Arbitration and Attorneys’ Fees: A Pandora’s Box
Arbitration, a privatization of civil justice, is a process without the right to a jury trial, and is free of the constraints of certain constitutional rights. Moreover, until very recently, the bases for appeal of an arbitration award were very limited, thereby preventing the parties from becoming enmeshed in a lengthy and time-consuming appellate review process.1 Notwithstanding these constraints and limitations, arbitration has increasingly found favor in the federal courts2 and the business community. Businesses prefer the anonymity of arbitration, and those who generally favor it believe that arbitration relieves clogged court dockets and involves fewer costs. Arbitration is also considered a favored alternative when: there is a need to offset power imbalances; there is a high volume of disputes that need to be resolved between the parties; parties need to be compelled to attend and participate (which is mandated by arbitration clauses); and there is a need for privacy.3 Consequently, many business institutions have made arbitration mandatory in many of their contractual relationships.
Arbitration has assumed an expanding role for resolving disputes in the areas of education, employment, health care, sports,4 securities, and credit card disputes. Despite the foregoing, members of the Bar are generally resistant to use arbitration as an alternative method of resolving disputes because: 1) a perception exists among the Bar that arbitrators are encouraged to reach “equitable and just” results, as opposed to adhering strictly to substantive and procedural law;5 2 ) arbitration limits the use of technical legal arguments to exclude testimony, such as the rule against hearsay; and 3) pretrial discovery and pretrial motion practice are severely limited in arbitration proceedings. More significantly, as the amounts in controversy become larger, counsel prefer that they have the option of seeking relief through the traditional, expanded judicial review afforded through the judicial process.
However, with the recent Florida Supreme Court decision in Moser v. Barron Chase Securities, Inc., 783 So. 2d 231 (Fla. 2001), the most significant of the foregoing aversions to arbitration, to wit, the touted “finality” of arbitration awards, may have come to an end and expanded judicial review of arbitration awards may become a reality.
The Moser Decision
The Moser court reviewed a case that began with an arbitration brought by the claimant, who was with the National Association of Securities Dealers (NASD), now known as NASD Dispute Resolution, Inc. Ms. Moser alleged various claims against the broker and the securities firm Barron Chase Securities, Inc. Included was a claim under F.S. §517.211(6) (1997), the Florida Blue Sky law, which provides for the award of attorneys’ fees to the prevailing party. This situation arises in many arbitration cases where parties request attorneys’ fees to be awarded to the prevailing party pursuant either to statute or contract. With the Florida Legislature’s recent overhaul of F.S. §57.105, which now mandates that courts apply sanctions, i.e., attorneys’ fees, when a movant has prevailed over an unsupported argument, pleading, or cause of action, it is not unreasonable to anticipate that the request for fees in arbitration proceedings will be standard, based on that statute. Whether arbitrators can choose to ignore §57.105 demands for attorneys’ fees in arbitration proceedings is a critical issue related to the “manifest disregard” of the law issue discussed below.
Moser sought to directly address the issue of entitlement to attorneys’ fees incident to arbitration, since it wished to resolve what it called
substantial confusion as to the procedure and appropriate forum for recovering attorneys’ fees incident to arbitration proceedings. . . arbitrating parties may waive their right to have the circuit court address the issue and agree that the arbitrators may do so. . . . Notwithstanding, confusion remains as to the authority of a trial court to award fees when an arbitration award is silent or ambiguous as to whether the award was based on a legal theory that carried with it an entitlement to attorneys’ fees.6
In Moser, the arbitration panel found in favor of Ms. Moser on her claims and stated in the award that “the Claimant’s request for attorneys’ fees is referred to a court of competent jurisdiction.” The arbitration panel, however, did not specifically state under which of the claims that Ms. Moser alleged in her statement of claim(s) the panel based its award. When the matter was brought before the circuit court, the court affirmed the arbitration award and awarded attorneys’ fees to Ms. Moser based on the attorneys’ fee language in the arbitration panel’s award. The court’s ruling was appealed to the Second District Court of Appeal, which reversed the ruling, holding that the circuit court did not have the authority to award attorneys’ fees to Ms. Moser because the arbitration panel’s award did not specify that Ms. Moser prevailed on her §517 claim (the only claim pursuant to which she could recover attorneys’ fees).
