The Sixth Circuit Court of Appeals affirmed a lower court's confirmation of an arbitration award and determined that, under the FAA, a prior professional relationship between the arbitrator and plaintiff's attorney was insignificant, and the arbitrator was under no duty to disclose the relationship.

In Uhl v. Komatsu Forklift Co., Ltd., No. 07-1044, 512 F.3d 294 (6th Cir. Jan. 9, 2008), Uhl was using a forklift manufactured by Komatsu when the forklift malfunctioned, resulting in severe injuries and Uhl's death. Uhl's wife, Donna Uhl, filed a lawsuit against Komatsu.

Additionally, Pacific Employer's Insurance Company (Pacific) joined the suit as an intervening plaintiff. Attorney Roy Johnson represented Pacific. The parties agreed to arbitration to settle the dispute, and signed an arbitration agreement that provided that each party would nominate one arbitrator, and the party-selected arbitrators would pick a third, neutral arbitrator.

Uhl and Pacific nominated Martin Stein as their party-selected arbitrator. Following arbitration proceedings, the arbitrators announced an award of $1.9 million for Uhl and Pacific. Thereafter, Komatsu discovered that Stein and Johnson had a prior professional relationship – namely, that they had been co-counsel on prior cases and been involved, though not as co-counsel, on other cases.

Komatsu filed a motion to vacate the award. Komatsu argued that Stein's decision not to disclose his prior relationship with Johnson was a violation of the Federal Arbitration Act (FAA). The lower court concluded that there was no conflict of interest between Stein and Johnson and confirmed the arbitration award, denying Komatsu's motion to vacate.

On appeal, Komatsu argued that the arbitration award should be vacated because Stein's relationship with Johnson created evident partiality in violation of the FAA. The Court noted that under the FAA, judicial review of arbitration awards is very narrow. A court may set aside an arbitration award only upon a finding that certain statutory or judicial grounds are present.

One of these statutory grounds occurs where there was evident partiality or corruption in the arbitrators. The Court considered Stein's relationship with Johnson and determined that their relationship did not constitute evident partiality under the FAA.

The Court noted that arbitrators are not automatically disqualified by a business relationship with the parties before them, if those parties are informed of the relationship or if the relationship is trivial. The Court further noted that not every nondisclosure violates the FAA.

The party asserting evident partiality must establish specific facts that indicate improper motives on the part of the arbitrator. The Court concluded that Komatsu had not sustained its burden. Komatsu only established that several years earlier Stein and Johnson were co-counsel on two cases, and that on six other cases, Stein represented the plaintiff, while Johnson represented the intervening plaintiff.