Daniel Lund III | Phelps Dunbar
Based on new information … your arbitration award is thrown out!
So said the United States Eleventh Circuit Court of Appeals, affirming a district court’s vacatur of the award based upon the award having been procured by fraud.
The lower court ruled as it did notwithstanding the fact that the action seeking to have the arbitration award vacated was filed and served beyond the three months allowed by the Federal Arbitration Act, 9 U.S.C. 12.
The party attacking arbitration award alleged that during the course of the arbitration hearing, a witness whose testimony was been handled remotely by videoconference was being inappropriately aided: the witness was being instructed remotely – by texting – by the corporate representative for his company, who was entitled to sit in on all portions of the arbitration hearing.
In light of the alleged fraudulent activity, and the fact that the activity was not able to be discovered until after the three months had passed (the text chain was provided as part of discovery in related court proceedings which occurred after the arbitration hearing), the attacking party requested that the district court “equitably toll the three-month statutory filing deadline and consider its otherwise overdue motion.” The district court consented to do so.
The district court also vacated the arbitration award, establishing a detailed chronology comparing the corporate representative’s text messages to the remote witness with that witness’s arbitration testimony. The district court held that “all of [the witness’s] testimony directly align[ed] in time and subject-matter with the messages being sent by [the corporate representative], and [the witness’s] testimony [was] always consistent with [the text] messages.”
For its part, in affirming the lower court, the Court of Appeals wrangled with the idea of the equitable tolling (that is, extension) of the three-month deadline to file and serve the motion to vacate the arbitration award. According to the appellate court: “We hold that the three-month window in § 12 may be equitably tolled in the appropriate circumstances. To be clear, we hold only that equitable tolling is available in the FAA context. Litigants still must demonstrate that their cases present circumstances warranting this extraordinary remedy.”
In the present case, the appellate court found the conduct of the witness to be egregious, noting that the witness, in connection with his sworn testimony, “took an oath affirming that there was no one in the room with him and no one communicating with him. Although the former was true, the latter was not.”
Nuvasive, Inc. v. Absolute Med., LLC, 2023 U.S. App. LEXIS 15607 (11th Cir. June 21, 2023)
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