Ms. Moser appealed to the Florida Supreme Court, which stated that the decision of the Second District Court of Appeal in Moser was in conflict with the Fifth District Court of Appeal decision in Josepthal Lyon & Ross, Inc. v. Durham, 734 So. 2d 487 (Fla. 5th DCA 1999), and that this issue needed resolution by the Florida Supreme Court. The Florida Supreme Court considered the contradictory testimony regarding the actual practice of the drafting of NASD arbitration panel awards and considered the testimony of one expert witness who testified that, at NASD arbitrator training, arbitrators were encouraged not to specify the decisional bases of their awards and to render only “bare bones” awards, so as to prevent the potential for further litigation after the rendering of the award.7 Moser was clear that parties in an arbitration have a substantive and procedural due process right to have the issue of attorneys’ fees decided in the circuit court and not by the arbitration panel. However, indirect references in an arbitration award referring the issue of attorneys’ fees to a court of competent jurisdiction signaled to the circuit court that the arbitration panel considered the claimant to be entitled to the award of attorneys’ fees.
Moser requires arbitration panels, when there are multiple claims, to specifically identify on what bases the claimant has prevailed, and on what theory the award is based. The failure to do so will result in the circuit court sending the case back to the arbitrators with instructions to specify in the arbitration “the theory under which the claimant prevailed or [to] otherwise clearly indicate whether the claimant has prevailed on a theory that would permit the trial court to award fees.”
Then, in a seemingly contradictory statement, the Florida Supreme Court stated in Moser that
under the code [the Florida Arbitration Code] it has been held that an award does not have to reflect the precise reasoning, findings of fact, conclusions of law, or ultimately the basis upon which a decision was arrived at by the arbitrators.
See generally Prudential-Bache Securities, Inc. v. Shuman, 483 So. 2d 888, 889 (Fla. 3d DCA 1986).
The Shuman court reasoned that the legal basis of an award is immaterial to the subsequent determination by a trial court of whether an award should be vacated. The fact that the relief granted is such that it could not or would not be granted by a court of law or equity is not a ground for vacating or modifying the award. 483 So. 2d at 889. This view appears to be consistent with a policy favoring the termination of disputes with an arbitration decision and limited review by the courts. Moser, 783 So. 2d at 235. Perhaps Moser could then be read as only requiring arbitrators to specify the cause of action on which a claimant prevails.
Moser ’s Progeny
However, approximately three weeks after the Florida Supreme Court decision in Moser, the Florida Supreme Court again addressed what should be included in an arbitration award. Kesler v. Chatfield Dean & Co., 794 So. 2d 577 (Fla. 2001), reviewed a decision of the Second District Court of Appeal which, citing Moser, held that since the arbitration award did not specify the theory on which the claimant prevailed, the trial court lacked the authority and did not have a basis upon which to grant attorneys’ fees. The Florida Supreme Court held that the trial court must remand the matter to the arbitration panel for the purpose of resolving the theory under which the claimant prevailed, or the panel must otherwise indicate clearly whether the claimant prevailed on a theory that would permit the trial court to award fees.
Thereafter, the circuit court may determine the fee issue in accord with the finding of the arbitrators. . . . We conclude that to the extent that knowledge of the basis of an award is necessary for the subsequent determination of entitlement to attorneys’ fees, an award without basis is per se inadequate and subject to correction by the trial court. Moser v. Barron Chase Securities, Inc., 783 So. 2d 231, 236–37 (Fla. 2001).
Kesler, 794 So. 2d at 578 (emphasis added).
The Kesler opinion seems to stand for the proposition that an award must contain written findings of the underlying facts or bases, as well as identification of the legal theory on which the claimant prevails when there is an attorneys’ fee issue.
