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Advancements in Arbitral Immunity and Judicial Review of Arbitral Awards Create Ethical Loopholes in Arbitration

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Justice, Conflict and Wellbeing

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Abstract

Compared to the litigation forum, arbitration is intended to be a flexible, efficient, and private method of rights-based dispute resolution. Because arbitration is a private system of dispute resolution, it is largely (and purposefully) unregulated. The perjury, tampering, and other criminal laws dealing with the administration of justice simply do not apply to arbitration as they are currently written. In addition, the expansion of judicial immunity to the arbitral forum has caused a potential ethical “loophole” within arbitration. In other words, when arbitration parties, witnesses, and attorneys engage in conduct that would be criminally punishable in litigation in the arbitral forum, those wrongdoers are not only free from criminal liability but also free from civil liability. While attorneys are still subject to ethical codes that would prohibit them from engaging in this type of wrongdoing, non-attorney participants are largely shielded from liability. This Chapter suggests two ways to close the loopholes. First, this Chapter recommends extending the criminal laws of perjury, tampering, and other crimes against the administration of justice to the arbitral forum. Second, this Chapter recommends that the courts employ a consistent standard of review to address better issues of participant wrongdoing.

Thanks to the Program of Excellence for allowing me to present this work at the December 2011 conference. Thanks, also, to Dean Susan Poser, Richard Moberly, Bob Schopp, Brian Bornstein, Charlie Hendrix, and Karlus Cozart for their helpful comments on earlier drafts. Thanks to Mike Douglass for his love and support.

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Notes

  1. 1.

    Other types of laws, such as obstruction of justice, might also apply.

  2. 2.

    This chapter will use the terms “judicial immunity” and “absolute immunity” interchangeably. Different jurisdictions use different names for the immunity. Essentially, the type of immunity is the same. The immunity afforded is to be absolutely free from suit for statements made while in a judicial proceeding.

  3. 3.

    See, e.g., Kidd vs. Superior Nursing Care, Inc., 2008 WL 2945960, at *2 (D.N.J. 2008) (“A statement made in the course of judicial, administrative, or legislative proceedings is absolutely privileged and wholly immune from liability.”) (citation omitted); Schultea vs. City of Patton Vill., 2006 WL 3063457, at *3 (S.D. Tex. October 27, 2006) (“Statements made in the due course of a quasi-judicial proceeding cannot serve as the basis of a civil action for defamation regardless of the negligence or malice with which they were made.”) (quotation marks and citation omitted).

  4. 4.

    Mahoney & Hagberg vs. Newgard, 712 N.W.2d 215, 219 (Minn. Ct. App. 2006) (“Even if the claim is not for defamation, if it sounds in defamation, absolute immunity applies. The judicial immunity rule is not to be ‘scuttled’ by pleadings which allege that the wrongful acts resulted from a conspiracy rather than from defamation”) (internal quotation marks and citation omitted). The Mahoney & Hagberg court noted that most often, the defense of absolute immunity arises in the context of a defamation claim. Id. (“Respondent claims that judicial immunity applies only to defamation claims. Traditionally, judicial immunity has applied to protect participants in the judicial process against claims of defamation. [D]efamatory matter published in the due course of a judicial proceeding is absolutely privileged and will not support a civil action for defamation. In Minnesota, nearly all assertions of judicial immunity involve underlying claims for defamation”) (internal quotation marks and citations omitted) (citing Prosser & Keaton on Torts § 113, at 816–17 (5th ed. 1984)).

  5. 5.

    Asset Mgmt. Sys. Inc. vs. White, Zuckerman, Warsavsky & Luna, 2002 WL 72925, at *8-9 (Cal. Ct. App. April 20, 2002) (dismissing all of the causes of action on the basis of immunity, including the causes of action for abuse of process and unfair business practice).

  6. 6.

    Soliz vs. Williams, 74 Cal. App. 4th 577, 589 (1999) (involving a claim for defamation against a judge who, in the hallway of the courthouse, told plaintiffs in one of his cases that their settlement demand was “bullshit” and that they had “shit for brains”). The Soliz court also noted that immunity is not “overcome by allegations of bad faith or malice.” Id. at 592. In comparison, if the privilege were only qualified (i.e., not absolute), then the privilege may be defeated by such a showing of malice or even recklessness.

  7. 7.

    Gallegos vs. Escalon, 993 S.W.2d 422, 424 (Tex. Ct. App. 1999) (“All communications, oral or written, made in the due course of a judicial proceeding are absolutely privileged.”).

  8. 8.

    Harmon vs. Bennett, 103 Wash. App. 1045 (2000) (“Allegedly libelous statements, spoken or written by a party or counsel in the course of a judicial proceeding, are absolutely privileged if they are pertinent or material to the redress or relief sought, whether or not the statements are legally sufficient to obtain that relief.”) (citing McNeal vs. Allen, 621 P.2d 1285 (Wash. 1980)).

    Note that if the statement made is not pertinent or material to the redress or relief sought, then the statement is not covered by the absolute privilege and the speaker may be liable for a cause of action in defamation. See Post vs. Mendel, 507 A.2d 351, 356 (Pa. 1986) (holding that a letter sent by an attorney was not privilege because it was not relevant to the redress or relief sought by the client).

  9. 9.

    Of course, other remedies exist if a person files a frivolous lawsuit, such as sanctions under the federal Civil Rule 11 (or state rule) or common law claims for frivolous conduct.

  10. 10.

    Id. at 424 (citing Reagan vs. Guardian Life Ins. Co., 166 S.W.2d 909 (Tex. 1942)).

  11. 11.

    Id. at 912 (“Stated in another way, where there is an absolute privilege, no action in damages for language, oral or written, will lie; and this is true even though the language is false and uttered or published with express malice…. The falsity of the statement or the malice of the utterer is immaterial, and the rule of nonliability prevails even though the statement was not relevant, pertinent and material to the issues involved in the case.”).

  12. 12.

    Gallegos, 933 S.W.2d at 425 (noting that the “administration of justice” is best served if witnesses “are not deterred by fear of lawsuits”).

  13. 13.

    Blevins vs. Hudson & Keyse, Inc., 395 F. Supp. 2d 662, 667 (S.D. Ohio 2004).

  14. 14.

    This rationale applies equally to defendants filing cross-claims and counterclaims.

  15. 15.

    Dan B. Dobbs, The Law of Torts § 412 (2001); see also Paul T. Hayden, Reconsidering the Litigator’s Absolute Privilege to Defame, 54 Ohio St. L.J. 985, 1027 (1993) (“We should recognize, in other words, that the absolute privilege, much like constitutional protections for speech, provides “breathing room” allowing for speech without fear.”); Harvey vs. Montgomery Cty., Tex., 2012 WL 12530, at *6 (S.D. Tex. January 3, 2012) (“Policy interests justifying immunity include the fact that the fear of suit may cause the prosecutor to shade his decisions instead of exercising the independence of judgment required by his public trust.”); Ims vs. Town of Portsmouth, 32 A.3d 914, 928 (R.I. 2011) (“The doctrine of absolute privilege exists because it is more important that witnesses be free from the fear of civil liability for what they say than that a person who has been defamed by their testimony have a remedy.”) (internal quotation marks and citation omitted); Simms vs. Seaman, 23 A.3d 1, 13 (Conn. App. Ct. 2011) (“While no civil remedies can guard against lies, the oath and the fear of being charged with perjury are adequate to warrant an absolute privilege for a witness’ statements.”) (citation omitted); Viviano vs. CBS, Inc., 597 A.2d 543, 549 (N.J. Super. Ct. 1991) (“An absolute privilege for words spoken in the course of a judicial proceeding was thought necessary to promote testimonial candor by shielding witnesses from fear of subsequent civil suits; criminal penalties were deemed sufficient sanctions against perjury.”); In re Raspanti, 8 So. 3d 526, 533–34 (La. 2009) (“Louisiana jurisprudence has consistently held that communications made in judicial or quasi-judicial proceedings carry an absolute privilege so that witnesses, bound by their oaths to tell the truth, may speak freely without fear of civil suits for damages.”); Hopkins vs. O’Connor, 925 A.2d 1030, 1042 (Conn. 2007) (“Participants in a judicial process must be able to testify or otherwise take part without being hampered by fear of defamation suits.”); Mahoney & Hagberg, 712 N.W.2d at 219 (“The absolute immunity of witnesses and parties from claims for damages arising out of their trial testimony is premised on public policy concerns that favor “ascertainment of truth” over self-censorship that may result from witnesses’ “fear of subsequent liability.””); Sinrod vs. Stone, 2004 WL 60396596, at *2 (N.Y. Sup. Ct. March 30, 2004) (“The public interest in maintaining high standards among members of the bar, and the necessity that persons be given a forum in which to lodge complaints without fear of being sued for libel, warrants that absolute privilege be maintained, even at the risk that some attorneys will be falsely or maliciously accused of wrongdoing.”); Boyd vs. Bressler, 18 F. App’x 360, 365 (6th Cir. 2001) (“In determining whether the writings or statements are reasonably related to the matter of inquiry, Ohio courts construe the absolute privilege with great liberality to assure that parties or their attorneys are not deterred from prosecuting an action vigorously for fear of personal liability.”).

  16. 16.

    The First Amendment of the Constitution preserves “the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” US Const. Am. 1.

  17. 17.

    Business Defamation and Disparagement, 19 No. 5 Bus. Tort Rep. 134, 140 (March 2007) (“Judicial proceedings have been held an appropriate setting for application of an absolute privilege. As a matter of public policy, the possible harm caused persons unable to recover for defamatory statements made in connection with judicial proceedings is deemed to be outweighed by the need to encourage parties and other participants in litigation to speak freely in the course of the proceedings. It has thus been held that a statement made in the course of legal proceedings is absolutely privileged if it is at all pertinent to the litigation. The privilege applies to all parties involved *141 in such proceedings, i.e., judges, jurors, counsel, witnesses, and the parties.”).

  18. 18.

    Surace vs. Wuliger, 25 Ohio St. 3d 229, 235 (1986).

  19. 19.

    Monica R. Nuckolls, Torts, 54 Wayne L. Rev. 439, 465 (2008) (noting that absolute privilege exists to promote the public policy of securing to attorneys as officers of the court the upmost freedom in their efforts to secure justice for their clients) (citations and quotation marks omitted). Ronald S. Canter & Manuel H. Newburger, Common Law Immunity for Litigation Activities Under the Fair Debt Collection Practices Act, 61 Consumer Fin. L. Q. 29, 39 (Spring 2007) (discussing the importance of attorneys exercising “sound legal perspective” as part of their duty as officers of the court and needing immunity from attempting to help clients achieve representation for their colorable legal claims).

