PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CENTRAL WEST VIRGINIA ENERGY,
INC.,
Plaintiff-Appellant,
v. No. 10-1706
BAYER CROPSCIENCE LP,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Henry E. Hudson, District Judge.
(3:10-cv-00093-HEH)
BAYER CROPSCIENCE LP,
Plaintiff-Appellee,
v.
CENTRAL WEST VIRGINIA ENERGY, No. 10-1934
INC.,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Joseph R. Goodwin, Chief District Judge.
(2:10-cv-00348)
Argued: May 10, 2011
Decided: July 14, 2011
2 CENTRAL WEST VIRGINIA ENERGY v. BAYER
Before GREGORY and DUNCAN, Circuit Judges,
and HAMILTON, Senior Circuit Judge.
Affirmed by published opinion. Judge Duncan wrote the opin-
ion, in which Judge Gregory and Senior Judge Hamilton
joined.
COUNSEL
ARGUED: Robert D. Luskin, PATTON BOGGS, LLP,
Washington, D.C., for Appellant. Bruce E. Stanley, REED
SMITH, LLP, Pittsburgh, Pennsylvania, for Appellee. ON
BRIEF: Benjamin G. Chew, Andrew Zimmitti, Haven G.
Ward, PATTON BOGGS, LLP, Washington, D.C., for Appel-
lant. Colin E. Wrabley, REED SMITH, LLP, Pittsburgh,
Pennsylvania; S. Miles Dumville, REED SMITH, LLP, Rich-
mond, Virginia, for Appellee.
OPINION
DUNCAN, Circuit Judge:
In this consolidated appeal, Central West Virginia Energy
("CWVE") appeals the judgments of the United States District
Courts for the Eastern District of Virginia and the Southern
District of West Virginia. CWVE challenges the determina-
tions of both district courts that a Charleston, West Virginia
arbitration panel (the "Charleston Panel") properly considered
the validity of a 2008 agreement between CWVE and Bayer
Cropscience LP ("Bayer"). Applying the highly deferential
standard of review due arbitration awards, we find that the
Charleston Panel did not exceed its powers. Accordingly, we
affirm.
CENTRAL WEST VIRGINIA ENERGY v. BAYER 3
I.
The relevant facts are not in dispute. This case centers on
the interplay between two agreements containing competing
arbitration provisions. A 1997 agreement between CWVE and
Bayer mandated arbitration in West Virginia; a 2008 agree-
ment sited it in Virginia. Some factual background provides
helpful context for the parties’ dispute.
A.
Bayer operates an industrial park in Kanawha County,
West Virginia. In 1997, Bayer’s predecessor entered into a
coal supply agreement (the "1997 Agreement") with CWVE,
a subsidiary of Massey Energy Company, under which
CWVE agreed to supply coal to the industrial park at a certain
price for a term of two years. The 1997 Agreement provided
that it could be extended for successive one-year terms if the
parties agreed upon a new price. Significantly for our pur-
poses, the 1997 Agreement also contained an arbitration
clause providing that "[a]ll disputes under th[e] Agreement"
would be referred to an arbitration panel in Charleston, West
Virginia, and would be conducted under the rules of the
American Arbitration Association ("AAA"). J.A. 47.
The parties extended the 1997 Agreement several times
between 1997 and 2006. They disagree as to whether a series
of emails between company representatives in 2006 effectu-
ated a valid extension of the Agreement through the end of
2008.
In the spring of 2008, CWVE informed Bayer that it was
not sure if the 2006 extension of the 1997 Agreement was
valid, and a protracted debate ensued. In July 2008, in the
midst of this uncertainty, a Bayer representative signed a new
contract with CWVE to receive coal at an increased price
through 2010 (the "2008 Agreement"). The 2008 Agreement
provided for the arbitration of disputes "arising out of or relat-
4 CENTRAL WEST VIRGINIA ENERGY v. BAYER
ing to this contract or the breach hereof" in Richmond, Vir-
ginia. J.A. 62. It specified that the AAA’s Commercial
Arbitration Rules would apply and that the parties would each
appoint one arbitrator, who would together select a third arbi-
trator. It also contained a merger clause stating that it set forth
the entire agreement between the parties and "any prior agree-
ments . . . relating to such transactions [were] merged into and
super[s]eded by this Agreement." Id. at 61.
