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Attia v. Audionamix, Inc.

Issue Discussed: Power of Arbitrators

Submitted by Lawrence S. Greengrass, Ann E. Halden*

Date Promulgated: September 21, 2015


Attia v. Audionamix, Inc., 2015 WL 5580501 (S.D.N.Y. Sept. 15, 2015)

Court: United States District Court, Southern District of New York

Issues Decided: Whether an arbitration award should be vacated where a party argues that it was denied a fundamentally fair hearing.

Key Holding

The District Court vacated an arbitration award on the basis that the arbitrator denied a party a “fundamental fair hearing.” In reaching its decision, the court found that the arbitrator had wrongly stricken Petitioner’s affidavit submitted in opposition to a summary judgment motion.  As a result, Respondent’s expert testimony was entirely unchallenged.  The arbitrator then ruled against Petitioner based on Respondent’s submission, subsequently awarding damages to Respondent.  Finding that the evidence in the excluded affidavit was pertinent and material to the controversy, and, if credited, would have undermined Respondent’s motion, the court held that the decision to strike the affidavit was fundamentally unfair and in violation of 9 U.S.C. §10 (a)(3).  The court therefore vacated the arbitration award.  In reaching its decision, the court noted that while arbitrators may set a low threshold to admit evidence and thus hear some irrelevant evidence, in doing so they may avoid excluding relevant evidence.

Key Takeaways

While arbitrators have discretion in discovery matters and what evidence it will hear, a party cannot be denied the opportunity to submit evidence pertinent and material to the controversy and must be afforded a fundamentally fair hearing pursuant to 9 U.S.C. §10(a)(3).

 

* Lawrence S. Greengrass is Senior Counsel and Ann E. Halden is Special Counsel at Mound Cotton Wollan and Greengrass LLP, where they specialize in reinsurance litigation and arbitration.