Arbitration

Recent Reported Challenge to JAMS’ Advertising

Parties who are displeased with an arbitration award have been known set off a post-award investigation of the arbitrator, in search of facts (or innuendo) to support a vacatur motion, seeking to set aside the award on the basis of arbitral bias.  These motions are usually couched as failures by the arbitrator to disclose a fact that, if known to the losing party, would have dissuaded that party from engaging the arbitrator.

An article appeared in the February 23, 2017, issue of the New Jersey Law Journal that puts a different spin on a losing party seeking to nullify the effect of an adverse arbitration award.  Rather than seeking to overturn the award, the disputant seeks to recover in a civil suit brought against the arbitrator and the service provider organization, JAMS, alleging that the arbitrator’s qualifications were fraudulent and that the party was misled to rely upon them, to his detriment.

Kevin Kinsella used JAMS to resolve the terms of his divorce, and claims that he engaged JAMS arbitrator former Judge Sheila Prell Sonenshine, based on her JAMS bio setting forth her experience co-founding an investment bank and a private equity fund.  After Sonenshine awarded Kinsella’s spouse temporary support, Kinsella hired a private investigator and discovered that Sonenshine’s equity fund invested only her own family’s funds, and that the bank had settled a class action claim.

JAMS and Sonenshine seek summary judgment based on judicial immunity and other theories that would bar recovery against an arbitrator-cum-private-judge.

Yet another instance — old meat in a new wrapper if you will — of a disputant accepting a neutral after due diligence, but starting up a whole different brand of diligence after losing a claim.   Only this time, it’s not vacatur we’re looking at — it’s personal liability and, in the case of JAMS, perhaps a new, less straightforward and more cautious way of doing business.

(A tip of the hat to Robert Margulies, Ted Cheng, and the Garibaldi ADR Inns of Court)

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