Today’s post continues our series of arbitration refreshers, to combat the Summer Slide. It was researched and written by Anne Marie Buethe from the University of Iowa Law School.
Despite clear grounds for authority, arbitrators remain wary of hearing and granting dispositive motions.* While arbitrators posit reasons for their reluctance—the risk of vacatur being of primary concern—courts’ consistent affirmance of arbitrators’ summary awards demonstrates that these reasons are overstated. As long as an arbitrator provides parties a fair opportunity to present their case, he or she can grant a dispositive motion without violating the right to a fundamentally fair hearing—the touchstone for whether or not a court will vacate an arbitral award.
Arbitrators have long had the implicit authority to grant dispositive motions. The AAA made that authority explicit for its arbitrators when it amended it rules in 2013. Rule 33 of the AAA Commercial Rules states, “[t]he arbitrator may allow the filing of and make rulings upon a dispositive motion only if the arbitrator determines that the moving party shows that the motion is likely to succeed and dispose of or narrow the issues in the case.” JAMS, FINRA, and CPR rules also allow for summary judgment.
Even before Rule 33, courts assumed arbitrators’ summary disposition authority. In Schlessinger v. Rosenfeld, Meyer & Susman, 40 Cal. App. 4th 1096 (Cal. App. Ct. 1995), for example, the California Court of Appeals upheld an award where the arbitrator decided the primary issues through summary adjudication motions. The court held that arbitrators have the implicit authority to rule on dispositive motions even if, at the time, there was no explicit power. There are at least a dozen cases before 2013 that uphold this implicit authority and affirm summary dispositions.**
Post-2013, courts have not changed their approach. For example, in South City Motors, Inc. v. Automotive Industries Pension Trust Fund, 2018 U.S. Dist. LEXIS 88452 (N.D. Cal. May 25, 2018), the Northern District of California affirmed a summary disposition, citing a long line of precedent in stating that “[t]he purpose of arbitration is to permit parties to agree to a more expedited and less costly means to resolve disputes than litigation in the courts. Summary judgment by an arbitrator is consistent with that purpose.” In NFL Management Council v. NFL Players Association, 820 F.3d 527 (2d Cir. 2016), the Second Circuit affirmed a summary award, emphasizing that judicial review of arbitral awards “is narrowly circumscribed and highly deferential—indeed, among the most deferential in law.” There are cases from a majority of federal circuits affirming arbitrators’ authority to grant dispositive motions.***
In the rare instance where courts have vacated a summary award, there is a common thread—fundamentally unfair proceedings. For example, in International Union, United Mine Workers of America v. Marrowbone Development Company, 232 F.3d 383 (4th Cir. 2000), the claimant highlighted the existence of a material factual dispute—seeking to distinguish the present facts from a prior dispute between the parties, to introduce testimony, and to present pertinent evidence. The arbitrator summarily dismissed the complaint, relying on the facts of the prior dispute between the parties without hearing the claimant’s argument, testimony, or evidence distinguishing the two cases. The Fourth Circuit vacated the arbitrator’s summary award, holding that by refusing to hear evidence material to the case’s resolution, the arbitrator denied the claimant a fair opportunity to present their case.
The handful of outlier cases should not dissuade arbitrators from issuing summary dispositions but should help them determine when to grant a dispositive motion. Some important pointers: (1) the arbitrator must apply the appropriate summary judgment standard; (2) the arbitrator should consider requests for discovery carefully to ensure that they do not deny discovery of material evidence; (3) the arbitrator should only consider motions likely to succeed; (4) the arbitrator should engage in a cost-benefit analysis, weighing the benefits of speed and efficiency with the potential risks for delay and improper denial of a fundamentally fair hearing; and (5) in granting a dispositive motion, an arbitrator may benefit by issuing a written decision detailing their reasoning, taking care to articulate why any unheard evidence or unpermitted discovery was immaterial.****
If arbitrators follow this guidance, they should feel confident in granting dispositive motions. Not only is the concern of vacatur overblown, appropriately granting dispositive motions helps streamline the efficiency and speed of arbitrated disputes by providing fair remedies without unnecessary proceedings.
* For example, a 2013 survey found that seventy percent of arbitrators granted dispositive motions fewer than five times. Edna Sussman, The Arbitrator Survey—Practices, Preferences and Changes on the Horizon, 26 Am. Rev. Int’l Arb. 517, 523 (2015).
