An Evident Contradiction: How Some Evident Partiality Standards Do Not Facilitate Impartial Arbitration.

• Author: Roberts, Braydon

1. INTRODUCTION II. BACKGROUND A. The Evident Partiality Standard 1. Commonwealth Coatings and Interpretation Issues 2. The Reasonable Person Majority 3. Minority Approaches 4. An Alternative Approach Proposed 5. Evident Partiality When a Contract Determines How the Arbitrator is Selected B. NFLMC and Tom Brady's Claim Commissioner Goodell was Partial 1. Arguments for and Against Evident Partiality III. ANALYSIS A. The Reasonable Person Standard is the Majority and Likely to Remain as Such B. Brady's Argument in NFLMC C. The Actual Bias Standard Led to a Partial Arbitration in NFLMC D. Giving Deference to the Contract Does Not Justify the Partial Arbitrations Caused by the Actual Bias Standard E. The Reasonable Person Standard Would Alleviate Some of the Problems of Actual Bias IV. RECOMMENDATIONS A. Recommendations for Federal Circuit Courts B. Recommendations for the Supreme Court of the United States C. Recommendations for Parties When Bargaining for an Arbitrator Selection Clause D. Recommendations for Parties Able to Select the Arbitrator V. CONCLUSION I. INTRODUCTION

   As arbitration becomes more important in settling legal disputes, (1) the methods available to vacate an unfavorable decision will likely become more popular. one such method is for a court to determine that the arbitrator in an arbitration was evidently partial. (2) The evident partiality standard is most often applied when a party learns after its arbitration that an arbitrator had some relationship with the opposing party he or she did not disclose. (3) Though it is rarer, parties can also argue evident partiality if they know of an arbitrator's relationship to a party before the proceeding. (4) In either case, the party appeals the award, claiming the arbitrator's relationship to the opposing party influenced the result. The Supreme Court's only decision on evident partiality, Commonwealth Coatings Corp. v. Continental Causality Co., came in 1968 (5) and did not specify how close a party-arbitrator relationship needed to be to make the arbitrator partial. (6) What was clear from the decision was that the Court believed Congress' goal for creating the standard was to have impartial arbitration. (7) The Court's inconclusive decision on evident partiality has caused varying interpretations by the circuit courts, as they try to apply a standard faithful to Commonwealth Coatings while maintaining Congress' goal of impartial arbitration. (8)

   This Note will explore the evident partiality standard with a particular focus on how the standard is applied when a contract determines how the arbitrator is selected. Part II will explore the history of the evident partiality standard and the three interpretations of the standard that have been articulated by courts. It will also explore the facts, decision, and standard applied in National Football League Management Council v. National Football League Players Association (hereinafter NFLMC), a case where a contract determined how the arbitrator was selected. Part III will analyze each of the articulated standards to determine whether they accomplish Congress' goal of impartial arbitration. It will also examine how the standard applied in NFLMC helped ensure the decision was maintained despite a partial arbitrator. Part IV will recommend that the reasonable person standard be universally adopted by courts for evident partiality because it best ensures Congress' goal of impartial arbitration.

   A few Notes have explored evident partiality. (9) None have explored in-depth evident partiality when a contract determines how the arbitrator is selected. Nor have they recommended the reasonable person standard be accepted as the evident partiality standard in all circumstances.

2. BACKGROUND

   This Part will explore the history of the evident partiality standard, starting with the Supreme Court's only decision on it in Commonwealth Coatings. Because the decision left the standard ambiguous, this part will examine the standards that have been used by various circuit courts and an alternative approach that has been proposed. It will then examine the standard when a contract determines how the arbitrator is selected. This Part will end by discussing NFLMC, a case where the contract selected the arbitrator that demonstrates how the standard is applied and its problems.

