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Resignation of a member of a three-person arbitration panel does not affect award

By Harvey Randall, Esq.

Resignation of a member of a three-person arbitration panel does not affect award
Zeiler v Deitsch, CA2, 500 F.3d 157

The primary issues in these two appeals, which were heard in tandem, concern the narrow questions of whether, under the circumstances of this case:

an arbitration panel composed of three arbitrators can proceed to make an award after one member has resigned from the panel; and

the court order enforcing a judgment that confirmed the three-member panel?s earlier determination was valid.

By way of background, in the late 1990s, the parties to these appeals decided to sever much of their business relations by dividing the jointly owned assets between them.

Due to the complexity of the issues and the various disputes involved in making the division, the parties decided to submit their dispute to arbitration. They agreed that arbitration would be conducted before a ?Bet Din,? a Jewish religious tribunal, traditionally comprised of three rabbis. ¹

The parties agreed to appoint the members of the Bet Din according to the method known in Jewish law as ?Zabla,? in which each party elects one arbitrator, and the two appointed arbitrators then pick a third neutral arbitrator as the presiding member of the panel.

The Circuit Court held that the authority of the two remaining arbitrators after the resignation of the third one is essentially an issue of contract interpretation, grounded in the language of the several agreements between the parties. Here the critical agreement was executed after the three panel members had been identified. Accordingly, said the court, ?the more natural reading of the 2003 Agreement is that the three members were named only to reflect the choices previously made by the parties and their designated members, not to state a limitation on the authority of the panel to continue in the unexpected event that one of the members might resign.?

The Circuit Court concluded that the arbitration panel was entitled to continue after one member?s resignation, that the accounting awards were properly confirmed, and that the enforcement order was properly entered.

The ?Zabla? method used in the selection of the panelists for this Bet Din parallels the process available to the parties in an arbitration conducted pursuant to Section 3020-a of the Education Law.

Court rulings indicate that the designation of Section 3020-a panel members by the school district and the employee respectively should not be viewed as the selection of a partisan representative. Rather the panelists should be viewed as impartial, quasi-judicial officials.

This point was made in Syquia v Harpursville Central School District, 568 NYS2d 263, an ?old law? Section 3020-a case. In Syquia, the court observed that a school board and a teacher each have a statutory right to select a panel member to serve on the three-member board.

However, the court rejected the argument advanced by the attorney for the Harpursville School District suggesting that ?a Section 3020-a hearing is, and is intended to be, something other than a fully impartial fact finding hearing....?

The court clearly stated that the panel members selected by the Board of Education and by the teacher are not advocates for the party respectively selecting them, with only the chair of the hearing panel intended to be impartial.

The court said that it was taking its opportunity in this case to dispel any such ?misapprehension in educational circles, if such in fact exists.?

It is likely that the same rationale would be applied to the selection of panel members by employers and employees under the new provisions of Section 3020-a.

The full text of the Zeiler decision may be found on the Internet at:

http://www.ca2.uscourts.gov:8080/isysnative/RDpcT3BpbnNcT1BOXDA2LTE4OTMtY3Zfb3BuLnBkZg==/06-1893-cv_opn.pdf#xml=http://10.213.23.111:8080/isysquery/irl9f5e/5/hilite

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¹ Bet Din is the Hebrew term applied to a Jewish religious or civil court of law. The Bet Din, literally translated as ?house of judgment,? originated during the period of the Second Temple [1 BCE. ? 70 CE], and was initially known as the Sanhedrin.

Full post as published by New York Public Personnel Law on April 21, 2008 (boomark / email).