Arbitration in favor of art dealers is repudiated by court after "neutral" contracted with a party
The Thomas Kinkade Company sued Nancy and David White and Lighthouse Galleries for non-payment with respect to a number of paintings. The Whites counter-sued, arguing that they had been fraudulently induced into the contract they signed with Kinkade. The parties' contract included a mandatory arbitration agreement and pursuant to the contract and AAA rules, the parties selected a neutral to head the three-member panel. After 50 hearing days (!) and five years pending, the Whites and their appointed arbitrator engaged the neutral's law firm to assist them with two potenatially lucrative matters. The Kinkade people objected but their objections were dismissed by the neutral and subsequently by the American Arbitration Association.
There followed a series of arbitration rulings in favor of the Whites that appeared to the reviewing court to be inappropriate, including all manner of relief from the Whites' non-cooperation in discovery. The irregularities culminated in a seven-figure award for the Whites. The Kinkades appealed to the Federal District Court which rejected the arbitration award. The decision was upheld in the Sixth Circuit. The appellate panel noted that the conduct of the Whites and of the neutral and White arbitrators was absolutely inappropriate under the circumstances.