Arbitration Rules/Procedures

The Fifth Circuit just issued a decision openly disagreeing with how the Second Circuit has interpreted both the Stolt-Nielsen decision and case law regarding the level of deference that courts owe arbitrators.  In Reed v. Florida Metropolitan Univ., Inc., __ F.3d __, 2012 WL 1759298 (5th Cir. May 18, 2012), the Fifth Circuit vacated an arbitration award that permitted class arbitration, acknowledging that SCOTUS’s “lengthy discussion of the significant disadvantages of class arbitration” in Stolt-Nielsen and Concepcion led the court to ditch the extraordinary deference it usually grants decisions by arbitrators.

Reed involved a potential class of students who attended undergraduate online learning programs, only to find out that graduate programs and employers did not recognize their online degrees.  The students’ Enrollment Agreements contained these key provisions: “any dispute arising from my enrollment at Everest University…shall be resolved by binding arbitration under the [FAA] conducted by the” AAA; and “any remedy available from a court under the law shall be available in the arbitration.”  Based on these provisions, the federal district court had compelled arbitration, but concluded that the arbitrator should decide whether the case could proceed as a class action in arbitration.  After interpreting the enrollment agreement and the relevant case law, the arbitrator ruled that the students could proceed as a class.  The district court confirmed that award.

The Fifth Circuit reacted like a guard dog, growling protectively about Stolt-Nielsen.  After confirming that the arbitrator (and not the court) had the power to decide whether the claims should proceed as a class in arbitration (based on the parties’ incorporation of the AAA rules, which now include Supplementary Rules clearly authorizing arbitrators to decide whether the arbitration clause permits class arbitration), the court launched into an eight page analysis of the merits of the arbitrator’s decision.  Why is that significant?  Because SCOTUS has said (and the Fifth Circuit even quoted) that “as long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority,” the arbitrator’s decision should be confirmed.  In Reed, the Fifth Circuit implicitly acknowledges that the arbitrator thoughtfully construed the enrollment agreement and the appropriate case law under the FAA, and had the authority to do so.  Even so, the Fifth Circuit vacated the arbitrator’s decision.

The Fifth Circuit held that neither of the contract clauses cited by the arbitrator (and quoted above) could properly be interpreted as allowing class arbitration.  It found the “any dispute” clause only reflects an agreement to arbitrate and is “not a valid contractual basis upon which to conclude that the parties agreed to submit to class arbitration.”  Similarly, it found the “any remedy” clause insufficient because “while a class action may lead to certain types of remedies or relief, a class action is not itself a remedy.”  In sum, said the Fifth, “the arbitrator lacked a contractual basis upon which to conclude that the parties agreed to authorize class arbitration.  At most, the agreement in this case could support a finding that the parties did not preclude class arbitration, but under Stolt-Nielsen this is not enough.”

Toward the end of the opinion, the Fifth Circuit acknowledged that the Second Circuit came to a different conclusion in Jock v. Sterling Jewelers, Inc., 646 F.3d 113 (2d. Cir. 2011).  The Second Circuit’s decision in Jock, confirming an arbitrator’s decision to permit class claims, was fundamentally determined by its understanding of the appropriate standard of review.  The Second Circuit noted that it could not decide whether the arbitrator correctly interpreted the arbitration agreement, but only whether the arbitrator had authority to do so and “whether the agreement or the law categorically prohibited the arbitrator from reaching” its conclusion.  What the Fifth Circuit failed to acknowledge is that the Third Circuit issued a decision just last month, agreeing with the Second Circuit.  See Sutter v. Oxford Health Plans LLC, __ F.3d __, 2012 WL 1088887 (3d Cir. April 3, 2012) (affirming an arbitrator’s decision to allow class arbitration based on an arbitration agreement that never mentioned class actions at all).

My own prediction is that the Supreme Court will not grant an appeal of these decisions, but will leave the circuit courts to try and develop a majority approach to this issue in the coming years.  As long as the existing cases about the deference courts must grant to arbitrators under Section 10 of the FAA remain good law, the approach of the Second and Third Circuits should be persuasive.

A few months ago I posted about actions that FINRA and the NLRB were taking in support of allowing class arbitration, and those agencies have recently taken additional actions that help consumers or employees with relatively low dollar claims.

