Sixth Circuit Clarifies Severability of Invalid De-Novo Review Clauses in Arbitration Agreements
A Detailed Commentary on Avient Corp. v. Westlake Vinyls, Inc. (6th Cir. 2025)

1. Introduction

Background. Avient Corporation (“Avient”) and Westlake Vinyls, Inc. (“Westlake”) have sparred for nearly two decades over who must pay for massive environmental remediation costs at a Superfund site in Calvert City, Kentucky. The controversy stems from a 2007 Settlement Agreement in which:

• All past cleanup cost disputes were extinguished.
• Future costs were to be allocated through arbitration, with an optional (but risky) path to “de novo judicial review.”

Avient twice invoked arbitration (2010, 2017) but began challenging the arbitral structure itself after unfavorable turns. In the current iteration, Westlake triggered a third arbitration (2022), prompting Avient to file suit claiming the entire arbitration regime was void because the Agreement promised de novo judicial review that is forbidden by the Federal Arbitration Act (“FAA”). The district court granted summary judgment for Westlake; Avient appealed.

Key Issue on Appeal. Does the invalidity of the Agreement’s de novo judicial review clause (§ 6.3) render the entire arbitration mechanism unenforceable, or is the clause severable so that arbitration may proceed?

Parties.

• Plaintiff-Appellant: Avient Corporation (formerly PolyOne Corp.; successor to Goodrich obligations).
• Defendant-Appellee: Westlake Vinyls, Inc. (current owner/operator of the vinyl-manufacturing complex).

2. Summary of the Judgment

Writing for a unanimous panel, Judge Kethledge affirmed the district court but on different grounds:

1. Invalidity of § 6.3. Consistent with Hall Street Assocs. v. Mattel, the clause allowing courts to “determine de novo” the amount and allocation of cleanup costs exceeds the narrow review grounds permitted by the FAA and is therefore void.
2. Severability. Applying Kentucky contract law and the Settlement Agreement’s own severance clause (§ 14), the court held that excising § 6.3 causes no “materially adverse” effect on the Agreement’s “economic and legal substance.” The remainder of the arbitration provisions survive.
3. Result. The court enforced the arbitration requirement, allowing Westlake’s 2022 demand to proceed, and definitively rejected Avient’s attempt to collapse the arbitral framework.

3. Analysis

3.1 Precedents Cited

• Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008)
  Established that §§ 10-11 of the FAA provide the exclusive bases to vacate or modify an award. The Sixth Circuit relied on it to invalidate § 6.3.
• Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381 (Ky. Ct. App. 2002)
  Reaffirmed the primacy of contractual text under Kentucky law, guiding the court’s interpretation of the severance clause.
• Citizen Potawatomi Nation v. Oklahoma, 881 F.3d 1226 (10th Cir. 2018)
  A contrasting decision in which the Tenth Circuit invalidated an entire arbitration agreement after striking a de novo review clause. The Sixth Circuit distinguished it on textual and sovereign-immunity grounds.
• Bennett v. State Farm Mut. Ins. Co., 731 F.3d 584 (6th Cir. 2013)
  Cited for the admonition against interpreting “contractual provisions in gross,” supporting a granular severability approach.
• Prior district-court orders in the Avient/Westlake saga (2018, 2019, 2020) and the earlier Sixth Circuit decision at 937 F.3d 692, which addressed waiver and arbitrability.

3.2 Legal Reasoning

Step 1 — Invalidity Conceded. Both sides accepted that § 6.3’s expansive review language conflicts with Hall Street and the FAA; thus the court moved immediately to severability.

Step 2 — Governing Law. Kentucky law controls the contract, but the FAA overlays the agreement’s arbitration aspects. Kentucky follows a textualist approach: where language is unambiguous, courts enforce it as written.

Step 3 — Text of the Severance Clause (§ 14).

• “In the event that any provision … shall be finally determined to be unenforceable, such provision shall … be deemed severed so long as the economic and legal substance of the transactions contemplated hereby is not affected in any materially adverse manner as to any Party.”
• Notably absent: any requirement that the unenforceable term be “material” per se; rather, the focus is downstream impact.

Step 4 — Application.

1. The loss of de novo review does not upset the bargain’s core: allocating future costs by arbitration on a five-year cycle. Both parties have been operating under that regime for 17 years without ever invoking § 6.3.
2. Avient’s claim that § 6.3 allowed parties to “reject any award” ignored the high fee-shifting deterrent in § 6.5, suggesting the clause was never intended as a routine escape hatch.
3. The court highlighted Avient’s own behavior: it demanded arbitration in 2017 after Hall Street made § 6.3’s illegality obvious—strong evidence that arbitration retained value sans de novo review.

Step 5 — Distinguishing Citizen Potawatomi.

• Potawatomi involved mutual sovereign immunity; the parties waived immunity only for de novo review, making that feature indispensable. No sovereign immunity exists here.
• The Oklahoma compact made arbitration expressly “subject to” the availability of de novo review; the Avient-Westlake contract does not.
• Potawatomi’s severance rule asked merely whether the invalid subsection was “material,” whereas § 14’s test is materially adverse effect on the transaction—a higher bar not met here.

3.3 Likely Impact of the Decision

• Precedential Weight. As a published opinion, it binds district courts within the Sixth Circuit and clarifies circuit law on severability of ultra-vires judicial-review provisions.
• Contract Drafting. Parties should add robust severance language if they wish to insulate core arbitration promises from partial invalidity; “subject to” conditions risk wholesale collapse.
• Forum Strategy. Litigants cannot count on an invalid review clause to torpedo an otherwise workable arbitration scheme, at least in the Sixth Circuit.
• Environmental Cost-Sharing Cases. The ruling keeps the Avient-Westlake arbitrations alive, offering a procedural roadmap for other long-term Superfund allocation agreements.
• Inter-Circuit Tension. Divergence with the Tenth Circuit’s approach in Potawatomi may invite Supreme Court interest or spur contractual harmonization efforts.

4. Complex Concepts Simplified

• Federal Arbitration Act (FAA). A 1925 statute favoring private arbitration. Sections 10-11 strictly limit judicial interference to issues like fraud, corruption, or exceeding powers.
• De Novo Judicial Review. A court looks at the matter “from scratch,” ignoring the arbitrator’s conclusions. The FAA bars parties from expanding courts’ power to do this.
• Severability Clause. A contractual provision stating that if one term is invalid, the rest stay intact unless the remaining bargain is fatally wounded.
• Materially Adverse Effect. A change so significant it undermines the economic or legal foundation of the deal; minor inconveniences do not suffice.
• Sovereign Immunity. The doctrine that governments (or tribes) cannot be sued without consent; absent here, but pivotal in Potawatomi.

5. Conclusion

The Sixth Circuit’s decision in Avient Corp. v. Westlake Vinyls, Inc. offers a pragmatic, text-centric roadmap for handling partially invalid arbitration agreements:

1. The presence of an unlawful de novo review clause does not automatically doom the entire arbitration arrangement.
2. Courts will honor severance provisions—especially those requiring a showing of material adversity—and preserve the parties’ broader bargain when feasible.
3. Litigants who have voluntarily embraced arbitration cannot later weaponize a known statutory defect to evade unfavorable awards.

In the broader landscape of arbitration law, the judgment underscores a continuing judicial commitment to enforcing arbitration agreements while scrupulously respecting the FAA’s limitations on judicial review. Parties crafting complex, long-term agreements should heed the Court’s signal: build severability in, assume limited court review, and expect to live with the arbitral process you design.