The HR Legal News Blog

How Not to Prove an Arbitrator’s Partiality

The Eleventh Circuit has issued a stern reminder to parties who are unhappy with an arbitrator’s rulings:  direct, definite and demonstrable evidence is necessary in order to prove that an arbitrator is biased in favor of an opponent.

In Fowler v. Ritz-Carlton Hotel Co., 2014 U.S. App. LEXIS 15895 (11th Cir. 2014)(unpublished opinion), plaintiffs filed a complaint against their employer, Ritz-Carlton Hotel Company, LLC.  The arbitrator issued a scheduling order that required plaintiffs to submit an amended demand for arbitration by a certain date. Plaintiffs’ attorney did not comply with this deadline.  In fact, the attorney only got around to filing a motion for extension of time four months after the deadline had passed.  Despite this tardiness, the arbitrator granted the motion and set a deadline for discovery that specified that the parties could take up to ten depositions.  Testing their luck (and, likely, the patience of the arbitrator), plaintiffs moved to depose 40 witnesses.  Predictably, the arbitrator denied their request. When plaintiffs gave Ritz-Carlton less than 48 hours’ notice of their intention to depose four witnesses, the arbitrator granted Ritz-Carlton’s request to prevent the depositions.  Even at this stage in the proceedings, the arbitrator took pains to specify that plaintiffs could still take depositions at a later date with reasonable notice.

Plaintiffs then moved to disqualify the arbitrator on the grounds that she was biased in Ritz-Carlton’s favor and  had “utterly thwarted” plaintiffs’ ability to conduct discovery. After more wrangling (including an unsuccessful effort by plaintiffs to remove the case to federal court), the arbitrator ultimately issued an award in Ritz-Carlton’s favor. The arbitrator’s decision was confirmed by a federal magistrate judge, who chastised plaintiffs for filing inaccurate, farfetched and unpersuasive arguments.

Plaintiffs claimed that the arbitration award should be vacated due to the arbitrator’s evident partiality in favor of Ritz-Carlton. In particular, plaintiffs claimed that Ritz-Carlton’s parent company, Marriot, advertised on the website maintained by the arbitrator’s law firm.   In fact, the website listed a number of hotels, including a local Marriot, as possible accommodations for firm visitors.

Under the Federal Arbitration Act, an arbitration award may be vacated if the arbitrator actually has a conflict of interest or knows and fails to disclose information which would lead a reasonable person to believe a conflict existed. Noting that plaintiffs failed to allege, let alone provide evidence, that the arbitrator even knew of the reference to the Marriot hotel, the Eleventh Circuit agreed that plaintiffs’ allegations were “remote, uncertain and speculative.” Moreover, the Court reminded plaintiffs that an arbitrator’s failure to investigate a potential conflict of interest is not sufficient to establish partiality.

This case certainly does not suggest that arbitrators should not investigate potential conflicts of interest. Instead, the Eleventh Circuit reminds us that vacating an arbitrator’s decision on the grounds of evident partiality is a serious act that requires serious proof. In this case, plaintiffs’ allegations were dismissed by the lower courts and the Eleventh Circuit as “distorted,” “frivolous,” “irrelevant,” “meritless” and “omit[ting]…inconvenient facts.” It is difficult to imagine a more strongly worded rebuke or a more clearly worded reminder that federal law favors arbitration.