On July 31, 2013, two different courts of appeals released two separate rulings on 9 U.S.C. § 10(a)(3), the FAA provision governing misconduct by arbitrators. Both courts refused to overturn evidentiary decisions made by arbitrators, finding that the arbitrators' decisions were not misconduct. The US Court of Appeals for the First Circuit's decision in Doral Financial Corp. v. García-Vélez held that an arbitration tribunal's refusal to grant subpoenas was not misconduct forbidden by 9 U.S.C. § 10(a)(3), and refused to vacate the decision. The US Court of Appeals for the Second Circuit's decision in LJL 33rd Street Associates, LLC v. Pitcairn Properties, Inc. held that an arbitrator's refusal to admit exhibits on hearsay grounds was not misconduct and refused to vacate the arbitrator's decision.

In Doral, García-Vélez sought severance compensation from his former employer, Doral. Under the terms of his employment agreement, García-Vélez brought an arbitration action. In the arbitration proceeding, the parties agreed on a schedule that included final dates for requests for information and submissions of witness lists, memorialized in an order from the arbitration tribunal. After both deadlines had passed, Doral filed applications for pre-hearing and, later, hearing subpoenas on a third party. The tribunal denied both requests as untimely, and after a hearing ruled in García-Vélez's favor. Doral later brought a district court action to have the arbitration award vacated, arguing that the tribunal's refusal to issue the subpoenas was "misconduct" under 9 U.S.C. § 10(a)(3). The district court denied the vacatur request and denied a motion to reconsider, and Doral appealed.

The First Circuit also refused to vacate the tribunal's determination. The court found that the tribunal's decision:

Therefore, the court found that there was no misconduct under 9 U.S.C. § 10(a)(3) and allowed the tribunal's decision to stand.

In LJL 33rd Street, two real estate investors sought to establish the value of a jointly owned property. According to the contract between LJL and Pitcairn, the determination of their property's stated value would be determined by an arbitrator. When LJL brought the matter of valuation before an arbitrator, it objected to four pieces of Pitcairn's evidence on hearsay grounds. The arbitrator sustained LJL's objection and refused to enter the documents into evidence. LJL brought the arbitrator's decision before New York state court for confirmation in part. Pitcairn removed the matter to federal district court and cross-petitioned to vacate the award in its entirety. Pitcairn argued that the arbitrator's exclusion of the evidence was "misconduct" under 9 U.S.C. § 10(a)(3). The district court agreed, and vacated the decision. LJL appealed.

The Second Circuit reversed. The court found that the arbitrator's actions were not misconduct. The court noted that although arbitrators are not bound by the rules of evidence and that they can allow hearsay evidence, they are not required to do so. The court found the hearsay evidence that was excluded easily could have been presented in a permissible manner if the makers of the evidence had been called as witnesses. The court reminded the litigants that arbitrators have substantial discretion to admit or exclude evidence, and the decision to exclude was well within the arbitrator's discretion.

Parties who seek to appeal an arbitrator's decision on 9 U.S.C. § 10(a)(3) grounds should be aware of the high standards that appellate courts have set for determining an arbitrator's misconduct, and should remember that arbitrators are given broad discretion when determining the admissibility of evidence.