The Florida Supreme Court remanded Moser to the Second District for further proceedings based on its April 5, 2001, decision and made it clear that since the arbitration panel had used an indirect method of signaling to the trial court that the claimant was entitled to attorneys’ fees, it was now the trial court’s duty to determine entitlement to and amount of attorneys’ fees. The Second District in Moser set down two guidelines which it directed the trial court to follow in reconsidering the issue:
1) The trial court could only grant interest on the attorneys’ fee award commencing on the date that the trial court initially determined entitlement to the fee. Since the circuit court and not the arbitration panel had jurisdiction to determine entitlement to attorneys’ fees (absent contrary agreement by the parties), interest on any attorneys’ fees awarded could not date back to the date of the arbitration award.
2) More interestingly, the new attorneys’ fee award entered by the trial could not include attorneys’ fees generated by litigating the amount of reasonable attorneys’ fees. The award could include attorneys’ fees generated in litigating the entitlement to fees. 794 So. 2d 649 (2d DCA 2001).
The Central Issue
The critical issue that the Moser and Kesler cases have created in the authors’ opinion is the prospective effect that they could, and most likely will, have on the finality of both federal and state arbitration awards. Under Florida law, a serious issue exists as to whether a panel’s “manifest disregard” of state or federal law constitutes a basis for the appeal of an award. To date, the Florida Supreme Court has not indicated whether the reasoning of Montes v. Shearson Lehman Bros, Inc., 128 F.3d 1456 (11th Cir. 1997), would apply to a state arbitration case.
One reason for this ambiguity is that until Moser and Kesler were decided, nothing in the law required arbitrators to render a reasoned opinion. Consequently, without a reasoned opinion, there was no basis on which attorneys could determine whether the arbitration panel “manifestly disregarded” the law in reaching its decision. However, with Moser and Kesler mandating reasoned opinions in all cases were attorneys’ fee issues arise (which will most likely be the case in a majority of arbitrations given: 1) The new F.S. §57.105 which liberalizes the ability of attorneys to make claims for attorneys’ fees in litigation; and 2) the fact that a careful attorney will want to find every possible means to include a claim for fees in the arbitration proceeding), a majority of arbitration decisions will now have to be reasoned opinions. Therefore, sooner or later, an aggrieved attorney will ultimately seek to have the Florida Supreme Court determine whether the “manifest disregard” doctrine applies to Florida arbitration cases.
Given the language of Moser and Kesler, it seems logical that the Florida Supreme Court is destined to apply the “manifest disregard” doctrine in Florida. The result could very likely be a significant rise in appeals of arbitration cases, since clever attorneys can always craft a reasonable argument that the arbitrators’ adverse decision came about as a result of the “manifest disregard” of Florida law, or whatever law the parties agree should govern the arbitration. The Moser and Kesler decisions, when fused with the “manifest disregard of the law” doctrine, will result in a fundamental change in one of the most significant advantages or reasons for parties to utilize arbitration as an alternative dispute resolution vehicle.
The following discussion of the “manifest disregard” doctrine in federal arbitration cases and the appealability of Florida arbitration cases should help to illustrate the foregoing dilemma.
The “manifest disregard of the law doctrine” and the theory that arbitration awards which are contrary to public policy should be vacated have been accepted in the federal courts.8
In Montes, the 11th Circuit stated that, in addition to the four statutory grounds for vacatur, there are two additional nonstatutory bases on which an arbitration award may be vacated. “First, an arbitration award may be vacated if it is arbitrary and capricious.. . . Second, an arbitration award may be vacated if enforcement of the award is contrary to public policy.” 128 F.2d at 1458. In Montes, the employee sued the brokerage firm for overtime pay pursuant to the Fair Labor Standards Act (FLSA). Shearson’s attorney specifically argued to the arbitration panel that they should disregard the FLSA and make an “equitable” decision. The 11th Circuit held that
It is certainly true that parties can establish the parameters of the arbitration explicitly in their agreement. When a claim arises under specific laws, however, the arbitrators are bound to follow those laws in the absence of a valid and legal agreement not to do so.9
The 11th Circuit quoted the U.S. Supreme Court in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991), which quoted Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985) that: “[b]y agreeing to arbitrate a statutory claim, a party does not forego the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum.” Montes, 128 F.2d at 1459–1460.
