In Abbott v Mulligan, (10th Cir. 2011), Abbott and Mulligan entered into an Attorney Association Agreement to jointly pursue clients who fell within a class action settlement. The agreement contained an arbitration clause requiring all disputes to be resolved by binding arbitration under the American Arbitration Association commercial arbitration rules. The choice of law provision stated that Utah law governed.

After a dispute arose over whether Abbott was following the terms of the agreement, which the parties litigated in court for a year, Abbott moved to compel arbitration. The arbitral panel determined that both Abbott and Mulligan violated terms of the agreement and ordered Abbott to pay an award based on gross damages.

Abbott then moved to vacate the award, arguing that it was in manifest disregard of Utah contract law to award damages based on gross rather than net damages. The district court denied the motion to vacate, finding no manifest disregard of the law because the arbitral panel's ruling "evidenced, at most, a misunderstanding or misapplication of the law."

Abbott appealed to the Tenth Circuit Court of Appeals, again arguing, amongst other claims, that the award was in manifest disregard of the law. Abbott argued that Utah law clearly requires that "contract damages must be reduced by the cost of performance." The court rejected Abbott's argument because he did not show "wilful inattentiveness to the governing law", which is what manifest disregard requires.

The court explained that, while it is true that the majority of Utah cases require calculating damages based on net, and not gross, profits and that the arbitral panel did not explain its decision to not reduce the amount claimed by expenses the party saved, this was, at most, a decision based on a misunderstanding or misinterpretation of the law. When a panel is presented with two different views of the law and conflicting evidence, it is not manifest disregard to choose one party's argument. The court refused to set aside the arbitral award because the panel, at most, misunderstood or misapplied the law.

This decision shows the narrow grounds on which a court can refuse to enforce an arbitral award. Even when a court thinks that an arbitral panel did not correctly understand or apply the law, the award can still be enforced.