Are You A Liar? Arbitration Is The Forum For You

Arbitration is very popular with employers, and no wonder. It's a liar's forum that employees can be blackmailed into. While courts penalize litigants for lying with heavy sanctions and dismissal of their claims/defenses, there is little a court can do when a litigant lies in an arbitration.

The Federal Arbitration Act, 9 U.S. Code § 10(a) provides:

In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration—

(1) where the award was procured by corruption, fraud, or undue means

The Florida Arbitration Act, Fla. Stat. § 682.13 provides:

Vacating an award.—

(1) Upon motion of a party to an arbitration proceeding, the court shall vacate an arbitration award if:

(a) The award was procured by corruption, fraud, or other undue means

However, courts have refused to interpret these provisions to allow a court to refuse to enforce an arbitration award procured by perjury, or to set aside judgments entered on awards procured by perjury, except where the perjury wasn't "discoverable upon the exercise of due diligence prior to or during the arbitration." And the perjury must, "materially relate to an issue in the arbitration."

This means that if you know a party is lying during the arbitration, can prove they lied, do your best to impeach them during the proceeding, and the arbitrator still enters judgment for the liar, you have no remedy. The court can't penalize the liar. Arbitration laws give judges almost no leeway to review an arbitration award.

In court, if the other side lies and you can prove it, but the jury finds for the liar anyhow, the judge can set aside the judgment. And if the trial judge doesn't do it, the appellate judge can. Judges hate liars.

This is just one of the many problems with the one-sided forum that is employment arbitration. Employers like it because there are almost no checks and balances. They mostly pick arbitrators that come from an employer-side background, and that tend to rule for employers. While many arbitrators, even from the employer side, try to be fair when wearing the neutral hat, many whose income depends on getting selected by employers are not. Rule for an employee and you can be blackballed from being chosen to arbitrate by employers. So what's a little lie between friends?

Employers in Florida and many states can force employees to sign arbitration agreements with a sign-or-be-fired threat, and the courts don't consider this to be duress. Everyone with any common sense understands that this is coercion, but it's allowed.

I used to be a strong believer in arbitration as a good way for parties to voluntarily choose to resolve disputes. But when one side can blackmail another into "voluntary agreeing" to arbitrate, then veto any arbitrators it knows might rule for employees, plus get away with lying at will, it's a travesty.