In Bowles Financial Group, Inc. v. Stifel, Nicolaus & Company, Inc., 22 F.3d 1010 (10th Cir. 1994), the Tenth Circuit made it clear that
[e]rrors in the arbitrator’s interpretation of law or findings of fact do not merit reversal under this standard (the Federal Arbitration Act), although we have recognized grounds to reverse an arbitrator’s decision based on manifest disregard of the law.10 ( Emphasis added)
However, as explained in Dawahare v. Spencer, 210 F.3d 666 (6th Cir. 2000), arbitrators are not required under the Federal Arbitration Act to explain their decisions. “If they choose not to do so, it is all but impossible to determine whether they acted with manifest disregard for the law.”11 According to the Dawahare decision, “An arbitration panel acts with manifest disregard when 1) the applicable legal principle is clearly defined and not subject to reasonable debate; and 2) the arbitrators refused to heed that legal principle (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Jaros, 70 F.3d at 421 (6th Cir. 1995)). An arbitrator’s interpretation of the law is not “manifest disregard of the law.”
The “manifest disregard of the law” doctrine was first applied in the U.S. Supreme Court case of Wilko v. Swan, 346 U.S. 427 (1953),12 based on the theory that when the arbitration panel fully understands the law that governs the case before the arbitrators, the arbitrators cannot intentionally ignore the law in rendering their award. Astute attorneys may be able to argue that the reasoning in Wilko should necessarily apply to all proceedings under the Florida law, as well as under the Federal Arbitration Act. After all, if the “manifest disregard of the law” doctrine in Wilko is not applied to all arbitrations, then theoretically arbitrators need only consider the applicability of a given law when both parties have agreed that a specific law will apply to the arbitration.
For example, in George Watts & Son, Inc. v. Tiffany and Co., 248 F.3d 577 (7th Cir. 2001), the Seventh Circuit stated that since the parties had not specified that their dispute was to be resolved under the Wisconsin Fair Dealership Law, the arbitrator did not have to consider whether the award of attorneys’ fees and costs was mandatory or permissive under the Wisconsin Fair Dealership Law. The arbitrator had no obligation to even consider the award of attorneys’ fees under this law.
If, in Moser, the claimant and the respondent had not expressly agreed that any specific law or legal theory applied to the controversy, or simply agreed that Florida law applied without citing a specific law, then the arbitrators would not be bound to make any award pursuant to any specific legal theory. Rather, the arbitrators could just exercise their “equitable” powers. However, the Moser court made the blanket proclamation that, in all multi-claim cases, regardless of the agreement of the parties as to what law or laws would govern the arbitration, the panel was obligated to identify the legal theory or basis on which the claimant prevailed when there was a request for attorneys’ fees. This grafts onto the arbitration process the “manifest disregard of the law” doctrine since it requires identification of the applicable law. Presumably, then, once a panel has found that a claimant has recovered pursuant to a specific legal theory, the panel understands and comprehends that law and has applied the facts of the arbitration proceeding to the law. This, then, opens up unfavorable awards to attack under the “manifest disregard of the law” doctrine.
Appeal of Awards Under the Florida Arbitration Code
The Florida Arbitration Code, F.S. Ch. 682.13 (2000), closely resembles the Federal Arbitration Act. The Florida Arbitration Code provides that a court shall vacate an arbitration award when: a) The award was procured by corruption, fraud, or other undue means; b) there was evident partiality by an arbitrator appointed as a neutral, or corruption in any of the arbitrators or umpire, or misconduct prejudicing the rights of any party; c) the arbitrators or the umpire in the course of their jurisdiction exceeded their powers; d) the arbitrators or the umpire in the course of their jurisdiction refused to postpone the hearing upon sufficient cause being shown therefor, or refused to hear evidence material to the controversy, or otherwise so conducted the hearing contrary to the provisions of F.S. §682.06 (rules of procedure unless otherwise provided by agreement or other provision of the parties), as to prejudice substantially the rights of a party; e) there was no agreement or provision for arbitration subject to this law, unless the matter was determined in proceedings under F.S. §682.03, and unless the party participated in the arbitration hearing without raising the objection. The Florida Arbitration Code goes on in §682.13 to state: “ [T]he fact that the relief (in the arbitration award) was such that it could not or would not be granted by a court of law or equity is not ground for vacating or refusing to confirm the award.” (Emphasis added).
