Private Arbitration Rules Strictly Enforced

Civil Procedure: Arbitration Awards

FIA Card Services, v. Levy, 545 Ariz. Adv. Rptr. 15 (Ct. App. Div. II, December 12, 2008) (Justice Vasquez) ARBITRATION CLAUSE ALLOWING ARBITRATOR TO RULE WITHOUT HEARING WHERE PARTY DOES NOT MEET DEADLINE FOR FILING OPPOSITION UPHELD

Doug Levy and his credit card company got into a dispute over the amount owed on his bill. He only paid what he thought he owed and the credit card company demanded arbitration pursuant to its arbitration clause. Levy received notice of the demand for arbitration, that National Arbitration Forum was the contractually mandated arbitrator and of his deadline to respond to the demand. Levy did not respond. A second notice giving Levy an additional 14 days to respond was received by Levy. He responded 3 days late and the arbitrator issued an award against him for the full amount sought by the credit card company and without a hearing.

Levy sued claiming under Ariz. Rev. Stat. 12-1512 (A) the arbitrator was biased and in failing to consider his response and give Levy a right to be heard, “undue means” had been used by the arbitrator to support an unfair judgment.

The court of appeals first noted that no Arizona court had defined “undue means” under this or any statute. The court found persuasive the line of federal cases interpreting these terms to require “intentional misconduct . . . immoral if not illegal [conduct] corruption or fraud . . . sloppy or overzealous lawyering” do not rise to the level of “undue means.”

Here there was no proof of even impartiality let alone intentional, wrongful, bad faith conduct. “Levy had ample notice that a claim had been filed against him, and he was informed of the potential consequences of failing to respond in a timely manner. He nonetheless failed to file a timely response. Therefore, having failed to timely appear in the action, he was not entitled to a participatory hearing, notice of the selected arbitrator, or to conduct discovery. The arbitrator acted well within his discretion by proceeding summarily . . .”

If you have a contract with a company be it your credit card company, hospital, car dealer or employer, and a dispute arises you may find the company has an arbitration clause in the contract requiring you to follow strict rules and often short deadlines in pursuing your rights.