376 S.W.3d 358
Tex. App.2012Background
- Ponderosa Pine Energy, LLC sued to confirm a $125 million AAA baseball arbitration award in its favor; the award was vacated for evident partiality based on one arbitrator’s disclosures.
- Arbitration was governed by a broad clause and AAA rules, with a three-arbitrator panel including a claimant-designated, a respondent-designated, and a third arbitrator.
- Samuel A. Stern was designated as arbitrator by Ponderosa; his disclosure disclosed some but not all connections to Nixon Peabody and Lexsite; questions were raised about additional undisclosed ties.
- Nixon Peabody lawyers Penski and Boland were involved with Stern’s appointment and with Lexsite; Lexsite’s involvement and the Ada Co-Generation arbitration created overlapping connections (Delta Power ownership).
- Appellees did not object to Stern’s disclosures during arbitration, but later sought vacatur arguing evident partiality; the trial court vacated the award; on appeal, the court reversed and rendered for Ponderosa.
- The central legal question is whether appellees waived a later evident-partiality challenge by not objecting to disclosures at the time they were made, under Texas waiver and evident-partiality standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of evident partiality based on disclosures | Ponderosa: disclosures placed appellees on notice of possible partiality; failure to object did not waive | Tenaska: undisclosed facts and tailored disclosures obscure partiality and require post-award challenge | Waived; post-disclosure challenge barred; trial court reversal affirmed |
Key Cases Cited
- TUCO v. Burlington Northern Railroad, 960 S.W.2d 629 (Tex. 1997) (evident partiality from nondisclosure weighs on materiality of information)
- Kendall Builders, Inc. v. Chesson, 149 S.W.3d 796 (Tex.App.-Austin 2004) (waiver when knowing of conflict but proceeding with arbitration)
- Skidmore Energy, Inc. v. Maxus (U.S.) Exploration Co., 345 S.W.3d 672 (Tex.App.-Dallas 2011) (waiver analysis when parties knew of relationships but did not object)
- Mariner Fin. Group, Inc. v. Bossley, 79 S.W.3d 30 (Tex. 2002) (arbitrary standard for evaluating partiality disclosures)
- Alim v. KBR, 331 S.W.3d 178 (Tex.App.-Dallas 2011) (waiver and disclosure considerations in arbitration)
- Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (U.S. 1968) (context for judicial role in arbitrator impartiality)