U.S. Electronics, Inc. v. Sirius Satellite Radio, Inc.
17 N.Y.3d 912
| NY | 2011Background
- USE seeks to vacate a unanimous arbitration award in Sirius dispute over breach of contract.
- USE alleges arbitrator chairman William Sessions had relationships suggesting partiality: his son supported Sirius-XM merger and was allied with DEI's founder, a distributor of competing receivers.
- Federal Arbitration Act governs vacatur due to interstate commerce implications.
- New York appellate court adopted the Second Circuit reasonable-person standard for evident partiality.
- Finding: no basis to vacate; the alleged connections were too tenuous to show evident partiality.
- Result: order affirmed with costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether evident partiality standard applies. | USE contends strict federal standard applies. | Sirius argues for traditional FAA standard. | Adopted reasonable-person standard; not strict evidence standard. |
| Whether the arbitral bias showing requires clear and convincing proof. | USE asserts high burden to show bias prejudiced rights. | Sirius argues standard aligns with federal precedent. | No clear-and-convincing burden; sufficient lack of demonstrated bias under standard. |
| Whether the asserted connections establish evident partiality under FAA §10(a)(2). | USE claims familial/political ties imply bias. | Arguments are too speculative to impute bias. | Connections too attenuated; no basis to vacate. |
Key Cases Cited
- Commonwealth Coatings Corp. v. Continental Casualty Co., 393 US 145 (1969) (evident partiality requiring unbiased arbitrators)
- Morelite Constr. Corp. (Div. of Morelite Elec. Serv., Inc.) v New York City Dist. Council Carpenters Benefit Funds, 748 F2d 79 (2d Cir. 1984) (reasonable-person standard for evident partiality)
- Local 814, Intl. Bhd. of Teamsters v J & B Sys. Installers & Moving, Inc., 878 F2d 38 (2d Cir. 1989) (adopted reasonable-person framework in Second Circuit)
- Lucent Tech. Inc. v Tatung Co., 379 F3d 24 (2d Cir. 2004) (further development of partiality standards)
- Applied Indus. Materials Corp. v Ovalar Makine Ticaret Ve Sanayi, A.S., 492 F3d 132 (2d Cir. 2007) (partiality standard considerations in arbitration)
- Ecoline, Inc. v Local Union No. 12 of Intl. Assn. of Heat & Frost Insulators & Asbestos Workers, AFL-CIO, 271 Fed Appx 70 (2d Cir. 2008) (summary of evidentiary burden in vacatur)
- Matter of Diamond Waterproofing Sys., Inc. v 55 Liberty Owners Corp., 4 NY3d 247 (2005) (federal standard informs state decision on vacatur)