## Facts

- Richard A. Gilling, Jean Gilling, Thomas Triano, and Alinde Triano were passengers on an Eastern Airlines flight from Miami to Martinique on November 27, 1983.
- During a stopover in St. Croix, two incidents involving knives occurred on board, after which the passengers were removed from the flight and were not permitted to continue.
- The passengers sued Eastern Airlines, Inc. (t/a Eastern Airlines) in the District of New Jersey asserting claims that included breach of contract and multiple tort theories (including negligence and various intentional torts) arising from the removal.
- Under the District of New Jersey’s compulsory, nonbinding arbitration program (General Rule 47), the case was referred to mandatory arbitration before trial.
- At the arbitration hearing (May 20, 1987), Eastern appeared only through counsel; no company representative or live witnesses attended for Eastern.
- Instead of calling witnesses, Eastern’s counsel relied largely on reading excerpts from deposition transcripts and interrogatory answers and offered brief position statements.
- According to the record summarized in secondary sources, when asked about a potential damages award, Eastern’s counsel indicated indifference because Eastern intended to seek a trial in court and did not plan to pay an arbitration award.
- The arbitrator found for the passengers and awarded damages.
- Eastern timely demanded a trial de novo under the local rule. The passengers objected, arguing Eastern had not participated in arbitration in a “meaningful manner,” and sought sanctions up to striking the demand for trial de novo.
- The district court remanded to the arbitrator for findings on whether Eastern’s arbitration participation was meaningful. The arbitrator found it was not.
- Eastern moved to vacate the arbitrator’s “meaningful participation” finding and renewed its request for a trial de novo; the court addressed those requests and the appropriate sanction.

## Issues

1. Whether Eastern participated in compulsory arbitration in a “meaningful” and good-faith manner when it appeared only through counsel, presented no live witnesses, and treated the award as irrelevant because it planned to demand a trial de novo.
2. If Eastern failed to participate meaningfully, whether the court may (or should) strike Eastern’s demand for a trial de novo, or instead allow trial de novo while imposing lesser sanctions.

## Decision

- The court accepted the arbitrator’s determination that Eastern did not participate in arbitration in a meaningful, good-faith manner.
- The court denied Eastern’s effort to vacate the arbitrator’s finding on meaningful participation.
- The court granted Eastern’s demand for a trial de novo, concluding that denying access to a trial would be an excessively severe sanction in this setting.
- The court imposed sanctions on Eastern for its failure to participate meaningfully in arbitration, using sanctions short of striking the trial-de-novo demand.

## Legal Principles

- Compulsory, nonbinding arbitration programs depend on parties participating in good faith; “meaningful participation” requires more than a token appearance designed only to clear a procedural step.
- When a party enters arbitration intending from the outset to reject any award and demand trial regardless of what occurs in arbitration, that conduct defeats the program’s goals of efficient, lower-cost dispute resolution and can unfairly burden an opposing party with fewer resources.
- Local rules may authorize sanctions for failure to participate meaningfully in arbitration, and courts may use their authority to enforce compliance with court-administered dispute-resolution procedures.
- Even when sanctions are warranted, denying a timely request for a trial de novo may be disproportionate where the arbitration scheme is designed to be nonbinding and where access to a judicial trial is a central feature of the program.
- Appropriate sanctions for bad-faith or non-meaningful arbitration participation can include monetary or comparable measures that address wasted time and expense without converting a nonbinding arbitration result into a binding adjudication.

## Conclusion

Gilling v. Eastern Airlines, Inc. holds that a party that treats compulsory, nonbinding arbitration as a formality—by appearing without witnesses, presenting little evidence, and signaling it will ignore any award—fails to participate in a meaningful, good-faith manner and may be sanctioned; however, the district court still permitted Eastern to obtain a trial de novo, choosing sanctions short of striking the trial demand.


Gilling v. Eastern Airlines, Inc., 680 F.Supp. 169 (1988)