The NLRB brought a complaint against 24 Hour Fitness USA, Inc.  The complaint alleges that 24 Hour Fitness’s requirement that all of its employees waive their rights to any type of collective or class action suits — whether in arbitration or litigation — “violates protections guaranteed by the National Labor Relations Act.”   The complaint cites seven instances where classes of employees were claiming wage and hour violations and 24 Hour Fitness moved to compel those plaintiffs to individual arbitrations. 

FINRA also recently approved a change in its arbitration rules.  In recognition that $25,00 is no longer the cutoff for “smallish” claims, FINRA raised the dollar limit for its simplified and streamlined arbitration from $25,000 to $50,000.  Cases under $50,000 can now be heard by one arbitrator on written submissions with expedited discovery.   This should help securities customers with lower damages afford to prosecute their claims.

Maryland’s highest court recently affirmed the dismissal of an employer’s non-compete claims as time-barred, even though the employer argued that the parties’ arbitration excused the untimely filing.  Kumar v. Dhanda, __ A.3d ___, 2012 WL 1521567 (Md. May 2, 2012).

The employee, a urologist, had signed a contract calling for all disputes to be “resolved pursuant to arbitration,” but noting “both parties can go to Court if not satisfied by the decision” of the arbitrator.  [The Court commented that the agreement was prepared “without the assistance of counsel,” as if to explain why such a useless provision was drafted in the first place.]  The employee’s contract was terminated in 2002, and the employee had a three year non-compete provision, which  extended through 2005.  In 2005, the employer sued the employee, alleging a breach of the non-compete and other claims.  The district court judge dismissed all counts (because they were subject to arbitration) and compelled arbitration.

Inexplicably, the employer waited two years to begin the arbitration. In June of 2008, the arbitrator denied all relief to either party (except a nominal $868 of insurance premiums).   The employer waited another nine months and  filed a lawsuit in the Maryland trial court in March of 2009.  The employee successfully moved to dismiss all claims based on Maryland’s three year statute of limitation on breaches of contract.

Maryland’s highest court affirmed that result.  In response to the employer’s argument that its action had not “accrued” until after the arbitration was complete, the court noted that claims accrue once all the elements of the claim have occurred.  Since arbitration is not an element of the breach of contract claim, the employer’s breach claim had accrued at the time of the breach.  In response to the employer’s argument that the arbitration tolled the statute of limitation, the court found that Maryland law did not support a tolling exception for non-binding arbitration.

Critical to the court’s analysis was this question: Why didn’t the employer avail itself of one of the many options it had to preserve its claim?  The court pointed out that the employer could have: negotiated for a tolling agreement with the employee, or asked the court hearing its 2005 claim to stay the case during the arbitration (instead of dismissing it), or just gotten off its rear and pursued its claims in a more timely fashion.

The lesson for litigators is this: do not rely on arbitration to toll any statute of limitation that may be running.  (The flip side is also true — do not rely on your court case to toll a statute of limitation that may apply in arbitration.)  Instead, file a placeholder suit in the alternative venue, and ask for a stay.


Although courts and practitioners may think of the Stolt-Nielsen decision as the death knell of class arbitration, the Third Circuit’s ruling last week serves as a reminder that the Stolt-Nielsen did not deal a mortal blow.  In fact, in Sutter v. Oxford Health Plans LLC, __ F.3d __, 2012 WL 1088887 (3d Cir. April 3, 2012), the Third Circuit affirmed an arbitrator’s decision to allow class arbitration based on an arbitration agreement that never mentioned class actions at all.

The arbitration agreement at issue in this dispute over medical reimbursements succinctly provided: “No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration…”  (Before you criticize the drafters, let me point out that this agreement was executed in 1998, before the availability of class arbitration was a hot topic.)  The putative class of doctors initially brought their case in state court, and the court granted the insurer’s motion to compel arbitration, noting that the issue of whether the case could proceed on a class basis was for the arbitrator to determine. 

The arbitrator determined that the arbitration agreement allowed the doctors to proceed in arbitration as a class.  The arbitrator based his analysis on both the breadth of the arbitration agreement and the absence of any express carve-out for class arbitration, which led him to conclude the parties intended to authorize class arbitrations. 

After the arbitration proceeded on a class-wide basis, the insurer moved to vacate the arbitrator’s decision to allow the class-wide claim.  The insurer argued the arbitrator “exceeded his power” within the meaning of Section 10 of the FAA.  (It is probably safe to assume the insurer lost the arbitration, although the opinion does not say…)  The district court and Third Circuit both upheld the arbitrator’s decision. 

