How a Case I Lost 20 Years Ago Informs My Service as an Arbitrator Today
How a Case I Lost 20 Years Ago Informs My Role as an Arbitrator Today
Published on June 14, 2022
Arthur Pressman, FCIArb
Full-time, independent commercial mediator/arbitrator with national practice. Remote, in-person. Speciality: Commercial, Intellectual Property, Business Divorces, Franchise, Distribution and Licensing Disputes.
I've been reading up on the use of dispositive motions in arbitration. AAA R-33, Dispositive Motions, expressly permits them “only if the arbitrator determines that the moving party has shown that the motion is likely to succeed and dispose of or narrow the issues in the case.” For good reason, dispositive motions in arbitration must get over a high hurdle before they can be considered, much less, granted. The hurdle is required for at least two reasons: 1) unfettered filing of dispositive motions undermines arbitration’s goal of prompt and economical resolution of cases, and 2) the failure of an arbitrator to allow a fair hearing is one of the few reasons an award can be vacated under 9 USC § 10(a). If every case has a dispositive motion, costs and time expended go up for all; not only are issues not narrowed, but the only thing that goes up is lawyers’ and arbitrator fees for all. Depending on the nature and timing of a dispositive motion, granting one can effectively mean no hearing at all. If a party is on the short end of summary judgment in arbitration, there’s no case to put on, and it’s easy to see how counsel and the losing party may think that the arbitrator has unfairly denied them a hearing, triggering a petition to vacate.
That’s what happened to me in a case 20 years ago. I had frankly forgotten about the case until a few days ago when I picked up an article written in 2011 by Edna Sussman and Solomon Ebere on the subject of the use of dispositive motions in arbitration. On the article’s first page, under a bold heading “The Arbitrator’s Authority,” was a block quote that read, “Granting summary judgment surely falls with this standard [of broad discretion to the arbitrator] and fundamental fairness is not implicated by an arbitration panel’s decision to forego an evidentiary hearing because of its conclusion that there were no genuine issues of material fact in dispute.” Sussman and Ebere, “Reflections on the Use of Dispositive Motions in Arbitration,” NYSBA New York Dispute Resolution Lawyer, Spring 2011, Vol. 4, No. 1.
To my surprise, this language came from the case I lost. I didn’t recognize it because somewhere after the panel’s grant of summary disposition against my client and before the District Court’s entering judgment on the award, I was fired, or I quit, or recommended that the client not appeal the entry of judgment. What happened may have been all three; suffice it to say, I wasn’t involved in any of the extensive proceedings after the panel’s final award which included a contested motion to confirm the award to District Court, entry of judgment on the award, and an unsuccessful appeal to Third Circuit.
What I do recall is the very long oral argument to the panel on the motion. I had full opportunity to sway the panel’s decision, but in the face of legal defense and undisputed facts, I lost 2 -1. Notwithstanding my seat on the sidelines after the panel found against my client, the lesson of the case came back to me immediately upon reading Edna and Solomon’s article – arbitration does not necessarily guaranty every case an evidentiary hearing. If there’s a complete legal defense to the claim (think res judicata, the defense in my client’s case), you may well lose, whether it be on summary disposition under R. 33 or after an evidentiary hearing. Arbitration is not like state trial court where dispositive motions are rarely granted (and sometimes not even heard) and everything is left to the jury.
Now, 20 years later, sitting as an arbitrator in commercial cases, I do see the wisdom in considering in the right case and at the right time a dispositive motion under R. 33. First, facts cannot be at issue. Second, the legal defense must dispose of the entire case, or at least a substantial portion of the case. Third, the motion should come before hearings have begun. By choosing arbitration, parties have expressed their strong interest in and preference for efficient, cost-effective and final resolution of disputes that fall within the scope of their agreement to arbitrate. While litigators may not like the outcome, and commercial clients who agree to arbitration pre-dispute may not like the outcome after a dispute arises, it’s hard to honor arbitration’s goals as a dispute resolution process if it does not accommodate dispositive motions in the right circumstances. So that’s the lesson I should have learned 20 years ago and have certainly learned by now.
Arthur L. Pressman, FCIArb is a full-time arbitrator and mediator of commercial disputes, Fellow in the Chartered Institute of Arbitrators, Distinguished Fellow in the International Academy of Mediators, Certified International Mediator by the International Mediation Institute and faculty at Boston University School of Law where he teaches ADR, negotiation and professional responsibility. Arthurlpressman.com/ apress@bu.edu/ 508 878 8656.
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Full-time, independent commercial mediator/arbitrator with national practice. Remote, in-person. Speciality: Commercial, Intellectual Property, Business Divorces, Franchise, Distribution and Licensing Disputes.
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