Bayer began paying CWVE the higher price specified in
the 2008 Agreement, but did so under protest. Bayer main-
tained that the 1997 Agreement remained in effect, and that
the 2008 Agreement was invalid.
B.
The parties’ disagreement led to litigation and arbitration in
several fora, although only some of those proceedings are rel-
evant here. On December 5, 2008, Bayer filed a claim for
arbitration in Charleston, West Virginia, under the 1997
Agreement. Bayer sought a determination that the extension
of the 1997 Agreement was valid and requested damages in
the amount of $12 million incurred in purchasing coal at the
higher price set by the 2008 Agreement. Bayer explained that
it only paid the higher price to cover its obligations because
CWVE threatened to stop delivery of coal if it refused to do
so.
On March 30, 2009, CWVE filed a demand for arbitration
before a panel convened in Richmond, Virginia (the "Rich-
mond Panel") under the 2008 Agreement. It also moved the
Charleston Panel to dismiss its arbitration proceedings, argu-
ing that Richmond was the proper venue because the 2008
Agreement governed the dispute.1 The Charleston Panel
1
After CWVE filed its arbitration demand against Bayer in Virginia,
Bayer filed a complaint in the Circuit Court of Kanawha County, West
Virginia, seeking a declaration that the West Virginia arbitration should go
forward and the Virginia arbitration should not. The state court dismissed
that action upon determining that the parties’ entire dispute belonged in
arbitration.
CENTRAL WEST VIRGINIA ENERGY v. BAYER 5
denied this motion on the ground that "adequate facts ha[d]
been alleged . . . to support a viable claim under the terms of
the 1997 Agreement." J.A. 107.
During an arbitration hearing held in Charleston on
November 9 through 12, 2009, CWVE continued to challenge
the jurisdiction of the Charleston Panel to consider the 2008
Agreement. Alternatively, CWVE argued that if the Charles-
ton Panel found that the 1997 Agreement had been extended
through 2008, it was nevertheless terminated by the 2008
Agreement, which "superseded all prior agreements by virtue
of its merger clause." J.A. 196.
On February 11, 2010, the Charleston Panel issued a Rea-
soned Award concluding that the parties had extended the
1997 Agreement through 2008. In rejecting CWVE’s argu-
ment that the Charleston Panel should await and defer to the
Richmond Panel’s interpretation of the 2008 Agreement, the
Charleston Panel explained that the validity of the 2008
Agreement was squarely before it:
Nowhere in CWVE’s extensive and impressive
briefing in this case does it deal with its ambivalent,
if not contrary, positions that it has directly inter-
posed the July 2008 Agreement as a bar to any
recovery by [Bayer] under the [1997 Agreement’s]
extension, yet [simultaneously] suggest[s] that the
Panel cannot consider its validity or enforceability.
The short answer to this argument is that CWVE has
clearly ple[d] and argued the validity of the July
2008 Agreement throughout this proceeding. By
doing so, it has placed that issue squarely before the
Panel for a decision as to whether it bars enforce-
ment of the [1997 Agreement’s] extension, and it has
waived its right to withdraw that aspect of the case
from the jurisdiction of the Panel.
J.A. 303 (footnote omitted).
6 CENTRAL WEST VIRGINIA ENERGY v. BAYER
The Charleston Panel found that the 2008 Agreement "op-
erated as a glaring breach" of the 1997 Agreement’s exten-
sion, was formed under a mutual mistake of fact, and failed
to meet the Uniform Commercial Code’s requirements of
good faith and fair dealing. J.A. 310-12. Accordingly, the
Panel deemed the 2008 Agreement void and awarded Bayer
stipulated damages in the amount of $10,540,885.07 plus fees.
The following month, on March 19, 2010, the Richmond
Panel issued an order staying its proceedings "in light of the
Reasoned Award dated February 11, 2010, of the Charleston
Panel and the disposition made therein of issues common to
this Arbitration now pending between the same parties involv-
ing the same transactions . . . ." J.A. 402. The parties reported
at oral argument that proceedings in front of the Richmond
Panel remain stayed pending resolution of this appeal.
C.
The dispute between the parties continued along dual
tracks. On February 16, 2010, CWVE filed a petition in dis-
trict court in Virginia seeking to vacate a portion of the
Charleston Panel’s award.2 In response, Bayer filed a motion
to dismiss in that forum. On March 17, 2010, Bayer filed an
action in district court in West Virginia to enforce the panel
award. CWVE moved to dismiss or stay the West Virginia
action pending resolution of the related Virginia case.