It has long been acknowledged by the Florida courts that “[a] high degree of conclusiveness attaches to an arbitration award because the parties themselves have chosen to go this route in order to avoid the expense and delay of litigation.” Johnson v. Wells, 72 Fla. 290, 73 So. 188 (Fla. 1916). “The arbitrator is the sole and final judge of the evidence and the weight to be given to it.” Bankers & Shippers Insurance Company v. Gonzalez, 234 So. 2d 693 (Fla. 3d DCA 1970). “The proceedings before an arbitrator are not generally to be examined by the court for the purpose of determining how the arbitrator arrived at his award.” Weeki Wachee Orchid Gardens v. Florida Inland Theatres, 239 So. 2d 601 (Fla. 2d DCA 1970).
The court in Affiliated Marketing, Inc. v. Dyco Chemical & Coatings, Inc., 340 So. 2d at 1243 (Fla. 2d DCA 1976), opined that just because the evidence presented to the arbitrator would have been insufficient to support a judgment in a civil court, this alone would not be sufficient grounds for vacating an arbitration award.
The point is that the parties were not in a court of law. When the parties agreed to arbitration, they gave up some of the safeguards which are traditionally afforded to those who go to court. One of these safeguards is the right to have the evidence weighed in accordance with legal principles.
Finality of arbitration awards has been assured by the narrow statutory grounds on which Florida arbitration awards can be vacated and the fact that the standard arbitration award was “bare bones. It told the parties exactly who won and in what amount and ways, but said little or nothing directly about why the decision came out the way it did.”13 Full, reasoned opinions, some with findings of fact and conclusions of law, were not common, and generally were not favored by arbitrators so as to prevent the appeal of their award. Moser and Kesler no longer leave the option open to the arbitrators to render a “bare bones” award in the majority of cases, that is, where there is a request for the award of attorneys’ fees.
While the ardor for arbitration among members of the Bar is not great, counsel should consider the foregoing factors as well as the benefits of voluntary arbitration and discuss them with their clients. More importantly, since, as stated above, many business contracts now contain clauses which mandate arbitration of disputes arising out of the contract, as well as the numerous federal and state statutes which require arbitration to resolve disputes arising under such statutes, it is important for counsel to become more familiar with arbitration procedures and be aware of some of the following practice tips when involved in an arbitration.
Any attorney faced with the prospect of becoming involved in an arbitration matter or actually involved in one must be sure that he or she knows exactly what procedural rules or substantive law will govern the arbitration. If attorneys are not aware of what rules and law govern the arbitration, they cannot adequately prepare for handling the arbitration.14 Arbitration may provide the opportunity for the attorneys to craft their own procedures, or to agree to follow certain procedural rules, and ordinarily the arbitrators are willing to accommodate the stipulation of the parties.
The attorney must make certain to know exactly what is the authority of the arbitrator. The careful attorney should clarify at the beginning and the end of the arbitration exactly what issues he expects the arbitrators to decide. Since arbitrators generally do not limit demonstrative evidence, counsel should take advantage of the power of demonstrative evidence, which is often more convincing than argument of counsel or other documentary evidence. Attorneys should brief all legal issues, and supply the arbitrators with copies of all legal authorities that are cited as a basis for their argument.
Some arbitrators are not attorneys, and even attorney/arbitrators ordinarily do not research the sources cited in the briefs. If counsel wants the arbitrators to read something, then counsel should provide it to the arbitrators in legible form. Additionally, if you have made the law clear to the arbitrators and they intentionally disregard the law, you may have created grounds for appeal of the award on the basis of “manifest disregard of the law.”
Ask for a preliminary hearing with the arbitrators to develop a schedule and hearing dates that are convenient for you, your clients, and your witnesses. Remember that arbitrators want to hear your case and if you need a continuance, make sure to provide a reasonable basis for this request. If the hearing must be continued due to client illness, provide documentation of your client’s illness to the arbitrators so that credibility is maintained. Also, make sure that the request for continuance is made within a reasonable time before the final hearing, absent a medical emergency, otherwise it may not be possible logistically for the arbitrators to make a fair determination before the commencement of the hearing.
Last minute requests for continuances which could have been made earlier will most certainly rankle the arbitrators who think that you are treating the arbitration process as a stepchild to a judicial proceeding.
