Those familiar with the arbitration process understand that a court will rarely vacate an award based on the arbitrator’s substantive determinations. A court’s only concern under both federal and state statutes is that the process be procedurally fair. For example, the Federal Arbitration Act provides that an award may be vacated:

“(1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.”

At the same time, arbitration offers an aspirational goal of providing the parties with a more expeditious proceeding than what they may encounter in a judicial court proceeding. Thus, arbitrators are tasked with exercising control over the process to ensure it “moves along,” while recognizing that failure to provide a party with a fair opportunity to present its case may result in the award being set aside by a court.

A recent decision by the Connecticut Appellate Court provides insight into this balancing act. In Lemma v. York and Chapel, Corp., an employee prevailed in an arbitration seeking damages associated with a claim of wrongful termination. The employer moved to vacate, asserting as one of its grounds that the arbitrator unreasonably failed to grant a postponement of the hearing. The underlying circumstances, set forth in detail by the trial court, explained that the hearing was scheduled to proceed on May 22 and 23, 2019. On May 17,

“the respondent’s attorney sent an e-mail to opposing counsel at 6:15 p.m. …—on which the arbitrator was copied—which reads in part as follows: ‘I was informed Thursday morning of an impending death of a friend of over [forty] years. He passed yesterday afternoon. I knew he was in hospice. I was unable to work at all yesterday and very little today. The arrangements are still not firm but are anticipated to be Monday/Tuesday or Tuesday/Wednesday. It will be in [Foxborough] MA. I am giving the eulogy. I plan to work Monday [morning, as] I have a [long-standing] mediation in an important case and then will be out of town. Because I was unable to attend to this, I request a continuance of the hearing.”

The arbitrator partially acceded to the request, granting a one day postponement, with the directive that the arbitration hearing would be reduced to one day, May 23. The arbitrator advised that, if the respondent’s designated counsel was not available, another attorney from his firm “should handle the case on behalf of the respondent.”

As the trial court explained, “[t]he respondent’s attorney did not return home from Massachusetts ‘until very late on May 22, 2019.'” On May 22, 2019, in the early afternoon, the respondent’s attorney sent a second continuance request, which was denied.”

The arbitrator’s denial of the postponement was made in the context of various objections raised by claimant’s attorney:

“[M]y client is literally en route from points west to attend the hearing tomorrow. [The] [r]espondent has an entire firm (including [one attorney], who participated in the preliminary conference call in the arbitration and has represented [the] [r]espondent in related litigation proceedings) available to handle this proceeding. [The] [c]laimant has paid all of the fees for this arbitration, the hearing of which was scheduled in November. [The] [r]espondent has ignored deadlines, failed to make payments and caused avoidable motion practice (motion to dismiss counterclaim). Enough is enough. As I wrote last week, I, as a solo attorney, do not have availability to handle a rescheduled hearing for several weeks. The prejudice to [the] [c]laimant is therefore even more palpable than it was several days ago. [The] [c]laimant insists that we proceed as ordered tomorrow. … One last point—at least one [third-party] witness has been subpoenaed to the hearing tomorrow as well. Disrupting the hearing therefore causes inconvenience to more than just the [p]anel, the parties and counsel.”

The arbitration proceeded, with the respondent being represented at the hearing by other counsel from other attorneys than the designated lead counsel. Having lost the arbitration, respondent moved to vacate, citing the arbitrator’s refusal to postpone.

The trial court denied the motion to vacate, explaining as follows:

“The court concludes that the arbitrator … acted within his discretion when he denied the respondent’s second request to continue the arbitration. This is because there were reasonable grounds for the refusal. To begin, the reason for the requested postponement— attendance at a close friend’s funeral in a neighboring state—is insufficiently compelling to require an arbitrator to postpone, twice, a previously scheduled hearing. While the court takes seriously the attorney’s loss of a close personal friend, that circumstance does not rise to the level of an event that would prescribe an adjournment in many circumstances, such as a medical emergency materially affecting the admission or presentation of evidence…

“Moreover, according to the respondent, [the attorney] was back home from the funeral on May 22, 2019, albeit ‘very late.’ Thus, the respondent’s attorney had returned by May 23, 2019, and the record does not reflect that [he] was unable to attend the hearing…In addition, and while [respondent’s preferred attorney] did not attend the hearing, the respondent was represented by counsel at the hearing, namely, by two of [his] colleagues, at least one of whom had been involved previously in the case.