The extraordinary deference that courts grant arbitrators was critical to the decision; the Third Circuit noted that as long as an arbitrator “makes a good faith attempt” to interpret and enforce the contract, the court will not vacate the arbitrator’s decision.  Because the arbitrator in Sutter rooted his decision in an analysis of the text of the arbitration agreement, the court concluded “the arbitrator performed his duty appropriately” and his decision on class arbitration could not be vacated. 

This decision is important for other courts, counsel, and arbitratorswho are interpreting Stolt-Nielsen S.A. v. Animal Feeds Int’l Corp., 130 S. Ct. 1758 (2010).  The Third Circuit recognized that “an arbitrator may exceed his powers by ordering class arbitration without authorization,” but also addressed some misconceptions about Stolt-Nielsen.  Most critically, the court emphasized that “Stolt-Nielsen did not establish a bright line rule that class arbitration is allowed only under an arbitration agreement that…expressly provides for aggregate procedures.”  Instead, it “established a default rule” that parties may not be compelled to class arbitration unless the contract indicates the party consented to class arbitration.   

What is the distinction?  It is that courts and arbitrators should not use the presence or absence of magic words like “class arbitration” or “class action” as the basis to rule on the availability of class arbitration, but instead must carefully analyze the contract to determine the parties’ intent.  The “default rule” mentioned in Sutter leaves the door open a smidge wider for arguments about the propriety of class arbitration than the “bright line rule”.  Just a smidge.


The Supreme Court of Arkansas has joined Florida, Ohio, and Arizona (at least) in holding that a non-lawyer is guilty of the “unauthorized practice of law” if he or she attempts to represent a corporation in arbitration proceedings.  Nisha v. Tribuilt Constr. Group, __ S.W.3d __, 2012 1034641 (Ark. Mar. 29, 2012).

Nisha involved a general contractor who claimed the owner owed it over $666,000 for completing construction of a hotel.  A year after the trial court compelled arbitration, the contractor’s counsel withdrew, and the contractor’s President sought to represent the company in the arbitration.  The owner objected and moved to enjoin the President from representing the contractor in arbitration, arguing that to do so constitutes the unauthorized practice of law.  The trial court found that the arbitrators, not the court, should decide whether the contractor could proceed without a lawyer, but certified the issue for immediate appeal.

The Supreme Court of Arkansas seemed offended that the trial court punted this issue to the arbitrators.  Just as the New York federal court noted in disqualifying lawyers from an arbitration, the courts have “exclusive authority to regulate the practice of law.”  After firmly claiming jurisdiction over the issue, Arkansas’s high court held that companies must be represented by lawyers, both in court and in arbitration.  The court cited two bases for its conclusion — first, Arkansas’s long-standing rule that corporations cannot engage in the practice of law through their officers, and second, “arbitration proceedings bear significant indicia of legal proceedings” and party representatives will make arguments, present evidence, and cross-examine witnesses.  Those two factors won the day, despite the court’s concern that arbitration is supposed to be cheaper than litigating in court.

Legitimate concern about the “unauthorized practice of law” comes up regularly in arbitration.  Not only for companies that may want to represent themselves, like the general contractor in Nisha, but also for out-of-state lawyers whose clients are contractually bound to arbitrate in another state (must I get admitted pro hac vice before the courts of Hawaii to represent a client at a hearing in Hawaii?  It might be worth it…).    Rule 5.5 of the ABA Model Rules of Professional Conduct (and its comments), and the relevant state’s equivalent rule, are the place to start for attorneys who are analyzing that issue.  Some mediators and arbitrators are also concerned that their work may be considered the “practice of law” and therefore need to be sanctioned by each state court where they offer dispute resolution services.   On top of these issues of how each state defines the practice of law, courts will likely have to consider the interplay of the FAA, and whether it preempts any state rules governing parties’ representation and choice of neutrals in arbitration.  For now, though, this area is in flux and parties must be cautious when analyzing their compliance with state rules governing the unauthorized practice of law.

A reasonable person may have thought that the Supreme Court effectively killed off class arbitrations with its decisions in Stolt-Nielsen and Concepcion, but at least two government agencies have recently made decisions that ensure financial consumers and employees can bring classwide claims in some arbitrations.

