Humor often helps make stressful situations bearable. And arbitration hearings can be stressful. I’ve seen many arbitrators use humor to defuse tension and just make life a little more enjoyable for everyone involved. I’ve even tried it myself. Sometimes it works. Sometimes it doesn’t.
But sometimes the joke isn’t taken the right way. Or is something a party may seize on to attack an arbitration award. Which brings us to the case of Meyer v. Kalanick and Uber Technologies, 15 Civ. 9796 (S.D.N.Y., Aug. 3, 2020).
Spencer Meyer filed a class action in court against Travis Kalanick, a co-founder and then-CEO of Uber. He claimed Uber’s pricing model fixed prices horizontally in violation of antitrust laws. Uber was joined as a necessary party, and the defendants successfully compelled arbitration of Mr. Meyer’s claims. Mr. Meyer lost. The Award was in Uber’s and Mr. Kalanick’s favor.
A disappointed Mr. Meyer moved to vacate the award. He claimed to the Court that the arbitrator had shown” evident partiality,” one of the limited grounds for vacating an arbitration award under the FAA. See 9 U.S.C. § 10(a)(2).
A joke and a picture
Evident partiality was shown in two ways, according to Mr. Meyer. First, the arbitrator said at the close of the third day of the arbitration, “I must say I act out of fear. My fear is if I ruled Uber illegal, I would need security. I wouldn’t be able to walk the streets at night. People would be after me.” Second, Mr. Meyer claimed the arbitrator took a picture of Mr. Kalanick with his smart phone after Mr. Kalanick’s testimony. Uber and Mr. Kalanick denied that happened. Mr. Meyer said taking a picture proved the arbitrator was “starstruck” by Mr. Kalanick.
The Court first found the attack on the award was too late. The settled law of the Second Circuit, the judge noted, is that where a party has knowledge of facts possibly indicating bias or partiality on the part of the arbitrator, he cannot remain silent and later object to the award on that ground. Silence is a waiver.
But even if Mr. Meyer had raised the issue on time, the Court said it would not have vacated the award on either of the two grounds argued. Evident partiality must be proven by clear and convincing evidence. The Court found Mr. Meyer’s proof to be less than clear and convincing.
It thought the “I act out of fear” remark was an attempt at humor. The arbitrator had used humor throughout the hearing. The Court, by the way, had a sense of humor itself. While noting that joke at issues was “perhaps inappropriate,” it also noted that “worse yet, [it was] not as humorous as some of the arbitrator’s better jokes.”
Also, if the arbitrator really made his decision out of fear, said the Court, the last thing he would have done was put that the record.
As for the picture, the evidence was inconsistent as to how or even whether it was taken. But even if it was taken exactly as Mr. Meyer said, the Court reasoned, it would be mere speculation to suggest taking the picture was motivated by hero worship. That wasn’t enough to vacate the award.
So, what lessons can be learned from this case? One for sure. If your jurisdiction applies the Second Circuit rule that sitting on an objection until after an award is entered waives the objection, you must raise the objection as soon as you know about it. In an administered case, the objection would be made to the administrator. As I’ve written before and in my book, Arbitrating Patent Disputes, a Practical Guide, having someone to handle such objections is an advantage to having an administrator, such as AAA. Otherwise, you are left making the objection to the same person you are accusing of being partial. That’s not likely to be comfortable. But unless a party has made a timely objection, the Court won’t entertain it.
Does the Meyer case teach us arbitrators should never use humor? Probably not. The award wasn’t vacated, after all. But the case probably does serve as a reminder that things that may be funny in person don’t seem as funny when they are read from a cold transcript by a losing party.
What about the photo? The facts surrounding that are too unclear to draw any conclusions. We don’t even know if the arbitrator actually took a photo.
I suppose one might conclude that, if an arbitrator wants to take photos, he or she should take photos of all the witnesses. That way, he or she can’t be accused of being partial to one side or the other.
In fact, I have found in a long arbitration with many witnesses, it is a good idea to snap photos of the witnesses or have the parties provide photos. It helps the arbitrator or arbitrators better recall a witness and his or her testimony. But that should be discussed with the parties so they understand why photos are being taken. You wouldn’t the photos be asserted in federal courts as a ground for overturning the award, even it that doesn’t ultimately succeed.