  20. 20.

    Surace, 25 Ohio St. 3d at 235.

  21. 21.

    Lambert vs. Carneghi, 158 Cal. App. 4th 1120, 1138 (2008) (quoting Mattco Forge, Inc. vs. Arthur Young & Co., 5 Cal. App. 4th 392, 402 (1992)). The Lambert case involved the application of immunity for a party-appointed expert witness in an arbitration. The California court did not extend the absolute privilege to those expert witnesses hired by the party to provide testimony in an arbitration (or litigation, for that matter).

  22. 22.

    Charles Dickens, Bleak House (1852). The Dickens novel involves the lawsuit of Jarndyce vs. Jarndyce, a complex probate case dealing with the inheritance of a large estate. The lawsuit, however, drags on over the course of several generations, and ultimately, the legal fees associated with litigating a case for so many years deplete the estate.

  23. 23.

    In fact, at the termination of every lawsuit is a decree known as a “final judgment.” See, e.g., Fed. R. Civ. P. 58. As a general matter, only “final judgments” can be appealed. 28 U.S.C. § 1291 (2006).

  24. 24.

    See, e.g., Jacob Macfarlane, Note, How Many Cooks Does It Take To Spoil A Soup? San Juan County vs. U.S. and Interventions In R.S. 2477 Land Disputes, 29 J. Land Res. & Environ. L 227, 244 (2009) (“Over the past few decades, a consensus has emerged that traditional litigation is an inefficient way to resolve disputes. Litigation is costly, drawn-out, adversarial, and fails to produce long-term solutions to problems.”); Ossie Ravid & William Hayes Weissman, Cash Management Activities and the Sales Factor: When is Gross Really Gross and a Receipt Really a Receipt?, 10 St. & Local Tax Law. 93, 146 (2005) (“Thus, litigation is an inefficient and expensive way to resolve these issues.”); Norman I. Silber, Commercial Litigators Reveal All: Exploring Commercial Litigation in New York State Courts, 25 Hofstra L. Rev. 235, 246 (1996) (“It is no wonder that litigation looks inefficient and unpredictable to outsiders: the profession’s own guidebook describes it this way to insiders.”).

  25. 25.

    Lambert, 158 Cal. App. 4th at 1143 (discussing finality).

  26. 26.

    Scholar John Lande has written extensively on dispute resolution design and how design can de-escalate conflict, compared to the escalation of conflict that often occurs in traditional litigation. See John Lande, The Revolution in Family Law Dispute Resolution, 24 J. Am. Acad. Mat. Law. 441, 445 (2012) (noting that many families do not like resorting to the litigation system because litigation has the potential to escalate conflict in the name of dispute resolution); John Lande, The Movement Toward Early Case Handling in Courts and Private Dispute Resolution, 24 Ohio St. J. on Disp. Resol. 81, 82 (2008) (“Being in a dispute in an adversarial disputing culture is enough to bring out the brute in many people. Even though many parties and lawyers are not generally nasty, they may act that way in response to their perception of nastiness by the other side. This can lead to a cycle of escalating conflict, which prolongs the agony.”).

  27. 27.

    Stare decisis is a system in which judges respect and act consistently with earlier precedents. The term stems from the Latin maxim: “Stare decisis et non quieta movere,” meaning “to stand by decisions and not disturb the undisturbed.”

  28. 28.

    See, e.g., Kathleen R. Guzman, Intents and Purposes, 60 U. Kan. L. Rev. 305, 307 (2011) (“Unpredictable outcomes encourage inefficient litigation and impose unnecessary economic and human costs on parties to it.”).

  29. 29.

    As noted supra note 28, the litigation privilege should not extend so far as to apply to a party’s own hired attorneys or expert witnesses. Judicial immunity does not serve as a bar to attorney malpractice suits or to suits against the expert witnesses hired by the parties. These situations are markedly different than the situation involving an opponent or neutral who utters words thought to be defamatory.

  30. 30.

    Of course, under some circumstances, litigants may be liable for sanctions based on litigation conduct. Attorneys who violate Civil Rule 11 can be sanctioned. Statutes exist allowing recovery for the filing of frivolous or vexatious litigation. Thus, the concept of judicial immunity is not absolute, and these are a few of the exceptions to judicial immunity, other than perjury, which is discussed elsewhere in this chapter.

  31. 31.

    Because arbitration is a creature of contract, only those parties and those disputes governed by the arbitration agreement would actually be subject to the use of the arbitral forum to resolve the dispute. See, e.g., 9 U.S.C. § 2 (2002). Claims of defamation against arbitrators, witnesses, and opposing counsel would likely all fall outside of the contract between the arbitration claimants and respondents (the arbitration equivalent of plaintiffs and defendants). Claims of defamation against an arbitral opponent may or may not fall within the arbitration agreement. If the disputes fall outside of existing arbitration agreements and the parties do not choose to arbitrate the new dispute, these cases will be heard in court. In other words, the proliferation of potential claims would most likely be claims in litigation and not claims in arbitration.

  32. 32.

    Different forms of alternative dispute resolution (ADR) achieve finality in different ways. Mediation and negotiation seek to end conflict through the use of a binding, contractual settlement. Such a settlement becomes an enforceable contract and ends the litigation process (if the parties had already instituted litigation). Arbitration, by contrast, seeks finality through a streamlined adjudicatory procedure with limited ability to appeal.

  33. 33.

    Arbitration is a private, i.e., nonpublic, process, but it is not necessarily confidential. See Bert K. Robinson, Arbitration: The Quest for Confidentiality, 58 La. B.J. 180, 181 (October/November 2010) (“Absent statute or contract, there is no confidentiality attaching to arbitration…. Feelings of confidentiality are perhaps created by the fact that arbitrations are, by their very nature, private and not public.”). Of course, parties interested in confidentiality can simply include a confidentiality provision in their agreement to arbitrate or even to execute a separate confidentiality agreement. Arbitral demands, filings, and hearings are not part of the public record.

  34. 34.

    Parties can streamline the arbitral process in order to resolve problems with less discovery, less motions, shorter hearings, and less delay than compared to traditional court processes. See Folkways Music Publ’sh’rs, Inc. v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993) (“Arbitration awards are subject to very limited review in order to avoid undermining the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation.”). The commercial rules for the American Arbitration offer a prime example of the types of procedures often employed in arbitration, specifically the treatment of discovery issues in arbitration. See American Arbitration Association, Commercial Arbitration Rules and Mediation R-21, at http://www.adr.org/sp.asp?id=22440. Because the parties have the freedom to design the arbitral process, parties could always contract for more or less discovery, hearings, motions, etc., if in the best interests of the parties.

  35. 35.

    Arbitration has flexible and informal procedures compared to traditional, American litigation. Arbitral hearings often occur in conference rooms, not court houses. Hearings occurring over multiple days may not occur consecutively if spreading out the hearing process over time is advantageous to one or more of the parties (or the arbitrator, for that matter). Arbitrators also have greater involvement in the merits’ presentation compared to judges, often engaging in questioning of witnesses and asking additional information of attorneys.

  36. 36.

    As noted above, the ability to review an arbitration award is quite limited. The primary purpose for the limited review is to ensure finality of the arbitration award. Because review is limited, the parties to arbitration have little incentive to challenge an arbitration award, thus ending the process before spending additional time and money in the appeals process.

  37. 37.

    This benefit of continuing a relationship between the parties will depend on the nature of the relationship of the parties at the onset. If, for example, the parties are a primary contractor and a subcontractor working on a project under a short deadline, then the ability to resolve disputes quickly and get back to a working relationship maybe of the utmost importance. In fact, the construction industry primarily uses arbitration to resolve disputes arising in a project. Construction projects often involve parties that must work together to meet deadlines, and these parties must continue to work with each other even after a dispute arises. If, on the other hand, the parties are a consumer and a national cell-phone company, the ability to return to a lasting relationship may not be important.

  38. 38.

    This paper is limited to a discussion of arbitrations occurring within the USA. International arbitration involves a whole host of ethics issues not covered here.

  39. 39.

    Arbitration is a consensual process. If the parties do not agree to be in arbitration, then they do not have to participate. Agreement to arbitrate, however, can take place before a dispute even arises. In fact, most agreements to arbitrate are pre-dispute contracts to arbitrate. These arbitration agreements occur in any number of contexts, including commercial (business) contracts, consumer contracts with businesses for products or services, and employment contracts. For more information regarding arbitration as a consensual process, see Kristen M. Blankley, Taming the Wild West of Arbitration Ethics, 60 U. Kan. L. Rev. 925 (2012) (describing the disconnect between arbitration and the court system and the consensual nature of the process).

  40. 40.

    Arbitration “awards” are the equivalent of a court judgment.

  41. 41.

    9 U.S.C. § 10 (a).

  42. 42.

    Interestingly, when examining these grounds for review, none of them concern whether the arbitrator was right or wrong in deciding the case. See R. Wilson Freyermuth, Foreclosure by Arbitration?, 37 Pepp. L. Rev. 459, 474 (2010) (“By contrast, an arbitration award is, for the most part, substantively unreviewable.”). In fact, arbitration awards will often not be vacated if the arbitrator ruled incorrectly on the law or made a seemly erroneous factual determination. See Yondan Li, Applying the Doctrine of Unconscionability to Employment Arbitration Agreements, With Emphasis on Class Action/Arbitration Waivers, 31 Whittier L. Rev. 665, 700 (2010) (“The FAA contains no guidance on the subject of whether or how arbitrators’ findings of fact or conclusions of law can be reviewed.”).

  43. 43.

    See Sarah R. Cole, Let the Grand Experiment Begin: Pyett Authorizes Arbitration of Unionized Employees’ Statutory Discrimination Claim, 14 Lewis & Clark L. Rev. 861, 880 (2010) (noting that the rates of reversal of arbitration awards is actually similar to the reversal rates of lower court decisions on appeal) (citing Christopher R. Drahozal, Is Arbitration Lawless?, 40 Loy. L.A. L. Rev. 187, 214 (2006) (conducting study of arbitration awards)); See also Robert B. Hamilton, When An Arbitration Ruling Must Be Overturned: The Commonwealth Court’s Proper Application of the “Essence Test” in Slippery Rock vs. APSCUF, 17 Wid. L. J. 508 (2008) (noting that a more searching review of arbitration awards could cause a higher rate of reversal, which would make “a contractual arbitration provision almost meaningless” and simply a step to take prior to litigation).

