If I am Selected as Your Arbitrator

The purpose of this page is to provide you with information about what to expect if I am selected as your arbitrator.

Before the Preliminary Hearing.  For context, this page assumes a hypothetical arbitration administered by the American Arbitration Association (“AAA”) and governed by its Commercial Arbitration Rules, but not by the AAA Expedited Procedures (claim $75,000 or less) or the AAA Procedures for Large, Complex Commercial Disputes (claim $500,000 or more).  Citation to a Commercial Arbitration Rule on this page is by rule number only, for example, R-6.  For a fuller discussion of what typically happens in an arbitration, see Larry D. Carlson, Problem Solver, A Guide to Walk You through What Typically Happens When Your Lawsuit is Sent to Arbitration, 77 Tex. Bar J. 146 (2014) (hereinafter “TBJ Article”).

My first notice of your arbitration will be an email from the AAA inviting me to serve as arbitrator.  The AAA will ask that I disclose in writing any circumstance that might create a justifiable doubt concerning my impartiality or independence and that I confirm what my compensation will be for the arbitration (hourly and daily rates on file with the AAA, no cancellation policy, compensation limited to $1,050 in an Expedited Procedures case).

By the time I learn of your arbitration, much has already happened.  The Claimant has filed its Demand for Arbitration and paid the applicable filing fee.  R-4.  The Respondent may have filed an Answering Statement and counterclaim.  R-5.  The AAA provided the parties with a list of arbitrator candidates.  Each party struck objectionable candidates on the list and numbered the remaining candidates in order of preference.  The AAA then selected me from the candidates not stricken and based on the order of mutual preference.  R-12.

Pursuant to AAA Commercial Arbitration Rule R-17, I will disclose in writing any financial or personal interest in the arbitration or any past or present relationship with the parties or counsel that might create a justifiable doubt about my impartiality or independence.  This disclosure will be in the form of a completed AAA checklist and likely also a supplemental letter from me.  The AAA will forward my disclosures to the parties and provide them with a period of time in which to object to my service, instructing the parties not to copy me on any objection.  If objection is made, the AAA will decide the objection, and its ruling is conclusive.  R-18(c).

Rule R-17(c) provides that “[d]isclosure of information pursuant to this Section R-17 is not an indication that the arbitrator considers that the disclosed circumstance is likely to affect impartiality or independence.”  Do not assume from the fact that I supplement the AAA disclosure checklist with a letter containing additional information that I believe I am not qualified to serve because of partiality, lack of independence, or for any other reason.  The opposite is true.  If I believe I am not qualified to serve in a particular case for any reason, I will advise the AAA of that view and decline the invitation to serve, after which the AAA will select another arbitrator.  If I complete disclosures, I believe I am qualified to serve.  If I provide additional information in a letter that supplements the AAA disclosure checklist, I provide that information in the interest of full and complete disclosure and to allow the parties to draw their own conclusions, which may differ from mine.

The disclosure obligation also applies to the parties, meaning that if a party is aware of a basis for objection to my service, it must make that objection timely during the arbitration and not wait to see if it loses the arbitration before raising the issue.  Courts have long held that if a party is aware of undisclosed information that calls an arbitrator’s fitness to serve into question and does not object to the arbitrator before the final award, the objection is waived.  TBJ Article, 77 Tex. Bar J. at 147 & n.13.  Effective October 1, 2013, the AAA amended the Commercial Arbitration Rules expressly to provide that the disclosure obligation applies not just to the arbitrator, but also to “the parties and their representatives.”  R-17(a).  “Failure on the part of a party or a representative to comply with the requirements of this rule may result in the waiver of the right to object to an arbitrator in accordance with Rule R-41.”  Id.

Pay attention to early deadlines.  An Answering Statement is due within fourteen days of notice to Respondent of the Demand for Arbitration.  R-5(a).  A Respondent’s objection to arbitrability must be made no later than the filing of the Answering Statement.  R-7(c).  A request for a reasoned award should be made “in writing prior to appointment of the arbitrator.”  R-46(b).  Like many arbitrators, at the preliminary hearing, I may be inclined to relax some of these very early deadlines (for example, allowing the Respondent to file an answer out of time), particularly in the absence of objection.  Better practice, however, is to meet these early deadlines, thus obviating the need to ask me and opposing counsel for an accommodation.

The Preliminary Hearing.  The AAA will schedule a preliminary hearing promptly following confirmation of my appointment.  This hearing usually takes place by telephone as opposed to in person.  Counsel for the parties and any pro se party are expected to attend.  Party representatives, such as a corporate executive or in-house counsel, are welcome, but I usually do not require their attendance.  The purposes of the preliminary hearing are to create a schedule for the entire arbitration (including locking in dates for the final evidentiary hearing), to set limits on discovery (properly called “exchange of information” in arbitration), to create a gating procedure for motion practice, to determine if any conditions to arbitrability have been satisfied, to address any issues about the location of the final evidentiary hearing, to ask the parties what type of award they prefer, to ask the parties whether they opt out of mandatory mediation, and to address housekeeping matters such as filing and service requirements.