“Finally, in declining the respondent’s request for a second continuance, the arbitrator was not limited to a consideration of the respondent’s concerns. Rather, the arbitrator was required to balance ‘the prejudice to the moving party resulting from the failure to postpone against the prejudice to the opposing party due to granting a postponement . . . and other circumstances as warranted in each case.’ … Here, in opposing the second requested continuance, the applicant’s counsel cited as prejudicial, inter alia, the fact that (1) the applicant was ‘en route from [the West Coast] to attend the hearing,’ (2) at least one third-party witness had been subpoenaed to the hearing, and (3) the applicant’s counsel, as a solo attorney, could not handle a rescheduled hearing for a period of time.”

Having failed to convince the trial court to vacate the award, the respondent appealed. The Connecticut Appellate Court was not persuaded, holding that the trial court “thoroughly addressed the arguments that are now before this court on appeal,” and adopting “its well reasoned decision.”

The takeaway from Lemma, at least in Connecticut, is that arbitrators will be afforded substantial deference in their management of a proceeding, without undue fear that their decisions will render the award vulnerable to vacatur.

As discussed by Bloomberg Law in this article discussing the Eleventh Circuit’s decision in Miller v. Midland Credit Management, Inc., attorneys need not pay the price for a client who fails to show at a court-ordered mediation. The trial court, dissatisfied with the client’s failure to appear, directed counsel to “address whether they have regained contact with their client.” The court thereafter received an explanation from the client “that she did not attend the mediation because she was relieved of duty from work three hours late, and could not access her phone to inform her attorneys of this unexpected issue.”

The court responded with a sanctions order against both the client and her two attorneys. Reversing, the Eleventh Circuit disagreed, holding that the lower court provided no prior notification that it was considering sanctioning the attorneys. Nor did the court make a finding that the attorneys had engaged in the requisite bad faith to warrant a sanctions order against them. Sending the case back to the lower court, the Eleventh Circuit noted (“[i]It may be that the district court’s imposition of sanctions was based on a finding of bad faith and was supported by the record. At this time, however, we cannot make this determination.”

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Yesterday, I flagged the Ninth Circuit’s divided decision upholding a California statute rendering unlawful an employer’s requirement that employees agree to the arbitration of disputes. The opinion already is generating commentary. Nancy Yaffe of Fox Rothschild has this article, describing the conundrum in which the decision places employers pending further review by the entire circuit (and possibly the U.S. Supreme Court), and Corey Cabral and Linda Wang of CDF Labor Law have authored this article, both of which are available at JD Supra.

Reuters offers this analysis of yesterday’s Ninth Circuit ruling upholding a California statute rendering unlawful an employer’s requirement that employees agree to the arbitration of disputes. The panel, in a sharply divided 2-1 decision, held that the California statute is not preempted by the Federal Arbitration Act’s admonition that an agreement to arbitrate “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

The jurisprudence regarding the scope of arbitration preemption already is substantial, but this decision promises to kick off a new volley of litigation activity arising out of recent years’ debate about the appropriateness of arbitration of workplace disputes.

Greg Keating, Katherine Rigby and Fran DeLuca of Epstein Becker & Green have authored this article, available at The National Law Review, discussing the Massachusetts Superior Court decision in Hernandez v. Universal Protection Services. As they explain, while “[m]any employers are aware that they could waive the ability to enforce an arbitration agreement if they delay moving to compel arbitration until after they have engaged in significant litigation activities in court,” Hernandez is “novel and significant” because the court “found that an employer waived its right to compel arbitration based on its actions before an employee filed suit in court.”

The waiver-producing conduct occurred when an employee, alleging that the was a victim of sexual harassment, requested her personnel record. The company’s production, however, failed to include a copy of the arbitration agreement the employee signed. The company’s failure, according to the court, created “irreversible” prejudice since the employee, absent the arbitration agreement, filed suit in court.