  44. 44.

    Currently, no research exists regarding the rate of reasoned awards compared to awards simply determining a winning party and obligations owed. See Drahozal, Is Arbitration Lawless?, supra, at 212 (“I know of no empirical evidence on the extent to which arbitration awards are reasoned or what proportion of reasoned awards are published”).

  45. 45.

    See, e.g., Edward Brunet & Jennifer J. Johnson, Substantive Fairness in Securities Arbitration, 76 U. Cin. L. Rev. 459, 490 (2008) (noting that judicial review can be extraordinarily difficult given the “paucity of reasoned awards”); Leanne Montgomery, Expanded Judicial Review of Commercial Arb. Awards—Bargaining for the Best of Both Worlds: Lapine Tech. Corp vs. Kyocera Corp., 130 F.3d 884 (9th Cir. 1997), 68 U. Cin. L. Rev. 553 (2000) (“Furthermore, there are practical difficulties for a court reviewing an unreasoned or unwritten award which was arrived at through different procedural rules than those employed by the courts.”); see also Univ. Commons-Urbana, Ltd. vs. Universal Constructors Inc., 304 F.3d 1331, 1337 (11th Cir. 2002) (stating that when arbitration awards are unreasoned, courts have a nearly impossible task on judicial review).

  46. 46.

    By and large, discovery is the most costly portion of a civil case. Even the US Supreme Court noted the expense of discovery in the 2007 case Bell Atl. Corp. vs. Twombly, 550 U.S. 544, 558 (2007). The Twombly Court heightened the pleading requirements for plaintiffs such that only “plausible” cases can survive a motion to dismiss and move into the realm of discovery practice. Motion practice in civil litigation is also costly and timely. Arbitration largely does not have the same motion practice (if at all) as seen in civil litigation, so the parties in arbitration can save substantial time and money bypassing that stage of the process.

  47. 47.

    Edna Sussman & Victoria A. Kummer, Drafting the Arbitration Clause: A Primer on the Opportunities and the Pitfalls, 67-Apr. Disp. Resol. J. 30, 35 (February–April 2012); See also Judy Rost et al., Cmoparative International Perspective of Arbitration in the Franchising Context, 31-NTR Franchise L.J. 124, 127 (Winter 2012) (noting that discovery can be expensive in US litigation and that the arbitration procedure is intended to cut down on much of that cost).

  48. 48.

    Cross-examination in court based on inconsistent statements is one of the most common courtroom techniques. The rules of evidence generally allow the use of previous sworn statements to come in to evidence as showing the witness’s inconsistent testimony. Such use of prior statements is simply not considered hearsay. See Fed. R. Evid. R. 801 (d 2011) (1).

  49. 49.

    In fact, if an arbitrator fails to admit certain evidence, under the FAA, an award is subject to vacatur in court. 9 U.S.C. § 10 (a) (2006)

  50. 50.

    Kidwell vs. General Motors Corp., 975 So. 2d 503, 504 (2007) (Fl. Ct. App. 2007) (“[W]e agree with the trial court that Nichols had immunity for his alleged wrongful actions because they occurred during an arbitration proceeding”).

  51. 51.

    9 U.S.C. § 10 (a).

  52. 52.

    Id. Kidwell complained that the GM employee denied him rights under Florida’s “Lemon Law,” and that the law specifically requires arbitration as a prerequisite for anyone seeking to make a claim in court under that law. See Fla. Stat. § 681.109 (2005).

  53. 53.

    Id. (citing Fla. Stat. § 681.109). The decision also notes that Kidwell failed to so appeal the adverse award. Id. Additionally, the Florida Division of Consumer Services and the Department of Agriculture and Consumer Services audits the BBB Auto Line Arbitration Program on a yearly basis. 9 U.S.C. § 10(a).

  54. 54.

    Id. § 505.

  55. 55.

    The opinion does not state whether an appeal on these same grounds would have been successful.

    For other cases involving arbitral immunity, see R., supra. Mahallati Dental Corp. vs. Adelman, 2011 WL 2811328, at *8 (“The litigation privilege protects witnesses from tort liability, with the exception of malicious prosecution, for any communication made in judicial or quasi-judicial proceedings by litigants and other participants to achieve the objects of the litigation. Statements made in the course of a private, contractual arbitration proceeding are protected by the litigation privilege”) (internal citations omitted); W. Mass. Blasting Corp. vs. Metro. & Cas. Ins. Co., 783 A.2d 389, 403 (R.I. 2001) (“To the extent that these assertions against Western were published in the context of an arbitration proceeding, we agree with those courts holding that such communications are privileged”); Dunn vs. Ladenburg Thalmann & Co., 686 N.Y.S.2d 471, 473 (App. Div. March 1999) (“The challenged arbitration award operates to completely negate the compelling public policy concerns underlying the privilege, i.e., the need to encourage the free and open disclosure of information relevant to potential securities violations.”); Duke vs. Domtar, 2006 WL 2228830, at *8 (W.D. Ark. August 3 2006) (“To the extent Duke and Maxey allege witnesses’ testimony given during their grievance and arbitration proceedings were defamatory, the law is crystal clear that such testimony is absolutely privileged as well”); Blanchard vs. Lithia Rose-FT, Inc., 2004, at 1WL 2331816, *1 (D. Ore. October 15, 2004) (“Such says nothing about confidentiality, but refers to communications in the course of or incident to the qausi-judicial proceeding of the arbitration. Such communications can have an absolute privilege attached to them under Oregon law for claims such as defamation”).

  56. 56.

    Bushell vs. Caterpillar, 693 N.E.2d 1286 (1997) (Ill. Ct. App. 1997).

  57. 57.

    Id.

  58. 58.

    Id.

  59. 59.

    683 N.E.2d at 1287. The court also relied on the Restatement (Second) of Torts for authority that arbitral proceedings should be covered by absolute privilege. Id. at 1288 (citing Restatement (Second) of Torts, 9 U.S.C. §§ 587, 588). The court found arbitration to constitute a “quasi-judicial” tribunal under Illinois law. Id. at 1288 (“Under Illinois law, a tribunal is quasi-judicial when it possesses powers and duties to (1) exercise judgment and discretion; (2) hear and determine or ascertain facts and decide; (3) make binding orders and judgments; (4) affect the personal or property rights of private persons; (5) examine witnesses, compel the attendance of witnesses, and hear the litigation of issues on a hearing; and (6) enforce decisions or impose penalties”) (citing Adco Servs., Inc. v. Bullard, 256 Ill. App. 3d 655 (1993)).

  60. 60.

    Id. at 1289.

  61. 61.

    Odyniec vs. Schneider, 588 A.2d 786 (Md. 1991).

  62. 62.

    Note that this case involved a lawsuit against the opponent’s expert witness, unlike the cases discussed above involving a suit against one’s own hired witness (or attorney). As noted above, immunity should apply in cases involving opposing witnesses, including experts—but that immunity should not extend to cases involving one’s own hired representatives and witnesses.

  63. 63.

    Id. at 787.

  64. 64.

    Id. at 790, 793 (“That Dr. Schneider’s defamatory statement may have been gratuitous, unsolicited, and in part irrelevant to the purpose for which he was employed, and was not made during the actual hearing before the arbitration panel, does not defeat the absolute privilege. Whatever Dr. Schneider’s motivation may have been, he made his verbal statement to Ms. Ensor, a party in the then-pending arbitration proceeding, while he was conducting a medical examination of her in preparation for his participation in that proceeding. It was thus made in the course of his participation in that pending proceeding and therefore, without regard to its relevance, the verbal statement is accorded the same absolute privilege as if it had been made by a witness during the arbitration hearing itself.”).

  65. 65.

    Id.; see also Yeung vs. Maric, 232 P.3d 1281, 1285 (2010) (Ariz. App. Ct. 2010) (extending privilege to a physician witness in an arbitration, and stating: “These principles support a corresponding immunity for witnesses who participate in arbitration proceedings. Arbitrators perform quasi-judicial functions, and arbitration proceedings are quasi-judicial in nature. Witnesses in private, contractual uninsured/underinsured motorist coverage arbitration proceedings should generally be covered by the absolute privilege regarding defamatory statements, assuming the statements are related to the proceeding and basic procedural safeguards… are present in the proceeding”).

  66. 66.

    Questions about arbitrator misconduct are not considered in this chapter. Unlike parties, arbitrators must often abide by a code of ethics. The doctrine of absolute immunity, however, applies equally to arbitrators as to other participants, provided that the arbitrators are acting in their official capacity as arbitrators in the case.

  67. 67.

    See 2 Maureen Weston, Anatomy of the First Public International Sports Arbitration and the Future of Public Arbitration After USADA vs. Floyd Landis, in Yearbook on Arbitration and Mediation, at 234–36 (Vandeplas Publishing 2010).

  68. 68.

    Id. at 235.

  69. 69.

    Id. at 236. At the time, the USADA had never lost a doping case to an athlete. Unlike standard procedure, Landis requested that his hearings be public. Id. at 237. The USADA rules specifically allow for such a public procedure. American Arbitration Association, Supplementary Procedures for the Arbitration of Olympic Sport Doping Disputes Rule, American Arbitration Association, Supplementary Procedures for the Arbitration of Olympic Sport Doping Disputes Rule 12 (May 1, 2009), available at www.ard.org/sp.asp?id=28627 (“The athlete….shall have the sole right to request that the hearing be open to the public subject to such limitations as may be imposed by the arbitrator(s)”).

  70. 70.

    Bonnie D. Ford, “Landis Admits Doping, Accuses Lance,” ESPN.com, May 21, 2010, available at http://sports.espon.go.com/oly/cycling/news/story?id=5203604 (last visited June 15, 2011). Even more recently, Lance Armstrong has now publically admitted his extensive use of performance-enhancing drugs during his cycling career, forfeiting all of his Tour de France titles.

  71. 71.

    Admittedly, because Landis lost his arbitration, his case might not make the best test-case for perjury within the arbitral forum. Whether a person convinces the decision-maker of the false statements, however, should not be part of the calculus in determining whether perjury occurred.

  72. 72.

    See Model Penal Code Articles §§ 240, 241, 242, 243 (1962).

