In one of two cases decided today, the Supreme Court of Virginia addressed for the first time the standard for “evident partiality” as a ground for vacating an arbitration award under the Virginia Uniform Arbitration Act, Code § 8.01-581.010(2).
The case arose from a soured business deal. Jayne Di Vincenzo sold her financial advising company, Lions Bridge Financial Advisors, to Devin Garofalo in early 2020. When Garofalo failed to make his quarterly payments, Di Vincenzo initiated FINRA arbitration. Attorney Michael Glasser was appointed to the arbitration panel and completed FINRA’s extensive disclosure process, affirming he had no conflicts. The panel unanimously found Garofalo in default and awarded damages to Di Vincenzo.
Garofalo then sought to vacate the award under Code § 8.01-581.010(2), which provides for vacating an award where there is “evident partiality by an arbitrator.” Garofalo argued that Glasser had “evident partiality” because of undisclosed prior connections to Di Vincenzo. Specifically, Glasser served on the board of Old Point Financial Corporation, whose subsidiary (Old Point Trust) had a short-lived business partnership with Lions Bridge that ended in 2015, about five years before the arbitration. Glasser had also introduced Di Vincenzo at two board meetings in 2014 and 2015 and shared office space in the same building. Glasser testified he did not remember Di Vincenzo when he accepted the arbitration appointment and acknowledged his disclosures were imperfect.
The Court held that “evident partiality” requires an exacting, objective standard: “a party seeking vacatur for evident partiality must objectively demonstrate that a reasonable person, knowing all the relevant facts, would conclude that the arbitrator’s conduct signifies obvious bias against that party.” The Court grounded this in a plain-language analysis, noting that “evident” means clear, manifest, and obvious, and that this high bar is consistent with the other serious grounds for vacatur listed in the statute (corruption, fraud, misconduct). The Court declined to adopt the Fourth Circuit’s four-factor test from ANR Coal (though it acknowledged its instructive value) and rejected Garofalo’s argument for a “reasonable impression of bias” standard. The Court also declined to treat the U.S. Supreme Court’s plurality opinion in Commonwealth Coatings as controlling Virginia law.
Applying its new standard, the Court found that Glasser was not evidently partial. The board meeting introductions were routine boardroom formalities, not evidence of a meaningful personal relationship. The business connection between Old Point’s subsidiary and Lions Bridge was de minimis as a short partnership that generated only about $8,000 in revenue and ended five years before the arbitration. The trial court credited Glasser’s testimony that he genuinely did not remember Di Vincenzo, and the Supreme Court was bound by that factual finding. The Court also emphasized that while FINRA’s disclosure rules set contractual obligations for arbitrators, a violation of those rules does not independently establish evident partiality under the VUAA. Rather, courts must assess whether the conduct rises to the statutory standard.
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