Monster Energy Company, fka Hansen Beverage Company v. City Beverages LLC, dba Olympic Eagle Distributing

Disappointed arbitration participants often seek to vacate arbitration awards by asserting the “evident partiality” of the arbitrator. 9 U.S.C. § 10(a)(2). Yet this Court has construed the frequently-litigated “evident partiality” provision only once, and that was a half century ago. Commonwealth Coatings Corp. v. Cont’l Cas. Co., 393 U.S. 145 (1968). The Court’s decision was so fractured and its reasoning so opaque that lower courts cannot agree on which rationale is controlling, much less on what standard to derive from it. In the long absence of further guidance from this Court, the courts of appeals and state courts of last resort have adopted conflicting standards on what constitutes evident partiality. Six circuits hew to the plain text of the statute and will vacate an award only when a reasonable observer would have to conclude the arbitrator was partial toward one of the parties. Only two circuits, including the Ninth Circuit here, find evident partiality any time an arbitrator fails to disclose information that might create an impression of possible bias. The questions presented are:

1. What is the standard for determining whether an arbitration award must be vacated for “evident partiality” under the Federal Arbitration Act, 9 U.S.C. § 10(a)(2)?

2. Under the correct “evident partiality” standard, must an arbitration award be vacated when the arbitrator does not disclose that (i) he has a de minimis “ownership interest” in his arbitration firm and (ii) that firm has conducted a “nontrivial” number of arbitrations with one of the parties?