In Virginia, CWVE asked the district court to vacate that
portion of the Charleston Panel’s arbitration award addressing
the 2008 Agreement, renewing its argument that the 2008
Agreement’s validity could be determined only by the Rich-
mond Panel. The Virginia district court disagreed. It held that
the issue of which arbitration panel should consider the 2008
2
CWVE did not seek to vacate the portion of the Charleston Panel’s
award unaffected by the validity of the 2008 Agreement and paid Bayer
that portion of the award, $2,391,390.16.
CENTRAL WEST VIRGINIA ENERGY v. BAYER 7
Agreement was a procedural question for the Charleston
Panel to resolve. It therefore granted Bayer’s motion to dis-
miss the petition on June 2, 2010, and CWVE appealed.
As a result of the Virginia district court’s ruling, the district
court in West Virginia denied as moot CWVE’s motion to
dismiss or stay Bayer’s action pending resolution of the Vir-
ginia action. It then turned to the parties’ cross-motions for
summary judgment. The West Virginia district court agreed
with its Virginia counterpart that the Charleston Panel did not
exceed its powers by adjudicating the validity of the 2008
Agreement. The West Virginia district court found that "the
dispute was properly submitted to arbitration under the terms
of the [1997] Agreement," and that "determining the validity
of the 2008 Agreement was necessary to the adjudication of
the contract dispute." J.A. 444. It granted summary judgment
to Bayer, and this consolidated appeal followed.
II.
CWVE argues that both the Virginia and West Virginia dis-
trict courts erred in finding that the Charleston Panel did not
exceed its powers under the Federal Arbitration Act ("FAA")
by adjudicating the validity of the 2008 Agreement. CWVE
contends that the Virginia district court erroneously held that
the Charleston Panel’s jurisdiction over the 2008 agreement
was a "procedural" issue properly left to the panel’s discre-
tion. It further argues that the West Virginia district court
erred in upholding the Charleston Panel’s rationale for exer-
cising jurisdiction over the 2008 agreement. We review these
legal challenges, brought under § 10(a)(4) of the FAA, 9
U.S.C. § 10(a)(4), de novo. MCI Constructors, LLC v. City of
Greensboro, 610 F.3d 849, 857 (4th Cir. 2010).
The FAA stands as "a congressional declaration of a liberal
federal policy favoring arbitration agreements." Moses H.
Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1,
24 (1983). Its "primary purpose . . . is to ensure that private
8 CENTRAL WEST VIRGINIA ENERGY v. BAYER
agreements to arbitrate are enforced according to their terms."
Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp., 130 S. Ct. 1758,
1773 (2010) (internal quotations omitted). In interpreting such
agreements, we resolve "any doubts concerning the scope of
arbitrable issues . . . in favor of arbitration." Moses H. Cone,
460 U.S. at 24-25; see also Levin v. Alms & Assocs., Inc., 634
F.3d 260, 266 (4th Cir. 2011).
Section 10(a)(4) permits a court to set aside an arbitration
award "where the arbitrators exceeded their powers, or so
imperfectly executed them that a mutual, final, and definite
award upon the subject matter submitted was not made." 9
U.S.C. § 10(a)(4). However, our review of an arbitration
panel’s decision under this provision is "substantially circum-
scribed." MCI Constructors, 610 F.3d at 857. A challenging
party
must clear a high hurdle. It is not enough . . . to show
that the panel committed an error—or even a serious
error. It is only when an arbitrator strays from inter-
pretation and application of the agreement and effec-
tively dispenses his own brand of industrial justice
that his decision may be unenforceable [under
§ 10(a)(4)].
Stolt-Nielsen, 130 S. Ct. at 1767 (internal alterations, quota-
tions, and citations omitted). With this demanding standard in
mind, we turn first to the decision of the Virginia district
court.
A.
CWVE argues that, contrary to the Virginia district court’s
conclusion, the issue of which panel should consider the 2008
Agreement’s validity is not a "procedural" one for arbitral res-
olution, but rather a jurisdictional question that must be
decided by the court in the first instance as a matter of "arbitra-
CENTRAL WEST VIRGINIA ENERGY v. BAYER 9
bility."3 CWVE contends that the Supreme Court’s decision in
Stolt-Nielsen, 130 S.Ct. at 1758, narrowed the range of ques-
tions that can be labeled as "procedural" to an extent that con-
trols the outcome here. In addressing this argument, we first
consider the development of the distinction between questions
of arbitrability and procedure. We then apply this framework
to the question at hand.