FINRA, the Financial Industry Regulatory Authority, regulates all securities firms doing business in the United States.  It also administers the largest dispute resolution forum for investors and investment firms.  FINRA has enacted rules that prohibit investment firms from including class action waivers in their agreements with customers.    Not only does it have those rules, but it is enforcing them.  Just last week, FINRA brought an enforcement action against Charles Schwab for “violating FINRA rules by requiring its customers to waive their rights to bring class actions against the firm.”

In January, the NLRB, National Labor Relations Board, “ruled that it is a violation of federal labor law to require employees to sign arbitration agreements that prevent them from joining together to pursue employment-related legal claims in any forum, whether in arbitration or in court.”   In its decision, the NLRB acknowledged that it was confronted for the first time with a conflict between federal precedent interpreting the Federal Arbitration Act and precedent interpreting the National Labor Relations Act.  The NLRB’s outcome, it found, was an “appropriate accomodation of the policies underlying the two statutes.” 

It appears the executive branch is ready to take on the judicial branch over the issue of class arbitration.

In a 2-1 decision, the Third Circuit held last week that the arbitration agreement in a personal computer purchase was valid, despite its mandate of a defunct arbitral forum.  Its decision, Khan v. Dell Inc., ___ F.3d ___, 2012 WL 163899 (3d Cir. Jan. 20, 2012), is in line with the decision of the South Dakota Supreme Court in late December, and suggests a trend toward upholding arbitration agreements that call for an impossible forum or arbitrator.

The plaintiff, Khan, purchased a Dell computer in 2004 and signed a contract including this arbitration language: “Any claim, dispute, or controversy…shall be resolved exclusively and finally by binding arbitration administered by the National Arbitration Forum (NAF) under its Code of Procedure.”  NAF’s Code of Procedure provided that it “shall be administered only by the National Arbitration Forum.”  After Kahn sued Dell for defective design, Dell moved to compel arbitration.  The district court denied the motion, based on the fact that the NAF no longer administers consumer arbitrations and the court’s conclusion that the NAF was “integral” to the arbitration agreement.

 The Third Circuit reversed the district court.  It first restated the applicable standard in a way that make it harder for Khan to meet, writing that for an impossible forum to invalidate an arbitration agreement  “the parties must have unambiguously expressed their intent not to arbitrate their disputes in the event that the designated arbitral forum is unavailable.”   The court then went out of its way to find ambiguity in the arbitration agreement.  For example, it found that it was ambiguous whether “exclusively” modified only the phrase “binding arbitration” or the entire phrase “binding arbitration administered by the [NAF]” and it found that the incorporation of the NAF rules still leaves ambiguous “what should happen in the event that the NAF is unavailable.”  In support of ambiguity, the Third Circuit cited cases that have interpreted similar NAF language and come to conflicting conclusions.  

After finding ambiguity in the agreement, the court concluded “we must resolve this ambiguity in favor of arbitration.”  The court then found Section 5 of the FAA was applicable and required the district court to appoint a substitute arbitrator.

The dissent found no ambiguity in the arbitration agreement between Khan and Dell.  It found “the selection of the NAF as arbitrator was an integral part” of the arbitration agreement.  It also cited to facts from an amicus brief from the National Association of Consumer Advocates, detailing the allegations of fraud against the NAF that led to the demise of NAF’s administration of consumer claims, suggesting that Dell should not be rewarded for requiring a biased arbitration forum in its consumer contracts. 

The Third Circuit is the highest federal court to date to address this exact issue — whether to enforce an arbitration agreement that calls for administration by the defunct NAF — and its decision makes it much more difficult for consumers with similar arbitration agreeements to convince trial courts to allow them to litigate their claims in court.


Earlier in 2011, courts in both Pennsylvania and Illinois issued decisions finding that when a consumer’s arbitration agreement called for the National Arbitration Forum (NAF) to administer the arbitration, but the NAF no longer administered consumer disputes, the arbitration agreements were unenforceable.  Those courts found the parties’ choice of NAF was “integral” to the arbitration agreement and could not be severed.  Just last week, the South Dakota Supreme Court disagreed.

