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485 F. App'x 724
5th Cir.
2012
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Background

  • DCS and MMC had a contract with an arbitration clause for disputes
  • MMC demanded arbitration; a three-member panel heard the case
  • The panel’s award favored DCS; MMC moved to vacate for evident partiality by DCS-appointed arbitrator
  • The district court vacated the award finding a reasonable impression of bias
  • Butner disclosed prior arbitrations; MMC argued disclosures were inadequate
  • The appellate court vacated the district court’s orders and remanded to confirm the arbitration award

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Waiver of evident partiality claim under FAA §10(a)(2) MMC did not know of Venus Ford panel; objections timely Waiver should apply; failure to object during arbitration is a waiver unless knowledge existed Waiver applied; MMC’s objections were waived
Sufficiency of arbitrator disclosures Butner’s disclosures, plus online Webfile, gave MMC notice of potential conflict Disclosures were inadequate or incomplete given prior service Disclosures were sufficient to place MMC on notice of potential bias
Standard of review and result on vacatur Arbitration awards reviewed narrowly; deference owed to panel Vacatur proper due to evident partiality District court erred; vacatur vacated and award to be confirmed

Key Cases Cited

  • Positive Software Solutions Inc. v. New Century Mortg. Corp., 476 F.3d 278 (5th Cir. 2007) (narrow review of arbitrator awards; strong deference to arbitral tribunals)
  • Lucent Technologies, Inc. v. Tatung Co., 379 F.3d 24 (2d Cir. 2004) (undisclosed relationships; duty to investigate possible bias)
  • Kiernan v. Piper Jaffray Cos., Inc., 137 F.3d 588 (8th Cir. 1998) (facts indicating bias; objector's duty to investigate before arbitration")
  • Bosarge v. Seawell & Kove, 813 F.2d 726 (5th Cir. 1987) (objection to arbitrator must be raised during proceedings to avoid waiver)
  • Delta Mine Holding Co. v. AFC Coal Props., Inc., 280 F.3d 815 (8th Cir. 2001) (waiver principle; objecting party must raise issue)
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Case Details

Case Name: Dealer Computer Services, Inc. v. Michael Motor Co.
Court Name: Court of Appeals for the Fifth Circuit
Date Published: Aug 14, 2012
Citations: 485 F. App'x 724; 11-20053
Docket Number: 11-20053
Court Abbreviation: 5th Cir.
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