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Cyrus Dugger

When The Arbitration Tables Are Turned

Maybe some corporations should read Paul Bland’s previous post about arbitration. The excerpted portion of that post below makes clear that once you are in the world of arbitration, your access to justice is basically at the often times arbitrary whims of the (almost) un-reviewable arbitrator. And although there is a lot of support for the assertion that most arbitrators favor the businesses that include them in their contracts, not all do.

Although mandatory arbitration agreements are often included by companies in contracts in order to deter lawsuits by consumers, sometimes the tables are turned (it is not clear whether this specific arbitration was mandatory or not).

The Thomas Kinkade Company Files Motion to Overturn Arbitration Ruling
Monday November 13, 2:33 pm ET

Cites Arbitration Panel for Multiple Abuses of Process, Bias, Ethical Abuses, and Violations of Professional Code of Conduct by Arbitrator

Arbitrator Hugs and Kisses Plaintiff During Proceedings
MORGAN HILL, Calif., Nov. 13 /PRNewswire/ -- The Thomas Kinkade Company (TKC) today sought to overturn the award issued by a panel of American Arbitration Association (AAA) in the case of Karen Hazelwood and Jeff Spinello.
"The final award by the arbitration panel is flawed and should be thrown out," said Dan Byrne, chief executive officer of The Thomas Kinkade Company. "The award for the plaintiffs and their attorney was unlawful and violated numerous AAA rules. We are confident that our motion to overturn the ruling will be granted and that this entire matter will be resolved in our favor."

(link)

The Thomas Kinkade Company's motion, filed in United States District Court for the Northern District of California in San Francisco, is based on facts that satisfy grounds established by previous court rulings to overturn an arbitration panel's award, including:
* Demonstrable Bias by Neutral Arbitrator: The disturbing behavior of
"neutral" arbitrator James H. Grossman, who repeatedly displayed
personal affection for plaintiff Karen Hazelwood, including a hug and
kiss during the arbitration proceeding. In addition, Mr. Grossman
allowed the claimant-appointed arbitrator to assume complete control of
the arbitration.

* Unethical Behavior by Plaintiff's Attorneys: Plaintiffs' attorneys
engaged in egregious, unethical and abusive behavior which resulted in
sanctions on four separate occasions by the arbitration panel. These
actions included stealing a privileged email from TKC's corporate
offices and inappropriate contact with a former TKC employee and client
of TKC's lawyer.

* Award Based on Wrong Complaint: The arbitration panel based its award
almost exclusively on allegations in a complaint that the panel
previously refused to consider rather than the complaint it had agreed
to consider. The plaintiff's law firm in its closing arguments relied
almost exclusively on allegations made in the rejected complaint. The
Thomas Kinkade Company was never able to respond to the allegations, and
consequently was denied a fair hearing.

* Plaintiff Attorneys Unilaterally Given Extra Time to Cross Examine:
After imposing strict time rules, to which The Thomas Kinkade Company
adhered, the plaintiffs' attorneys were given additional time to cross
examine TKC witnesses and to present their rebuttal case, against the
objections of TKC attorneys.

* Arbitrator Violated Code of Conduct: Arbitrator named to the panel by
plaintiffs, repeatedly engaged in out-of-bounds behavior by belittling,
intimidating and bullying witnesses. Such behavior violates AAA's
professional code that arbitrators "act in good faith and with integrity
and fairness." In addition, the arbitrator did not disclose that his
full payment was tied to favorable outcome of award to plaintiffs, again
violating code of ethics for arbitrators prohibiting them from having
financial stake in award.

* Arbitration Panel Failed to Meet Deadline for Award: The rules of
arbitration require a panel to make an award in a timely fashion. The
panel did not issue the award until October 10, 2006, four days past its
October 6, 2006, issue date as agreed to by all parties and as
previously ordered by the panel.

(link)

Cyrus Dugger: Author Bio | Other Posts
Posted at 11:00 AM, Nov 14, 2006 in Arbitration
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