In Wright v. GGNSC Holdings LLC, ___ N.W.2d ___, 2011 WL 68490097 (S.D. Dec. 28, 2011), a wrongful death claim against a nursing home (and related parties), the South Dakota Supreme Court considered the defendants’ motion to appoint a “substitute” arbitrator under Section 5 of the Federal Arbitration Act.  (That section says the court “shall” appoint an arbitrator if there is a lapse in naming an arbitrator for any reason.)  The relevant agreement provided that all disputes would be “resolved exclusively by binding arbitration . . . in accordance with the National Arbitration Forum Code of Procedure.”  While the defendants’ motion to compel arbitration of the estate’s suit was pending, the NAF “became unavailable to administer an arbitration” of the dispute.  The lower court then denied the nursing home’s motion to compel arbitration based on the unavailability of the NAF.

The South Dakota Supreme Court reversed that decision, concluding that “designation of the NAF’s Code of Procedure was an ancillary logistical concern that was not as important to the agreement as the agreement to arbitrate.”   Its analysis that the NAF Code was not “integral” was based on two things: first, South Dakota’s “overriding policy that arbitration will be favored”; and second, the fact that the NAF Code did not require an “NAF arbitrator.”  In other words, the court concluded that any arbitrator chosen by the agreed-upon process could still hear the dispute under the NAF rules.  (The court found “of little significance” that the NAF Code itself provides that only the NAF could administer the NAF Code.)  Finally, the court chided the plaintiff for never raising the unavailability of the NAF Code as a defense, using that as additional evidence that the choice of code was not “integral.”  Because the court found NAF’s unavailability to administer the dispute was not “integral,” it found that the court was required to appoint a substitute arbitrator under the FAA.

The Supreme Court of Texas issued three decisions last week that all relate to arbitrator selection and offer reminders to drafters and litigators that arbitrator selection is a critical component of arbitration agreements.

Two of the decisions involved tort claims against the same defendant, a cemetery owner.  In re Serv. Corp. Int’l, ___ S.W.3d ___, 2011 WL 6276124 (Tex. Dec. 16, 2011); In re Serv. Corp. Int’l, ___ S.W.3d ___, 2011 WL 6276126 (Tex. Dec. 16, 2011).  The arbitration provisions within the cemetery owner’s contracts called for the parties to choose an arbitrator by agreement, but if that was not possible, the American Arbitration Association was authorized to select the arbitrator. 

In one of the cases, it took several months for the parties to agree on an arbitrator, and that individual was then disqualified based on his previous representation of the defendant.   About a month after the disqualification, the trial court concluded that the parties were unable to agree on an arbitrator and appointed an arbitrator of the court’s choosing.  The Supreme Court of Texas issued a writ of mandamus, directing the trial court to vacate its appointment of the arbitrator.   The court analyzed Section 5 of the Federal Arbitration Act, which governs how and when courts may intercede in arbitrator selection.  Section 5 provides that the selection provisions in the contract “shall be followed,” but if the parties “fail to avail” themselves of such a method or if there is a “lapse” in the naming of an arbitrator, the court may appoint the arbitrator. 

Though the Texas court noted that previous cases have found a five month “lapse” in arbitrator selection was sufficient to allow the trial court to step in, it held that an impasse of “at most one month” did not constitute a “lapse” within the meaning of Section 5.  (In the second cemetery case, the Texas court also issued a writ of mandamus, directing the trial court to vacate its order appointing an arbitrator, when there had been a two-month delay in the selection of an arbitrator.  Would three months be enough?  Or four?  Those are questions for another day…)

Texas’ third arbitrator selection case from December 16 relates to whether a party-appointed arbitrator must meet the regular standards of the AAA, or only the requirements of the contract.  Americo Life, Inc. v. Myer, __ S.W.3d __, 2011 WL 6276529 (Tex. Dec. 16, 2011).  In the Americo case, the contract provided that the arbitration would be decided by a panel of three arbitrators: each party would appoint an arbitrator who is a “knowledgeable, independent businessperson or prrofessional” (does that really cut down the list of possibilities??); and those two arbitrators would select the third arbitrator.  The contract also incorporated the commercial arbitration rules of the AAA, which provide that arbitrators shall be “impartial and independent.”  Americo’s chosen arbitrator ended up being removed by the AAA for lack of impartiality.  After Americo lost the arbitration (unanimously), it moved to vacate the award, arguing that the arbitration panel was not formed according to the parties’ contract.  Americo argued that the party-appointed arbitrators only had to be “knowledgeable, independent business[people]” and did not have to meet the impartiality standards of the AAA.   The Supreme Court of Texas did not address the merits of that dispute, however, and just clarified that Americo had properly preserved that issue for appeal.  (We will post the substantive result when it is available.)