  73. 73.

    For instance, the sections dealing with law enforcement, obstruction of justice, escape, bail jumping, and abuse of office are not applicable to this discussion.

  74. 74.

    Mark Curriden, The Lies Have It, 81 A.B.A. J. 68, 69 (May 1995) (quoting former ABA Section of Litigation chair David Weiner); see also John L. Watts, To Tell The Truth: A Qui Tam Action for Perjury in a Civil Proceeding is Necessary to Protect the Integrity of the Civil Judicial System, 79 Temp. L. Rev. 773, 784 (2006) (“While this reluctance to criminally prosecute perjury in civil cases may be understandable, it is regrettable because perjury undermines the real and perceived legitimacy of the civil judicial system”).

  75. 75.

    Fla. Stat. § 241.1 (1972)(1).

  76. 76.

    Id. § 240.0 (4).

  77. 77.

    Ala. Code § 13A-10-100, -101 (2010).

  78. 78.

    Colo. Rev. Stat. § 18-8-501, -502 (2010).

  79. 79.

    Conn. Gen. Stat. § 53a-146, -156 (2010).

  80. 80.

    Fla. Stat. Ann. § 837.02, -0.11 (2010).

  81. 81.

    Hawaii. Rev. Stat. § 710-1000, -1060 (2010).

  82. 82.

    720 I.L.C.S. 5/32-3 (a) (2010).

  83. 83.

    Kan. Stat. Ann. § 21-5903 (a)(1) (2010).

  84. 84.

    Ky. Rev. Stat. Ann. § 523.010 (3), -.020 (2010).

  85. 85.

    17-A Maine Rev. Stat. Ann. §§ 451 (1), 451 (5) (2010) (defining perjury). Maine also has a civil cause of action for perjury—the only state to have such a statute. 14 Maine Rev. Stat. Ann. § 870 (2010). Whether this statute would apply to arbitration is also questionable.

  86. 86.

    Mo. Ann. Stat. § 492.040 (West 2010); Mo. Ann. Stat. § 575.010 (2010).

  87. 87.

    Mont. Code Ann. § 45-7-201 (2010).

  88. 88.

    Neb. Rev. Stat. § 29-915(1), -916 (2010).

  89. 89.

    N.H. Rev. Stat. Ann. § 641:1 (I, II) (2010).

  90. 90.

    N.M. Stat. Ann. § 30-25-1; N.M. Stat. Ann. § 30-1-12 (G) (2010).

  91. 91.

    N.D. Cent. Code § 12.1-11-01 (2010) (defining perjury).

  92. 92.

    Ohio Rev. Code Ann. § 2921.01(D), -.11(A) (2010).

  93. 93.

    18 Pa. Stat. Ann. § 4902 (West 2010).

  94. 94.

    Utah Code Ann. § 76-8-501(1), -502 (2010).

  95. 95.

    Id. §§ 9A.72.010 (4)-.020 (2010). The Washington perjury laws, like some other state laws, require that the oath taken be an oath mandated by law. Wash. Rev. Code Ann. § 9A.72.010 (3) (defining “oath”). Because arbitration does not involve a statutory mandate to give testimony under oath, these perjury statutes would not apply to arbitration.

  96. 96.

    Id. § 11.56.200 (2010) (“A person commits the crime of perjury if the person makes a false sworn statement which the person does not believe to be true”); Alaska Stat. § 11.56.240 (2010) (“defining “sworn statement” as statement knowingly given under oath or affirmation attesting to the trust of what is stated, including a notarized statement”). These statues apply to arbitration proceedings. Gilbert vs. Sperbeck, 126 P.3d 1057, 1060 (Alaska 2005) (assuming, without deciding, that perjury rules apply to arbitration proceedings).

  97. 97.

    683 N.E.2d at 1287. The court also relied on the Restatement (Second) of Torts for authority that arbitral proceedings should be covered by absolute privilege. Id. at 1288 (citing Restatement (Second) of Torts), 9 U.S.C. §§ 13-2702 (“A person commits perjury by making either: 1. A false sworn statement in regard to a material issue, believing it to be false”); Ariz. Rev. Stat. § 13-2701 (LexisNexis 2010) (defining “sworn statement” as “any statement knowingly given under oath or affirmation attesting to the truth of what is stated”). Arizona courts, similarly, applied perjury laws to attorney fee arbitrations. State vs. Self, 135 Ariz. 374 (Ct. App. 1983) (holding that the “sworn statement” language in the perjury statute facially applies to arbitration, and finding that an arbitration hearing before the State Bar Committee constituted an “official proceeding” for the tampering charges).

  98. 98.

    Ark. Code Ann. § 16-2-103 (2010) (“In all cases in which an oath is required or authorized by law, it may be taken in any of the forms prescribed in this chapter. Every person swearing, affirming, or declaring in any such form, or any form authorized by law, shall be deemed to have been lawfully sworn and to be guilty of perjury for corruptly and falsely swearing, affirming, or declaring, in the same manner as if he or she had sworn by laying his or her hand on the Gospels and kissing them”)

  99. 99.

    Cal. Penal Code § 118 (Deering 2010) (“Every person who, having taken an oath that he or she will testify, declare, depose, or certify truly before any competent tribunal, officer, or person, in any of the cases in which the oath may by law of the State of California be administered, willfully and contrary to the oath, states as true any material matter which he or she knows to be false, and every person who testifies, declares, deposes, or certifies under penalty of perjury in any of the cases in which the testimony, declarations, depositions, or certification is permitted by law of the State of California under penalty of perjury and willfully states as true any material matter which he or she knows to be false, is guilty of perjury”).

  100. 100.

    Del. Stat. Tit. 11, 9 U.S.C. § 1221 (2010) (“A person is guilty of perjury in the first degree when the person swears falsely and when the false statement consists of testimony and is material to the action, proceeding or matter in which it is made”). Delaware, however, defines “testimony” as “oral statement made under oath in a proceeding before any court, body, agency, public servant or other person authorized to conduct the proceeding and to administer the oath or cause it to be administered.” Id. (2010).

  101. 101.

    D.C. Code § 22-2402(a) (2010) (A person commits the offense of perjury if: (“(1) Having taken an oath or affirmation before a competent tribunal, officer, or person, in a case in which the law authorized such oath or affirmation to be administered, that he or she will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by that person subscribed is true, wilfully and contrary to an oath or affirmation states or subscribes any material matter which he or she does not believe to be true and which in fact is not true”).

  102. 102.

    Idaho Code Ann. § 18-5401 (2010) (“Every person who, having taken an oath that he will testify, declare, depose, or certify truly, before any competent tribunal, legislative committee, officer, or person in any of the cases in which such an oath may by law be administered, willfully and contrary to such oath, states as true any material matter which he knows to be false, is guilty of perjury”).

  103. 103.

    Ind. Code § 35-44-2-1 (a)(1) (2010) (“A person who makes a false, material statement under oath or affirmation, knowing the statement to be false or not believing it to be true”).

  104. 104.

    Iowa Code Ann. § 720.2 (West 2010) (“A person who, while under oath or affirmation in any proceeding or other matter in which statements under oath or affirmation are required or authorized by law, knowingly makes a false statement of material facts or who falsely denies knowledge of material facts, commits a class “D” felony”). This statute applies to workman’s compensation arbitrations. Continental Fire Sprinkler Co. vs. Hoolandt, 2002 WL 700977, at *2 (Iowa App. Ct. 2002).

  105. 105.

    Md. Crim. Code, 9 U.S.C. §§ 9-101(a) (“A person may not willfully and falsely make an oath or affirmation as to a material fact: (1) if the false swearing is perjury at common law”).

  106. 106.

    Mich. Comp. Law Ann. § 750.423 (West 2010) (“Any person authorized by any statute of this state to take an oath, or any person of whom an oath shall be required by law, who shall wilfully swear falsely, in regard to any matter or thing, respecting which such oath is authorized or required, shall be guilty of perjury, a felony”).

  107. 107.

    Minn. Stat. Ann. § 609.48 (1) (West 2010) (“Whoever makes a false material statement not believing it to be true in any of the following cases is guilty of perjury and may be sentenced as provided in subdivision 4: (1) in or for an action, hearing or proceeding of any kind in which the statement is required or authorized by law to be made under oath or affirmation”)

  108. 108.

    Miss. Code Ann. § 97-9-59 (2010) (“Every person who shall willfully and corruptly swear, testify, or affirm falsely to any material matter under any oath, affirmation, or declaration legally administered in any matter, cause, or proceeding pending in any court of law or equity, or before any officer thereof, or in any case where an oath or affirmation is required by law or is necessary for the prosecution or defense of any private right or for the ends of public justice, or in any matter or proceeding before any tribunal or officer created by the Constitution or by law, or where any oath may be lawfully required by any judicial, executive, or administrative officer, shall be guilty of perjury, and shall not thereafter be received as a witness to be sworn in any matter or cause whatever, until the judgment against him be reversed”).

  109. 109.

    N.Y. Penal Code § 210.15 (2010) (“A person is guilty of perjury in the first degree when he swears falsely and when his false statement (a) consists of testimony, and (b) is material to the action, proceeding or matter in which it is made”). This statute applies to National Association of Securities Dealers (NASD) arbitrations. People vs. Cohen, 773 N.Y.S.2d 371, 385 (App. Div. 2004) (affirming perjury conviction).

  110. 110.

    21 Okla. St. Ann. § 491 (2010) (“Whoever, in a trial, hearing, investigation, deposition, certification or declaration, in which the making or subscribing of a statement is required or authorized by law, makes or subscribes a statement under oath, affirmation or other legally binding assertion that the statement is true, when in fact the witness or declarant does not believe that the statement is true or knows that it is not true or intends thereby to avoid or obstruct the ascertainment of the truth, is guilty of perjury. It shall be a defense to the charge of perjury as defined in this section that the statement is true”).

  111. 111.

    Ore. Rev. Stat. § 162. 065 (1) (2010) (“Whoever, in a trial, hearing, investigation, deposition, certification or declaration, in which the making or subscribing of a statement is required or authorized by law, makes or subscribes a statement under oath, affirmation or other legally binding assertion that the statement is true, when in fact the witness or declarant does not believe that the statement is true or knows that it is not true or intends thereby to avoid or obstruct the ascertainment of the truth, is guilty of perjury. It shall be a defense to the charge of perjury as defined in this section that the statement is true”).

