Arbitration — Failure to Rule on Discovery Motion within Arbitrator’s Discretion

The pro se appellant in Halim v. Great Gatsby’s Auction Gallery, Inc., 2008 U.S. App. LEXIS 3165 (7th Cir. Feb. 14, 2007), contending, inter alia, that “the arbitrator ‘manifestly disregarded the law’ by declining to formally rule on a discovery dispute.” The Seventh Circuit rejected the argument, reasoning that the failure to decide the discovery dispute was consistent with the goal of arbitration — expeditiously and economically resolving disputes. Note the generic order entered by the arbitrator and American Arbitration Association Rule L-4, both relied on by the Court:

Keeping in mind the goal of resolving disputes in an expeditious and cost-effective manner, the arbitrator directed the parties' attention to his January 23, 2006 order instructing the parties to complete discovery in good faith and without micromanagement. This instruction was in compliance with the AAA rules governing discovery. Rule L-4 of the AAA permits the arbitrator to "take such steps as [he] may deem necessary or desirable to avoid delay and to achieve a just, speedy and cost effective resolution." Accord George Watts & Son, Inc. [v. Tiffany and Co.], 248 F.3d [577] at 580 [(7th Cir. 2001)] ("[J]udges may not deprive arbitrators of authority to reach compromise outcomes that legal norms leave within the discretion of the parties to the arbitration agreement."); see also Ganton Techs., Inc. v. Int'l Union, United Auto., Aerospace & Agric. Implement Workers of Am., U.A.W., Local 627, 358 F.3d 459, 462 (7th Cir. 2004) (reiterating the need for arbitration to be efficient and cost-effective resolution of disputes); Major League Umpires Ass'n v. Am. League of Prof'l Baseball Clubs, 357 F.3d 272, 289 (3d Cir. 2004) (noting that limited judicial review of arbitrator's decisions is necessary to uphold the federal policy in favor of arbitration and to avoid long and expensive litigation proceedings). The arbitrator's decision not to rule on the additional discovery disputes and instead to remind the parties of their mutual contractual obligations to cooperate in discovery was an attempt by the arbitrator to give the parties what they had contracted for: a cost-effective and efficient resolution of their dispute. See George Watts & Son, Inc., 248 F.3d at 578. The arbitrator's failure to formally rule on that particular discovery dispute was a far cry from a "manifest disregard of the law." [Brackets in original.]

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