   1. The Evident Partiality Standard

      1. Commonwealth Coatings and Interpretation Issues

         Writing for the majority in Commonwealth Coatings, Justice Black said that an arbitrator, "not only must be unbiased but also must avoid even the appearance of bias." (10) Black also said that arbitrators must disclose to parties "any dealings that might create an impression of possible bias," (11) and that arbitrators should be held to the same ethical standards as judges. (12) In attempting to clarify the Court's position, Justice White said in his concurrence that arbitrators should not be disqualified for having a trivial relationship to one party, even though Justice Black's opinion could be read to require it. (13) He also said that the Court did not decide that arbitrators should be held to the same standard as judges. (14) Because of the contradictions Justice White's concurrence presented and the fact that his vote was needed to reach a majority, courts have struggled with whether to apply the majority or concurrence as the opinion of the court. (15) That struggle has resulted in multiple interpretations of what type of undisclosed relationship between a party and the arbitrator requires vacating the award. (16)

      2. The Reasonable Person Majority

         The prevailing view that has developed since Commonwealth Coatings is that an arbitrator is partial under evident partiality "where a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration." (17) Evidence of an arbitrator being partial must be clear and convincing. (18) It also likely requires something more than a trivial relationship. (19) That standard is closer to White's concurrence, as it is an objective view that requires clear evidence that a relationship was close enough to make an arbitrator partial. (20) The reasonable person standard has gained a significant following amongst the circuit courts, becoming a majority view for determining a relationship under the evident partiality standard. (21) Some courts have gone further still, adding factors to consider when determining if a reasonable person would believe an arbitrator was partial. (22) These factors have not been adopted by a majority of courts using the reasonable person standard, however, and thus can be helpful in analyzing the standard, but are not binding for most circuits. (23)

      3. Minority Approaches

         Another approach courts have used is based on the appearance of bias standard that Justice Black articulated in Commonwealth Coatings. (24) The court in Schmitz v. Zilveti determined that, even though Justice White's concurrence contradicted the majority in some areas, it did not explicitly disavow the appearance of bias language from the majority. (25) The Schmitz court then implemented a reasonable impression of partiality standard. (26) Though the Schmitz court called its standard something other than the appearance of bias, it acknowledged it is based on the appearance of bias standard from Commonwealth Coatings. (27) The appearance of bias standard is seen as a lower standard than reasonable person, (28) because it can vacate awards where an arbitrator seemed biased even if there is evidence a relationship did not impact the arbitration. (29) Despite being based on the Commonwealth Coatings majority, the appearance of bias standard is the minority. (30)

         Another standard higher than both appearance of bias and reasonable person is showing actual bias in the arbitrator's decision. (31) It has not been adopted by courts as the standard for most evident partiality cases, (32) however, because evidence of it would be difficult to obtain. (33) The standard likely requires an admission by the arbitrator that his or her partiality prejudicially affected the decision. (34)

      4. An Alternative Approach Proposed

         In a law review comment, Lee Korland proposed an alternative approach to the evident partiality standard because of the uncertainty after Commonwealth Coatings and his belief that no standard presents a clear framework for when party-arbitrator relationships result in biased arbitrations. (35) Korland first argued that arbitrators should be encouraged, but not compelled, to investigate any relationship he or she has to either party and then disclose such relationships to both parties. (36) Korland then recommended that the appearance of bias standard articulated in Schmitz be followed for undisclosed relationships. (37) Under his proposal, once a party has proven evident partiality under the lower appearance of bias standard, the party that opposes vacating the award has a potential affirmative defense, whereby it can have the award maintained if it shows the arbitrator completed a reasonable investigation and did not know about the relationship. (38) Korland's approach has not been widely followed.

      5. Evident Partiality When a Contract Determines How the Arbitrator is Selected

         Sometimes arbitrators are selected by the contract the parties agree to. Such situations have generally been given a different standard for questions of arbitrator partiality. (39) Courts in those situations often give deference to the contract, as demonstrated by the court in Winfrey v. Simmons Foods, Inc., which said "parties to an arbitration choose their method of dispute resolution, and can ask no more impartiality than inheres in the method they have chosen." (40) The Winfrey court also said, "[W]here the parties have expressly agreed to select partial party arbitrators, the award should be confirmed unless the objecting party proves that the arbitrator's partiality prejudicially affected the award." (41) Thus, the...