1.
In Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83
(2002), the Supreme Court recognized an exception to the
federal policy in favor of arbitration agreements: "[t]he ques-
tion whether the parties have submitted a particular dispute to
arbitration, i.e., the question of arbitrability, is an issue for
judicial determination unless the parties clearly and unmistak-
ably provide otherwise." Id. (internal alterations and quota-
tions omitted). Howsam made clear, however, that not every
"potentially dispositive gateway question" is one of arbitra-
bility. Id. Rather, questions of arbitrability are limited to
the kind of narrow circumstance where contracting
parties would likely have expected a court to have
3
CWVE also claims that the distinction between questions of arbitra-
bility and procedure applies only at the stage of pre-award challenges, but
has no import at the stage of a post-award challenge under § 10(a)(4), such
as this one, because "the distinction whether a challenge to an arbitrator’s
jurisdiction is ‘procedural’ or ‘substantive’ . . . is irrelevant once an award
is rendered." Appellant’s Br. at 42. It cites no case law in support of this
position, which we find unpersuasive.
The determination of whether a particular issue was for arbitral or judi-
cial resolution is of critical importance to our determination, under
§ 10(a)(4), of whether the arbitration panel exceeded its powers in consid-
ering the issue. Indeed, Stolt-Nielsen, one of the primary cases on which
CWVE relies, utilized the procedural/substantive distinction when review-
ing an award under § 10(a)(4), thereby undermining CWVE’s argument
that the distinction should not be applied during review under this provi-
sion. See 130 S. Ct. at 1775-76.
10 CENTRAL WEST VIRGINIA ENERGY v. BAYER
decided the gateway matter, where they are not
likely to have thought that they had agreed that an
arbitrator would do so, and, consequently, where ref-
erence of the gateway dispute to the court avoids the
risk of forcing parties to arbitrate a matter that they
may well not have agreed to arbitrate.
Id. at 83-84. Other "procedural questions which grow out of
the dispute and bear on its final disposition are . . . for an arbi-
trator [ ] to decide." Id. at 84 (internal quotations omitted).
Applying these rules, the Court concluded that the question
presented in Howsam of whether the dispute was ineligible
for arbitration because it was more than six years old was pro-
cedural in nature and therefore appropriate for arbitral resolu-
tion. Id. at 85.
In Dockser v. Schwartzberg, 433 F.3d 421 (4th Cir. 2006),
we considered whether a party to an undisputedly binding
arbitration agreement could compel litigation on the issue of
whether one arbitrator or three should preside in light of How-
sam’s guidance. See id. at 423. We concluded that "the ques-
tion of the number of arbitrators [was] one of arbitration
procedure, and that the parties’ agreement [did] nothing to
overcome the presumption that such questions are for arbitral,
rather than judicial, resolution." Id. at 425.4 As we explained,
it would eviscerate the liberal federal policy favoring arbitra-
tion if "parties to a concededly binding arbitration agreement
were nonetheless able to hale one another into court to contest
even the most minor of issues regarding their arbitration." Id.
at 428.
2.
Under the framework established by Howsam and Dockser,
4
Dockser also stated, more generally, that a court should involve itself
in an arbitration dispute "only when there is a question regarding whether
the parties should be arbitrating at all." Id. at 426 (emphasis added).
CENTRAL WEST VIRGINIA ENERGY v. BAYER 11
we find that the issue here—whether the Charleston Panel or
the Richmond panel should have decided the 2008 Agree-
ment’s validity—is procedural in nature. CWVE tries to char-
acterize the instant dispute as one of arbitrability by arguing
that it involves the "jurisdiction" of the panels. This argument
is unavailing because, as we explain below, a dispute impli-
cating the overlapping jurisdiction of two arbitration panels is
not a matter of arbitrability that necessitates resolution by a
court.
As Howsam makes clear, delineating an issue as either one
of arbitrability or one of procedure serves the goal of preserv-
ing the former for judicial resolution. CWVE largely con-
cedes the argument that it presents a question of arbitrability
by asserting not that a court should decide the 2008 Agree-
ment’s validity, but merely that a different arbitration panel
should consider it.5 Its argument therefore does not implicate
whether to proceed by arbitration, but which arbitration panel
should decide certain issues. CWVE’s contention is far more
akin to a venue dispute than a question of arbitrability, and,
as such, it is appropriate for arbitral resolution.
