Court Denies Petition to Vacate, Finding Petitioner Waived Objection Based on Arbitrator Impartiality

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Section 10(a)(2) of the Federal Arbitration Act allows a court to vacate an arbitration award based on “evident partiality” in the arbitrators. Citing section 10(a)(2), the petitioner moved to vacate a JAMS arbitration award issued in favor of the respondent, claiming the arbitrator failed to timely disclose the full extent of her financial interest in JAMS, and because JAMS itself belatedly disclosed the number of proceedings it had conducted involving the respondent’s law firm. The information was first disclosed after post-hearing briefing and roughly one week before closing arguments.

Failure to disclose apparent interests and/or conflicts is not, in and of itself, a basis for vacating an arbitration award in the Third Circuit. Rather, the court explained, non-disclosure is relevant only to the extent that the non-disclosure reveals evident partiality, defined as “proof so powerfully suggestive of bias that a reasonable person would have to believe that the arbitrator was partial to Respondent.” Using a four-factor balancing test adopted from the Second and Fourth Circuits, the court held that the failures to disclose in this case were “blatant and indefensible” and thus weighed in favor of a finding of bias. Nevertheless, the court denied the petitioner’s motion to vacate, finding her “glaring” failure to raise the issue until several months later, and only after an award was issued against her, constituted a waiver of any otherwise valid objection.

Martin v. NTT Data, Inc., No. 2:20-cv-00686 (E.D. Pa. June 23, 2020).

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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