These three cases illustrate that if the parties are going to insert an arbitrator selection process in the contract that varies at all from the “standard” arbitration rules they are incorporating, it is worth the time to clarify any potential inconsistencies between those two processes.  It also shows that if there are alternative processes offered (like first trying to mutually agree, and then going to the AAA), it may be worth spelling out how to determine when the first process has failed and how the parties must move to the second option.



The lawyers who sought to disqualify their opposing counsel during a pending arbitration must have been giddy when they drew Judge Shira Scheindlin of the Southern District of New York as their judge.  Judge Scheindlin, who is famously tough on unscrupulous lawyers, did not disappoint.  She went out of her way to exercise jurisdiction over the motion and disqualified  attorneys who had received improper communications from the arbitrator in Northwestern Nat’l Ins. Co. v. Insco, Ltd., 2011 WL 4552997 (S.D.N.Y. Oct. 3, 2011).

At issue in Insco was the communication between the defendant’s lawyer and the arbitrator the defendant had appointed.  The arbitration agreement called for each party to appoint one non-neutral arbitrator, and then for a third neutral arbitrator to be chosen by lottery.  At the outset, the parties and arbitrators agreed that each party could communicate ex parte with their appointed arbitrator, but there could be no ex parte communication about pending motions after they were fully briefed. 

One year into the arbitration proceedings, the arbitrator appointed by the defendant shared 130 e-mails with the defendant’s counsel (ostensibly because he was concerned about another arbitrator’s bias).  The e-mails included many private emails that had been exchanged solely among the arbitrators during their deliberations over various motions.   The arbitrator who had turned over the e-mails then resigned, another arbitrator was appointed, and the panel noted that the resigned arbitrator’s actions were “highly inappropriate” but that the panel would proceed to the hearing and would decide the case on the merits.   After the plaintiff’s summary judgment motion was denied, it asked the federal court to disqualify the defendant’s counsel from representing defendant any further in the arbitration, based on its actions in obtaining the private emails and failing to timely disclose their contents. 

Judge Scheindlin disqualified the defendant’s attorneys, finding they had engaged in “serious violation[s] of arbitral guildelines, as well as ethical rules.”  The Judge further found that the ethical violations could taint the arbitration hearing itself, because the private e-mails “relate[d] to actual and ongoing disputes in the arbitration” — indeed the e-mails included drafts of orders and the neutral arbitrator’s views on a number of pending issues.  The Judge noted that: “Allowing parties to obtain confidential panel deliberations would provide an unfair advantage in the legal proceedings and have a chilling effect on the ability of arbitrators to communicate freely.”

The case is unusual in large part because the Court was willing to hear this mid-arbitration motion.  In general, the FAA only allows courts to consider any arguments as to the arbitration after the final award is issued.  For example, a non-party to an arbitration agreement recentlly brought a petition to federal court, seeking to overturn an arbitrator’s decision to join that non-party to the arbitration proceeding.  The court dismissed the action, noting that Section 10 of the Federal Arbitration Act only authorizes a court to review the fairness of the arbition proceeding after a final award.  Northland Truss Sys., Inc. v. Henning Constr. Co., LLC, ___ F. Supp. 2d ___, 2011 WL 3915538, at *4 (S. D. Iowa Sept. 2011). 

In Insco, however, the court relied on New York precedent finding attorney discipline is beyond the jurisdiction of arbitrators and can only be decided by courts.   The court also noted that the arbitration panel had refused to consider any sanctions as a result of the e-mail disclosure.   The court included some choice quotes from the panel, like “I avoid that whole circumstance because I go forward in life.  I don’t go backward.”  Those glib quotes from the panel may well have influence the court’s decision to intercede before the final award. 

If New York law applies in an arbitration, there is now a new basis to seek court intervention during an arbitration gone very, very wrong: the unethical conduct of lawyers that may taint the hearing.  In fact, the argument may hold water under the law of other jurisdictions as well.  A Connecticut court has also been willing to consider a motion to disqualify a lawyer in the middle of an arbitration proceeding.  City of Bridgeport v. Kasper Group, Inc., 2002 WL 1008244 (Conn. Sup. Ct. 2002) (denying motion to disqualify, after noting that was an issue for the courts).  Furthermore, Judge Scheindlin’s high regard as a jurist will make most courts take a mid-arbitration motion for attorney disqualification seriously going forward.