656 F. App'x 240
6th Cir.2016Background
- Meadowbrook and National Union entered a reinsurance Treaty (1999) with an arbitration clause; party-appointed arbitrators (Meadowbrook: Schlaybaugh; National Union: Rosen) and an umpire (Greene) were selected.
- The Arbitration Panel issued a Scheduling Order and a First Amended Scheduling Order forbidding ex parte communications with panel members after the parties filed their initial pre-hearing briefs (National Union filed its initial brief on June 14, 2013).
- The Panel issued an Interim Final Award on July 23, 2013 ordering Meadowbrook to pay specified damages and directing Meadowbrook to produce additional program documentation for possible further liability; Rosen (National Union’s party arbitrator) then had multiple ex parte communications with National Union’s counsel (Moglin) on July 23, July 25, and August 7, 2013.
- After Meadowbrook submitted supplemental material under the Interim Award, Greene and Rosen (without timely input from Schlaybaugh, who was on vacation) issued orders striking the supplemental filing and expanding documentary obligations; Schlaybaugh dissented from those panel actions.
- Meadowbrook sought to enjoin arbitration and later to vacate the Interim Final Award and Final Award in federal court; the district court denied discovery into the alleged misconduct and confirmed the awards in part. This court reversed, holding the ex parte contacts violated the scheduling orders and vacating both awards.
Issues
| Issue | Meadowbrook's Argument | National Union's Argument | Held |
|---|---|---|---|
| Whether ex parte communications between a party’s counsel and a party-appointed arbitrator require vacatur | Rosen’s ex parte communications with Moglin violated the Scheduling Orders that barred ex parte contacts after initial pre-hearing briefs, so awards must be vacated | The scheduling orders only specified when ex parte contacts would cease, not when they could resume; the Interim Final Award was a merits ruling so ex parte contacts were permissible thereafter | Vacatur required: ex parte contacts violated the parties’ agreement (scheduling orders); prejudice need not be shown |
| Proper legal standard for ex parte contacts under Michigan law | Hewitt and subsequent Michigan cases support vacatur when ex parte contacts violate arbitration agreement; no bright-line immunity for post-submission contacts | Ex parte contacts do not automatically void awards absent evidence they occurred before final decision or caused prejudice | Michigan rule: ex parte communications void an award if they violate the parties’ arbitration agreement; prejudice inquiry unnecessary when agreement breached |
| Whether the district court abused discretion by denying discovery into alleged panel misconduct | Meadowbrook sought expedited discovery to establish scope and impact of ex parte contacts and panel deliberations | District court found Meadowbrook failed to allege specific misconduct instances and relied on Panel appendix to reject further inquiry | Denial of discovery affirmed by district court was reversed as part of vacatur rationale (panel conduct required vacation) |
| Whether panel majority’s procedural actions (orders issued without full participation) required vacatur | Meadowbrook argued Greene and Rosen disenfranchised Schlaybaugh and relied on Rosen’s ex parte-influenced emails to issue orders | National Union and Panel majority defended actions as consistent with reinsurance practice and not violative of scheduling order | Court held panel majority’s actions—tied to ex parte communications that breached the scheduling orders—warrant vacatur of awards |
Key Cases Cited
- Hewitt v. Village of Reed City, 82 N.W. 616 (Mich. 1900) (establishes strict rule excluding ex parte communications to arbitrators after submission)
- Gates v. USA Jet Airlines, Inc., 756 N.W.2d 83 (Mich. 2008) (applies Hewitt where party filed brief with arbitrators after proofs; vacates award)
- Cipriano v. Cipriano, 808 N.W.2d 230 (Mich. Ct. App. 2010) (holds question is whether ex parte contact violated arbitration agreement)
- Krist v. Krist, 631 N.W.2d 53 (Mich. Ct. App. 2001) (explains narrow statutory/court-rule limits on judicial review of arbitration awards)
- Savers Prop. & Cas. Ins. Co. v. Nat’l Union Fire Ins. Co., 748 F.3d 708 (6th Cir. 2014) (dissolved district court injunction for lack of jurisdiction where arbitration had not produced a final award)
- Thomas Kinkade Co. v. White, 711 F.3d 719 (6th Cir. 2013) (observes that factual coincidences favoring one party can suggest unfairness and warrant scrutiny)