Here, as in Howsam, we do not risk "forcing parties to arbi-
trate a matter that they may well not have agreed to arbitrate,"
537 U.S. at 84, by allowing the Charleston Panel to determine
which issues it, as opposed to the Richmond Panel, should
consider. By agreeing to have their entire dispute heard by
arbitrators, CWVE and Bayer chose to remove the courts
from such threshold disputes over how their arbitration should
proceed. See Dockser, 433 F.3d at 428.
5
CWVE makes much of the fact that the 1997 Agreement only provided
for arbitration of disputes "under" that agreement, whereas the 2008
Agreement provided for arbitration of disputes "arising out of or related
to" the 2008 Agreement. CWVE agrees, however, that it intended for the
validity of both agreements to be determined between the two arbitration
panels.
12 CENTRAL WEST VIRGINIA ENERGY v. BAYER
Moreover, it is worthy of note that CWVE has received
precisely what it contracted for: the question of the validity of
the 2008 Agreement remains pending before the very Rich-
mond arbitration panel that CWVE argues should resolve it.
The fact that the Charleston Panel deemed it necessary to con-
sider the 2008 Agreement’s validity in determining whether
the 1997 Agreement remained in force may raise the question
of whether that panel was impermissibly dispensing its own
brand of industrial justice, a question to which we shortly
turn, but it does not convert the parties’ venue dispute into
one of arbitrability. To the contrary, our duty to give primacy
to the parties’ intent and to resolve doubts in favor of arbitra-
tion reinforces our conclusion that the arbitrators, not the
courts, should determine this gateway issue. See Stolt-Nielsen,
130 S. Ct. at 1773; Moses H. Cone, 460 U.S. at 24-25.
3.
CWVE attempts to avoid this conclusion by arguing that
the Supreme Court’s recent decision in Stolt-Nielsen changes
the contours of the procedural/arbitrability distinction to such
an extent as to impact our analysis. We disagree.
Stolt-Nielsen involved a dispute over whether a party who
had agreed to submit a certain issue to bilateral arbitration
could be compelled to submit to class-action arbitration of the
same issue. The Supreme Court held that the arbitration panel
"exceeded its powers" in finding that the parties’ silence on
the matter of class arbitration amounted to consent.6 Id. at
1770. It explained that it would not defer to the arbitrators’
view because consent to class arbitration did not fall within
Howsam’s category of "procedural" questions. It found con-
6
Unlike the instant dispute, the Court in Stolt-Nielsen was not faced
with the issue of whether the arbitration panel had properly considered the
issue before it, because the parties executed a supplemental agreement that
"expressly assigned th[at] issue to the arbitration panel." 130 S. Ct. at
1772.
CENTRAL WEST VIRGINIA ENERGY v. BAYER 13
sent to class-arbitration not to be a procedural matter because
the class-action construct wreaks "fundamental changes" on
the "nature of arbitration." Id. at 1775-76. Specifically, it
observed that class-action arbitration alters the rules of confi-
dentiality and privacy, adjudicates the rights of absent parties,
and raises the commercial stakes of arbitration. Id. at 1776.
According to CWVE, Stolt-Nielsen stands for the proposi-
tion that "courts must intervene under the FAA to enforce the
parties’ intent as to who should resolve their disputes." Appel-
lant’s Reply Br. at 9. CWVE reads Stolt-Nielsen too broadly.7
Although Stolt-Nielsen found that the particular question of
whether parties had "agreed to authorize class arbitration"
was not one of procedure, it reaffirmed the Court’s view that
many threshold questions do fall into the procedural category.
Id. at 1776. Citing Howsam, it explained that by entering an
arbitration agreement, parties "implicitly authorize the arbitra-
tor to adopt such procedures as are necessary to give effect to
the parties’ agreement." Id. at 1775. This authorization allows
the arbitrator to supply those terms "essential to a determina-
tion of [the parties’] rights and duties," id. (internal marks
omitted), so long as the arbitrator does not, in the process,
7
CWVE also contends that Stolt-Nielsen overruled Dockser insofar as
Dockser stated that only questions of whether to arbitrate "at all" are for
a court to decide. See Dockser, 433 F.3d at 426. CWVE extrapolates this
view from the fact that Stolt-Nielsen held that the question of consent to
class arbitration, which does not implicate whether to arbitrate at all, was
not a procedural question. We note, however, that Stolt-Nielsen also spe-
cifically declined to address whether it was for a court or an arbitrator to
decide the issue of consent to class arbitration, noting that the parties had
agreed to arbitrate the question. See 130 S. Ct. at 1772 (finding that the
Court "need not revisit" the question of whether its previous judgment in
Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), "requires an
arbitrator, not a court, to decide whether a contract permits class arbitra-
tion"). Thus, Stolt-Nielsen did not directly contradict Dockser, and, as a
subsequent panel, we may not lightly infer that a prior panel decision has
been overruled. In any event, the statement in Dockser with which CWVE
takes issue is not necessary to our holding.