As the article notes, since Hernandez is a trial court decision and therefore not binding in Massachusetts (and still may be reversed upon appeal).

Law/Street has this article, discussing the Third Circuit’s decision in Verizon Pennsylvania, LLC v. Communicatins Workers of America, AFL-CIO, Local 13000, in which the court reaffirmed the ongoing vitality of the functus officio doctrine: “we hold that it is alive and well in this Court.” Under the doctrine, as the article explains, “once an arbitrator, unlike a judge, issues a finding she may not modify it absent all parties’ consent.”

In the case before it, a union arbitration board determined that Verizon violated a collective bargaining agreement by arranging to have cable boxes shipped to customers rather than delivered by union technicians. The arbitrators went astray, however, when they subsequently expanded the scope of their award.

Having recently returned from a trip to Block Island that included walks along the Great Salt Pond and past Champlin’s Marina, this article caught my attention. It critiques a mediation between Rhode Island’s administrative Coastal Resources Management Council and Champlin’s. The mediation resolved a longstanding dispute arising out of Champlin’s desire to expand its capacity from 225 to 365 boats. The dispute had worked its way up to the Rhode Island Supreme Court, and while the case was pending, the parties reached an agreement that, no surprise, permitted a more modest marina expansion.

Now the mediated agreement itself is being challenged by environmental groups, the Town of New Shoreham, and the Rhode Island Attorney General, who claim that the CRMC approved a settlement without public input. From a legal standpoint, the dispute raises the issue of a public agency’s ability to mediate and resolve disputes rather than letting them play out in accordance with the administrative legal process. In a broader sense, of interest to mediators and the attorneys who appear before them, the case emphasizes the importance of having all stakeholders participate if they want the settlement to bring finality to a dispute.

A recent decision by a Texas Court of Appeals provides a cautionary tale to employers seeking to implement a program of arbitrating employee disputes. In CC Restaurant, L.P. v. Olague, a divided appeallate panel affirmed the trial court’s denial of an employer’s motion to compel arbitration based upon the employer’s failure to sign the arbitration agreement it prepared and provided to its employee. The court referenced this language in the agreement:

The Parties expressly acknowledge and understand that by signing this Agreement, each is affirming that he/she/it has read and understands this arbitration provision; each is agreeing to be bound by it; each is waiving its respective rights to have a Dispute between or among them adjudicated by a court or by a jury; and each is waiving its respective rights to have a Dispute between or among them proceed as a class, collective, or consolidated action or arbitration.

As the court held, “the Agreement’s language specified the Employer’s signature was required for the Employer to be bound to arbitrate its claims against the Employee. The Employer did not sign the Agreement, however the Employee did, therefore, only the Employee agreed to arbitration.”

The court acknowledged that that, in addition to the agreement, the employer provided the employee with a notice referencing the agreement which called only for the employee’s signature (which was provided), “indicating both the Employee and the Employer are bound by the Agreement to arbitrate, as provided in the Agreement, by virtue of the Employee’s continued employment.” However, according to the court, while the employee’s signature,

may evidence the Employee’s agreement to arbitrate her claims against the Employer, the Motice itself provides no consideration on the part of the Employer for an agreement to arbitrate other than continuing employment, which is alone insufficient. There is no mutuality in its terms; instead, the Notice is predicated on the Agreement: it indicates the parties are bound by the Agreement as provided for in the Agreement.

The takeaway for employers endeavoring to implement arbitration programs: make sure the requisite documents are signed by all appropriate parties.

Lexology has published this article by Buckley discussing the Florida District Court of Appeals decision in Marino Performance, Inc. v. Zuniga, in which the court denied a motion tofo compel arbitration, holding that the movant “engaged in a litigation strategy of ‘outcome oriented gamesmanship.’” As the article explains, none of the movant’s seven affirmative defenses referenced arbitration, and it unsuccessfully moved for judgment on the pleadings. Only days before the scheduled court hearing on the motion for class certification did the movant, for the first time, raise arbitration as an issue. On these facts, and measured against “instructive” precedent, the court held that movant had waived its right to seek arbitration of the class claims.

AdvisorHub has this article, offering an unusual and interesting story about a recent arbitration focusing on events 21 years ago.