  112. 112.

    R.I. Gen. Laws § 11-33-1(a) (2010) (“Every person under oath or affirmation who knowingly makes any false material declaration or makes or uses any other information, including any book, paper, document, record, recording, or other material, knowing it contains any false material declaration, shall be deemed guilty of perjury”).

  113. 113.

    S.C. Code Ann. § 16-9-30 (2010) (“It is unlawful for a person to willfully and knowingly swear falsely in taking any oath required by law that is administered by a person directed or permitted by law to administer such oath”).

  114. 114.

    S.D. Comp. L. § 22-29-1 (2010) (“Any person who, having taken an oath to testify, declare, depose, or certify truly, before any competent tribunal, officer, or person, in any state or federal proceeding or action in which such an oath may by law be administered, states, intentionally and contrary to the oath, any material matter which the person knows to be false, is guilty of perjury”).

  115. 115.

    Tenn. Code Ann. § 39-16-702 (a)(1) (2010) (“A person commits an offense who, with intent to deceive… Makes a false statement, under oath”).

  116. 116.

    Tex. Code Ann., Penal Code § 37.02 (a) (2010) (“A person commits an offense if, with intent to deceive and with knowledge of the statement’s meaning: (1) he makes a false statement under oath or swears to the truth of a false statement previously made and the statement is required or authorized by law to be made under oath”).

  117. 117.

    Va. Code Ann. § 18.2-434 (2010) (“If any person to whom an oath is lawfully administered on any occasion willfully swears falsely on such occasion touching any material matter or thing… he is guilty of perjury”).

  118. 118.

    See Gilbert, 126 P.3d at 1060 (assuming, without deciding, that the perjury rules apply equally to arbitration proceedings); Self, 135 Ariz. 374 (holding that the “sworn statement” language in the perjury statute facially applies to arbitration, and finding that an arbitration hearing before the State Bar Committee constituted an “official proceeding” for the tampering charges); Hoolandt, supra (acknowledging perjury in a worker’s compensation arbitration); Scott vs. Commonwealth, 416 S.E.2d 47, 49 (Va. Ct. App. 1992) (Neither Code § 18.2-434 nor Code § 18.2-435 expressly restricts “testimony” to testimony given in judicial proceedings. In fact, Code § 18.2-434 provides that it is perjury to swear falsely when an oath is lawfully administered “on any occasion”).

  119. 119.

    Wis. Stat. Ann. § 946.31 (d) (West 2010) (emphasis added).

  120. 120.

    N.J. Stat. Ann. § 2C:28-1 (a) (West 2010) (“Offense defined. A person is guilty of perjury, a crime of the third degree, if in any official proceeding he makes a false statement under oath or equivalent affirmation, or swears or affirms the truth of a statement previously made, when the statement is material and he does not believe it to be true”).

  121. 121.

    Id. § 2C:277:1 (d) (2010).

  122. 122.

    Ga. Code Ann. § 16-10-70 (a) (2010).

  123. 123.

    La. Rev. Stat. Ann. § 14:123 (2010).

  124. 124.

    Mass. Gen. Law Ann. 268, § 1 (West 2012) (“Whoever, being lawfully required to depose the truth in a judicial proceeding or in a proceeding in a court of justice, willfully swears or affirms falsely in a matter material to the issue or point in question, or whoever, being required by law to take an oath or affirmation, willfully swears or affirms falsely in a matter relative to which such oath or affirmation is required, shall be guilty of perjury”).

  125. 125.

    Ezekiel vs. Jones Motor Co., 372 N.E.2d 1281, 1285 (Mass. 1978) (not applying perjury to a labor arbitration).

  126. 126.

    Nev. Rev. Stat. § 199.120 (2010). Nevada case law emphasizes that an oath must be required by law (i.e., not voluntary). Licata vs. State, 661 P.2d 1306, 1307 (Nev. 1983) (“We construe the language of the statute to mean that a perjury charge may be sustained only where the false statement was made in a judicial or other setting where an oath or affirmation is legally required. Appellant’s voluntary statement taken in the insurance company lawyer’s office does not fall within the purview of the statute and thus, appellant could not have been found guilty of perjury in this case”).

  127. 127.

    N.C. Gen. Stat. Ann. § 14-209 (West 2010).

  128. 128.

    Vt. Code Ann. § 2901 (2010).

  129. 129.

    W. Va. Code § 61-5-1 (a) (2010).

  130. 130.

    Wyo. Stat. Ann. § 6-5-301 (a) (2010).

  131. 131.

    18 U.S.C. § 1621 (1) (2012).

  132. 132.

    FINRA News Release, “Morgan Stanley to Pay $ 12.5 Million to Resolve FINRA Charges that it Failed to Provide Documents to Arbitration Claimants, Regulators,” September 27, 2007.

  133. 133.

    Richard L. McConnell et al., “Compliance Readiness—Law Firms: Discovery of Electronic Information: The Scylla of Excessive Cost and the Charybdis of Potential Sanctions,” at http://www.metrocorpcounsel.com/current.php?artType=view&artMonth=October&artYear=2006&EntryNo=5741 (last viewed June 14, 2011).

  134. 134.

    Ohio Rev. Code Ann. § 241.7 (2007).

  135. 135.

    Ala. Code § 13A-10-129 (2010).

  136. 136.

    Alaska Stat. § 11.56.610.

  137. 137.

    Ariz. Rev. Stat. § 13-2809.

  138. 138.

    Ark. Code Ann. § 5-53-111 (2010).

  139. 139.

    Colo. Rev. Stat. Ann. § 18-8-610 (West 2010).

  140. 140.

    Conn. Gen. Stat. Ann. § 53a-155 (West 2010).

  141. 141.

    11 Del. Code § 1274 (2010).

  142. 142.

    D.C. Stat. § 22-723 (2010).

  143. 143.

    Haw. Rev. Stat. § 710-1076 (2010).

  144. 144.

    Idaho Code Ann. § 18-2603 (2010).

  145. 145.

    Ky. Rev. Stat. Ann. § 524.100 (West 2010).

  146. 146.

    Mich. Comp. Laws Ann. § 750.483a (5).

  147. 147.

    Miss. Code Ann. § 97-9-125 (2010).

  148. 148.

    Mont. Code Ann. § 45-7-207 (2010).

  149. 149.

    Neb. Rev. Stat. §§ 45-7 to -207 (2010).

  150. 150.

    N.H. Rev. Stat. Ann. § 641:6.

  151. 151.

    N.J. Stat. Ann. § 2C:28:6 (2010).

  152. 152.

    N.Y. Penal Law § 251.40 (West, 2010).

  153. 153.

    N.D. Cent. Code § 12.1-09-03 (2010).

  154. 154.

    Ohio Rev. Code Ann. § 2921.12 (2010).

  155. 155.

    21 Okla.Stat. Ann. § 454 (2010).

  156. 156.

    Ore. Rev. Stat. § 162.295 (2010).

  157. 157.

    18 Pa. Stat. Ann. § 4910.

  158. 158.

    S.D. Comp. Laws § 19-7-14 (2010) (using the term “proceeding,” not “official proceeding”).

  159. 159.

    Tenn. Code Ann. § 39-16-503 (2010).

  160. 160.

    Tex. Penal Code Ann. § 37.09 (West 2010).

  161. 161.

    Utah Code Ann. § 76-8-510.5 (2010) (including a catchall provision of “examination under oath”).

  162. 162.

    Wash. Rev. Code Ann. § 9A.72.150.

  163. 163.

    Comment, Cecelia Hallinan, Balancing the Scales After The Evidence is Spoiled: Does Pennsylvania’s Approach Sufficiently Protect the Injured Party?, 44 Vill. L. Rev. 947, 956 (1999) (describing the cause of action). Note that some jurisdictions require the completion of the underlying cause of action before raising a claim of spoliation.

  164. 164.

    See Nichols vs. State Farm Ins. & Cas.Co., 6 P.3d 300 (Alaska 2000) (recognizing tort of intentional spoliation of evidence); Holmes vs. Amerex Rent-A-Car, 710 A.2d 846 (D.C. 1998) (establishing tort); Dardeen vs. Kuehling, 821 N.E.2d 227, 2321 (Ill. 2004) (establishing tort); Clotzbach, CPA vs. Froman, 827 N.E.2d 105, 108 (Ind. App. 2005) (establishing tort); Desselle vs. Jefferson Hosp. Dist. No. 2, 887 So. 2d 524, 534 (La. Ct. App. 2004) (recognizing a tort of intentional spoliation); Gentry vs. Douglas Hereford Ranch, Inc., 962 P.2d 1205 (Mont. 1998) (establishing tort); Manorcare Health vs. Osmose Wood, 336 N.J. Super. 218, 226, 764 A.2d 475, 479 (App. Div. 2001) (noting that destruction of evidence could result in a separate tort for spoliation, discovery sanctions, or an adverse inference); Smith vs. Howard Johnson Co., 67 Ohio St. 3d 28, 29, 615 N.E.2d 1037 (1993) (applying tort); Hanna vs. Heeter, 584 S.E.2d 560, 563–64 (W. Va. 2003) (noting elements); DiDomenico vs. C & S Aeromatik Supplies, 252 A.D.2d 41, 682 N.Y.S.2d 452 (2d Dep’t 1998) (noting availability of tort, but holding tort not established in the particular case).

    Some states expressly reject this tort. Tobel vs. Travelers Ins. Co., 988 P.2d 148, 156 (Ariz. Ct. App. 1999); Cedars-Sinai Med. Ctr. vs. Sup.Ct., 18 Cal. 4th 1, 74 Cal. Rptr. 2d 248, 258, 954 P.2d 511 (1998); Lucas vs. Christiana Skating Ctr., Ltd., 722 A.2d 1247, 1250 (Del. 1998); Lucas vs. Christiana Skating Center, Ltd., 722 A.2d 1247, 1250 (1998); Owens vs. Am. Refuse. Sys., Inc., 244 Ga. App. 780, 536 S.E.2d 782 (2000); Monsanto Co. vs. Reed, 950 S.W.2d 811, 815 (Ky. 1997).); Fletcher vs. Dorchester Mut. Ins. Co., 437 Mass. 544, 773 N.E.2d 420 (2002); Panich vs. Iron Wood Prods. Corp., 445 N.W.2d 795 (Mich. Ct. App. 1989); Federated Mut. Ins. Co. vs. Litchfield Precision Components, Inc., 456 N.W.2d 434, 437 (Minn. 1990); Dowdle Butane Gas Co. vs. Moore, 831 So. 2d 1124, 1135 (Miss. 2002).; Patel vs. OMH Med. Ctr., Inc., 987 P.2d 1185 (Okla. 1999); Elias vs. Lancaster Gen. Hosp., 710 A.2d 65, 68 (Pa. Super. Ct. 1998); Malinowski vs. Documented Vehicle/Drivers Sys., Inc., 66 F. App’x 216, 222 (R.I. 2003). Trevino vs. Ortega, 969 S.W.2d 950, 951 (Tex. 1998); Estate of Neumann ex rel. Rodli vs. Neumann, 242 Wis. 2d 205, 244–49, 626 N.W.2d 821, 840–43 (Wis.App., 2001).

