Saturday, August 01, 2015
pointed out the other day, the "manifest disregard of the law" standard for overturning an arbitrator's decision is recognized in the Second Circuit U.S. Court of Appeals (which covers the New York federal courts), but is no longer recognized in the Eighth Circuit (which covers the District of Minnesota, where Tom Brady originally brought his lawsuit). This may or may not a big deal. Only time will tell. But what may ultimately prove to be a "game-changer" for Brady and the NFLPA is the Second Circuit's standard for setting aside an arbitrator's decision on the basis of "evident partiality," which differs markedly from the Eighth Circuit standard.
"Evident partiality" is another way of saying that the arbitrator was biased. In the Second Circuit, "evident partiality" within the meaning of 9 U.S.C. § 10 will be found where "a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration."
Ometto v. ASA Bioenergy Holding A.G., 549 Fed.Appx. 41, 42 (2d Cir.),
cert. denied, 134 S.Ct. 2877 (2014). Stated another way, "evident partiality" exists under the law of the Second Circuit where it reasonably looks as though a given arbitrator would tend to favor one of the parties. This does not appear to be a particularly onerous standard to satisfy. Further, evident partiality can be "inferred" from objective facts inconsistent with impartiality.
See Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 729 F.3d 99, 104 (2d Cir. 2013).
Now compare this test to the one espoused by the Eighth Circuit. In a case involving former Vikings players Kevin Williams and Pat Williams (who were each suspended 4 games by the NFL for violating the league's anti-doping policy), the Eighth Circuit described the "evident partiality" standard thusly: the challenging party must put forward facts that "objectively demonstrate such a degree of partiality that a reasonable person could assume that the arbitrator had
improper motives.”
Williams v. National Football League, 582 F.3d 863, 885 (8th Cir. 2009). This standard has been described as a "heavy burden."
Id. Further, the alleged partiality "must be direct, definite, and capable of demonstration."
Free Country Design & Const., Inc. v. Properformance Group, Inc., 2011 WL 603298, at *2 (W.D. Mo. Dec. 5, 2011). So, the two circuit approaches to "evident partiality" differ in at least two key respects: the Eighth Circuit requires a showing of an "improper motive," whereas the Second Circuit looks simply to whether a reasonable person would have to conclude that the arbitrator was predisposed to favoring one of the parties. But even more critically, evident partiality in the Second Circuit can be "inferred" from objective facts, whereas in the Eighth Circuit, it must be shown through "direct" proof. And so much of Brady's counterclaim on "evident partiality" depends on circumstantial proof: the delegation of decision-making authority to Troy Vincent, the public statements lauding the Wells Report, etc.
But wait, there's more. The Eighth Circuit imposes a "heightened bar" for challenges to the partiality of an arbitrator selected under an agreement (e.g., a collective bargaining agreement) that entitles one of the parties to select an "interested" or "partial" arbitrator. In the Eighth Circuit, where the parties' arbitration agreement provides for the selection of a partial arbitrator, a party cannot claim "evident partiality" unless the party can prove that the partial arbitrator "prejudiced" the arbitration award.
Winfrey v. Simmons Foods, Inc., 495 F.3d 549, 551 (8th Cir. 2007). As the Eighth Circuit explained in
Winfrey, "where the parties have expressly agreed to select partial arbitrators, the award should be confirmed unless the objecting party proves that the arbitrator's partiality prejudicially affected the award."
Id. (citing
Delta Mine Holding Co. v. AFC Coal Properties, 280 F.3d 815, 821 (8th Cir.2001)).
By contrast, the Second Circuit has not adopted this heightened standard.
See Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co., 668 F.3d 60, 76 (2d Cir. 2012) ("we need not decide at this time whether the FAA imposes a heightened burden of proving evident partiality in cases in which the allegedly biased arbitrator was party-appointed.").
These material differences could turn out to be of paramount importance to Tom Brady's "evident partiality" challenge. Thus, by "jumping the gun" and filing suit in New York (which I still maintain is a bad faith anticipatory filing, although that ship has sailed by virtue of Judge Kyle's order), the NFL may be guilty of much more than a "false start" or "illegal procedure." And it may ultimately cost them far more than just five yards. The NFL may have unwittingly ceded valuable field position to Brady and the NFLPA, a ironic turn of events given the league's brazen forum-shopping strategy.
