A federal judge scolded arbitration firm JAMS over one of its shareholders' failure to timely disclose the extent of her financial interests in the firm, adding that JAMS also had "far greater contacts" with the law firm representing the defendants than it disclosed at the start of the case.

U.S. District Judge J. Curtis Joyner of the Eastern District of Pennsylvania's excoriation came in his ruling declining to vacate an arbitration award in favor of the defendants, NTT Data, sued by plaintiff Sarah Martin over alleged sex discrimination. The case went to arbitration in February 2018 before JAMS arbitrator and shareholder Vivien Shelanski.

Martin claimed that Shelanski failed to make the appropriate disclosures involving her own interests in JAMS soon enough and that JAMS failed to timely show it had an extensive business history with NTT's lawyers. Although Joyner did not rule in favor of Martin, he had choice words for JAMS.

"We find that there was indeed a blatant and indefensible failure on the part of arbitrator Shelanski to reveal that she had more than a mere 'economic interest in the overall financial success of JAMS,' as she was one of a limited number of JAMS' arbitrators who are also owner-shareholders," Joyner said in his June 23 opinion.

"Why she failed to make this revelation until nearly two months following the conclusion of arbitration hearings and after the submission of final briefing is also incomprehensible to this court," Joyner continued. "Were Ms. Shelanski a judge, in all likelihood, she would have been disqualified and her actions subject to ethical review."

Joyner didn't stop there:

"The court is equally appalled by JAMS' failure to provide its 'Commencement Disclosures' to the parties at the outset of this case. It wasn't until November 5, 2019 that the commencement disclosures were apparently sent reflecting that JAMS had, within the preceding five years, a total of seven arbitrations and 31 mediations with the law firm representing petitioner, 10 of which involved two of the attorneys representing Ms. Martin and a total of 72 arbitrations and 151 mediations with counsel from the law firm representing the respondent, three of which involved the individual attorneys participating on behalf of NTT in this case."

Shelanski did not respond to a request for comment.

While Joyner noted in his opinion that he was not happy about the the lapses on JAMS' part, he noted that Martin waited far too long to question the arbitration award, appearing to "game the system."

"Here, while petitioner may not have been able to discover the arbitrator's interests before they were actually disclosed, her failure to offer any explanation whatsoever as to why she waited until after the award was entered in this case is glaring."

Martin, a NTT employee for 32 years, claimed she was fired because she is a woman, and that her job duties were given to a male who kept her title of executive. In a counterclaim, NTT alleged breach of contract violations against Martin for copying purportedly confidential and proprietary business information and not returning it to the company for several months, Joyner said.

During the proceedings it came to light "that Ms. Shelanski in fact had a greater financial interest in JAMS than had previously been revealed and that JAMS had had far greater contacts with the law firm representing the defendant than had been disclosed at the outset of the matter," Joyner said.

Despite that, no objections were filed and the case continued. Shelanski ultimately found in favor of NTT.

Martin's attorney, Laura Mattiacci of Console Mattiacci, said, "There's a reason why companies are forcing their employees to have their civil rights cases heard by JAMS." She declined to comment further.

Reached for comment, a JAMS spokesperson said, "We want to make it clear that Ms. Shelanski followed all of the disclosure protocols that have been put into place. We believe that the court has made incorrect assumptions about how JAMS operates and is structured as well as the impact of disclosures related to this structure."

Donald Schroeder of Foley & Lardner in Boston, who represented NTT, did not respond to a request for comment.