Arbitrator’s Social Life Overturns Award

In Dallas last week, a court overturned a $22 million (!) arbitration decision because the arbitrator had failed to disclose that he had socialized with one of the lawyers. 

As the Wall Street Journal law blog reported:

Arbitration awards, as most litigators know, are very difficult to overturn on appeal.

That’s why a Dallas appellate court’s decision this week to vacate a $22 million arbitration award is so notable.

The reason for the appellate court’s ruling: the arbitrator failed to disclose contacts he’d had with a lawyer in the case, including attending a Dallas Mavericks basketball game and sharing meals with the attorney.

Here’s the story from the Texas Lawyer’s TexParte blog and click here to see the ruling setting aside the arbitration award.

The ruling involves a partnership dispute arbitrated in 2007-08 by JAMS arbitrator Robert Faulkner. The winning party in the dispute was represented by Brett Johnson, a partner at Fish & Richardson.

Faulkner disclosed that he had presided over an arbitration involving Fish & Richardson, but he did not reveal any social contacts with Johnson.  The contacts included the Mavericks game, several private meals, and Johnson’s Christmas gift of a wine basket to Faulkner and the arbitrator’s wife, according to the appellate court ruling.

The court concluded the two men had a “direct, personal, professional, social and business relationship” that should have been disclosed because it might give rise to a “reasonable impression” that Faulkner would be partial to Johnson.

Although the lawyer claimed that the minor socializing was the same as with any lawyer, judge or arbitrator, the court did not view it that way.  The parties have not yet decided if they are going to appeal.  Hat Tip and much appreciation to Susan Franck for sending this along.

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