If your client can afford to hire a court reporter, hire your own reporter. Although many arbitrators tape the arbitration sessions, the quality of the recording is often poor. Remember that arbitrators can and will negotiate the amount of their fees. Make sure that you know clearly what the arbitrators will charge and whether there will be charges for study, travel, or other expenses. Know what the bases are for appealing an unfavorable award, so you can best advise your client in the event that your client is unhappy with the arbitration award.
While it may be argued that this should not present a problem, but only provides additional rights for litigants in arbitration, the “manifest disregard of the law” doctrine, reviewed in conjunction with Moser and Kesler, requires a reasoned opinion with findings of fact and law in any case involving attorneys’ fees. This opens a Pandora’s box.
For example, in Halligan v. Piper Jaffray, Inc., 148 F.3d 197 (2d Cir. 1998), cert. denied, 526 U.S. 1034 (1999), the Second Circuit reversed an arbitration award by applying the “manifest disregard doctrine.” The Second Circuit found that, where the plaintiff presented “strong evidence that he was fired because of his age” the arbitration panel’s failure to award relief on the ADEA claim showed manifest disregard by ignoring “the law or the evidence or both.”
The Second Circuit came to this conclusion, even though the arbitrators in Halligan did not give written reasons in support of their award. Halligan holds that, absent a written opinion supporting the arbitration decision, a reviewing court which believes that the evidence compels a different result can upset the arbitration award on the grounds of manifest disregard of the law. Thus, the “manifest disregard of the law” standard of review, which can now be more universally applied as a result of Moser and Kesler, will likely lead to an increased plenary review of arbitration awards, both as to the law and the facts.
This will result in two related detrimental blows to arbitration as a favored alternative dispute resolution method. It will expand the length of time it will take to conclude the dispute, since the finality of the arbitration will have to include the appellate process, which has proven in normal judicial proceedings to substantially increase the length of time it takes to resolve a dispute. It will substantially increase the cost of arbitration. Not only will arbitration costs have to contemplate the determination of entitlement and amount of fees in the trial court and the possible cost involved in the appellate process, but members of the Bar, as well as the arbitrators, now will have to make arbitration proceedings more closely resemble a judicial proceeding.
Rulings, evidence, and procedures ordinarily treated informally in an arbitration proceeding will have to be carefully adhered to so that the litigants are protected by preserving errors that can be utilized on appeal. In short, to protect themselves and their clients, lawyers will be burdened with trying an arbitration case in a manner similar to a judicial proceeding. If the unfortunate result of the Moser decision and its progeny is to make arbitration simply an appendage to the judicial process, then the benefits of simplicity, informality, and expedition of arbitration will be lost.
1 Some of the other benefits of arbitration are: a) a more speedy process; b) parties have a role in selecting the arbitrators; c) arbitrators can be selected based upon their expertise; and d) arbitration is a more informal and simplified process. George H. Friedman, Securities Arbitration: Still Effective as the Millennium Dawns , 10 The World Arbitration and Mediation Report 5 (May 1999).
2 In Circuit City Stores, Inc. v. Saint Clair Adams , 532 U.S. 105 (2001), the Court held that Section One of the Federal Arbitration Act, which excludes from the act certain contracts of employment, excludes from arbitration only disputes related to transportation workers. Therefore, since retailer Circuit City Stores’ employment application mandated arbitration of employment disputes, an employee was required to arbitrate all tort claims and claims asserted under the California Fair Employment and Housing Act pursuant to the arbitration clause in his or her employment contract. While lending support to the enforceability of arbitration clauses in employment contracts, the U.S. Supreme Court has also held that such arbitration clauses do not prevent the EEOC from pursuing victim-specific judicial relief, such as back pay, reinstatement, and damages, in an ADA enforcement action alleging that the employer violated Title I of the Americans With Disabilities Act of 1990. Equal Employment Opportunity Commission v. Waffle House, Inc. , 534 U.S. 279 (2002).