  165. 165.

    See Holmes vs. Amerex Rent-A-Car, 710 A.2d 846 (D.C. 1998) (establishing torts for both intentional and negligent spoliation); Dardeen vs. Kuehling, 821 N.E.2d 227, 2321 (Ill. 2004) (holding that the tort of negligent spoliation fit within traditional negligence law); Clotzbach, CPA, 827 N.E.2d at 108 (requiring the finding of a duty whether the claim is for intentional or negligent spoliation); Gentry, 962 P.2d 1205 (recognizing claim for intentional and negligent spoliation); Smith, 67 Ohio St. 3d at 29, 615 N.E.2d 1037 (recognizing the tort of negligent spoliation, provided that the parties have a special relationship).

  166. 166.

    Arbitrability issues can arise in this area with courts considering whether the arbitrator has jurisdiction over this question in the first instance. See Clyde Bergemann, Inc. vs. Sullivan, Higgins & Brion, PPE, L.L.C., 2008 WL 2116908 (D. Or. May 14, 2008) (compelling spoliation claim to arbitration); Positive Software Solutions, Inc. vs. New Century Mortgage Co., 259 F. Supp. 2d 561 (N.D. Tex. 2003) (same); Dantz vs. Apple Ohio, L.L.C., 277 F. Supp. 2d 794 (N.D. Ohio 2003) (same).

  167. 167.

    Some arbitral opinions evidence that parties have asked for damages for a cause of action for spoliation. See In the Matter of Arbitration Between Name of Claimants Daniel G Parsons Ellen M. Petri vs. Name of Respondent The Prudential Ins. Co. of Am., 1999 WL 681,721 (N.A.S.D. July 8 1999); In the Matter of Arbitration Between Name of Claimant Brenda Rose Names of Respondents Lehwald Orosey Pepe, Inc., 1998 WL 11,78726 (N.A.S.D. August 5, 1998)

  168. 168.

    See, e.g., Ungerland vs. Morgan Stanley & Co., 2010 WL 1795628 (Conn. Super. Ct. April 5, 2010) (dismissing cause of action for spoliation as a collateral attack on the arbitration award).

  169. 169.

    Nearly every jurisdiction in the USA recognizes some types of sanctions for spoliation of evidence. Those sanctions can range from drawing an adverse inference against the alleged spoliator to an award of attorney’s fees to outright dismissal of a claim.

  170. 170.

    See, e.g., Jones vs. PPG Indus., 2010 WL 3565731 (3d Cir. September 15, 2010). Interestingly, the Jones court involved a claim in which the arbitrator found an adverse inference against the respondent party and then still ruled in favor of the respondent. The trial court and Third Circuit confirmed the arbitral award based a review of the extensive record in the case.

  171. 171.

    See, e.g., Davis vs. Reliance Elec., 104 S.W.3d 57 (Tenn. Ct. App. 2002). In Davis, the arbitrator had grave concerns regarding the respondent-employer’s failure to provide certain critical documents, so the arbitrator awarded punitive damages against the employer based on a portion of the employer’s net worth.

  172. 172.

    See, e.g., AmeriCredit Fin. Serv., Inc. vs. Oxford Mgmt. Serv., 627 F. Supp. 2d 85 (E.D.N.Y. 2008) (confirming award dismissing counterclaims when the party asserting the counterclaims destroyed documents relevant to the claim).

  173. 173.

    Model Rules of Professional Conduct, Rule 1. 0 (m 2010) (“‘Tribunal’ denotes a court, an arbitrator in a binding arbitration proceeding or a legislative body, administrative agency or other body acting in an adjudicative capacity. A legislative body, administrative agency or other body acts in an adjudicative capacity when a neutral official, after the presentation of evidence or legal arguments by a party or parties, will render a binding legal judgment directly affecting a party’s interests in a particular matter”); see also W. Suflas, The Role of Ethics in ADR Leading Lawyers on Understanding the Ethical Obligation of Attorneys Engaging in Alternative Dispute Resolution, Aspatore, at *3 (November 2011) (“A ‘tribunal’ is defined broadly to specifically include ‘an arbitrator in a binding arbitration proceeding’”). Non-binding arbitration proceedings are exempt from these ethical rules.

    States adopting this definition of tribunal include (found in Rule 1.0 of the respective state’s model rules, unless otherwise noted): Arizona; Colorado; Connecticut; Delaware; District of Columbia; Georgia (unnumbered Terminology section); Idaho; Indiana; Iowa (Rule 32:1.0); Kansas; Kentucky (SCR 3/130 (1.0)); Louisiana; Maine; Maryland; Minnesota; Missouri (Rule 4-1.0); Montana; Nebraska (Rule 3-501.0); Nevada; New Hampshire; New Jersey; New Mexico (Rule 16-100); New York; North Carolina; North Dakota; Ohio; Oklahoma; Oregon; Pennsylvania; Rhode Island; South Carolina; South Dakota; Tennessee; Texas (undefined definitions’ section); Utah; Vermont; Washington; Wisconsin; and Wyoming.

    A number of states have not adopted any definition of tribunal. Those states include: Alabama, Alaska, Arkansas, Florida, Illinois, Michigan, Mississippi, Virginia, and West Virginia. Massachusetts defines “tribunal” only as a “court or other adjudicatory body.” Mass. R. Prof. Resp., R. 9.1 (o). Presumably, arbitration is an “adjudicatory body” because the purpose of arbitration is to make final and binding determinations of law and fact. The New York law does not contain a limitation on binding arbitrations, but it applies to all arbitration proceedings. NY Rules of Professional Conduct, R. 1.0 (w). Hawaii proposed an amendment to its rules of professional conduct that would include the above definition of the word “tribunal.” Proposed HRPC Final Version, at http://www.hsba.org/resources/1/HRPC/Proposed%20HRPC%20Final%20Version.pdf.

  174. 174.

    Model Code of Professional Responsibility, R. 3.3 (a) (2002) (emphasis added). The following states adopted this, or a substantially similar rule (found in Rule 3.3 of the respective state’s model rules, unless otherwise noted): Alabama; Alaska; Arizona; Arkansas; Colorado; Connecticut; Delaware; District of Columbia; Florida (Rule 4-3.3); Georgia; Hawaii; Idaho; Illinois; Indiana; Iowa (Rule 32:3.3); Kansas; Kentucky (SCR 3.130 (3.3)); Louisiana; Maine; Maryland; Massachusetts; Michigan; Minnesota; Mississippi; Missouri (Rule 4-3.3); Montana; Nebraska (Rule 3-503.3); Nevada; New Hampshire; New Jersey; New Mexico (Rule 16-303); New York; North Carolina; North Dakota; Ohio; Oklahoma; Oregon; Pennsylvania; Rhode Island; South Carolina; South Dakota; Tennessee; Texas (Rule 3.03); Utah; Vermont; Virginia; Washington; West Virginia; Wisconsin; and Wyoming. See also Restatement (Third) of The Law Governing Lawyers § 120 (2000).

  175. 175.

    Model R. Prof. Conduct R. 3. 3 (b) (2002).

  176. 176.

    Model Rule of Professional Conduct R. 3.4; See also Restatement (Third) of The Law Governing Lawyers § 117. The following states adopted a version of Model Rule of Professional Conduct 3.4 dealing with candor towards opposing counsel and parties (labeled as Rule 3.4, unless otherwise noted): Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, and Wyoming.

  177. 177.

    The nature of consumer and employment arbitration changed in 1991 when the Supreme Court decided the case Gilmer v. Interstate Johnson, 500 U.S. 44, 50 (1991). The Gilmer Court held that a party could enforce a pre-dispute agreement to arbitrate statutory claims, such as discrimination claims under the Age Discrimination in Employment Act. Following Gilmer, the floodgates opened and many large companies began requiring consumers and employees to agree to arbitrate all claims, including statutory claims.

  178. 178.

    Erin Murphy, Manufacturing Crime: Process, Pretext, and Criminal Justice, 97 Geo. L.J. 1435, 1489 (2009) (noting that, while perjury charges are hard to quantify, sources indicate that as little as 0.2 % of all federally filed felonies are perjury charges, and noting that perjury charges are more likely filed in high-profile cases or cases involving difficult cases other than the process crimes).

  179. 179.

    As will be demonstrated below, a showing of fraud requires a “clear and convincing” evidentiary burden, unlike the burden of proof for any other standard of review.

  180. 180.

    See supra Section II (D) 2010 (1).

  181. 181.

    Low vs. Minichino, 267 P.3d 683, 689 (Haw. 2011) (reversing the decision of the court below confirming an award challenged on the basis of fraud so that the lower court can hold an evidentiary hearing on the issue).

  182. 182.

    Stephen K. Huber & Maureen A Weston, Arbitration: Cases and Materials, by Huber, 2nd Edition (2006).

  183. 183.

    9 U.S.C. § 10 (a) (2002).

  184. 184.

    Over the past few years, the Supreme Court has given indications that only the four enumerated grounds for review listed in Sect. 10 (a) of the FAA can be used to vacate an arbitration award. In Hall St. Assocs. vs. Mattel, Inc., 552 US 576 (2008), the Supreme Court held that parties could not contract for a standard of review greater than that proscribed in Sect. 10 (a). The Court left open the possibility that courts could review an award based on standards other than those in the statute. The Court acknowledged, but did not resolve this issue again in Stolt-Nielsen, S.A vs. AnimalFeeds Int’l, 130 S. Ct. 1758 (2010). For the purposes of this chapter, whether these grounds exist is immaterial because these grounds of review deal with an arbitrator’s award, as opposed to the conduct of an opposing party or witness.

  185. 185.

