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Consumer Arbitration Agreements: 11.4.6 Award Procured by Corruption, Fraud, or Undue Means

A court may vacate an award upon application of any party to the arbitration when the award was procured by corruption, fraud, or undue means.235 Parties moving for vacatur on these grounds generally must establish by clear and convincing evidence that the requisite misconduct occurred, that the misconduct was not discoverable with due diligence before or during the arbitration, and that the misconduct was material to an issue in the arbitration.236 Even when an award is attributabl

Consumer Arbitration Agreements: 11.5.2.3 A Different Standard for Statutory Claims?

While review for manifest disregard of the law is quite limited, a number of courts, prior to Hall Street Associates, were willing to look more closely at an award responding to a party’s statutory claim. This willingness is based on Supreme Court rulings that there is a fundamental requirement that arbitration allow parties to effectively vindicate their statutory rights.282 This principle has been narrowed, but not rejected, by the Supreme Court’s decision in American Express Co. v.

Consumer Arbitration Agreements: 11.5.3 Must Courts Ensure Arbitration Decision Is Consistent with Public Policy?

In the context of collective bargaining agreement disputes, the Supreme Court has stated that a court’s role in reviewing the merits of an arbitral award is to make sure that the arbitrator’s interpretation of the private contract does not conflict with public policy.296 This public policy review of arbitral decisions is derived from the common law doctrine that a court may not enforce a contract that itself violates law or public policy.297

Consumer Arbitration Agreements: 11.5.5 Can the Court Re-Examine Evidence?

Although the presumption is that a reviewing court will not second guess an arbitrator’s determination of the facts, there may be some room for the courts to re-examine the evidence that was presented to the arbitrator.311 Whereas federal courts reviewing jury verdicts are restrained by the Seventh Amendment from engaging in independent fact finding,312 there is no such explicit prohibition on judicial review of arbitral fact finding.

Consumer Arbitration Agreements: 11.5.6 Review of Award Affecting Individual Not Party to Arbitration Agreement

When a third party has not agreed to be bound by an arbitration agreement, courts are likely to use a different standard when reviewing awards affecting those third parties. For example, when an arbitrator directs a discovery order to an individual not a party to the arbitration agreement, the California Supreme Court has ruled that the third party must first raise objections to the order to the arbitrator.

Consumer Arbitration Agreements: 11.7.2 Is a Challenge to a Punitive Damages Award Timely and Brought in the Correct Court?

Under the Federal Arbitration Act (FAA) and most state laws, a party must seek to vacate or modify an award within ninety days after receiving notice of the award (or even less in certain states).330 On the other hand, the consumer typically has at least a year to confirm the award.331 Consequently there are advantages to waiting ninety days to confirm the award to see if the opposing party forgoes its right to vacate or modify the award.332

Consumer Arbitration Agreements: 11.7.3.1 Introduction

An award can be vacated if the arbitrator, in providing for punitive damages, exceeded the arbitrator’s powers.334 Thus a corporation may seek a court order vacating an award by arguing that the arbitrator exceeded their powers because the arbitration agreement, the rules of the arbitration service provider, or state law limits an arbitrator’s power to award punitive damages.

Consumer Arbitration Agreements: 11.7.3.2 Does the Arbitration Agreement Limit the Arbitrator’s Authority to Award Punitive Damages?

The United States Supreme Court holds that punitive damages are available in an arbitration proceeding unless the arbitration agreement unambiguously limits them.335 The Court finds a dual policy in allowing punitive damages whenever the language is unclear: ambiguities in the scope of an arbitration clause are to be resolved in favor of arbitration, and ambiguities in a contract are to be resolved against the party drafting the agreement.336

Consumer Arbitration Agreements: 11.7.3.4.1 Few state laws limit punitive damages in arbitration

The Supreme Court in Mastrobuono ruled that the FAA authorizes punitive damages in arbitration awards.349 Fifteen states have enacted the revised Uniform Arbitration Act (UAA),350 and the revised UAA specifically states: “An arbitrator may award punitive damages or other exemplary relief if such an award is authorized by law in a civil action involving the same claim and the evidence produced at the hearing justifies the award under the legal standards otherwise applicable to the cl

Consumer Arbitration Agreements: 11.7.6 Due Process Challenges to Punitive Damages Awards

A series of United States Supreme Court decisions have established constitutional due process standards for court-issued punitive damages awards.369 Corporations opposing an arbitrator’s punitive damages award are likely to claim that the award does not meet these due process standards, and that the arbitration process itself does not provide sufficient due process to allow for a punitive damages award.

Consumer Arbitration Agreements: 11.8.3 Preclusive Effect of Arbitration or Court Ruling on Subsequent Arbitration

While an arbitration proceeding may have a preclusive effect on a subsequent court action, the same is not the case for either an arbitration or court proceeding’s effect on a subsequent arbitration. There are few limits as to what an arbitrator can do in that subsequent arbitration. A challenge that the arbitrator, in failing to give preclusive effect to a prior decision, manifestly disregarded the law is unlikely to prevail.383

Consumer Arbitration Agreements: D.1 Consumer Arbitration Minimum Standards

JAMS Policy on Consumer Arbitrations Pursuant to Pre-Dispute Clauses Minimum Standards of Procedural Fairness

Effective July 15, 2009

Minimum Standards for Arbitration Procedures

JAMS will administer arbitrations pursuant to mandatory pre-dispute arbitration clauses between companies and consumers1 only if the contract arbitration clause and specified applicable rules comply with the following minimum standards of fairness.

Consumer Arbitration Agreements: Rule 1. Scope of Rules

(a) The JAMS Comprehensive Arbitration Rules and Procedures (“Rules”) govern binding Arbitrations of disputes or claims that are administered by JAMS and in which the Parties agree to use these Rules or, in the absence of such agreement, any disputed claim or counterclaim that exceeds $250,000, not including interest or attorneys’ fees, unless other Rules are prescribed.

Consumer Arbitration Agreements: Rule 2. Party Self-Determination and Emergency Relief Procedures

(a) The Parties may agree on any procedures not specified herein or in lieu of these Rules that are consistent with the applicable law and JAMS policies (including, without limitation, Rules 15(i), 30 and 31). The Parties shall promptly notify JAMS of any such Party-agreed procedures and shall confirm such procedures in writing. The Party-agreed procedures shall be enforceable as if contained in these Rules.

Consumer Arbitration Agreements: Rule 3. Amendment of Rules

JAMS may amend these Rules without notice. The Rules in effect on the date of the commencement of an Arbitration (as defined in Rule 5) shall apply to that Arbitration, unless the Parties have agreed upon another version of the Rules.