October 28, 2016
Lawrence Ginsburg, Jay Fialkoff and Robert McFarlane recently authored a brief on behalf of Ken Feinberg, as Amicus Curiae, that has been accepted for filing with the Appellate Division: First Department of Supreme Court of the State of New York. Mr. Feinberg has been at the forefront of utilizing arbitration and other forms of alternate dispute resolution in the resolution of some of the most complex and highly-charged issues of our time. He is a recognized leader within the dispute resolution community. In his illustrious career, Mr. Feinberg has acted as the Special Master of: the Federal September 11th Victim Compensation Fund of 2001; of the Terrorism Victim Compensation Fund at the Department of Justice; and of the Troubled Asset Relief Program (“TARP”) Executive Compensation Act of 2009. In his role as arbitrator, Mr. Feinberg has helped determined the value of the Zapruder film of the Kennedy assassination and the allocation of legal fees in the Holocaust Slave Labor litigation.
Mr. Feinberg’s Amicus brief was filed in a case involving the dispute between Major League Baseball (“MLB”), aligned with the Washington Nationals baseball club, against the Baltimore Orioles baseball club involving television broadcast rights and fees. When MLB bought the struggling Montreal Expos and relocated that franchise to Washington DC [renamed the Washington Nationals], the broadcast rights of the Orioles in its exclusive territory were violated. In 2007, a settlement resolving that rights violation was entered into by the parties. The settlement agreement provided that, after an initial five year period [for which period the apportionment of broadcast fees was agreed upon], the parties would arbitrate any further fee disputes before a standing committee of MLB comprised of representative of three major league teams operating under the auspices of MLB, as arbitral forum.
After the initial five year settlement period, a fee dispute arose and an arbitration was commenced as required under the parties’ settlement agreement. Following hearings, the arbitrators awarded judgment favorable to the Nationals. On the application of the Orioles, New York Supreme Court Justice Lawrence Marks vacated that award upon a finding of “evident partiality”. In so ruling, Justice Marks rejected the Orioles’ request that the dispute be referred to a neutral panel [not operating under the auspices of MLB] rather than remanding the dispute to a new panel of MLB team representatives under the same MLB arbitral forum. In making that determination, the Court observed that it was without authority to “re-write” the parties’ contract to compel arbitration before a different arbitral forum.
The core issue on appeal before the First Department is whether the Court has the power, upon vacating an award by reason of “evident partiality”, to direct the parties to proceed before a new and impartial arbitral forum if that is required to ensure a neutral and fair proceeding—even if such direction has the effect of “re-writing” the arbitration contract of sophisticated parties. There is sharp disagreement among the parties on almost every aspect of the case—including (i) whether the “evident partiality” found to exist by Justice Marks extends beyond the committee arbitrators to the arbitral forum [MLB] itself; and (ii) whether the Court has the power under the Federal Arbitration Act to require that the parties proceed before an arbitral forum other than the forum designated in their agreement.
Mr. Feinberg believed that this appeal presented an issue significant to the arbitration and dispute resolution community and, with the assistance of Moses & Singer, he determined to offer his expert view to the First Department.
In the Amicus brief, Mr. Feinberg defends his view that the foundational principle of neutrality in arbitration [and, indeed, in all ADR proceedings] requires that, in the rather unique and extreme facts of the case, the First Department override the parties’ contractual designation of arbitrators and arbitral forum.