** See, e.g., Sherrock Bros., Inc. v. DaimlerChrysler Motors Co., LLC, 260 Fed. App’x 497, 499 (3d. Cir. 2008) (affirming a summary adjudication issued on res judicata and collateral estoppel grounds); Ozormoor v. T-Mobile USA Inc., 2010 WL 3272620, *4 (E.D. Mich. Aug. 19, 2010) (affirming a summary adjudication issued on statute of limitation grounds); Global Int’l Reinsurance Co. Ltd. v. TIG Ins. Co., 2009 WL 161086, *5 (S.D.N.Y. Jan. 21, 2009) (affirming a summary adjudication issued on plain meaning of contract grounds); LaPine v. Kyocera Corp., 2008 WL 2168914, *10 (N.D. Cal. May 23, 2008) (affirming a summary adjudication issued on waiver and estoppel grounds); Hamilton v. Sirius Satellite Radio Inc., 375 F. Supp. 2d 269, 273, 277 (S.D.N.Y. 2005) (affirming a summary adjudication issued on insufficient evidence grounds); Warran v. Thacher, 114 F. Supp. 2d 600, 602 (W.D. Ky. 2000) (affirming a summary adjudication on failure to state a claim grounds); Max Marx Color & Chem. Co. Employees’ Profit Sharing Plan v. Barnes, 37 F. Supp. 2d 248, 255 (S.D.N.Y. 1999) (affirming a summary adjudication issued on standing and preemption grounds); Intercarbon Bermuda, Ltd. v. Caltex Trading and Transp. Corp., 146 F.R.D. 64 (S.D.N.Y. 1993) (affirming a summary adjudication issued without holding in-person evidentiary hearings); Atreus Cmtys. Grp. of Ariz. v. Stardust Dev., Inc., 229 Ariz. 503, 508 (Ct. App. Ariz. May 1, 2012) (affirming a summary adjudication even though the parties’ arbitration agreement did not expressly allow for such authority); Pegasus Constr. Corp. v. Turner Constr. Co., 84 Wash.App. 744, 750 (Ct. App. Wash. 1997) (affirming a summary adjudication issued on failure to comply with contractual obligations grounds); Goldman Sachs & Co. v. Patel QDS: 224S164, 222 N.Y.L.J. 35 (S. Ct., N.Y. Cty. 1999) (affirming a summary adjudication issued on employment at will grounds).
*** See, e.g., NFL Mgmt. Council v. NFL Players Ass’n, 820 F.3d 527, 547–48 (2d Cir. 2016) (affirming a summary adjudication issued for failure to state a claim); Samaan v. Gen. Dynamics Land Sys., 835 F.3d 593, 603–05 (6th Cir. 2016) (affirming summary adjudication issued without an evidentiary hearing); South City Motors, Inc. v. Auto. Indus. Pension Trust Fund, 2018 U.S. Dist. LEXIS 88452, *8 (N.D. Cal. May 25, 2018) (affirming a summary adjudication issued without full evidentiary hearing); McGee v. Armstrong, 2017 U.S. Dist. LEXIS 129734, *10 (N.D. Ohio Aug. 15, 2017) (affirming a summary adjudication issued on all claims); Weirton Med. Ctr. v. Comm. Health Sys., 2017 LEXIS 203725, *13–14 (N.D. W. Va. Dec. 12, 2017) (upholding a summary award even though the parties’ arbitration agreement did not expressly allow for such authority); Balberdi v. FedEx Ground Package Sys., 209 F. Supp. 3d 1160, 1162, 1168 (D. Haw. 2016) (affirming a summary adjudication issued on statute of limitations grounds); Kuznesoff v. Finish Line, Inc., 2015 U.S. Dist. LEXIS 71388, *4, *11 (M.D. Penn. June 3, 2015) (affirming a summary adjudication issued on statute of limitation and failure to state a claim grounds); Tucker v. Ernst & Young LLP, 159 So. 3d 1263, 1285 (Ala. 2014) (affirming a summary adjudication issued on all claims).
**** See Edna Sussman & Solomon Ebere, Reflections on the Use of Dispositive Motions in Arbitration, 4 N.Y. Disp. Resol. Law., 28, 30 (2011).