Arbitrator Snooze … You Lose? A Reminder to Raise Specific Objections to an Arbitrator First, or Risk Forfeiting Them on Appeal

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Foley & Lardner LLPYou represent a business owner who ends up arbitrating a dispute with a supplier.  After spending tons of time and money preparing for the 5-day evidentiary hearing, you look up to hear snoring from the arbitrator - he fell asleep for part of the proceedings!  Surely you’ll be able to get the result vacated by the circuit court on appeal, right?  Well, no – not if you slept on your objection by failing to first specifically raise it with the arbitrator, according to the Wisconsin Court of Appeals’ recent decision in Loren Imhoff Homebuilder, Inc. v. Lisa Taylor, et al., No. 2019AP2205, 2020 WL 6495102 (Wis. Ct. App. Nov. 5, 2020).   

The underlying facts of Loren Imhoff, a remodeling dispute between homeowners and a builder, are commonplace.  But the case took an unusual turn after the arbitration hearing, when the homeowners asked the arbitrator to recuse himself, alleging, among other reasons, that he had been sleeping (or at least drowsy) during parts of the hearing.1  Loren Imhoff, 2020 WL 6495102, *2.  The arbitrator rejected the request, and issued a decision in the builder’s favor, which the homeowners persuaded the circuit court to vacate on the ground (under Wis. Stat. § 788.10(1)(d)) that the arbitrator had “imperfectly executed” his powers.  Id. *2-3.  The Court of Appeals reversed, holding that the homeowners had forfeited their objection by failing to raise it during or after the arbitration hearing.  Id. *3.

The opinion includes a lengthy discussion of Wisconsin law involving arbitration, as well as forfeiture of objections.  The key point was that, just as a potential appellant generally forfeits arguments not first presented to the trial court, parties to an arbitration generally forfeit objections not first raised before the arbitrator.  Id. *5-9.  The Court found additional support for this holding in the fact that appellate standards of review are very deferential to arbitration decisions.  The fatal flaw for the homeowners was that they did not specifically present to the arbitrator the issues that his sleeping caused, but raised it for the first time in the circuit court.  They thus snoozed on (and forfeited) their objection. 

Careful readers may protest, noting that the homeowners had asked the arbitrator to recuse himself on this basis.  That was not enough.  Instead, the homeowners needed to point to what evidence the arbitrator slept through, and ask him to resolve any issues that his naps had caused in his final decision.  Id.  They didn’t do this, so their arguments about making “reasonable attempts to rouse the arbitrator” while “trying to be subtle about it” were unavailing.  Id. *10.  Perhaps an air horn next time?  In all seriousness, practitioners should note that in any litigation, particularly in arbitration, they need to raise objections soon as possible, and make them as detailed as possible, pointing to exactly what errors they allegedly caused.  Otherwise, your hopes of delivering your client a win may be nothing but a dream.

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1 One of the funnier aspects of the opinion is that its citations reveal this is not the first – or third, or fourth – time an appellate court has needed to confront issues arising from a dozing arbitrator.  See id. *9.  Parties to arbitration may want to consider spicing up their presentation of the evidence…or at least making sure salads are served at lunch?

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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