Anne’s attorney Bob is an avid reader of the Legal
Intelligencer. His favorite article on arbitration said lawyers
should engage in voir dire of all potential arbitrators. Bob could
not agree more. After all, one arbitrator can act as judge, jury and
appellate court. All the more reason to find out whether a person with
this much power is capable of deciding the matter and, even more importantly,
whether he or she has any biases or prejudices against any of the parties.
So when Anne asked him to file an arbitration claim, Bob did not hesitate to
tell her that he would do everything possible to ensure that the selected
arbitrator would be “better than fair.” Bob assured Anne that he was
terrific at identifying “good” jurors, and that his juror-picking abilities
would come in handy in picking the right arbitrator.
A few weeks later, a list of ten potential arbitrators arrived in Bob’s
office. Bob sprung into action. After reading the minimal
biographical detail that appeared next to each name and searching the Internet,
Bob winnowed the number of “acceptable” arbitrators to four.
That is when Bob started his real voir dire. He called the four
prospective arbitrators; explained in painstaking detail what Anne’s claim was
all about; summarized the contested legal and factual issues; and asked whether
the prospective arbitrators had any “general thoughts” about the matter.
Because Anne as franchisee was locked in a bitter dispute with a franchisor, Bob
also solicited their views on franchisees.
Bob’s foray into arbitrator
voir dire was seemingly
successful. He found out that one prospective arbitrator does not ever
enforce the parol evidence rule – a critical issue in Anne’s case – and Bob
immediately got rid of that person. Another potential arbitrator
exclusively represents franchisors against franchisees, and had some choice
words for certain aspects of franchise law. Not a good sign since Anne’s
claim arose out of a failed franchisor-franchisee agreement. Bob struck
that person as well. The third arbitrator was more to Bob’s liking.
She agreed with Bob’s take on the parol evidence rule and agreed that
franchisors often take advantage of individual franchisees. The fourth
arbitrator refused to talk to Bob. Never a good sign. Bob
returned his arbitrator selection sheet with the statement that only the third
arbitrator was acceptable. Bob then telephoned Anne and chortled that his
arbitrator voir dire had worked: “I have just the arbitrator for you,
Anne; you are going to love her.”
Did Bob do it right? Did he properly communicate with these potential
arbitrators? Why did the fourth arbitrator stay mum?
In 1977, a joint committee of the American Arbitration Association and a
special committee of the American Bar Association prepared a Code of Ethics for
arbitrators in commercial disputes. In 2003, an ABA task force and a
special committee of the AAA revised the Code. Canon III of the Code
expressly talks about communications between a party and a prospective
arbitrator. This canon proscribes all ex parte communications
between a party and a prospective neutral arbitrator, except for two types of
communications:
- The prospective arbitrator may ask a party or his/her attorney about the
identities of the parties, lawyers, or witnesses, and the general nature of the
case.
- The prospective arbitrator may respond to inquiries from a party or his/her
attorney “designed to determine his or her suitability and availability for the
appointment.”
It is bad enough that Bob and three of the four potential arbitrators
disregarded these ethical rules by engaging in substantive conversations that
went well beyond “the general nature of the case.” Consider the
consequences. If Bob’s chosen arbitrator ended up hearing the case, Anne’s
adversary could well be able, during the pendency of the arbitration, to force
the removal of the arbitrator based on the improper ex parte
communications.
There are even more drastic consequences if Anne’s adversary found out about
the ex parte communications after the arbitration hearing was over.
The Code of Ethics does not have the force of law and is “not the proper
starting point for an inquiry into an award’s validity.” Merit Ins. Co.
v. Leatherby Ins. Co., 714 F.2d 673 (7th Cir.), cert.
denied, 464 U.S. 1009 (1983). Nevertheless,
Robert’s failure to by Canon III may give Anne’s adversary an opportunity to
vacate the arbitration award. Although Anne’s adversary would have to
present proof “of circumstances powerfully suggestive of bias,” Kaplan v.
First Options, 19 F. 3d 1503 (3d Cir. 1994), Bob has opened the door to such
an attack. If the attack led to vacating the award, there then would be a
second arbitration hearing, before a brand new arbitrator, with all of
the attendant costs, delays and finger pointing.
The bottom line: lawyers and their clients should restrict communications
with prospective neutral arbitrators to the permissible areas set forth in Canon
III and engage in so-called arbitrator voir dire outside the presence of
the potential arbitrators.
But what about prospective “party-appointed” arbitrators? Do the Canon
III limitations apply to them? Wait till my next column to find out
whether Bob acted properly when Anne asked him to represent her in an
arbitration that will involve party-appointed arbitrators.
