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Arbitrators Take One More Step Toward Infallibility

The U.S. Supreme Court has refused to review a decision of the Ninth Circuit (http://cdn.ca9.uscourts.gov/datastore/opinions/2018/12/04/16-16363.pdf) allowing an arbitrator to alter the terms of a collective bargaining agreement, despite contract language saying that the arbitrator could not alter the agreement in any way. ASARCO v. Steelworkers , No. 18-1415, Cert denied 10/7/19.  https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/18-1415.html

One thing that is rarely mentioned by persons advocating arbitration provisions in lieu of filing a lawsuit is that an arbitrator’s decision is extremely difficult to have overturned, unlike an incorrect decision by a judge. Generally, if the arbitrator’s decision has its “essence” in the contract, it will not be set aside absent fraud. One of the principles that allowed courts to review an arbitrator’s decision was language in the agreement preventing the arbitrator from actually changing the contract itself. In other words, plain language in the contract could not be given a new interpretation by the arbitrator. The Ninth Circuit, saying that the arbitrator could ignore “no change” language to correct a mutual mistake by the parties, moved the needle one step closer toward arbitrator infallibility, which the Supreme will allow to stand.

If you think you want to arbitrate, consider the near impossibility of reversing an arbitrator’s decision that is clearly wrong. And unlike a judge who is paid by the government, arbitrators are paid by the parties to make decisions. As a result, you might be paying an arbitrator to make a decision against you that is wrong and impossible to appeal.

 

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