    See, e.g., Wachovia Sec., L.L.C. vs. Brand, 671 F.3d 472, 481 (4th Cir. 2012) (“Before Hall Street, we stated that for a court to vacate an award under the manifest disregard theory, the arbitration record must show that ‘(1) the applicable legal principle is clearly defined and not subject to reasonable debate; and (2) the arbitrator[ ] refused to heed that legal principle’”) (citation omitted).

  186. 186.

    See Wachovia Sec., 671 F.3d at 481–83 (discussing the Supreme Court’s decisions and the resulting circuit split).

  187. 187.

    Lagstein vs. Certain Underwriters at Lloyd’s, London, 607 F.3d 634, 641 n.4 (9th Cir. 2010).

  188. 188.

    See, e.g., Delta Air Lines, Inc. vs. Air Line Pilots Ass’n, 861 F.2d 665 (11th Cir. 1988) (finding a violation of public policy when a labor arbitrator awarded reinstatement of a pilot who flew a passenger aircraft while intoxicated).

  189. 189.

    In the 2012 decision of Marmet Health Care Ctr., Inc. vs. Brown, 565 U.S. ___ (2012), the US Supreme Court reversed a decision by the West Virginia Supreme Court invalidating certain nursing home contracts as violative of public policy. While never stating that the public policy exception does not exist, the Court struck down the West Virginia decision as preempted by the Federal Arbitration Act—thus leaving in doubt whether any public policy exception based on state law would not be preempted.

  190. 190.

    The FAA has a handful of limited grounds for vacatur, but the one most often invoked in situations involving perjury or tampering is the exception for fraud. See, e.g., Trans Chem. Ltd. vs. P.R.C. Nat. Mach. Imp. & Exp. Corp., 161 F.3d 314, 319 (5th Cir. 1998) (“Willful destruction or withholding of evidence constitutes fraud under the FAA”).

  191. 191.

    Fraud is difficult to prove in any context. A cause of action for fraud requires a heightened pleading standard, see, e.g., Fed. R. Civ. P. 9 (b), and a higher burden of proof. Fraud in the context of FAA § 10 (a)(2007) (1) is different than fraud generally, but it is still difficult to prove.

  192. 192.

    Lafarge Conseils Et Etudes, S.A. vs. Kaiser Cement & Gypsum Corp., 791 F.2d 1334, 1339 (9th Cir. 1986) (emphasis added) (affirming confirmation of an arbitration award despite allegations of document falsification because the information was discoverable with the exercise of due diligence); see also Smith West, LLC vs. Mognach Payne Inc., 2010 WL 2471051, *2 (Ariz. App. Div. June 17, 2010) (“[A] party seeking to vacate an arbitration award claiming fraud must show ‘that the fraud was (1) not discoverable upon the exercise of due diligence prior to the arbitration, (2) materially related to an issue in the arbitration, and (3) established by clear and convincing evidence’”) (citing Lafarge Conseils Et Etudes, S.A., 791 F.2d at 1339). This test appears to be the test that a majority of the courts employ when confronted with a motion for vacatur on the grounds of fraud. Other tests are employed in a minority of jurisdictions. See, e.g., 6 C.J.S., Arbitration § 151, p. 400 (“As a general rule any fraud or misconduct having a tendency to affect the award improperly will vitiate it and render it subject to impeachment”); Prof’l Builders, Inc. vs. Sedan Floral, Ind., 819 P.2d 1254, 1258 (Kan. Ct. App. 1991) (same).

  193. 193.

    Molten Metal Equip. Innovations vs. Pyotek, Inc., 2010 WL 2639912, at *2 (N.D. Ohio June 29, 2010) (articulating same test and holding that no clear and convincing evidence of fraud existed that was not already presented to the arbitrator and noting that the reason for the rule is because a broader review would “undermine a substantive determination made by the arbitrator”); Site, Inc. vs. Peabody Const. Co., 872 N.E.2d 841 (Mass. App. Ct. 2007) (“In addition, the court held that perjury itself does not constitute fraud for the purposes of vacating a judgment where the moving party cannot demonstrate that the judicial process itself was corrupted by the perjury”); Artco, Inc. vs. DiFruscia, 5 Mass. App. Ct. 513, 518 (1977) (“There is no fraud on the court where a judgment has been obtained with the aid of a witness who, on the basis of after-discovered evidence, is believed possibly to have been guilty of perjury”); Groves vs. Merrill, Lynch, Pierce, Fenner, & Smith, Inc., 2006, at *4WL 2059514 (N.J. Super. A.D. 2006) (finding movant did not establish fraud based on alleged document tampering when the arbitrator considered the issue in the first instance); Thomas vs. Lusk, 27 Cal. App. 4th 1709 (1994) (reversing judgment in favor of plaintiff, client, in an action for legal malpractice when the plaintiff alleged that his counsel allowed evidence kept at plaintiff’s workplace to spoilate prior to an arbitration when both parties had equal access to the evidence).

  194. 194.

    See Jones vs. Dykstra, 2008 WL 4901080 (November 17, 2008) (affirming confirmation of award because under California law, even if the losing party could show fraud with respect to document destruction, such fraud is “intrinsic” fraud and not a basis upon which an arbitration award may be vacated).

  195. 195.

    Sometimes the arbitrator finds that a witness lied or that a party committed misconduct during the hearing. The awards in cases in which an arbitrator found participant misconduct are equally difficult to vacate (here, by the party who allegedly engaged in the misconduct). See, e.g., Hendrik Delivery Serv., Inc. vs. St. Louis Post-Dispatch L.L.C., 2007 WL 3071827 (E.D. Mo. October 19, 2007) (confirming an award in which an arbitrator awarded punitive damages, in part, because of the respondent’s destruction of documents and failure to create a record of information pertinent to the upcoming arbitration).

  196. 196.

    See, e.g., Clyde Bergemann, Inc. vs. Sullivan, Higgins & Brion, 2008 WL 4279632 (D. Or. September 18, 2008) (“ARC also argues that it is prejudiced by defendants’ delay in seeking arbitration because of defendants’ alleged spoliation of evidence. I am unpersuaded by ARC’s contention that the arbitrator cannot appropriately remedy the situation, if he concludes that the allegations are true”); Gateway Funding Diversified Mortg. Serv., L.P. v. Field, 2008 WL 2758877 (E.D. Pa. July 10, 2008) (confirming arbitration award despite arguments that one party destroyed documents when the arbitrator considered the issue on a full record and refused to apply an adverse inference); Banc of Am. Inv. Serv., Inc. vs. Plycraft Indus., 2005 WL 905927 (Cal. Ct. App. April 20, 2005) (enjoining a claim of spoliation from proceeding in arbitration under the doctrine of res judicata when the plaintiff failed to bring such a claim in a first arbitration against Bank of America in a claim involving investment advice and when the plaintiff actually used evidence of the “missing” documentation in the first arbitration).

  197. 197.

    Id. at 691 (“The second element [of the test for fraud] prevents the movant from taking a ‘second bite at the apple’ if the fraud could have been discovered at arbitration”). The Low court also recognized that the test for vacatur on the basis of fraud “sets a high standard in order to deter motions that merely seeks to relitigate issues that were already—or could have been—presented to the arbitrator. The test therefore preserves the parties’ bargain for the judgment of the arbitrator.” Low, 267 P.3d at 692.

  198. 198.

    See, e.g., Kelly vs. VinZant, 197 P.3d 803 (2008) (requiring a plaintiff to prove the following elements of fraud by clear and convincing evidence: (1) a false statement of material fact; (2) that was known to be false or was recklessly made without knowledge concerning falsity; (3) the representation was intentionally made for the purpose of inducing another party to act; (4) the other party reasonably relied and acted upon the representation made; and (5) resulting in damages); Fleges, Inc. vs. Truserv Corp., 2009 WL 424813 (Ky. February 19, 2009) (requiring a plaintiff to prove by clear and convincing evidence that: (1) statement of material fact, (2) that was false, (3) that declarant knew to be false or made recklessly, (4) that declarant induced plaintiff to act upon the misrepresentation, (5) that plaintiff relied upon the misrepresentation, and (6) that the misrepresentation caused damages); Cowburn vs. Leventis, 619 S.E.2d 437 (S.C. Ct. App. 2005) (requiring clear and convincing evidence to prove fraud).

  199. 199.

    Worth noting is the fact that arbitration is a non-public proceeding that may or may not be transcribed or recorded. The amount and type of record in an arbitration might change from case to case, depending on the amount at stake and the financial resources of the parties involved. Proving fraud on the basis of an incomplete record may be difficult, logistically, to do. An additional constraint on the process could be issues of confidentiality, and whether the parties are even at liberty to discuss what happened at the arbitration.

  200. 200.

    To be sure, some financial repercussion will result if an award is vacated. Typically, the movant seeks to vacate in order to not pay money that is awarded to the non-movant. The movant in this action typically seeks not to get money but to prevent paying out money.

  201. 201.

    Courts often conflate the grounds for review with the standard of review. Although the grounds are limited, the burden of proving these grounds is typically analyzed on a de novo basis. See, e.g., Allstate N.J. Ins. Co. vs. Driscoll, 2011 WL 408837, at *2 (N.J. Super. Ct. App. Div. February 19, 2011) (“Where, as here, a party seeks to vacate an award pursuant to N.J.S.A. 2A:23A-13c(3), the trial court ‘shall make an independent determination of any facts relevant [to the application for vacating the award] de novo, upon such record as may exist or as it may determine in a summary expedited proceeding’”); Braata, Inc. vs. Oneida Cold Storage Co., 251 P.3d 584, 588 (Colo. App. 2010) (“The latter issue is explicitly assigned to the court to decide by section 13–22–206(2), C.R.S.2009, and each of the other bases to vacate necessarily requires de novo findings by a court”).

  202. 202.

    9 U.S.C. § 10 (a)(2).

  203. 203.

    2012 WL 25,03972 (N.D. Cal. June 28, 2012).

  204. 204.

    Id. at *1.

  205. 205.

    Id. at *2–3 (citing the heightened standard of review and then finding the award did not evidence any corruption, fraud, or undue means).

  206. 206.

    Id. at *3 (“[Plaintiff] must show that specific facts create a reasonable impression of bias”).

  207. 207.

    Id. at *4.

  208. 208.

    2012 WL 10,79723 (E.D. Mich. Feb. 17, 2012).

  209. 209.

    Id. at *6–8. Prior to the arbitration, the court ruled on summary judgment motions that was later appealed to the Sixth Circuit. Id.

