The plaintiffs-appellants were 23 individuals who were employees of Seagull Energy. The plaintiffs comprised virtually all of the employees of the Operations and Construction Group (O&C Group), a division of Seagull. Seagull had adopted a Management Stability Plan (the Plan) in 1995, which provided that employees involuntarily terminated within two years after a "change in control,"such as a merger, would receive specified severance benefits. It provided that disputes under the Plan should be submitted to arbitration.

After a merger, the plaintiffs did not timely receive severance benefits pursuant to the terms of the Plan, so they each filed a claim with the Ocean Organization and Compensation Committee (the Committee), which was also the named fiduciary with the power to administer the Plan and review claims. It was primarily composed of outside directors and Senior Ocean executives. The Committee based its decision on a packet of information, including a denial letter drafted by the company's general counsel. The Committee met for one hour and decided to deny benefits
The plaintiffs filed suit in Texas state district court.

Ocean removed to federal court and then moved the district court to compel arbitration. The district court ordered "plaintiffs' claims"to be arbitrated. The parties agreed on an arbitrator and submitted the case. The arbitrator entered a 42-page opinion awarding the plaintiffs benefits under the Plan totaling some $1.5 million plus $75,000 attorney fees and 6 percent preaward interest and 10 percent postaward interest.

Ocean then filed an application to vacate the award in the district court, arguing that the arbitrator had exceeded his authority by reviewing the merits of the Plan and its amendments. The plaintiffs' statement of claim had clearly presented to the arbitrator all of the issues decided by the arbitrator. The defendant never objected to any of the issues submitted to arbitration by the plaintiffs until after the arbitrator decided against the defendant.

The district court vacated the award, finding that the arbitrator had "exceeded his powers, misunderstood the law, and misread the documents."

The plaintiffs appealed, asserting that the district court improperly applied a de novo standard of review and ignored the considerable deference due arbitration awards. Ocean argued that the arbitrator exceeded his powers by reviewing the merits of the Plan and its amendments. On appeal, was the district court order to vacate the arbitration award upheld? Why or why not?

Harold A. Kergosien, et al. v. Ocean Energy, Inc., 376 F.3d 377; 2004 WL 2451351 (5th Cir. 2004).