Arbitration

Pollard PLLC has significant experience arbitrating a variety of commercial disputes, particularly those arising in the employment and partnership context. Recent representative arbitration matters include:

• Sofia v. Fross et. al. (AAA 2017). In this matter, the firm represented the claimant. After separating from a company and his former business partners, those partners threatened the claimant with enforcement of various non-compete agreements. The firm initiated arbitration on behalf of the claimant seeking a declaratory judgment that the non-compete restrictions were unenforceable and compensation for his equity in the venture that had been revoked. After more than a year in arbitration, the firm obtained a final award of more than $1 million and a judgment declaring the claimant’s non-compete agreement unenforceable.
• Greenfield v. Consumer Real Estate Finance Co. (AAA 2017): In this matter, the firm represented the claimant in pursuing unpaid wages and a declaratory judgment holding his non-compete agreement unenforceable. After obtaining a decision shifting all costs of the arbitration to the company, the matter settled on confidential terms.

In any arbitration proceeding, some of the most significant concerns are as follows:

• Determining which rules apply. The American Arbitration Association is the preeminent arbitration body in the country. The AAA has several different sets of rules. There are rules that govern consumer disputes, employment disputes, and commercial disputes. Which set of rules applies can make a significant difference in the proceeding. For instance: If a case is governed by the employment rules, the company/employer is required to pay for the costs of the arbitration. Those costs can be substantial.
• Getting a list of qualified arbitrators. The AAA (or other arbitration body) will provide the parties a list of available arbitrators. Many parties assume that this list represents the entire universe of available arbitrators. They assume that they must select arbitrators from the initial list provided. Usually, this is incorrect. When a case is originated within the AAA, a case manager (who is not a lawyer and usually has no grasp on the substance of the case) puts together a roster of potential arbitrators. If parties pay attention, they will often note that half the arbitrators on the original list have no relevant experience. At this point, one or both of the parties must demand a new list or additional potential arbitrators. Unless the operative contract/arbitration agreement allows the AAA to unilaterally appoint the arbitrator(s), there is nothing to stop a party from demanding multiple new arbitrator lists until they are satisfied with the options.

• Selecting the right arbitrators. Once parties have a list of potential arbitrators, they can easily identify several arbitrators as their leading prospects. Call it a top 5. At this point, parties should thoroughly vet the background and experience of their top candidates. It is ill-advised to select arbitrators based solely on their AAA 1-page biography. Look into their body of work. Search for cases they have litigated through commercially available databases. And, ideally, obtain some insight into their track-record as an arbitrator.

• Insist on an expedited schedule. Arbitration is often touted as better than litigation because it is supposedly faster and less expensive. That usually turns out to be false. In many instances, arbitration takes just as long if not longer than litigation and costs just as much if not more. In a complex, commercial arbitration with a panel of 3 arbitrators, the cost for paying the arbitrators alone can easily exceed $200,000. That says nothing of paying for counsel. One strategy is for both parties to insist on an expedited or shorter schedule. Before agreeing to an arbitrator (or a panel of arbitrators), get the arbitrator to agree that he/she will put the case on a 6-month schedule. The AAA merely has default systems/schedules. There is nothing to stop the parties from insisting on something different, provided the arbitrator agrees. And if a potential arbitrator will not agree to an expedited proceeding, the parties can select a different arbitrator who will.

In most instances, Jonathan Pollard only advises arbitration where it is absolutely necessary and there is no way to pursue the case in court. A critical difference between arbitration and litigation is that arbitration decisions are generally final and unappealable. In litigation, appeal is almost always an option. In arbitration, an appeal is only a realistic option in the case of something egregious like fraud on the tribunal or an undisclosed arbitrator conflict of interest.

For more information about engaging Pollard PLLC as arbitration counsel, please contact the Firm’s office at 954-332-2380.