The panel affirmed the district court’s order (1) confirming an arbitration award in favor of Jennifer Gates on claims under the Fair Labor Standards Act and Arizona state law and (2) denying VIP Mortgage Inc.’s petition to vacate the award of unpaid overtime wages, attorneys’ fees, and liquidated damages.

VIP contended that the arbitrator erred in awarding attorneys’ fees without disallowing time spent on VIP’s counterclaims because the arbitrator had previously approved the parties’ stipulation to dismiss the counterclaims, which stated that the parties would bear their own fees and costs on the counterclaims.

The panel held that, generally, an arbitrator’s unsubstantiated fact finding cannot justify federal court review of an arbitral award under the Federal Arbitration Act. There is, however, a narrow basis for vacatur where the facts are so firmly established that an arbitrator cannot fail to recognize them without manifestly disregarding the law. To vacate an arbitration award based on such an error regarding a legally dispositive fact, the factual error must be dispositive to the disputed legal issue, and the arbitrator must have known about this undisputed fact when she decided the legal issue. In other words, the arbitrator’s factual error must have been so critical, obvious, and intentional that it amounted to manifestly disregarding the law.

The panel held that the arbitrator’s factual error in apparently not remembering that the parties had agreed to bear their own fees for the settled counterclaims did not fall within the narrow carveout for “legally dispositive facts.” VIP met the first prong because the factual error was legally dispositive, but it could not meet the second prong because the fact was not so obvious that the arbitrator must have known about it when she decided Gates’s fees motion.

https://cdn.ca9.uscourts.gov/datastore/opinions/2025/12/22/24-7624.pdf