Arbitrator Misconduct and Counsel’s Hobson’s Choice

The Wisconsin Supreme Court’s March 1, 2022, decision in Loren Imhoff Homebuilder, Inc. v. Taylor, 2022 WI 12, underscores the difficult position an advocate faces when confronted with arbitrator misconduct during an evidentiary hearing.

The case arose out of a residential remodeling contract in which the homebuilder invoked arbitration. At issue was the arbitrator’s repeatedly dozing and outright sleeping during all five days of the merits hearing. In particular, it was alleged that his sleeping during the testimony of the homeowners’ expert prejudiced their case. The issue was raised after the merits hearing in the form of a recusal motion which was denied prior to the issuance of a $320,000 award in the homebuilder’s favor.

Both confirmation and vacatur were sought. The circuit court granted vacatur on the grounds that the arbitrator’s misbehavior resulted in prejudice and was indicative of a fatally flawed process. The court of appeals reversed, holding the issue had been forfeited by failure to raise it during the hearing when the arbitrator could have been requested to reconsider any missed evidence or arguments. The Wisconsin Supreme Court reversed holding there was no waiver because the homeowners raised the issue prior to award issuance. However, because the court was evenly divided (there was one recusal) on whether vacatur should be granted, there was a remand to the court of appeals to consider it.

 Practice Tip

Despite the Wisconsin Supreme Court’s holding that the “snoozing objection” was not forfeited because it was raised pre-award issuance, the safer but inherently perilous course is to raise arbitrator misbehavior during the hearing so putative remedial action can be taken by the offending arbitrator.