Yesterday, the Fifth Ciruit Court of Appeals handed down an opinion affirming a decision from the Northern District of Texas to vacate an arbitral award where the single arbitrator failed to disclose that he had worked with one of the attorneys in the case on a large piece of patent litigation in the 1990s. The arbitrator and the attorney in question were two of thirty-four lawyers representing Intel in the prior case over the course of several years, and they never met or spoke prior to the arbitration, but the district court found that the arbitrator still had an obligation to disclose the prior relationship, and the failure to disclose required that the District Court vacate the award. The Fifth Circuit agreed.
The opinion (download .pdf version of opinion here), written by Justice Reavley, explains in detail the history of Fifth Circuit Jurisprudence on the question of arbitrator disclosure of potential conflicts, and confirms that the rule in the Circuit is “when in doubt, at all, disclose.”
Positive Software v. New Century Mortgage Corp., et al. Cause No. 04-11432 (designated for publication).
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