Originally from Alternatives to the High Cost of Litigation

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The Ninth U.S. Court of Appeals threw out an arbitration award in October, ruling that arbitrators are required to disclose their ownership interests in the organizations they are affiliated with and the organizations’ business dealings with the arbitration parties.

The appeals panel’s emphasis on more thorough arbitrator disclosure reflects concerns about repeat players in arbitration. Even a dissent that said further disclosure wouldn’t have mattered and which would have sustained the award warned that “arbitrators have incentives to make decisions that are viewed favorably by parties who frequently engage in arbitrations.”

In Monster Energy Co. v. City Beverages LLC, Nos. 17-55813/17-56082 (9th Cir. Oct. 22) (available at http://bit.ly/2PjmXzq), a 2-1 appellate panel vacated an arbitration award because the arbitrator, retired California state judge John W. Kennedy, failed to disclose both his ownership interest in JAMS and the fact that JAMS had administered 97 arbitrations for one of the parties.