ARBITRATION-FRAUD

France v. Bernstein, 2022 U.S. App. LEXIS 21945 (3^rd 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.