## Facts

- The Thomas Kinkade Company and the Whites entered dealer agreements requiring arbitration under the AAA Commercial Arbitration Rules.
- Kinkade initiated AAA arbitration alleging the Whites owed hundreds of thousands of dollars for artwork; the Whites counterclaimed fraudulent inducement.
- The parties selected party-appointed arbitrators, who jointly selected Mark Kowalsky as the neutral chair.
- After years of proceedings and extensive hearings, Kowalsky directed post-closing briefing and additional proof on causation and damages over Kinkade’s objection, allowing the Whites to address weaknesses after the record would ordinarily be closed.
- Kowalsky later disclosed that David White and the Whites’ party-appointed arbitrator had hired Kowalsky’s law firm for engagements described as likely substantial, while the arbitration was still pending.
- Kinkade sought Kowalsky’s disqualification; Kowalsky refused to withdraw.
- After the disclosure, Kowalsky allowed the Whites to submit roughly 8,800 pages of financial records that had not been produced earlier, despite Kinkade’s objections.
- The panel issued an interim award granting the Whites money and summarily denying Kinkade’s breach-of-contract claim; the panel later issued a final award exceeding $1.4 million for the Whites.
- Kinkade petitioned to vacate the award in federal district court; the court vacated under FAA § 10(a)(2) for evident partiality by the neutral chair.
- The Whites appealed the vacatur.

## Issues

1. Whether the district court correctly vacated the arbitration award under FAA § 10(a)(2) based on the neutral chair’s evident partiality arising from substantial concurrent business relationships with one side and related arbitration irregularities.

## Decision

- The Sixth Circuit affirmed the order vacating the arbitration award.
- The court held that the neutral chair’s concurrent, substantial engagements from David White and the Whites’ party-appointed arbitrator created evident partiality.
- The court found the appearance of partiality reinforced by a pattern of discretionary procedural decisions favoring the Whites, including reopening or expanding post-hearing submissions and admitting late-produced financial records.
- The court concluded that the FAA required vacatur because a reasonable person would have to conclude the neutral chair was partial.

## Legal Principles

- Under FAA § 10(a)(2), an arbitration award may be vacated where there was “evident partiality” in the arbitrators.
- “Evident partiality” does not require proof of actual bias; it is satisfied when a reasonable person would have to conclude the arbitrator was partial to one party.
- A neutral arbitrator’s acceptance of substantial concurrent business from a party (or that party’s arbitration advocate) during a pending arbitration can create evident partiality warranting vacatur, particularly when coupled with one-sided procedural rulings affecting the record and outcome.
- In a tripartite panel where party-appointed arbitrators may be expected to favor their appointing parties, the chair’s neutrality is central; conflicts affecting the chair are assessed with that role in mind.

## Conclusion

The Sixth Circuit affirmed vacatur of the Whites’ arbitration award because the neutral chair’s substantial, contemporaneous business relationships with the Whites and their party-appointed arbitrator, together with procedural irregularities favoring the Whites, compelled the conclusion of evident partiality under FAA § 10(a)(2).


Thomas Kinkade Co. v. White, 711 F.3d 719 (6th Cir. 2013)