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Finding no "evident partiality" within the meaning of the Federal Arbitration Act (FAA), a Federal District Court in Connecticut refused to vacate an award, despite an arbitrator's "unduly belated" disclosure that the Defendant employed his son part-time.
In Vigorito v. UBS PaineWebber, Inc., No. 04cv1505 (JBA), 2007 WL 756320 (D. Conn. Mar. 13, 2007), Vigorito claimed UBS PaineWebber (PaineWebber) mismanaged his stock portfolio by investing nearly all his funds in WorldCom stock, even after the he had retired with heavy ongoing financial commitments. When WorldCom lost its value, Vigorito commenced arbitration pursuant to a NYSE arbitration agreement.
Vigorito sought to vacate the award in which a split arbitration panel found for PaineWebber, based upon "evident partiality" of the arbitrator under FAA, Sec. 10(a)(2). Specifically, Vigorito argued that by making an untimely, offhand, and less-than-fully forthcoming disclosure of his son's relationship with PaineWebber, Vigorito's counsel was prevented from objecting when the disclosure was made.
In refusing to vacate, the Court noted that "evident partiality" required "something more than the mere appearance of bias," but needed instead to pass a "reasonable person" test, where factors like financial interest and timing play key roles. Though the timing was questionable, the Court found no evidence of any direct financial interest on the part of the arbitrator or his son in the award being decided as it was.
Though scolding the tardiness of the disclosure, and noting that it "cast a shadow" over the outcome, the Court granted PaineWebber's motion to confirm the award.
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