Arbitrator in Amazon Reseller Contract Case Showed Partiality, Says Petitioner
An arbitrator in a fraud case failed to disclose that he had previously ruled in cases between Amazon and third-party sellers before petitioner Simon Haines’ September 2022 demand for arbitration, said Haines’ memorandum of points and authorities Friday (docket 2:23-cv-10748).…
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He filed in support of his petition to vacate an arbitration award in U.S. District Court for Central California in Los Angeles. Haines alleges Amazon breached its Amazon business solutions agreement (BSA) by failing to pay net proceeds of sales for goods sold on Amazon on Haines’ behalf and converting proceeds for its “own use.” Section 2 of the BSA provides that if Amazon determines that a seller’s account has been used to engage in the sale of counterfeit goods, it can withhold payments, the memorandum said. Haines’ opening briefs in the arbitration case in June requested arbitrator Dale Kingman to declare Section 2 unenforceable under the Washington Consumer Protection Act. On Sept. 26, Kingman issued the award, ruling “in manifest disregard of the law,” that there was a “complete absence of evidence” relating to the formation of a contract between the parties, that there was no statutory right guaranteed to Haines under Washington law and that the BSA was not unenforceable as a liquidated damages clause because Amazon’s permanent withholding of proceeds from Haines was “14 days of revenue” and damages to Amazon were difficult to determine. Haines argued that Section 2’s “unfettered discretion” to permanently withhold any payments to a seller “makes the provision a penalty rather than a reasonable forecast,” said the memorandum. "The withheld funds are simply a penalty that bear no reasonable relationship to any damages suffered by Amazon and should have been construed as a penalty," said the memorandum, saying Kingman ignored “this principle of law." The award should be vacated based on the arbitrator's “evident partiality” and disregard of the law of substantive unconscionability, it said.