14 CENTRAL WEST VIRGINIA ENERGY v. BAYER
commit the parties to a fundamentally different type or cate-
gory of arbitration which they have not "agreed to authorize."
Id. at 1776.
The issue before us does not transgress the limits of Stolt-
Nielsen’s guidance. CWVE expressly "agreed to authorize"
arbitration in both West Virginia and Virginia. As a result, its
entire disagreement with Bayer is properly in arbitration; it
contests only by whom the validity of the 2008 Agreement
should be arbitrated in the first instance. The Stolt-Nielsen
Court viewed the class-action mechanism contemplated there
as constituting a fundamentally different process, altering the
rules of confidentiality, implicating the rights of absent par-
ties, and changing the commercial stakes of arbitration. See
id. None of those concerns are present here. Although the
Charleston and Richmond panels are constituted differently,8
the parties’ arbitration in each venue remains a bilateral pro-
ceeding that is subject to the same rules of privacy and confi-
dentiality and is of comparable cost. Stolt-Nielsen does not
support the proposition that a choice between two arbitration
panels implicates the type of fundamental change that con-
cerned the Supreme Court.
Accordingly, we affirm the Virginia district court’s holding
that the question of whether the Charleston Panel could con-
8
CWVE tries to bring this dispute closer to the question at issue in Stolt-
Nielsen by arguing that just as class-action arbitration "change[d] the
nature" of arbitration, there are material differences between the arbitra-
tion procedures agreed to in the 1997 and 2008 Agreements that change
the nature of arbitration in Charleston as compared to Richmond. In partic-
ular, CWVE points to the fact that the 1997 Agreement called for arbitra-
tors to be selected from the AAA’s list, whereas the 2008 Agreement
called for each party to appoint one arbitrator, who together would choose
a third. These are differences, to be sure, but we are constrained to dis-
agree that they amount to fundamental changes in the nature of the arbitra-
tion agreed to by the parties.
CENTRAL WEST VIRGINIA ENERGY v. BAYER 15
sider the 2008 Agreement’s validity was a procedural ques-
tion properly for resolution by the panel.9
B.
Our determination that the question of the Charleston
Panel’s jurisdiction over the 2008 Agreement is procedural
does not end the analysis. CWVE argues that even if we find
that the Charleston Panel had authority to rule on its jurisdic-
tion over the 2008 Agreement, the panel nevertheless "ex-
ceeded its powers" under § 10(a)(4) by impermissibly
creating its own theory of jurisdiction rather than grounding
its ruling in the parties’ contract.
Bayer asserts, and the Virginia district court appeared to
agree, that we should not even reach this argument, because
once an issue is deemed procedural, arbitrators cannot err in
the way they decide it. This statement is too sweeping. To be
sure, our review under § 10(a)(4) over a procedural issue that
an arbitrator had authority to decide is exceedingly narrow: "if
an arbitrator is even arguably construing or applying the con-
tract and acting within the scope of his authority, the fact that
a court is convinced he committed serious error does not suf-
fice to overturn his decision." Major League Baseball Players
Ass’n v. Garvey, 532 U.S. 504, 509 (2001) (per curiam)
(internal quotations omitted). However, we nevertheless have
an obligation to ensure that the arbitrator’s decision was "ra-
tionally inferable from the contract." Qorvis Commc’ns, LLC
v. Wilson, 549 F.3d 303, 312 (4th Cir. 2008); see also United
Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S.
29, 39-40 (1987) (reviewing an arbitrator’s decision on a pro-
cedural matter to ensure that it was "a construction of what
9
Because we hold that the question of which panel should decide the
validity of the 2008 Agreement was procedural, we do not reach Bayer’s
alternative argument that the parties ceded questions of arbitrability to the
Charleston Panel by incorporating the AAA Rules into the 1997 Agree-
ment.
