question—undercutting the “intentional lie” inference required at the clear-and-convincing level.
• Procedural posture matters: By not requesting an evidentiary hearing, BDO limited the court’s ability to test credibility directly, leaving only an ambiguous documentary record.

On materiality (the third Bonar factor), the court held the alleged lie did not materially relate to the award because the majority did not base its decision “predominantly” on Perez. Instead, it relied on other testimony (Alex Spiro), the absence of contrary testimony from investigators, and—critically—the finding that BDO denied Bakhai adequate process regarding the disengagement issue, rendering the termination decision “fatally flawed.”

The combination of (i) insufficient proof of intent and (ii) weak materiality meant BDO could not satisfy Bonar and thus could not obtain vacatur under § 10(a)(1).

B. Exceeding powers under § 10(a)(4): “ignored the contract” fails where the award expressly interprets it

BDO’s principal § 10(a)(4) theory was that § 11.5 defines “cause” as what qualifies “in the determination of the Board of Directors,” allegedly conferring discretionary, business-judgment-like authority so long as the Board acted in good faith.

The Eleventh Circuit’s response had two steps:

• Factual refutation: The arbitrators did not ignore discretionary language; they explicitly analyzed whether the contract contained the kind of “final and binding” / “sole and absolute discretion” / “sole judge” language that triggers strong deference in some contract schemes, and concluded it did not.
• Doctrinal boundary: Even if BDO believed that interpretation was wrong, Reach Air Med. Servs. forecloses vacatur for mere interpretive error. The “sole question” is whether the arbitrators arguably performed the interpretive task—here, they did.

This portion of the opinion reinforces a practical boundary: an “ignored the contract” argument must show abandonment of interpretation, not disagreement with how the arbitrators read specific clauses.

C. Alleged inconsistency/irrationality: at-will employment later is irrelevant to “cause” now

BDO also argued the award was “capricious” because the panel both found no contractual cause for partnership termination at the time and credited BDO’s assertion it would later terminate Bakhai as an at-will employee after a business-form conversion.

The Eleventh Circuit treated this as a category error: at-will termination power is not the same as contractually defined “cause” for terminating a partnership interest. Because the latter was the issue submitted, the former did not make the award irrational. Under Ainsworth v. Skurnick, a ground for the decision could plainly be inferred from the facts; therefore the award was not arbitrary or capricious.

3.3. Impact

Although designated “NOT FOR PUBLICATION,” the decision is instructive in at least four ways for arbitration practice in the Eleventh Circuit:

• Perjury-based vacatur demands a credibility-grade record: Allegations that testimony was “false” will often fail unless the movant can prove intentional deception by clear and convincing evidence. Ambiguous billing entries, without witness-specific detail or a developed evidentiary record, are unlikely to meet that threshold.
• Materiality is evaluated holistically: Even if a witness is important, the court will examine whether the award substantially rests on that testimony or whether other independent grounds support the outcome.
• § 10(a)(4) is not an appeal of contract interpretation: Parties should expect courts to uphold awards where the arbitrators explicitly engaged in textual analysis—even if one side claims the arbitrators misunderstood discretionary terms.
• “I would have fired you later anyway” is not a cure for lack of “cause” now: The opinion underscores remedial and liability separation: an employer’s later at-will counterfactual does not negate contractual limits governing earlier termination decisions.

More broadly, the opinion strengthens the finality norm under the FAA: vacatur remains exceptional, especially where the alleged defect can be characterized as evidentiary weight, credibility assessment, or contractual interpretation.

4. Complex Concepts Simplified

• FAA vacatur: The Federal Arbitration Act allows a court to set aside (vacate) an arbitration award only for specific, narrow reasons—such as fraud (§ 10(a)(1)) or arbitrators exceeding their powers (§ 10(a)(4)).
• Clear and convincing evidence: A high level of proof—more than “more likely than not,” less than “beyond a reasonable doubt.” Here, it meant BDO needed strong proof that the witness intentionally lied, not just that her testimony was inaccurate.
• Materiality (in this context): Not simply whether the testimony mattered, but whether the alleged fraud was important enough that it prevented the challenger from fully and fairly presenting its case, and whether the award substantially depended on it.
• Business judgment rule: A doctrine (often associated with Delaware law) that generally shields corporate directors’ good-faith business decisions from judicial second-guessing. The arbitrators recognized that certain contracts can mimic this deference if they grant “sole discretion” or “final and binding” authority—but found this agreement did not.
• Exceeded powers (§ 10(a)(4)): This does not mean “got it wrong.” It means the arbitrators stopped interpreting/applying the contract and instead imposed their own policy preferences—something the court found did not occur here.
• Arbitrary and capricious: An extremely narrow label in arbitration enforcement: an award is not “capricious” if any rational basis for it can be inferred from the record.

5. Conclusion

Kashyap Bakhai v. BDO USA, P.C. reinforces two durable themes in Eleventh Circuit arbitration law. First, perjury-based vacatur under § 10(a)(1) is difficult: a movant must prove intentional deception by clear and convincing evidence and show meaningful materiality—something not established by ambiguous fee-log entries and speculative inference. Second, § 10(a)(4) remains tightly cabined: where arbitrators actually engage the contract’s text and explain why it does (or does not) confer broad discretion, courts will not re-litigate the merits under the guise of “exceeded powers” or “irrationality.” The decision thus underscores arbitration finality and the limited supervisory role of federal courts under the FAA.