ARBITRATION-FRAUD

August 22nd, 2022 by Rieders Travis in Arbitration

France v. Bernstein, 2022 U.S. App. LEXIS 21945 (3rd Cir. August 9, 2022) (Jordan, C.J.)  Courts will disturb an arbitration award only in limited circumstances, but those circumstances do occasionally arise. Under the Federal Arbitration Act (“FAA”), a court may, for example, vacate an award that was procured by fraud, and fraud is exactly what Jason Bernstein says was perpetrated by Todd France in the arbitration underlying this suit. Like something out of the film Jerry Maguire, these two sports agents fought over Bernstein’s claim that France improperly organized a money-making event for a football player who was then one of Bernstein’s clients, all in an effort to induce that player to fire Bernstein and hire France. The matter went to arbitration, and, in pre-hearing discovery, France denied possessing any documents pertaining to the event. He flatly denied having any involvement in the event at all. The end of this tale hasn’t been told yet, but this much is now clear: France lied to Bernstein and the arbitrator, though his lies were not uncovered until after the arbitration was decided in his favor. Because the arbitration award was procured by France’s fraud, we will reverse the District Court’s order confirming the award and will remand with the instruction to vacate it. In view of that fraudulent representation, which France made under oath, Bernstein could have reasonably concluded it was not worthwhile to aggressively pursue non-party discovery, especially considering the cost and burden involved in instituting an action in federal court, as necessary to enforce those subpoenas. That decision and the efforts Bernstein made to that point were appropriate under the circumstances, so Bernstein was not required to pursue judicial enforcement of the subpoenas through an independent federal action in order to satisfy due diligence. While it is not for us to make those factual findings, it is clear that the arbitrator’s fact-finding task would have looked much different had Bernstein possessed the concealed evidence to support the core allegation in his grievance. That is enough for us to see a “nexus between [France’s] fraud and the basis for the [arbitrator’s] decision.” Int’l Bhd. of Teamsters, 335 F.3d at 503 (internal quotation marks omitted) (quoting Forsythe Int’l, S.A. v. Gibbs Oil Co. of Tex., 915 F.2d 1017, 1022 (5th Cir. 1990)). Recognizing the limited circumstances that justify vacating an arbitration award, we are satisfied that one such circumstance is present here: the award was procured by fraud. An honest process is what those who agree to arbitration have a right to expect. Accordingly, we will reverse and remand for entry of an order vacating the arbitration award.

Attorney Cliff Rieders

Attorney Cliff RiedersCliff Rieders is a Nationally Board Certified Trial Lawyer practicing personal injury law. A large part of his practice involves multi-district litigation, including cases related to pharmaceuticals, vitamin supplements and medical devices. He is admitted in several state and federal courts, as well as the Supreme Court of the United States. Rieders is the past regional president of the Federal Bar Association and is a life member of the distinguished American Law Institute, which promulgates proposed rules adopted by many state courts. He is a past president of the Pennsylvania Association for Justice, formerly Pennsylvania Trial Lawyers Association. As a founder of the Pennsylvania Patient Safety Authority, he served on the Board for 15 years.

Not only has Rieders held many highly esteemed, leadership positions, he authored legislation related to the Patient Safety Authority and the Mcare Act, which governs medical and hospital liability actions in Pennsylvania. He authored texts upon which both practitioners and judges rely, including Pennsylvania Malpractice Laws and Forms, and Financial Responsibility Law Issues in Pennsylvania, the latter governing auto and truck collisions in Pennsylvania. In addition, he wrote several books on the practice of law in Pennsylvania regarding wrongful death and survivor actions, insurance bad faith, legal malpractice claims and worker rights, among others. Rieders also serves as a resource to practitioners as a regular speaker for Celesq, an arm of the world’s largest legal publisher, Thomson Reuters West Publishing.

As recognition of his wide range of contribution to his profession and of his dedication to protecting the rights of his clients, he received numerous awards, among them the George F. Douglas Amicus Curiae Award, the Milton D. Rosenberg Award, the B’nai B’rith Justice Award, and awards of recognition from the Pennsylvania Trial Lawyers. [ Attorney Bio ]

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