Texas Supreme Court Will Not Review Case Where Post-Arbitration Discovery Ordered Due to Neutral’s Alleged Evident Partiality

Disputing Blog by Karl Bayer, Victoria VanBuren, and Holly Hayes

The Supreme Court of Texas has denied a party’s request to review the Dallas Appeals Court’s decision allowing post-arbitration discovery in a case that was filed by an injured worker. In Rodas v. La Madeleine of Texas, No. 15-0340, a woman sought damages from her employer for the purported injuries she sustained in an accident at work. At the time, the woman’s employer was not a Texas workers’ compensation insurance coverage subscriber. The dispute was later sent to arbitration and an award was issued in favor of the employer.

A few months later, the injured worker sought to vacate the arbitral award. According to the woman, the arbitrator demonstrated evident partiality when he did not disclose that he served as the sole arbitrator for another dispute involving her employer’s counsel while her own case was pending. As a result, the worker sought to conduct discovery regarding the arbitrator’s alleged partiality. The trial court refused the woman’s request, but Texas’ Fifth District appellate court reversed.

A previous Disputing blog post on the case stated:

The appeals court said evident partiality occurs when a neutral arbitrator fails to disclose information that would reasonably give an objective observer the impression that he or she exhibited partiality. The court continued by stating, “an arbitrator’s failure to disclose that a party’s representative has previously appeared before him as a party representative in a different arbitration may also be sufficient evidence of evident partiality. See Alim v. KBR (Kellogg, Brown & Root)— Halliburton, 331 S.W.3d 178, 182 (Tex. App.-Dallas 2011, no pet.).”

Ultimately, Texas’ Fifth District Court of Appeals ruled that the lower court abused its discretion when it denied the hurt worker’s post-arbitration discovery request and reversed the trial court’s order confirming the arbitral award. After that, the woman’s employer filed a petition for review with the Texas Supreme Court.

According to the employer, the issues presented in the case were:

Issue No. 1: Does the Federal Arbitration Act (FAA) preempt state law thereby disallowing a disgruntled litigant from pursing discovery from the arbitrator and Petitioners’ Counsel in order to prove evident partiality?

Issue No. 2: Pursuant to 9 U.S.C. § 10(a)(2), are disgruntled litigants allowed to depose the arbitrator and Petitioners’ Counsel when the statute does not authorize it?

Issue No. 3: Under TEX. CIV. PRAC. & REM. CODE § 154.073(b), did the court of appeals reversibly err when it allowed discovery to proceed against the arbitrator and Petitioners’ Counsel when the Texas ADR Act prohibits such discovery?

Issue No. 4: Under the FAA, is a personal injury plaintiff who loses a binding arbitration entitled to pursue carte blanche discovery from the arbitrator and Petitioners’ Counsel simply because the plaintiff alleges the arbitrator is evidently partial?

Issue No. 5: If the court of appeals’ opinion is allowed to stand, will it have a chilling effect on a person’s willingness to serve as a neutral arbitrator?

On Friday, the Texas high court denied the employer’s petition following a full briefing.

                       

Beth Graham

Beth Graham received a J.D. from the University of Nebraska College of Law in 2004 and a M.A. in Information Science and Learning Technologies from the University of Missouri in 2006. She also holds a B.S. in Public Administration from the University of Nebraska-Omaha. She is licensed to practice law… MORE >