In nearly every case, I or the AAA will circulate an agenda for the preliminary hearing to counsel beforehand and ask that counsel confer concerning the items on the agenda.  In every case, I will circulate a written order promptly following the hearing that memorializes the schedule and other items discussed during the hearing.

I suggest that you carefully review the parties’ arbitration agreement before the preliminary hearing.  If you are not already familiar with them, review the applicable rules, in our hypothetical arbitration the AAA Commercial Arbitration Rules.

At the hearing, have available calendar information for yourself and any witnesses and corporate representatives who will attend the final evidentiary hearing so that we can lock in dates for the final hearing.  For a moderate sized case, ordinarily I will want to set the final evidentiary hearing three to six months from the preliminary hearing.

Consistent with the speed and efficiency goals of arbitration, and only after hearing from counsel about what discovery they think they need, at the preliminary hearing I will work with counsel to limit discovery to just that which is needed for the correct and accurate resolution of the dispute, taking into account the amount in controversy.

I usually limit depositions, if any are allowed, by either number of deponents (with an hours limit on each deposition) or overall deposition hours.

There are two methods of document discovery recognized by the Commercial Arbitration Rules.  The first requires the parties to exchange documents “on which they intend to rely” and to update when appropriate.  R-22(b)(i),(ii).  The second allows the parties to exchange “reasonable document requests.”  R-22(b)(iii).  If we opt for the latter, I will require that the document requests be specific, rifle shot, not general (not, for example, all documents that relate in any way to any claim or defense), and I will set a numeric limit on the number of discrete requests.

I disfavor the use of interrogatories in arbitration and almost never allow requests for admission.  But I am happy to hear from counsel if there is a persuasive reason to allow this type of written discovery in a particular case.

Ordinarily, I will provide a mechanism that allows a party, after taking the allowed discovery, to ask for additional discovery in the event of a legitimate, unforeseen need.

Also consistent with the speed and consistency goals of arbitration, at the preliminary hearing I will work with counsel to create a gating procedure that will avoid unlimited motion practice.   Subject to revision based on input from counsel, I ordinarily suggest something like the following.  The parties must confer in good faith concerning any proposed motion.  The party seeking relief should advise the AAA and me by short email (with a copy to opposing counsel) of the nature of the proposed motion and whether it is opposed or unopposed.  I will then advise the parties concerning next steps, which will likely include a telephone call and which may include an email response and/or a briefing schedule (with page limits).  My objective, particularly with respect to discovery disputes, is to get to a telephone call with counsel as quickly and efficiently as possible.

Motions for summary judgment are usually disfavored in arbitration, although such a motion might make sense if there is a pivotal legal issue that could be dispositive of the entire arbitration.  AAA Commercial Arbitration Rule R-33 was amended effective October 1, 2013, to provide that an arbitrator may allow the filing of a dispositive motion “only if the arbitrator determines that the moving party has shown that the motion is likely to succeed and dispose of or narrow the issues in the case.”

If there are any conditions to arbitrability in the parties’ arbitration agreement (for example, mediation or a meeting of key executives), I will want to hear during the preliminary hearing whether those conditions have been satisfied.

I usually ask the parties during the preliminary hearing whether they want a standard award or a reasoned award.  A standard award is bare bones – it simply announces who wins, and if the award is in favor of a party seeking money damages, how much.  A reasoned award sets forth the bases for the arbitrator’s award.  Absent different direction in the parties’ arbitration agreement, I will almost always agree to issue a reasoned award if both parties favor such an award.  Even when just one party asks for a reasoned award, I usually agree to issue such an award, finding that a reasoned award “is appropriate.”  R-46(b).

Commercial Arbitration Rule R-9, as amended effective October 1, 2013, now provides that in arbitrations with a claim for more than $75,000, mediation is mandatory.  “However, any party to an arbitration may unilaterally opt out of this rule upon notification to the AAA and the other parties to the arbitration.”  At the preliminary hearing, I will ask the parties if they opt out of the requirement for mandatory mediation.  If the parties wish to mediate (do not opt out), I will not serve as your mediator.

I will ask about expert witnesses during the preliminary hearing.  When there are retained experts, my preference, subject to taking a different approach based on input from counsel, is to require the exchange of expert reports and presumptively disallow expert depositions, subject to a party’s asking for an expert deposition based on a showing of good cause after the exchange of reports.

In most cases administered by the AAA, the parties will be allowed to communicate with me by email provided the AAA Case Manager and opposing counsel are copied on all such communications.  The parties are not allowed to communicate orally with me except at telephone or in-person hearings when opposing counsel are present.  R-19(a).

