Bob likes arbitration because it provides his clients with speedy, efficient
and cost-saving results. One rub, however, is that some arbitrators flatly
refuse to consider summary judgment motions. They reason that, “I was
hired to give the parties a hearing where each party can present evidence, cross
examine witnesses, and make arguments.”
In response to this uniform refusal to consider dispositive motions, Bob’s
clients repeatedly have complained: “Why did we pick arbitration? If we
had gone to Court, we could have filed pretrial motions and we then would have
been done with this meritless case. Instead, we have to pay you to
represent us all the way through the arbitration hearing.”
At last, however, Bob found an arbitrator who responded favorably to Bob’s
argument that the statute of limitations barred claimant’s claims. In
fact, at the case management conference, the arbitrator set a summary
judgment-briefing schedule on this very issue.
Naturally, Bob was more than happy that he finally had a chance to present a
legal argument that would knock out a frivolous case before proceeding to an
arbitration hearing. Bob was ecstatic when he received the arbitrator’s
order that granted Bob’s summary judgment motion and dismissed the case.
The footnote in the order said it all: “It would be utterly senseless to proceed
to an arbitration hearing when the statute of limitations issue can be resolved
as a matter of law. Under these circumstances, claimant is not entitled to
a hearing.”
Bob promptly telephoned his client and chortled, “This shows that arbitration
really does provide speedy results. No more complaining!” A few
weeks later, Bob received his adversary’s motion seeking to vacate the
award. “Just going through the motions,” Bob assured his client.
“Courts refuse to second guess arbitrators. We win even if the arbitrator
missed the mark in construing the law.”
Then the boom came down. The trial court’s order and opinion vacated
the arbitration award in favor of Bob’s client and excoriated the arbitrator for
refusing to observe the minimal standards applicable to arbitration. The
trial court quoted the following from the Superior Court’s opinion in Andrew
v. CUNA Brokerage Services, Inc.:
These minimum standards require that both parties are provided with notice,
all the arbitrators must sit at the hearing, each side is entitled to be heard
and to be present when the other party’s evidence is being given and, unless the
submission allows a decision by a majority of the arbitrators, all must join in
the award.
Bob scratched his head. What did the arbitrator do wrong here?
She considered claimant’s legal argument, including a nineteen-page brief, and
she had an hour-long and tedious telephone conference call where the parties
argued, re-argued, and re-re-argued their respective positions. Does this
mean that any legally insufficient claims must proceed to an arbitration
hearing? Is this the end of dispositive motion practice in
arbitration?
Then Bob looked at the case law and, in particular, the opinion in Andrew
v. CUNA Brokerage Services, Inc. Here is what Bob wrote:
- A party can file and win a dispositive motion in an arbitration
proceeding.
- An arbitrator can grant a dispositive motion, but only after giving the
parties a full and fair opportunity to present their arguments.
- An arbitrator cannot grant a dispositive motion, and thereby refuse a party
the opportunity to a hearing, if the party raises any triable issue of
fact. Put another way: an arbitrator cannot grant a dispositive motion if
the arbitrator refuses to consider other evidence needed to determine the merits
of the motion.
As he read his conclusions, Bob got more confused. There was no
other evidence that the arbitrator refused to consider. To
the contrary, Bob’s summary judgment motion demonstrated that the undisputed
facts of record warranted dismissal of claimant’s claim based on the statute of
limitations. Claimant did not point to a shred of evidence that supported
his legal position on the statute of limitations issue.
Here is what Bob forgot, at least according to Bob’s mentor: an arbitrator’s
failure to consider material evidence constitutes the denial of a full and fair
hearing, which compels vacating an arbitration award. Accordingly, an
arbitrator must not preclude a party from presenting his or her case at an
evidentiary hearing. In connection with a dispositive motion, therefore,
the arbitrator must consider not only the facts of record – which is what trial
courts do all the time in ruling on summary judgment motions – but also must
consider facts that are not of record, but which a party says that he or she
will present if he or she is given the opportunity to do so at hearing.
Bob’s confusion grew to outright disbelief. “In connection with a
summary judgment motion, no Court would let a party get away with the strategy
of responding as follows: ‘Look, Your Honor, I cannot point to any disputed
issued of fact. However, here is what I intend to prove at the trial if
you will give me that chance.’”
Bob’s mentor rolled his eyes and responded: “But, Bob, you are forgetting
that an arbitrator must accord deference to a party’s asserted ability to
present facts even if those facts are currently nonexistent. So if a party
says that there are facts ‘out there,’ the arbitrator must give the party some
leeway and proceed to a full blown evidentiary hearing.” Crystal clear,
right?
