Arbitrator’s Joke Not Grounds for Vacating Arbitration Award

Did you hear the one about the arbitration award that almost got overturned because the arbitrator made a joke?

In Meyer v. Kalanick and Uber Technologies, No. 15 Civ. 9796 (S.D.N.Y. Aug. 3, 2020), the U.S. District Court for the Southern District of New York tackled the question of whether an arbitrator had manifested “evident partiality” toward the prevailing party such that the arbitration award should be vacated. The court determined that a comment by the arbitrator that the plaintiff alleged was biased was nothing more than an attempt at humor.

The Underlying Arbitration

In 2015, plaintiff Spencer Meyer filed a putative class action against Uber Technologies and its co-founder Trevor Kalanick, alleging that the defendants, in their use of “surge pricing,” had facilitated an illegal price-fixing conspiracy among Uber drivers in violation of federal antitrust laws. The court granted the defendants’ motion to compel arbitration in 2017, and the parties held a three-day arbitration in October 2019.

By Meyer’s account, after the first day of testimony, the arbitrator, Les Weinstein, took a photo of Kalanick on his smartphone. Also according to Meyer, during concluding remarks on the third day of the arbitration, the arbitrator said, “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.”

Three months after the arbitration concluded, the arbitrator entered an award in favor of the defendants.

The Plaintiff’s Motion to Vacate

Meyer moved to vacate the arbitration award on the ground that the arbitrator manifested “evident partiality” toward Uber in violation of 9 U.S.C. § 10(a)(2), which sets forth various grounds for federal district courts to vacate arbitration awards. He argued that, based on the arbitrator’s remarks and taking a photo of Kalanick, “the arbitrator was afraid of the public backlash that would ensue if he were to strike down Uber’s pricing algorithm and also that the arbitrator was ‘starstruck’ by the presence of Mr. Kalanick.” The defendants responded that, by waiting until after the award was entered to make his motion, the plaintiff had waived his right to seek vacatur. They also argued that, in any event, the arbitrator’s conduct did not warrant vacating the award.

The Court’s Analysis

The court agreed with the defendants that the plaintiff forfeited his right to seek vacatur based on the arbitrator’s behavior by not raising an objection prior to the award being issued. The court also held that, regardless of the timing of the plaintiff’s objection, his motion to vacate would have failed on the merits. Citing Second Circuit case law holding that the burden of proof is high for vacating an arbitration award, the court concluded that the arbitrator’s remarks were not a true expression of fear, but rather an attempt at humor. If the arbitrator had really been fearful, the court noted, he would not have said so on the record. With respect to the photo of Kalanick, the court concluded that there was disagreement as to whether it actually occurred, but assuming it did, it did not rise to the level of bias necessary to vacate the award.