The opinion of the court was delivered by: Savage, J.
In this consolidated action, we must decide whether we have subject matter jurisdiction to review an arbitrator's award in a dispute arising out of an employment contract. The parties had agreed that all disputes would be submitted to arbitration. They do not disagree that arbitration was mandated by the contract. They disagree whether a federal court may review the award.
James E. Kirkpatrick and his former employer, Royal Bank America ("Royal Bank"), have filed cross-motions for summary judgment. Royal Bank argues that we must vacate the arbitration award because the arbitrator granted it in "manifest disregard" of federal law. Kirkpatrick counters that the federal court lacks subject matter jurisdiction of the controversy, requiring remand to state court.
We conclude that we lack subject matter jurisdiction, and, even if we did not, that the arbitrator's award was not issued in manifest disregard of federal law. We shall remand Kirkpatrick's action to confirm the arbitration award to state court and dismiss Royal Bank's petition to vacate the award. *fn1
On October 6, 2008, Kirkpatrick signed a two-year employment agreement to become Royal Bank's executive vice president and chief lending officer. The employment agreement provided that Royal Bank could terminate Kirkpatrick without cause "upon giving written notice of such termination . . . at least ninety (90) days prior to the date upon which such termination shall take effect." The agreement further stated that if Royal Bank exercised the termination provision it would pay Kirkpatrick "any earned or unpaid salary accrued through the effective date of termination" and "any benefits which may be due . . . on the date of termination," among other benefits.
Pursuant to an arbitration provision in the employment agreement, the parties agreed to arbitrate disputes arising out of the agreement. They agreed that "[t]he decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction."
On February 20, 2009, Royal Bank began participating in the Troubled Assets Relief
Program ("TARP"). *fn2 As a condition to participate in TARP, Royal Bank agreed to "prohibit any golden parachute payment" to a senior executive officer during its participation in the program. 31 C.F.R. § 30.9 (2011). To ensure compliance with that condition, Royal Bank had Kirkpatrick sign a waiver of his right to bring a claim against Royal Bank "for any changes to [his] compensation or benefits that are required to comply with [TARP]." By signing the agreement, Kirkpatrick acknowledged that Royal Bank was prohibited from making "golden parachute payments."
On February 4, 2010, Royal Bank asked Kirkpatrick to resign. *fn3 Kirkpatrick refused. Royal Bank terminated Kirkpatrick's employment eight days later, on February 12, 2010, effective immediately.
On April 15, 2010, Kirkpatrick filed a demand for binding arbitration, claiming that Royal Bank breached the employment agreement by failing to give him 90 days notice of his termination. He sought compensation for the 90-day period that he claims should have been given.
During the arbitration proceeding, Royal Bank filed a motion for summary judgment. It contended that Kirkpatrick was not entitled to post-termination compensation because it would be an impermissible "golden parachute payment" under TARP. TARP regulations defined a "golden parachute payment" as "any payment for the departure from a TARP recipient for any reason . . . except for payments for services performed or benefits accrued ." 31 C.F.R. § 30.1 (emphasis added). The arbitrator denied Royal Bank's motion, concluding that payment of 90-days' wages was a "payment for services performed or benefits accrued," and not a prohibited "golden parachute payment." On January 18, 2011, the arbitrator found in favor of Kirkpatrick and awarded him $48,329.00, the amount he would have received during the 90-day notice period.
On January 27, 2011, Kirkpatrick filed a petition to confirm the arbitration award in the Berks County Court of Common Pleas. Royal Bank removed the action to federal court, contending that the arbitrator's decision was made in manifest disregard of TARP. On February 11, 2011, Royal Bank filed an action in ...