The Final Evidentiary Hearing.  At the preliminary hearing, I usually schedule a telephone call with counsel, to take place about two weeks before the final evidentiary hearing, to discuss matters relating to the final hearing.  What follows are my practices with respect to a final evidentiary hearing, any or all of which may be discussed during this telephone call.

AAA Commercial Arbitration Rule R-34 provides that at the final evidentiary hearing “[c]onformity to legal rules of evidence shall not be necessary,” that I have to power to exclude “cumulative or irrelevant” evidence, and that I am required to honor privileges, such as the attorney-client privilege.  Consistent with the first part of this rule, and subject to different guidance from the parties’ arbitration agreement, I ordinarily do not exclude evidence (testimony or exhibits) based on a rule of evidence objection.  I will take relevant rules of evidence into account in deciding how much weight to give evidence.  For example, everything else being equal, I would be inclined to give less weight to testimony based on third-hand hearsay than testimony from a witness based on personal knowledge.  And there may be reasons other than a rule of evidence to exclude evidence.  For example, if one side asked for a document during discovery, the request was allowed by our scheduling order, the other party did not object, but also did not produce the document, then tried to use it at the final evidentiary hearing, fairness might require exclusion of that exhibit.

Except in small dollar cases in which the effort is not justified by the amount in controversy, I usually ask the parties to work together to produce a single binder or binders of joint exhibits, with each exhibit having a unique number and without duplication.  In a two party case, we will ordinarily need four copies of the exhibits (four binders) – one for each counsel, one for the witness, and one for me.

AAA Commercial Arbitration Rule R-25 provides that I “have the power to require the exclusion of any witness, other than a party or other essential person, during the testimony of any other witness.”  Consistent with this rule, I ordinarily sequester witnesses at the final evidentiary hearing.  A corporate party is allowed to designate a corporate representative who can attend the hearing even if that person is a witness, and I ordinarily allow retained expert witnesses to sit in.

If the parties agree to time limits for the final evidentiary hearing (for example, limits on opening statements, case in chief, case in defense, etc.), I will usually enforce the agreed upon limits.  Absent agreement of all parties, I will not impose time limits.

I will almost always allow opening statements.

If a party wants me to consider a video-taped deposition, my preference is to have the relevant video excerpts played at the hearing as opposed to my simply receiving copies of a paper transcript for later review.

If a party wants to project an exhibit onto a screen using an Elmo or similar projection device, that is certainly acceptable, but not necessary for me.  I am content if I have a hard copy of the exhibit that I can read while it is being discussed and that I can highlight and take notes on.

If you claim prejudgment interest, I will encourage you to present to me and opposing counsel at the final evidentiary hearing an interest calculation and citation to the statute or other legal authority that provides the applicable rate.

If there are cases or other legal authorities that you want me to read, please have copies of them at the final hearing to provide to me and opposing counsel.

I usually do not bifurcate attorneys’ fees.  Accordingly, be prepared to present whatever evidence you wish to offer in support of an attorneys’ fee claim at or before the final evidentiary hearing.  Typically all that I need to decide a claim for attorneys’ fees is redacted billing statements (redacted for privileged attorney-client communications) and a summary sheet.  Testimony and attorney affidavits are allowed, but not necessary.  We will discuss this at the preliminary hearing.  In most cases, subject to suggestions from counsel, we create a schedule that allows each party seeking attorneys’ fees to circulate its opening written submission a week or two before the final evidentiary hearing with the other side being allowed to file a written response a few days before the hearing.  At the final evidentiary hearing, each side will need to “get current,” advising me of the hours and fees that have been incurred since the opening submission.  Also at the hearing, each side will be permitted to argue the attorneys’ fee issue and to offer any additional evidence, including testimony, that might be relevant and noncumulative.

You can have a court reporter at the final evidentiary hearing if you want one.  Be sure to satisfy the requirements set forth in AAA Commercial Arbitration Rule R-28(a) (you make the arrangements, three days’ notice to the other side, and you pay).

Closing the Hearing; the Award.  After all the evidence is in and both sides have been fully heard, the issue of closing the hearing arises.  See R-39.  In some (not many) cases it make sense to receive additional briefing or other materials after the final evidentiary hearing or to schedule a telephone call or in-person hearing for me to hear final argument.  In those situations, I will not close the hearing until the additional materials are received or the final argument is heard.  R-39 (b).  Otherwise, I will close the hearing after all witnesses have been heard and counsel have nothing left to offer or say.  R-39(a).  Closing of the hearing triggers the due date for the final award – thirty days from closing, or fourteen days in an Expedited Procedures case.  R-39(c); R-45; E-9.

Once I have issued an award, the parties may within twenty days request that I “correct any clerical, typographical, or computational errors in the award.”  R-50.  Once the award is issued, however, I do not have the power “to redetermine the merits of any claim already decided.”