Appearance of Impropriety by Arbitrator Insufficient to Vacate Arbitrator’s Award

This York County matter concerned the plaintiff’s claim that Weis Markets was liable for her slip-and-fall and her injuries resulting therefrom. The plaintiff and the defendant agreed to remove the case to binding arbitration after discovery. The written agreement for the arbitration provided for a “hi/low” of $75,000/$750,000 and specified that no ex parte communications with the arbiter would be permitted.

During a lunchbreak at the arbitration, the arbiter privately met with counsel for the defendant and a Weis representative, contrary to the agreement. The arbiter then found in the defendant’s favor. Given the appearance of impropriety by the arbiter in engaging in ex parte communications, the plaintiff filed a motion to vacate the award.

The trial court denied the plaintiff’s motion, which was appealed to the Superior Court. The Superior Court noted that the arbiter’s ex parte meeting, indeed, gave the appearance of impropriety and could cast doubt on the impartiality of the arbitrator. However, the court held that this, by itself, was insufficient to vacate the award under 42 Pa. C.S.A. § 7341. Instead, the Superior Court held that the plaintiff needed to present specific evidence of fraud, misconduct or corruption by the arbiter (i.e., that something improper occurred during the ex parte meeting). The Superior Court further held that vacating the award was not warranted as the the $75,000 “low” received by the plaintiff was not inequitable given disputed liability or unconscionable since the plaintiff still received some compensation.

The impact of this decision is that the party attempting to vacate a binding arbitration award on the lack of neutrality by the arbitrator faces a very high burden of alleging specific conduct that would constitute fraud. In cases like Shannon, where the fraud is claimed to have occurred “behind closed doors,” this would seem to be a near impossible burden to meet.