  210. 210.

    The plaintiff did not move for vacatur under Sect. 10 (a)(1).

  211. 211.

    Urban Assoc., Inc., 2012 WL 1079723, at *10 (quoting Uhl vs. Komatsu Forklift Co., 512 F.3d 294, 306–07 (6th Cir. 2003)).

  212. 212.

    Typically, the types of information that would create bias would be personal or financial relationships between the arbitrator and one of the parties, witnesses, or counsel.

  213. 213.

    Id. at *10 (“The fact that the majority arbitrators ruled against plaintiff, even repeatedly, does not establish improper motives and thus provides no evidence of evident partiality”).

  214. 214.

    See, e.g., Freedom Investors Corp. vs. Hadath, 2012 WL 383944, at *4 (S.D.N.Y. Feb. 7, 2012) (“An arbitrator is disqualified only when a reasonable person, considering all of the circumstances, would have to conclude that an arbitrator was partial to one side”); Cont’l Cas. Co. vs. Staffing Concepts, Inc., 2001 WL 7459781 (M.D. Fla. Dec. 20, 2011) (requiring evidence of an undisclosed conflict of interest or an actual conflict of interest); Nw. Direct Teleservices, Inc. vs. Zweizig, 2011 WL 7331297 (D. Or. Nov. 18, 2011) (“To show evident partiality in an arbitrator, a party either must establish specific facts indicating actual bias toward or against a party or show the arbitrator failed to disclose to the parties information that creates a reasonable impression of bias”) (internal quotation marks and citation omitted); Vinco Painting, Inc. vs. Painters Dist. Counsel No. 30, 2010 WL 28,91685 (N.D. Ill. July 19, 2012) (“[E]vident partiality” exists where a “reasonable person would… conclude that an arbitrator was partial”) (citation omitted). These are a mere sampling of recent cases ruling on the issue of evident partiality.

  215. 215.

    Section 10 (a)(3) allows vacation “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.”

  216. 216.

    673 F. Supp. 2d 475 (W.D. Tex. 2009).

  217. 217.

    Id. at 483.

  218. 218.

    Id. at 482.

  219. 219.

    MPJ moved to confirm the award under Sect. 9 of the FAA, which mandates that courts confirm an arbitration award if it is not vacated or modified under Sects. 10 and 11 of the FAA. 9 U.S.C. § 9.

  220. 220.

    673 F. Supp. 2d at 494.

  221. 221.

    Id. at 498.

  222. 222.

    Id. (citing Laws vs. Morgan Stanley Dean Witter, 452 F.3d 398, 399 (5th Cir. 2006)) (internal quotation marks omitted).

  223. 223.

    Id. at 499.

  224. 224.

    2004 WL 2072460 (S.D.N.Y. Sept. 5, 2004).

  225. 225.

    Id. at *4.

  226. 226.

    Id. at *10 (citing Tempo Shane Corp. vs. Bertek, Inc., 120 F.3d 16, 20 (2d Cir. 1997) (internal quotation marks omitted).

  227. 227.

    Id. at *10–11.

  228. 228.

    See, e.g., Stone v. Bear, Sterns & Co., ___ F. Supp. 2d ___, 2012 WL 1946938, at *13 (E.D. Pa. May 29, 2012) (requiring a plaintiff to show that the aggrieved party did not receive a “fundamentally fair” hearing); New York City Dist. Council of Carpenters vs. Dufour Grp. Inc., 2012 WL 13,72122 (S.D.N.Y. Apr. 19, 2012) (requiring vacatur if the proceeding is “fundamentally unfair”); Bajaj vs. Fisher Asset Mgmt., L.L.C., 2012 WL 1293169 (D. Del. Apr. 10, 2012) (granting vacatur only if the evidence not allowed in the hearing deprives the complaining party of a “fair hearing”); Wells Fargo Advisors, L.L.C. vs. Watts, ___ F. Supp. 2d ___, 2012 WL 831878 (W.D.N.C. Mar. 12, 2012) (refusing to vacate because the plaintiff could not show any “gross misconduct” with respect to evidentiary and other procedural issues).

  229. 229.

    9 U.S.C. § 10 (a) (4).

  230. 230.

    See, e.g., First Options of Chi., Inc. vs. Kaplan, 514 U.S. 938 (1995) (holding that a party who did not sign an arbitration agreement did not have to arbitrate the dispute because the evidence did not show that the party who did not sign the agreement had actually agreed to arbitrate the matter in dispute).

  231. 231.

    Harper Ins. Ltd. vs. Century Indem. Co., 819 F. Supp. 2d 270, 276 (S.D.N.Y. 2011) (“The Second Circuit has consistently accorded the narrowest readings to the FAA’s authorization to vacate awards pursuant to § 10(a)(4)”) (internal quotation marks and citations omitted).

  232. 232.

    New research suggests that fewer companies use widespread arbitration agreements in consumer contracts than originally suggested. See Peter B. Rutledge & Christopher R. Drahozal, Contract and Choice, __ B.Y.U.L.R. ___ (2012) (finding that arbitration agreements are not as widespread in consumer contracts as the literature suggests and finding that many businesses use arbitration in their business-to-business contracts).

  233. 233.

    Green Tree Fin. Corp. vs. Bazzle, 539 U.S. 444 (2003).

  234. 234.

    Id. In Bazzle, the South Carolina courts, not the arbitrators, decided that class status was appropriate. The Court reversed for the arbitrators to make this determination in the first instance.

  235. 235.

    Stolt-Nielsen, S.A, 130 S. Ct. at 1770.

  236. 236.

    Id. at 1764–65.

  237. 237.

    The AAA published all documents in the class action docket. Something of an anomaly in arbitration law, arbitrators in the class action docket could conduct an electronic search for similar awards. Given the accessibility of awards by fellow arbitrators, a type of arbitral “common law” began to develop in which the majority of “silent” arbitration awards were interpreted to support a class action procedure. See Stolt-Nielsen, S.A, 130 S. Ct. at 1176.

  238. 238.

    Id. at 1775 (emphasis in original).

  239. 239.

    Id. at 1775–76.

  240. 240.

    See, e.g., Agility Pub. Warehousing Co. K.S.C. vs. Supreme Foodservice GmbH, ___ F. Supp. 2d ___ (S.D.N.Y. 2011) (citing Stolt-Nielsen and not applying any particular burden of proof with respect to the claim under Sect. 10 (a) (4)); S. Comm. Servs., Inc. vs. Thomas, 829 F. Supp. 2d 1324 (N.D. Ga. 2011) (post-Stolt-Nielsen case finding that the arbitrator did not exceed powers in interpreting the law and the parties’ contract to find that a cellular telephone agreement permitted class action relief); Morgan Keegan & Co. vs. Garrett, 816 F. Supp. 2d 439 (S.D. Tex. 2011) (vacating award on the basis of exceeding powers because an arbitrator heard claims by parties not subject to the arbitration agreement as well as claims not covered by the arbitration agreement and applying no particular burden in conducting this analysis); Priority One Servs., Inc. vs. W & T Travel Servs., L.L.C., 825 F. Supp. 2d 43 (D.D.C. 2011) (analyzing the case under Sect. 10 (a)(4) without applying any type of heightened evidentiary burden).

  241. 241.

    Langlais vs. PennMont Ben. Servs., Inc., 2012 WL 2849414, at *3 (E.D. Pa. July 11, 2012) (citations omitted).

  242. 242.

    878 F. Supp. 2d 439, 2012 WL 2719159 (S.D.N.Y. July 9, 2012).

  243. 243.

    Id. at *4.

  244. 244.

    Id. (citations omitted).

  245. 245.

    Id. at *13.

  246. 246.

    See Langlais, 2012 WL 2849414, at *3 (applying two-part test without any discussion of the burden of proof); Ardalan vs. Macy’s Inc., 2012 WL 2503972, at *6 (N.D. Cal. June 28, 2012) (same); Williams vs. Nat’l Football League, 2012 WL 2366636, at *7 (D. Colo. June 21, 2012) (same).

  247. 247.

    2012 WL 25,00930 (E.D. Pa. June 29, 2012).

  248. 248.

    Id. at *2.

  249. 249.

    Id. at *1.

  250. 250.

    Id. at *5 (internal quotations and citations omitted).

  251. 251.

    Id.

  252. 252.

    Williams, 2012 WL 2366636 (D. Colo. June 21, 2012).

  253. 253.

    Id. at 1.

  254. 254.

    Id.

  255. 255.

    Id. at *3 (noting how the arbitrator was troubled by the procedures followed in the arbitration, but that “the deviations from established protocol in this case did not materially affect the validity of the test”).

  256. 256.

    Id. at *6.

  257. 257.

    Id . (internal quotation marks and citations omitted).

  258. 258.

    Id. The case involving the vacated suspension involved the steroid scandal of Ryan Braun.

  259. 259.

    Bradford vs. Union Pac. R. Co., ___ F. Supp. 2d ___, 2012 WL 1969319 (D. Ariz. June 1, 2012) (requiring public policy to be well established, but not requiring any type of heightened evidentiary standard); Zoom Elec., Inc. vs. Int’l Broth. Of Elec. Workers, Local 595, 2012 WL 951778, at *6 (N.D. Cal. Mar. 20, 2012) (“Similarly, to vacate an arbitration award on public policy grounds, a court must find: (1) that an explicit, well-defined and dominant public policy exists, and (2) that the policy is one that specifically militates against the relief ordered by the arbitrator”) (internal quotation marks and citations omitted); Chi. Bears Football Club, Inc. vs. Haynes, 816 F. Supp. 2d 534, 537 (N.D. Ill. 2011) (noting that the standard to vacate for public policy reasons is narrow, but saying nothing with respect to the burden of proof of showing that the party meets the standard).

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    Kristen M. Blankley

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  1. Department of Psychology, University of Nebraska-Lincoln, Lincoln, Nebraska, USA

    Brian H. Bornstein

  2. Department of Psychology, University of Nebraska-Lincoln, Lincoln, Nebraska, USA

    Richard L. Wiener

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Blankley, K. (2014). Advancements in Arbitral Immunity and Judicial Review of Arbitral Awards Create Ethical Loopholes in Arbitration. In: Bornstein, B., Wiener, R. (eds) Justice, Conflict and Wellbeing. Springer, New York, NY. https://doi.org/10.1007/978-1-4939-0623-9_10

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