3 John W. Cooley, The Arbitrator’s Handbook, National Institute for Trial Advocacy (1998).
4 Justice William Rehnquist has supported the notion that, with regard to certain disputes, a quick and expeditious resolution is paramount: “At least in situations like sports events, where all of the evidence takes place right on the scene, and occurs in a matter of seconds, this system (of using a cadre of competent officials who understand the rules and do their best to follow the play) seems not only adequate but necessary.” Chief Justice Rehnquist emphasized the importance of closure in resolving disputes, and quoted Justice Brandeis who said that “with respect to most matters, it is better that they be decided than that they be decided right.” William Rehnquist, A Jurist’s View of Arbitration , Dispute Resolution Times, April-June 2001, American Arbitration Association Reprint of Address (February 8, 1977).
5 The Arbitrator’s Manual, January 2001, published by the Securities Industry Conference on Arbitration contains the following quote by Domke on Aristotle: “Equity is justice in that it goes beyond the written law. And it is equitable to prefer arbitration to the law court, for the arbitrator keeps equity in view, whereas the judge looks only to the law, and the reason why arbitrators were appointed was that equity might prevail.”
6 Moser , 783 So. 2d at 233–34.
7 After Moser the Southeast Regional Office of the NASD Dispute Resolution, Inc., reversed its view by distributing to all arbitrators appointed to panels the following memorandum: “Attached is a copy of a Florida Supreme Court Opinion. In this opinion, the court held ‘that where a party brings claims in arbitration based upon several theories, one or more of which provide for recovery of attorneys’ fees, the arbitration award must specify the theory under which the claimant prevailed, or otherwise clearly indicate whether the claimant has prevailed on a theory that would permit the trial court to award fees.’”
8 These two bases for vacating an arbitration award are in addition to the bases set forth in the Federal Arbitration Act, 9 U.S.C. §10 (1992). The Federal Arbitration Act limits the grounds on which an arbi-tration award can be vacated to the following four grounds: 1) where the award was procured by corruption, fraud, or undue means; 2) where there was evident partiality or corrup-tion in the arbitrators, or any of them; 3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy, or of any other misbehavior by which the rights of any party have been prejudiced; 4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
9 Montes , 128 F.3d at 1459.
10 See also Sunpoint Securities v. Mary K. and Doris Porta , 192 FRD 71 (MD. U.S.D.C. March 31, 2000).
11 Dawahare , 210 F.3d at 669.
12 Wilko , 346 U.S. 427 (1953), overruled on other grounds by Rodriguez de Quijas v. Shearson/American Express, Inc. , 490 U.S. 477 (1989).
13 Edward J. Costello, ADR: Virtue or Vice? , Dispute Resolution J. 62 (May 1999).
14 In Gallardo v. Scott , 2002 Fla. App. Lexis 10670, decided on July 26, 2002, the Fifth DCA reviewed a case where the trial court ordered the parties to nonvoluntary, nonbinding arbitration. However, the trial judge said that in doing so, he was not aware of either the statute ( Fla. Stat. §44.103 (1999)), or the Florida Rule of Civil Procedure (Rule 1.820) which applied. Apparently, counsel for the appellants did not know the rule or statute that applied either. Because of the defects in the proceeding, the Fifth District Court of Appeal refused to bind the parties to the arbitrators’ award.
Frank Nussbaum , of counsel to Sinclair, Louis, Heath, Nussbaum & Zavertnik, P.A., Miami, thanks Paul A. Louis and John L. Zavertnik for their contributions to this article. Mr. Nussbaum received his J.D. from the University of Miami and his LL.M. from the University of Miami in international law. He is a certified civil and family mediator in the circuit court and certified as a mediator in the U.S. District Court for the Southern District of Florida. He is an arbitrator with the NASD and the American Arbitration Association.
Meah Rothman Tell is a former adjunct professor at Nova Southeastern University, School of Social and Systemic Studies, Department of Dispute Resolution. She received her J.D. from Columbia University in 1976, and her M.B.A. from the Columbia University School of Business Administration in 1977. She is a certified civil and family mediator in the circuit court and certified as a mediator in the U.S. District Court for the Southern District of Florida. She is an arbitrator with the NASD and the American Arbitration Association.
This column is submitted on behalf of the General Practice, Solo and Small Firm Section, Jack W. Bettman, chair, and David A. Donet, editor.