arrows-221459_1280Update (11/21/2016): As predicted, below. One of my less impressive predictions, imio (“in my immodest opinion”). 

Update (January 7, 2016): Immediately below nearly a month ago, I wondered, “And will the fool’s errand go still further with an appeal?” We now know the answer as of today: Yes.

I wish the best of luck to appellant and his lawyers at the distinguished law firm of Anthony Ostlund Baer & Louwagie even while I put their chances of winning on appeal near zero. If their appeal is successful, I will have to eat crow for having called the attack on the AAA a “fool’s errand” but it will be with a smile on my face in light of my serious misgivings about arbitration as a general matter.

Update (December 9, 2015): Chalk up a successful prediction of Minnesota Litigator (see below and linked order). Owens’ quixotic attack on the American Arbitration Association failed quite quickly and decisively. (Who, I wonder, footed the bill for that doomed misadventure? And will the fool’s errand go still further with an appeal?)

Update (November 18, 2015): The American Arbitration Association’s reply brief is linked here. It has been a while since I have inched out on a limb and predicted how a motion or a case will go. I am feeling bold. I predict the AAA will win and, in doing so, will reinforce my deep reservations about arbitration as a desirable dispute resolution process in most legal disputes.

Update (November 10, 2015): I challenge anyone to read the attached memorandum and to contest that Mr. Timothy Owens was dealt a disturbing and, in fact, shocking injustice. (On the other hand, other allegations about Mr. Owens might lower one’s sympathy for him a notch or two.)

Unfortunately for Mr. Owens, there is some ambiguity as to whether the AAA (who removed one of three arbitrators, post-award under opaque circumstances (described below)) can and should be held liable or whether Hennepin County Judge Thomas Sipkins (who vacated the arbitration award due to the removal of the arbitrator) was responsible.

And, in the latter case, maybe the correct route to justice was via appeal of Judge Sipkins decision, which Mr. Owens successfully sought and then, for reasons unknown, dropped (perhaps a variant of the “settle and sue” model at work?).

Original post (August 25, 2015)“The problem with arbitration is that it is arbitrary…,” Minnesota Litigator has repeatedly quoted a senior seasoned trial lawyer as having said years ago.

Complain all you’d like about our state and federal court systems but the process is sanitized by sun-light (by which I mean that it is public, it is more subject to public scrutiny). And the judges do not charge the litigants by the hour. And there are fairly comprehensive rules of procedure and evidence that have been developed and refined over literally hundreds of years (and courts generally apply them in more or less uniform fashions while, with arbitrators, who knows (and there is no recourse if rules are not followed)?).

Also, although there are arguably all kinds of challenges and problems with our court systems’ appellate processes, at least we have those in our state and federal court systems. We have the right to appeal bad results and bad results get a fresh look from other judges. And this process works more often than not (that is, the appellate courts reverse bad trial court results and they affirm appropriate trial court results correctly most of the time).

In arbitrations, on the other hand, the appellate process is so extremely narrow that arbitration litigants are better off adopting the point of view that there is no appeal. There is just one bite at the apple. A duel in which the duelists each get one shot. In fact, this is an attraction to some of arbitration because the lack of appeal is a cap, of sorts, on time and money.

But, if arbitrations risk being arbitrary, as I have noted, then it would be fitting that something like appeals sometimes happen in arbitrations and they can flip the entire proceeding upside down, right? See what I am saying? If arbitrations are really arbitrary, an iron-clad rule that it is “one shot and that’s it” seems solid and maybe non-arbitrary? But believe me (and the wise lawyer whom I have quoted on this):

The problem with arbitration is that it is arbitrary.

Just ask Mr. Timothy Owens.

According to a recent complaint, originally filed in Minnesota state court and then removed to federal court, Mr. Owens is suing the American Arbitration Association (“AAA”).

An AAA three-arbitrator panel issued a ruling resoundingly in Mr. Owens’ favor in connection with an employment dispute.

After the five-day arbitration, after a $3.2 million arbitration award, after Mr. Owens incurred $830,000 in arbitrator fees and attorneys fees, Mr. Owens’ adversaries raised an objection to one of the three arbitrators, claiming he was biased and tainted. (I find it a glaring omission that the complaint does not say that the objection to the arbitrator was made “for the first time” after the arbitration award. Either it was the first time, which would strengthen Mr. Owens’ complaint and it should have been alleged. Or it was not the first time, which makes the complaint misleading in my opinion.)

Whether the complaint of bias against one member of the three-member panel was made once or more than once, after the award, without any notice to the arbitrator, without any information about reasoning or decision, the AAA decided to remove the challenged arbitrator from the panel. A little late, woudn’t you say? And the AAA never notified the arbitrator or gave him any opportunity to respond to the challenge.

Then Hennepin County District Court Judge Thomas Sipkins vacated the $3.2 million award allegedly as “a direct result of the decision made by the AAA – in secret, according to undisclosed procedures and contrary to its own rules…,” according to Owens’ recently filed court complaint.

1024px-Matryoshka_dolls_in_Budapest

Ouroboros: The Self-Devouring Snake

Ouroboros: The Self-Devouring Snake

I actually think this case might include nested arbitrariness worthy of an M.C. Escher drawing of Matryoshka dolls that encapsulate and contain arbitrariness within arbitrariness nestled inside a shrinking cups of whim and caprice?

For example, in Mr. Owens’ arbitration, there was no appeal, but there kind of was, to the AAA itself? Then, there was no real appeal of that AAA decision but there was an action in state court to “confirm” the award, which kind of functioned as an appeal (and reversal) of the arbitration award? Then there was an appeal of the state district court decision, the court of appeals said the appeal was improper but they said they would review it anyway and then the parties agreed to dismiss that appeal? And now there is a lawsuit in federal court, which is, in a sense a third appeal of the arbitration process, right (that is, an “appeal” in federal court of a state court decision?)? And the lawsuit in federal court is likely to be tossed out because parties to AAA arbitrations agree, as a pre-condition not to sue the AAA…

So, like I said, there are no appeals in arbitration except sometimes there are, sort of? I think I will continue with my own bias in favor or our court systems…

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *