MARTIN v. NTT DATA, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

SARAH MARTIN, :

: CIVIL ACTION

Petitioner :

:

vs. : NO. 20-CV-0686

:

NTT DATA, INC., :

:

Respondent :

MEMORANDUM AND ORDER

JOYNER, J. June 23, 2020

The instant case has been brought before the Court on

Petition of Sarah Martin to Vacate an Arbitration Award issued

on January 6, 2020 by an independent arbitrator and the Cross-

Petition of NTT Data, Inc. to Confirm that award. For the

reasons which follow, the Petition to Vacate shall be denied

and the Cross-Petition to Confirm granted.

Factual Background

Petitioner, Sarah Martin, commenced this employment

discrimination action against NTT Data, Inc. by first filing a

Complaint of Discrimination with the EEOC1 on April 7, 2017. Ms.

Martin had been employed by NTT Data and/or its predecessors for

32 years before her termination on March 9, 2017, ostensibly for

1 Plaintiff asked that her Discrimination Complaint also be filed with the

Pennsylvania Human Relations Commission (“PHRC”) by checking off the

appropriate box on the EEOC form.

the reason that her position as an executive was being

eliminated. According to Petitioner, however, there had long

existed at NTT Data a culture of discrimination against women in

favor of men about which she had complained numerous times over

the years. Petitioner further avers that immediately following

her termination, all of her job responsibilities were

transferred to a male executive, Ande Lake, who kept the same

title as that which Plaintiff had held.

Following receipt of a “right-to-sue” letter on September

29, 2017, Petitioner filed a Demand for Arbitration with JAMS, a

private arbitration company, on December 27, 2017 pursuant to an

Arbitration Agreement which she had entered into with NTT Data.

That agreement provided in pertinent part:

“[a]s a condition for participation in the Company’s Long

Term Incentive Plan and not in reliance on any promises or

representations by the Company other than those, if any,

contained in the Agreement itself,” “[a]ny dispute or

controversy justiciable under federal, state or local law

between Employee and the Company …including but not limited

to, a dispute or controversy arising out of or relating to

Employee’s employment with Company … or involving claims of

discrimination…” would be submitted to JAMS or its

successor “for final and binding arbitration.”

In her initial Arbitration Demand, Ms. Martin asserted a

single count under Title VII of the Civil Rights Act of 1964, 42

U.S.C. §2000e, et. seq. (“Title VII”) for discrimination based

on her sex and retaliation for her “complaints about the same.”

On January 12, 2018, Respondent employer filed its Answer,

Affirmative Defenses and Counterclaim in which it raised a claim

for breach of contract against Petitioner based upon her alleged

failure to comply with the terms of her Confidentiality

Agreement with the company by copying purportedly confidential

and proprietary business information and not returning it for

several months. Some two weeks later, Petitioner responded by

filing an Amended Demand for Arbitration claiming that the

counterclaim was made in retaliation for her initial Demand for

Arbitration. Subsequently, after arbitration proceedings had

formally commenced, a Second Amended Demand for Arbitration was

submitted adding a claim for discrimination and retaliation

under the Pennsylvania Human Relations Act, 43 P.S. §951, et.

seq. on April 9, 2018.

In its January 26, 2018 formal notice to all parties of

Commencement of Arbitration, JAMS provided a list of five

available arbitrators with their hourly rates, locations,

curriculum vitaes and individual procedures, together with

copies of JAMS Arbitration Policies and Rules & Procedures. The

Notice included the following:

…The parties are encouraged to mutually agree to an

arbitrator. If the parties are unable to mutually agree to

an arbitrator, then using the following list of arbitrator

candidates each party may strike two (2) names and rank the

remaining candidates in order of preference. The deadline

for return of your strike list is on Monday, February 5,

2018. [Note: Strike lists should not be exchanged amongst

the parties.] …

If a party fails to respond to the list of arbitrator

candidates in a timely manner, that party shall be deemed

agreeable to all the proposed candidates. JAMS will then

confirm the appointment of the arbitrator and begin

scheduling. If the parties are unable to agree on a date

and time, the arbitrator shall determine those issues.

It is unclear from the existing record whether the parties

here were able to mutually agree or what strikes, if any, were

registered to any of the arbitrators listed. In any event, on

February 7, 2018, Vivien B. Shelanski, Esquire was appointed to

serve as the arbitrator in the case. As noted in the Demand for

Arbitration form, “[f]or matters based on a clause of agreement

that is required as a condition of employment, the employee is

only required to pay $400.” The filing fee alone to initiate

the arbitration process in two-party matters is $1,200.00. The

Appointment of Arbitrator notice further stated:

The Arbitrator will bill in accordance with the enclosed

Fee Schedule. The arbitration will be administered

consistent with the enclosed JAMS Policy on Employment

Arbitration, Minimum Standards of Procedural Fairness.

According to this Policy, the only fee a consumer employee

may be required to pay is $400 of the Filing Fee. All

other costs, including the remainder of the Filing Fee,

must be borne by the Company. JAMS will also administer

the case consistent with the JAMS Cancellation/Continuance

Policy. Any party who cancels or continues a hearing after

the deadline will be responsible for 100% of the

professional fees unless we can fill the reserved but

unused time with another matter.

Concurrent with the appointment notice of Ms. Shelanski,

the parties received a copy of the “Disclosure Checklist for All

Arbitrations,” which Ms. Shelanski had signed on February 6,

2018. In response to question 4(d) of the checklist, Shelanski

checked the “yes” box indicating that within the preceding five

years, she had served “[a]s dispute resolution neutral other

than an arbitrator in another prior or pending case involving a

party, lawyer for a party, or law firm in the current

arbitration.” She went on to explain:

I have not met or worked with any of the attorneys in this

matter. I was the mediator in one closed matter in which

the Foley & Lardner firm (not Donald W. Schroeder, Esq. or

Jillian M. Collins, Esq.) appeared. Nothing in the above

alters my ability to be fair, impartial, and independent in

this arbitration.

Additionally, at the bottom of the Disclosure Checklist, the

following “Declarations” appear directly above the signature of

the appointed arbitrator:

1. Having been nominated or appointed as an arbitrator, I

have made a reasonable effort to inform myself of any

matters that could cause a person aware of the facts to

reasonably entertain a doubt that as the proposed

arbitrator I would be able to be impartial. In addition,

I have disclosed all such matters to the parties.

2. I practice in association with JAMS. I and each other

JAMS neutral have an economic interest in the overall

financial success of JAMS. In addition, because of the

nature and size of JAMS, the parties should assume that

one or more of the other neutrals who practice with JAMS

has participated in an arbitration, mediation or other

dispute resolution proceeding with the parties, counsel

or insurers in this case and may do so in the future.

3. My responses to the questions above are true and correct

to the best of my knowledge.

4. Please note JAMS neutrals regularly engage in speaking

engagements, CLEs, discussion groups and other

professional activities, and it is possible that a lawyer

or law firm connected with this proceeding either

attended, participated or was on a panel with the

Arbitrator.

Subsequent to the appointment of Arbitrator Shelanski, the

parties proceeded to engage in discovery which appears to have

been limited under JAMS’ Rules with regard to, inter alia, the

number of depositions which could be taken by the parties. The

Arbitration Hearings at which the evidence was presented

commenced on September 5, 2019 and continued over six days,

concluding on September 12, 2019. On October 21, 2019, the

parties submitted post-hearing briefs and then presented closing

arguments on November 13, 2019. Roughly one week prior to the

presentation of closing argument, via Notice dated November 5,

2019, JAMS forwarded a supplemental “Notice to All Parties”

together with a document entitled “JAMS Commencement Disclosure

(MKT0161).” Those documents reflected that Ms. Shelanski in fact

had a greater financial interest in JAMS than had previously

been revealed and that JAMS had had far greater contacts with

the law firm representing the Defendant than had been disclosed

at the outset of the matter. Despite these revelations, no

objections were registered by either party at or contemporaneous

to the mailing of the November 5th notices.

On January 6, 2020, Arbitrator Shelanski issued her

decision ruling in favor of Respondent and dismissing

Petitioner’s claims in their entirety. Two days later,

Petitioner’s counsel sent an email to Arbitrator Shelanski and

Case Manager Douglas Duzant asking two questions: “(1) In how

many matters has JAMS had the respondent in this case, NTT Data,

and its parent and subsidiary companies, as a party in

Arbitration or Mediation? [and] (2) Does Arbitrator Shelanski

have an ownership interest in JAMS?” A short time later, Mr.

Duzant replied, noting that the information requested had been

previously supplied on November 5th. One month later, Petitioner

filed the instant Petition to Vacate the Award on the grounds of

evident partiality or corruption on the part of the arbitrator,

misconduct in refusing to postpone the hearings and in refusing

to hear evidence pertinent and material to the controversy

pursuant to 9 U.S.C. §10(a)(2) – (3). Respondent filed its

Response in opposition and Cross-Petition to Confirm the Award

on March 9, 2020.

Discussion

1. Principles Governing Confirmation and/or Vacatur of

Arbitration Awards

The general principles and rules for confirming and, in

appropriate cases, vacating arbitration awards are outlined in

Sections 9 and 10 of the Federal Arbitration Act, 9 U.S.C. §§9

and 10, which read as follows in relevant part:

§9. Award of arbitrators; confirmation; jurisdiction;

procedure.

If the parties in their agreement have agreed that a

judgment of the court shall be entered upon the award made

pursuant to the arbitration, and shall specify the court,

then at any time within one year after the award is made

any party to the arbitration may apply to the court so

specified for an order confirming the award and thereupon

the court must grant such an order unless the award is

vacated, modified or corrected as prescribed in sections 10

and 11 of this title [9 U.S.C. §§10 and 11]. If no such

court is specified in the agreement of the parties, then

such application shall be made to the United States court

in and for the district within which such award was made. …

§10. Same; vacation; grounds; rehearing.

(a) In any of the following cases the United States court

in and for the district where the award was made may

make an order vacating the award upon application of

any party to the arbitration –

(1) where the award was procured by corruption,

fraud, or undue means;

(2) where there was evident partiality or corruption

in the arbitrators, or either of them;

(3) where the arbitrators were guilty of misconduct

in refusing to postpone the hearing, upon

sufficient cause shown, or in refusing to hear

evidence pertinent and material to the

controversy; or of any other misbehavior by which

the rights of any party have been prejudiced; or

(4) where the arbitrators exceeded their powers, or

so imperfectly executed them that a mutual,

final, and definite award upon the subject matter

submitted was not made.

…

Inasmuch as the Federal Arbitration Act is something of an

anomaly in the field of federal court jurisdiction, it does not

in and of itself provide a federal cause of action for vacatur

of an arbitration award. Goldman v. Citigroup Global Markets,

Inc., 834 F.3d 242, 249-250 (3d Cir. 2016)(citing Moses H. Cone

Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 25,

n.32, 103 S. Ct. 927, 74 L. Ed.2d 765 (1983)). Rather, “it

creates a body of federal substantive law establishing and

regulating the duty to honor an agreement to arbitrate,” and

“hence there must be diversity of citizenship or some other

independent basis for federal jurisdiction before an order can

issue.” Moses H. Cone, id.

Moreover, the Federal Arbitration Act (hereafter “FAA”)

imposes a strong presumption in favor of enforcing arbitration

awards. Prospect CCMC LLC v. Crozer Chester Nurses

Association/Pennsylvania Ass’n. of Staff Nurses & Allied

Professionals, Nos. 19-1439, 19-1440, 2020 U.S. App. LEXIS 5841

at *7 (3d Cir. Feb. 26, 2020)(citing Hamilton Park Health Care

Center Ltd. v. 1199 SEIU United Health Care Workers East, 817

F.3d 857, 861 (3d Cir. 2016)). Accordingly, the Courts properly

review such awards under an “`extremely deferential standard,’

the application of which ‘is generally to affirm easily the

arbitration award.’” Hamilton Park, id, (quoting Dluhos v.

Strasberg, 321 F.3d 365, 370 (3d Cir. 2003)). However,

notwithstanding this “deferential language,” … “the courts are

neither entitled nor encouraged simply to ‘rubber-stamp’ the

interpretations and decisions of arbitrators.” Id. (quoting

Matteson v. Ryder Systems, Inc., 99 F.3d 108, 113 (3d Cir.

1996)). To be sure, “a fair trial in a fair tribunal is a basic

requirement of due process.” Withrow v. Larkin, 421 U.S. 35,

46, 95 S. Ct. 1456, 1465, 43 L. Ed.2d 712 (1975)(quoting In re

Murchison, 349 U.S. 133, 136 (1955). “In sum, when parties

agree to resolve their disputes before an arbitrator without

involving the courts, the courts will enforce the bargains

implicit in such agreements by enforcing arbitration awards

absent a reason to doubt the authority or integrity of the

arbitral forum.” Sutter v. Oxford Health Plans, LLC, 675 F.3d

215, 219 (3d Cir. 2012).

Whether there is or may be reason to doubt the authority or

integrity of an arbitrator or his or her forum, the Supreme

Court has held that §§ 10 and 112 respectively provide the FAA’s

2 Section 11 has not been invoked in this matter as a basis upon which to set

aside the arbitrator’s award. It provides grounds for correction or

modification of such an award by virtue of the following language:

In either of the following cases the United States court in and for the

district wherein the award was made may make an order modifying or correcting

the award upon the application of any party to the arbitration –

(a) Where there was an evident material miscalculation of figures or

an evident material mistake in the description of any person,

thing or property referred to in the award.

(b) Where the arbitrators have awarded on a matter not submitted to

them unless it is a matter not affecting the merits of the

decision upon the matter submitted.

(c) Where the award is imperfect in matter of form not affecting the

merits of the controversy.

exclusive grounds for expedited vacatur and modification. Hall

Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 584,

128 S. Ct. 1396, 1403, 170 L. Ed.2d 254, 263 (2008). Here,

Petitioner Martin moves to vacate on three grounds - evident

partiality pursuant to 9 U.S.C. §10(a)(2), misconduct in

refusing to postpone the hearing and in refusing to hear

evidence pertinent and material to the controversy or of any

other misbehavior by which the rights of any party have been

prejudiced pursuant to 9 U.S.C. §10(a)(3), and “manifest

disregard of the law,” which appears to be a judicially created

ground for vacatur the validity and/or viability of which is

unclear since the Supreme Court decided Hall Street. See, e.g.,

Prospect CCMC, 2020 U.S. App. LEXIS at *8 (citing Stolt-Nielsen

v. AnimalFeeds Int’l Corp., 559 U.S. 662, 672, n.3, 130 S. Ct.

1758, 176 L. Ed.2d 605 (2010) and Whitehead v. Pullman Grp.,

LLC, 811 F.3d 116, 120-121 (3d Cir. 2016))(“After the Supreme

Court’s decision in Hall Street, it is unclear whether that

rationale [manifest disregard of law] provides an independent

basis for setting aside arbitration awards”).3

The order may modify and correct the award, so as to effect the intent

thereof and promote justice between the parties.

3 Inasmuch as there is now a circuit split on this question and the Third

Circuit has yet to weigh in with a definitive decision since Hall Street and

Stolt-Nielsen were decided, as have other courts in this district, we shall

assume without deciding that manifest disregard may still be considered as

grounds for vacating an arbitration decision. See e.g., Prospect CCMC v.

Crozer-Chester Nurses Association, Nos. 19-1439, 19-1440, 2020 U.S. App.

LEXIS 5841 at *9 - *10 (3d Cir. Feb. 26, 2020); Simons v. Brown, Civ. A. No.

a. Evident Partiality – 9 U.S.C. §10(a)(2).

Here, Petitioner first asserts that the decision issued by

the arbitrator, Vivian Shelanski, should be set aside under FAA

§10(a)(2) because she failed to timely disclose the full extent

of her financial interest in JAMS and because JAMS very

belatedly revealed the number of arbitrations and mediations

which it had conducted in which the law firm representing

Respondent was involved.

The matter of what does and does not constitute evident

partiality on the part of arbitrators is one which has been

litigated for more than the last 40 years. In the 1968 case of

Commonwealth Coatings Corp. v. Continental Casualty Co., 393

U.S. 145, 89 S. Ct. 337, 21 L. Ed.2d 301 (1968), the U.S.

Supreme Court endeavored to resolve whether “the elementary

element of impartiality taken for granted in every judicial

proceeding are suspended when the parties agree to resolve a

dispute through arbitration.” In that case, a painting

subcontractor sued the sureties on a prime contractor’s bond to

recover payment for a job. Pursuant to an arbitration clause in

the painting contract, the prime contractor named one

arbitrator, the subcontractor named a second and the two

19-5074, 2020 U.S. Dist. LEXIS 45454 at *24 (E.D. Pa. March 16, 2020); Knabb

Partnership v. Home Income Equity, LLC, Civ. A. No. 17-

373, 2017 WL 1397247, 2017 U.S. Dist. LEXIS 59485 at *5 (E.D. Pa. Apr. 19,

2017).

designated arbitrators then chose a third “neutral.” The third

arbitrator, however, unbeknownst to the subcontractor, had the

prime contractor as one of his regular customers. No

information concerning this relationship was revealed to the

subcontractor until after an award had been made. The

subcontractor then petitioned to set the award aside on the

grounds of partiality, but the district court refused and the

First Circuit Court of Appeals affirmed. After granting

certiorari, in a plurality opinion authored by Justice Black in

which Justices Warren, Douglas and Brennan joined, the Court

answered the foregoing question in the negative, reasoning:

This rule of arbitration [§18 of the Rules of the American

Arbitration Association] and this canon of judicial ethics

[33] rest on the premise that any tribunal permitted by law

to try cases and controversies not only must be unbiased

but must also avoid even the appearance of bias. We cannot

believe that it was the purpose of Congress to authorize

litigants to submit their cases and controversies to

arbitration boards that might reasonably be thought biased

against one litigant and favorable to another.

393 U.S. 150, 89 S. Ct. 340. In a concurring opinion4 written by

Justice White in which Justice Marshall joined, it was clarified

that the Court was not deciding that arbitrators were to be held

to the same “standards of judicial decorum” as judges. Instead,

Justices White and Marshall stated,

…where the arbitrator has a substantial interest in a firm

which has done more than trivial business with a party,

4 Justices Fortas, Harlan and Steward dissented finding that as the award at

issue was unanimous and no claims of actual partiality, fraud, unfairness or

bias were made, it was properly confirmed.

that fact must be disclosed. If arbitrators err on the

side of disclosure, as they should, it will not be

difficult for courts to identify those undisclosed

relationships which are too insubstantial to warrant

vacating an award.

Id, 393 U.S. at 151-152, 89 S. Ct. at 340-341.

Although much confusion reigned in the years following the

Supreme Court’s decision in Commonwealth Coatings regarding the

meaning of “evident partiality” in the context of §10(a)(2),

that case did make clear that “arbitrators must tell the parties

about any ‘substantial interest they may have in a firm’ that

does business with one of the parties.” Freeman v. Pittsburgh

Glass Works, LLC, 709 F.3d 240, 252 (3d Cir. 2013)(quoting

Commonwealth Coatings, 393 U.S. at 151-152). In other words,

there absolutely is a duty to disclose on the part of

arbitrators and/or potential arbitrators, although “`failure to

disclose,’ in and of itself, is not a basis for vacating an

arbitration award.” Stone v. Bear, Stearns & Co., 872 F. Supp.

2d 435, 447 (E.D. Pa. 2012). Instead, non-disclosure “has

relevance in the vacatur context only to the extent that the

non-disclosure reveals evident partiality”. Id,(citing

Scandinavian Reinsurance Co., Ltd. v. Saint Paul Fire & Marine

Insurance Co., 668 F.3d 60, 76-77 (2d Cir. 2012)).

In Freeman, the Third Circuit set as its “first order of

business,” defining “evident partiality” under the FAA,

§10(a)(2). It then went on to articulate the following

definition:

An arbitrator is evidently partial only if a reasonable

person would have to conclude that she was partial to one

side. …The conclusion of bias must be ineluctable, the

favorable treatment unilateral.

Freeman, 709 F.3d at 253(citing Andersons, Inc. v. Horton

Farms, Inc., 166 F.3d 308, 329 (6th Cir. 1998); Kaplan v. First

Options of Chicago, Inc., 19 F.3d 1503, 1523, n. 30 (3d Cir.

1994) and Morelite Construction Corp. v. New York City District

Council Carpenters Benefit Funds, 748 F.2d 79, 84 (2d Cir.

1984)).

Moreover, it is irrelevant whether this partiality is shown

to the party or the party’s counsel. (See, Freeman, at 255:

“[w]hether an arbitrator favors a party or its attorneys, the

harm to the other party is no less real”). Indeed, “‘[e]vident

partiality’ is strong language and requires proof of

circumstances ‘powerfully suggestive of bias.’” Kaplan, supra,

(quoting Merit Insurance Co. v. Leatherby Ins. Co., 714 F.2d

673, 681-82 (7th Cir.), cert. denied, 464 U.S. 1009, 104 S. Ct.

529, 78 L. Ed.2d 711 (1983)).

In support of her argument in this case, Petitioner

directs this Court’s attention to a recent 9th Circuit case with

a nearly-identical fact pattern – Monster Energy Co. v. City

Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019). That case arose

out of a 2006 exclusive sales agreement between City Beverages,

an Anheuser-Busch distributor doing business as Olympic Eagle,

and Monster Energy whereby Olympic agreed to promote and sell

Monster energy drinks for 20 years in an exclusive territory.

The contract permitted Monster to terminate the agreement

without cause upon payment of a severance fee and included an

arbitration clause before JAMS in Orange County, California.

Monster sought to terminate the agreement after a period of 8

years by offering to pay severance in the amount of $2.5

million. In response, Olympic invoked a Washington state

statute prohibiting termination of franchise contracts absent

good cause and Monster filed an action in the District Court for

the Central District of California to compel arbitration, which

the District Court granted. JAMS provided a list of 7 neutral

arbitrators and the parties chose one. The Arbitrator’s multi-

page disclosure statement contained an identical provision to

the one given in this case by Ms. Shelanski:

I practice in association with JAMS. Each JAMS neutral,

including me, has an economic interest in the overall

financial success of JAMS. In addition, because of the

nature and size of JAMS, the parties should assume that one

or more of the other neutrals who practice with JAMS has

participated in an arbitration, mediation or other dispute

resolution proceeding with the parties, counsel or insurers

in this case and may do so in the future.

The arbitrator in Monster Energy also disclosed that he

arbitrated a separate dispute between Monster and a distributor

which resulted in an award of some $400,000 against Monster but

failed to disclose that he was also an owner-shareholder of JAMS

and that JAMS had administered 97 arbitrations for Monster over

the preceding five-year period. Following two weeks of

hearings, the arbitrator issued an award in favor of Monster and

against Olympic Eagle. Olympic then moved to vacate the award

on the basis of the later-discovered information concerning

Monster’s substantial business relationship with JAMS and the

arbitrator’s ownership interest. The district court confirmed

the award but the 9th Circuit vacated:

Here, the Arbitrator’s failure to disclose his ownership

interest in JAMS – given its nontrivial business relations

with Monster – creates a reasonable impression of bias and

supports vacatur of the arbitration award. Because we

vacate the arbitration award, we also vacate the district

court’s award of post-arbitration fees to Monster.

940 F.3d at 1138.

Notwithstanding the remarkable factual similarities between

Monster Energy and the case at hand, there are several important

differences. For one, in Monster Energy, although JAMS did

indeed belatedly disclose the financial interest which its

arbitrator had in it, JAMS did not make this disclosure

voluntarily or before the award itself issued. Instead it was

only in response to the petitioner’s subsequent investigation

and over JAMS’ refusal to divulge, that the full extent of the

financial relationship was unearthed. Further, the nature of

the Monster Energy holding appears to be at odds with the Third

Circuit precedent outlined in Freeman. Unlike the 9th Circuit,

which evidently adheres to the viewpoint that failure to

disclose is by itself a sufficient basis upon which to vacate an

arbitration award, the Third Circuit has expressly declined to

treat non-disclosure cases differently than “non-bias” cases.5

As the Third Circuit held in Freeman:

Freeman nevertheless argues that Kaplan6 applies only to so-

called actual bias cases (where the relevant facts were

known and objected to beforehand), not to nondisclosure

cases (where the relevant facts were not disclosed). We

see no reason to adopt a different standard for each type

of case. The Federal Arbitration Act does not distinguish

between actual-bias and non-disclosure cases – instead it

condemns “evident partiality” in all cases. 9 U.S.C.

§10(a)(2). And Kaplan is sufficiently flexible to

accommodate the vagaries of each case. Accordingly, we

join the Sixth Circuit in applying this standard in non-

disclosure cases. See, Nationwide Mut. Ins. v. Home Ins.,

429 F.3d 640, 644-45 (6th Cir. 2005).

From this language, we conclude that while failure and/or

refusal to disclose apparent interests or conflicts may be

compelling evidence of evident partiality, a party challenging

an award on this basis must nevertheless still produce “proof so

powerfully suggestive of bias that a reasonable person would

5 For all intents and purposes, the Third Circuit thus joined the Second and

Sixth Circuits in its holding in Freeman. See, Freeman, 709 F.3d at 254;

Nationwide Mutual Insurance v. Home Ins., 429 F.3d 640, 644-45 (6th Cir.

2005); Morelite Construction Corp. v. New York City District Council

Carpenters Benefiti Fundselite Construction Corp. v. New York City District

Council Carpenters Benefiti Funds, 748 F.2d 79, 84 (2d Cir. 1984).

6 Kaplan v. First Options, supra.

have to believe that [the arbitrator] was partial to

Responden[t].” Stone v. Bear, Stearns, 872 F.Supp.2d at 447.

In assessing this proof, it is useful to consider the following

four factors utilized by Courts in the Second and Fourth

Circuits:

(1)The extent and character of the personal interest,

pecuniary or otherwise, of the arbitrator in the

proceedings; (2) the directness of the relationship between

the arbitrator and the party he is alleged to favor; (3)

the connection of that relationship to the arbitrator; and

(4) the proximity in time between the relationship and the

arbitration proceeding.

Scandanavian Reinsurance v. St. Paul, 66 F.3d at 74 (citing

Three S Del., Inc. v. DataQuick Data Systems, 492 F.3d 520, 530

(4th Cir. 2007)).

In application of the preceding principles to the matter

now before us, we find that there was indeed a blatant and

indefensible failure on the part of Arbitrator Shelanski to

reveal that she had more than a mere “economic interest in the

overall financial success of JAMS,” as she was one of a limited

number of JAMS’ arbitrators who are also owner-shareholders.7

7 The letter notice sent by JAMS on November 5, 2020 addressed to “all

parties” reads as follows:

Vivien Shelanski is an owner panelist of JAMS. As such, she has an

equal share ownership interest. She has never received a profit

distribution of more than .1% of JAMS total revenue in a given year.

Vivien is not privy to information regarding the number of cases or

revenue related to cases assigned to other panelists. As an owner she

is not informed about how her profit distribution is impacted by any

particular client, lawyer or law firm and she does not earn credit for

the creation or retention of customer relationships.

Why she failed to make this revelation until nearly two months

following the conclusion of arbitration hearings and after the

submission of final briefing is also incomprehensible to this

Court. Were Ms. Shelanski a judge, in all likelihood, she would

have been disqualified and her actions subject to ethical

review.8 The Court is equally appalled by JAMS’ failure to

provide its “Commencement Disclosures” to the parties at the

outset of this case.9 It wasn’t until November 5, 2019 that the

Commencement Disclosures were apparently sent reflecting that

JAMS had, within the preceding five years, a total of 7

arbitrations and 31 mediations with the law firm representing

Petitioner, 10 of which involved two of the attorneys

representing Ms. Martin and a total of 72 arbitrations and 151

mediations with counsel from the law firm representing the

respondent, three of which involved the individual attorneys

participating on behalf of NTT in this case. No cases prior to

The letter/notice is signed by Douglas Duzant, ADR specialist.

8 See, e.g., In re Antar 71 F.3d 97, 101 (3d Cir. 1995)(noting that [28

U.S.C.] Ҥ455(a) imposes a general duty on a federal judge to recuse whenever

there is an appearance of judicial partiality”).

9 Again, although JAMS provided a “Disclosure Checklist For All Arbitrations”

on February 7, 2018, this disclosure provided only that Arbitrator Shelanski

had never had a case with NTT Data, that she had previously served as a

mediator in a closed case with Respondent’s law firm, Foley & Lardner, LLP,

but had not previously served as a neutral for either Donald W. Schroeder or

Jillian M. Collins, Respondent’s outside co-counsel. That disclosure also

stated that despite this prior mediation with Foley & Lardner, that did not

alter Shelanski’s ability to be “fair, impartial, and independent” in this

arbitration.

this one involved Petitioner and 4 prior cases involved

Respondent.10

However, despite the clear appearances of impropriety posed

by these belated revelations, we are nevertheless constrained to

examine the record for that necessary evidence that is

“powerfully suggestive of bias” to support a finding of “evident

partiality.” In so doing, we consider the four factors outlined

by the Fourth and Sixth Circuits. With regard to the first one,

the extent and character of the personal interest, pecuniary or

otherwise, of the arbitrator in the proceedings, we note that as

per the November 5, 2019 letter from JAMS ADR Specialist Douglas

Duzant, as an owner panelist with an equal share interest, Ms.

Shelanski has never received a profit distribution greater than

than .1% of JAMS total revenue in a given year. However,

depending upon what JAMS’ total annual revenue is in a given

year (and this information does not appear in the materials

before us), this may well evince a significant pecuniary

10 We note that this late amendment appears to violate Rule 15(h) of JAMS’ own

Arbitration Rules:

Any disclosures regarding the selected Arbitrator shall be made as

required by law or within ten (10) calendar days from the date of

appointment. Such disclosures may be made in electronic format,

provided that JAMS will provide a hard copy to any party that requests

it. The parties and their representatives shall disclose to JAMS any

circumstances likely to give rise to justifiable doubt as to the

Arbitrator’s impartiality or independence, including any bias or any

financial or personal interest in the result of the Arbitration or any

past or present relationship with the parties and their

representatives. The obligation of the Arbitrator and their

representatives to make all required disclosures continues throughout

the Arbitration process.

interest on the part of its owner panelists, particularly in

light of the fact that JAMS was paid some $84,000 by Respondent

for this arbitration alone. Accordingly, this Court shall

assume for the sake of this analysis that Ms. Shelanski’s

economic interest is at least, somewhat significant. This

factor would therefore militate in favor of a finding of bias.

Turning to the second element, that of directness of the

relationship between the arbitrator and the party he is alleged

to favor, we find that while there is no connection between

Arbitrator Shelanski and the respondent party, there is some

relationship between Shelanski and the law firm representing

Respondent and a significant relationship between JAMS and the

Foley firm as evidenced by the 223 arbitration and mediation

cases which it had with Foley attorneys over the preceding five

years. Thus, the second element likewise weighs in favor of a

bias finding. However, the connection between that relationship

(JAMS to Foley) and Ms. Shelanski appears attenuated at best.

The third element is thus reflective of no bias.

Finally, the proximity in time between the relationship and

the arbitration proceeding seems, from the evidence that has

been presented to this Court, to be close in that the

relationship between Respondent, its law firm and JAMS looks to

be an ongoing one. The fourth factor therefore also is

suggestive of bias.

Our analysis does not end here, however, as Petitioner has

failed to explain why she waited for some two months after the

November 5, 2019 disclosures were made and until after the award

in favor of the Respondent was entered on January 6, 2020 to

lodge her challenge to the Arbitrator. Under JAMS Arbitration

Rule 27(b):

If any Party becomes aware of information that could be the

basis of a challenge for cause to the continued service of

the Arbitrator, such challenge must be made promptly, in

writing to the Arbitrator or JAMS. Failure to do so shall

constitute a waiver of any objection to continued service

by the Arbitrator.

In addition, the Third Circuit has also made clear that in

the arbitration context it frowns upon affording the losing

party “a second bite at the apple.” Freeman, 709 F.3d at 250.

Indeed, it now adheres to the “constructive knowledge standard”

such that a party will be held to have waived a later challenge

where it knew or should have known of the facts indicating

partiality. Goldman, Sachs & Co. v. Athena Venture Partners,

L.P., 803 F.3d 144, 149 (3d Cir. 2015). This standard thereby

encourages the parties to conduct adequate due diligence prior

to issuance of the award and promotes the arbitration goals of

efficiency and finality while allowing a party to challenge an

arbitration when it had no way of discovering the arbitrator’s

bias beforehand. Id. Here, while Petitioner may not have been

able to discover the Arbitrator’s interests before they were

actually disclosed, her failure to offer any explanation

whatsoever as to why she waited until after the award was

entered in this case is glaring. In the absence of any evidence

that she made any effort to question or to even mention

Arbitrator Shelanski’s non-disclosures and potential bias

promptly after the November 5, 2019 mailing or at the closing

arguments of the case, it appears that Petitioner was trying to

“game the system by rolling the dice on whether to raise the

challenge during the proceedings or wait until [losing] to seek

vacatur on the issue.” Goldman, 803 F.3d at 150. By so doing,

Petitioner waived her objections. For these reasons, we

therefore decline to set aside the award on the basis of waiver.

b. Arbitrator Misconduct: Refusing to Postpone or Hear

Evidence -- §10(a)(3).

Ms. Martin also moves to vacate the award at issue pursuant

to FAA §10(a)(3) because of Arbitrator Shelanski’s refusal to

grant a postponement and to hear pertinent and material

evidence. In so refusing, Petitioner avers that she was

prevented from developing a full evidentiary record and deprived

of a fair hearing.

To reiterate, Section 10(a)(3) permits a court to vacate an

arbitration award where the arbitrator was guilty of misconduct

in improperly refusing to postpone the hearing or to hear

relevant and pertinent evidence or “of any misbehavior by which

the rights of any party have been prejudiced.” It is well-

settled that “arbitrators have wide latitude in how they conduct

proceedings,” and hence a court’s role in reviewing an

arbitrator’s procedural decisions is extremely limited. Sabre

GLBL, Inc. v. Shan, Nos. 18-2079, 18-2144, 779 Fed. Appx. 843,

856, 2019 U.S. App. LEXIS 19983 (3d Cir. July 3, 2019)(citing

Office of Professional Employees International Union, Local 471

v. Brownsville General Hospital, 186 F.3d 326, 334-335 (3d Cir.

1999). An arbitrator’s error in excluding evidence can only

support vacation of an award if it is “in bad faith or so gross

as to amount to affirmative misconduct.” Simons v. Brown, Civ.

A. No. 19-5074, 2020 U.S. Dist. LEXIS 45454 at *13 (E.D. Pa.

March 16, 2020)(citing United Paperworkers Int’l Union, AFL-CIO

v. Misco, Inc., 484 U.S 29, 40, 108 S. Ct. 364, 98 L. Ed.2d 286

(1987)). A court may vacate an arbitration award based on an

arbitrator’s error in “the receipt or rejection of evidence”

only if the error “so affects the rights of a party that it may

be said that he was deprived of a fair hearing.” Id, (quoting

Newark Stereotypers’ Union No. 18 v. Newark Morning Ledger Co.,

397 F.2d 594, 599 (3d Cir. 1968)). Procedural irregularities

must be so prejudicial that they result in “fundamental

unfairness.” Whitehead v. Pullman Group, LLC, 811 F.3d 116, 120

(3d Cir. 2016)(citing Teamsters Local 312 v. Matlack, Inc., 118

F.3d 985, 995 (3d Cir. 1997)).

Instantly, Petitioner first contends that Arbitrator

Shelanski deprived her of a fair hearing by refusing to grant

her request for a 60-day postponement to review Respondent’s

“eleventh hour” production of 900 pages of documents. According

to Petitioner, this production occurred over a three-day period

between August 20 and August 23, 2019 -- less than two weeks

prior to the first scheduled hearing.

The record in this matter reflects that following the

postponement request, Ms. Shelanski held a teleconference with

the parties following which she reviewed copies of the documents

produced. According to the two-page “Decision on Request for

Adjournment of Hearing” authored by Arbitrator Shelanski on

August 28, 2019, the 101 pages produced on August 30, consisted

of 33 documents, some 55 of which were copies of powerpoints or

corporate documents including a 17-page information and data

privacy document from 2012. Fewer than 50 pages were emails or

notes. Second, the 14 documents (comprising 114 pages) that

were produced on the morning of August 23 included a 77-page

Global Information Security Policy, copies of two other

powerpoints of 17 and 9 pages, respectively, a mailing label and

an affidavit from the claimant (Ms. Martin) attesting to a

return of documents. There were only 8 pages of notes and/or

emails. Finally, the arbitrator found that the 667-page

production made on the afternoon of August 23 consisted of 36

documents, almost all of which were powerpoints or other forms

of brochures, some of which were created by Ms. Martin. Only 16

pages of that production were notes or emails. Because all of

the powerpoints and printed brochures duplicated Respondent’s

earlier productions, the arbitrator found there were only 75

pages of new material produced and that this did not warrant a

60-day postponement.

In view of the wide latitude and discretion afforded

arbitrators in conducting the proceedings before them and the

fact that Petitioner still had a week to digest and incorporate

the 75-newly-produced pages of material into her preparation for

the hearing, we cannot find that Arbitrator Shelanski’s refusal

to postpone was unreasonable or that it constituted the

“fundamental unfairness” necessary to warrant vacatur. We

therefore deny Petitioner’s motion to vacate on this ground.

Petitioner also avers that Arbitrator Shelanski prevented

her from presenting evidence from the Boston Consulting Group

(“BCG”) that she had obtained through subpoena and which

included a spreadsheet that purportedly showed egregious

sexually discriminatory pay practices, a document never produced

by NTT Data. More particularly, Petitioner alleges that she had

sought these materials in response to Respondent’s interrogatory

response that Ms. Martin’s termination arose out of an in-depth

review of Respondent’s corporate hierarchy and corporate re-

design of Respondent’s organizational structure conducted in

conjunction with BCG. Petitioner contends that by refusing to

allow her to use any of these BCG documents in questioning

witnesses during discovery or allowing Petitioner herself to

view them,11 Ms. Shelanski prevented her from ascertaining how

and from whom the information in the spreadsheet was compiled

and that this failure resulted in Shelanski’s determination that

the spreadsheet was “not a foundation for finding unequal pay

practices.” To this argument, Respondent rejoins that

Petitioner could have properly laid the foundation for and

authenticated the spreadsheet at arbitration had she subpoenaed

and called a BCG employee to testify to this information at the

hearing and that in any event, the document was improperly

produced pursuant to subpoena duces tecum issued by the

Arbitrator.12

In considering these arguments, while we would agree with

Petitioner that the BCG spreadsheet and other documents would

11 These documents were designated “Attorneys Eyes Only” and Petitioner states

that when the spreadsheet was used at the arbitration hearing, she was made

to leave the room.

12 Indeed, in denying Respondent’s request to subpoena materials from one of

Petitioner’s witnesses, Patrick Branigan, Arbitrator Shelanski acknowledged

that under Hay Group, Inc. v. E.B.S. Acquisition Corp. 360 F.3d 404 (3d Cir.

2004), Section 7 of the Arbitration Act authorized arbitrators to issue

subpoenas only compelling the production of documents and attendance of

witnesses in hearings before them. Despite this ruling and recognition that

the Third Circuit’s ruling in Hay Group bound her in this case, Ms. Shelanski

nevertheless denied Respondent’s pre-hearing motion to preclude Petitioner

from using the BCG documents which she had obtained via subpoena duces tecum,

holding that “[a]ny objections to the evidentiary use of materials obtained

in discovery will be addressed at the hearing on a case-by-case basis.”

certainly be relevant to the central issue in this case, i.e.¸

the basis for the termination of Petitioner’s employment,

relevance does not, in and of itself, equate to automatic

admission of evidence. It remained incumbent upon Petitioner

and her counsel to lay a proper foundation for the admission of

that evidence through whatever witnesses they deemed

appropriate. Knowing in advance that the material had been

designated “attorneys’ eyes only” and that Ms. Martin was

precluded from viewing it herself, it is difficult to understand

why Petitioner did not avail herself of the Arbitrator’s

subpoena power to call a BCG representative to authenticate the

document. Given that a court may vacate an arbitration award

based on an arbitrator’s error in “the receipt or rejection of

evidence” only if the error “so affects the rights of a party

that it may be said that he was deprived of a fair hearing,” we

cannot find that that high bar has been reached here. We

therefore deny the motion to vacate on this ground as well.

c. Manifest Disregard

Finally, Petitioner moves for vacatur for the reason that

Arbitrator Shelanski manifestly disregarded applicable legal

standards in rendering her decision. In particular, Petitioner

avers that Ms. Shelanski manifestly disregarded the law

applicable to retaliation claims under Title VII and the PHRA.

“The manifest disregard standard requires more than legal

error.” Whitehead v. Pullman, 811 F.3d at 121. Indeed, the

standard is “extremely deferential” and the arbitrator’s

decision “`must fly in the face of clearly established legal

precedent,’ such as where an arbitrator ‘appreciates the

existence of a clearly governing legal principle but decides to

ignore or pay no attention to it.’” Id, (citing Dluhos v.

Strasberg, 321 F.3d at 370; Merrill Lynch, Pierce, Fenner &

Smith, Inc. v. Jaros, 70 F.3d 418, 421 (6th Cir. 1995); Merrill

Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933

(2d Cir. 1986)). See Also, Sabre GLBL, Inc. v. Shan, Nos. 18-

2079, 18-2144, 779 Fed. Appx. 843, 850, 2019 U.S. App. LEXIS

19983 (3d Cir. July 3, 2019) and Bellantuono v. ICAP Securities,

USA, No. 12-4253, 557 Fed. Appx. 168, 174, 2014 U.S. App. LEXIS

1859 (3d Cir. Jan. 30, 2014)(same). Thus, the Third Circuit has

held that there “must be absolutely no support at all in the

record justifying the arbitrator’s determinations for a court to

deny enforcement of an award.” News America Publications, Inc.

Daily Racing Form Division v. Newark Typographical Union, Local

103, 918 F.2d 21, 24 (3d Cir. 1990).

Petitioner argues that in rejecting her claim that

Respondent retaliated against her by filing a breach of contract

claim against her just two weeks after she filed her demand for

arbitration and in finding that her removal from Respondent’s

Leadership Council could not be the basis for such a claim

because it involved no change to her title, duties, or

compensation, Shelanski ignored the standard for retaliation

articulated by the Supreme Court in Burlington Northern & Santa

Fe Railroad Co. v. White Northern & Santa Fe Railroad Co. v.

White, 548 U.S. 53, 126 S. Ct. 2405, 165 L. Ed.2d 345 (2006).

Specifically, the Burlington Northern court held that “the

antiretaliation provision does not confine the actions and harms

it forbids to those that are related to employment or occur at

the workplace.” 548 U.S. at 57. Instead, “the provision covers

those (and only those) employer actions that would have been

materially adverse to a reasonable employee or job applicant.”

Id. … “[T]hat means that the employer’s actions must be harmful

to the point that they could well dissuade a reasonable worker

from making or supporting a charge of discrimination.”

In reviewing Arbitrator Shelanski’s written decision, we

find that she recited the correct standard and pre-requisites

for establishing a prima facie case of both discrimination and

retaliation.13 Then, in applying those legal principles, she

13 Specifically, the Decision states in relevant part:

In order to establish a prima facie case of gender discrimination, the

requirements under Title VII and the PHRA are the same: a claimant must

prove that: (i) she is a member of a protected class; (ii) she was

qualified for the job in question; (iii) she suffered an adverse

employment action that affected the terms and conditions of employment;

and (iv) the circumstances support an inference of discrimination.

See, Geraci v. Moody-Tottrup Int’l, Inc., 82 F.3d 578, 580-81 (3d Cir.

1996)(citing Texas Dep’t of Community Affairs v. Burdine, 450 U.S. 248,

found that Petitioner had failed to prove that the decision to

remove her from the Leadership Council was discriminatorily

based on her gender or in retaliation for her expressed concerns

about Respondent’s failure to promote women and minorities and

that the filing of Respondent’s counterclaim was retaliatory.

Specifically, Arbitrator Shelanski determined that inasmuch as

Petitioner was not the only person removed from the Leadership

Council when then-CEO McCain decided to reduce the number of

direct reports and the other individual removed was a male, and

since the only consequence of removal was a reduction in the

number of subordinates that she could invite to certain company

conferences with no other changes to the terms or conditions of

her employment, Petitioner had failed in making out a prima

facie case of discrimination. Her proof that the action was

253 (1981)). The fourth element may be satisfied by sufficient

evidence that persons outside the protected class were treated more

favorably. See, Goosby v. Johnson & Johnson Med., Inc., 228 F.3d 313,

318-19 (3d Cir. 2000). If the Claimant meets this burden, the

Respondent must come forward with legitimate, non-discriminatory

reasons for the decision. McDonnell Douglas Corp. v. Green, 411 U.S.

792, 802 (1973). If Respondent does so, the Claimant must demonstrate

that the stated reasons were a pretext for unlawful action.

To establish a prima facie case of retaliation, Ms. Martin must show

that: (i) she engaged in a protected activity; (ii) she suffered an

adverse employment action after or contemporaneously with the protected

activity; and (iii) there is a causal connection between her protected

activity and NTT Data’s adverse action. Marra v. Phila. Housing Auth.,

497 F.3d 286, 300 (3d Cir. 2007). If Ms. Martin meets this burden, NTT

Data must articulate a legitimate, non-discriminatory reason for the

adverse action. McDonnell Douglas, 411 U.S. at 802; Fuentes v.

Perskie, 32 F.3d 759, 763 (3d Cir. 1994). If that burden is met, Ms.

Martin must show that the explanation is false and that retaliation was

the real reason for the action. Moore v. City of Philadelphia, 461

F.3d 331, 342 (3d Cir. 2006).

retaliatory also failed because the only comments/complaints

that Petitioner had made about disparate treatment before her

removal from the Council had been made some two years

beforehand. Thus, the arbitrator concluded that a causal nexus

between the complaints and the allegedly discriminatory and/or

retaliatory decision had not been established and, even giving

Petitioner the benefit of the doubt that a prima facie case had

been made out, she failed to show that the reason proffered, to

wit, that the CEO wanted to reduce the number of direct reports

was false.

In addition to these findings, Ms. Shelanski went on to

discuss her consideration and analysis of the evidence presented

by both sides in the matter and the basis for her ultimate

finding that the retaliation claims had not been proven. While

this analysis may not have been perfect, this Court finds that

it was sound overall and adequately supported by evidence.

Again, the manifest disregard standard requires more than legal

error and the arbitrator’s decision “must fly in the face of

clearly established legal precedent.” Whitehead, 811 F.3d at

121. We do not find that to be the case here. For this reason,

we cannot justify setting the arbitrator’s determinations aside

nor can we find grounds to deny enforcement of the award on the

basis of manifest disregard.

For all of the foregoing reasons, we deny Petitioner’s

Motion to Vacate and grant Respondent’s Motion to Confirm the

Arbitration Award entered in this matter on January 6, 2020. An

Order follows.