16 CENTRAL WEST VIRGINIA ENERGY v. BAYER
the contract required," but explaining that even an error in
interpretation would not require setting aside the award unless
it amounted to "bad faith" or "affirmative misconduct" by the
arbitrator).10
The West Virginia district court concluded that the Charles-
ton Panel met this deferential standard because the dispute
was properly before the panel under the 1997 Agreement’s
terms and a determination of the validity of the 2008 Agree-
ment "was necessary to the adjudication of the contract dis-
pute." J.A. 444. CWVE argues that this conclusion was in
error, because the Charleston Panel actually based its jurisdic-
tion on a novel theory of waiver rather than on any plausible
interpretation of the parties’ contract. In particular, it suggests
that the Charleston Panel’s exercise of jurisdiction was
improperly rooted in the panel’s conclusion that by arguing
the validity of the 2008 Agreement throughout that proceed-
ing, CWVE "waived its right to withdraw that aspect of the
case from the jurisdiction of the Panel." J.A. 303.
The record shows, however, that the Charleston Panel
anchored its decision to rule on the 2008 Agreement’s validity
in the authority granted to it by the 1997 Agreement to adjudi-
cate "[a]ll disputes under th[at] Agreement." J.A. 47. It
explained that CWVE "interposed the July 2008 Agreement
as a bar to any recovery by [Bayer] under the [1997 Agree-
ment’s] extension," such that the 2008 Agreement’s validity
was integral to a determination of "whether it bar[red]
enforcement of the [1997 Agreement’s] extension." J.A. 303
10
Other circuits review procedural questions decided by an arbitrator
under similar standards. See, e.g., Trustmark Ins. Co. v. John Hancock Life
Ins. Co. (U.S.A.), 631 F.3d 869, 874 (7th Cir. 2011) (noting that arbitra-
tors’ procedural decisions are reviewed only to ensure that they are inter-
preting the contract, not interpreting the contract correctly); Lagstein v.
Certain Underwriters at Lloyd’s, London, 607 F.3d 634, 643 (9th Cir.
2010) (reviewing the arbitrators’ decision on a procedural issue "only [to]
determine whether the arbitrators’ interpretation [of the contract] was
plausible" (internal quotations omitted)).
CENTRAL WEST VIRGINIA ENERGY v. BAYER 17
(emphasis added). From this quoted language, we can discern
that the panel treated its jurisdiction over "disputes under" the
1997 Agreement as the starting point of its analysis. It simply
construed this grant of jurisdiction more expansively than
CWVE believes it should have.11
Our determination that the Charleston Panel based its juris-
diction on a plausible reading of the parties’ contractual lan-
guage ends our inquiry under § 10(a)(4). Because we do not
believe the Charleston Panel "irrationally disregarded the
terms of the contract," it is not our role "to review the correct-
ness of the arbitrator’s reasoning." Qorvis, 549 F.3d at 312;
see also Misco, Inc., 484 U.S. at 38 ("The arbitrator may not
ignore the plain language of the contract; but the parties hav-
ing authorized the arbitrator to give meaning to the language
of the agreement, a court should not reject an award on the
ground that the arbitrator misread the contract.").
We therefore affirm the West Virginia district court’s hold-
ing that the Charleston Panel did not exceed its powers under
§ 10(a)(4), and uphold the Charleston Panel’s award in favor
of Bayer.
11
CWVE also argues that the Supreme Court’s recent decision in Gran-
ite Rock Co. v. International Brotherhood of Teamsters, 130 S. Ct 2847
(2010), established that the analogous phrase "arising under" must be con-
strued narrowly. Granite Rock held that the phrase "arising under," as used
in an arbitration clause, did not extend to cover disputes about the agree-
ment’s formation, even when the formation issue was raised as a defense.
Id. at 2860-62. Granite Rock does not, however, compel the conclusion
that the phrase "all disputes under" cannot be construed to extend to a
defense raised to the continuing validity, rather than formation, of a con-
tract. Accordingly, it does not change our conclusion that the Charleston
Panel was at least "arguably construing or applying" the 1997 Agreement
when it exercised jurisdiction over the 2008 Agreement. Garvey, 532 U.S.
at 509.
18 CENTRAL WEST VIRGINIA ENERGY v. BAYER
III.
For the reasons stated above, the judgments of the Virginia
and West Virginia district courts are hereby
AFFIRMED.