In Marlowe v. IDS Property Cas. Ins. Co., No. 11AP2067 (Wis. Ct. App. Mar. 13, 2012), the Court of Appeals, resolving an issue of first impression in Wisconsin, held that a party to an arbitration under the Wisconsin Arbitration Act, Wis. Stat. ch. 788, may not, while the arbitration is pending, seek circuit court review of a decision by the arbitrators on the scope of discovery. As a separate and independent ground for its conclusion, the court held that, where arbitrators resolve a discovery dispute by interpreting a provision in the arbitration agreement, their decision is final and not subject to judicial review.
In arbitrating a dispute about an uninsured motorist clause, the insurer sought not only to depose the insureds but to obtain their medical records and an independent medical exam. The policy contained a provision that, in the arbitration, “[l]ocal rules of law as to procedure and evidence will apply.” The arbitrators decided that the insurer could take all discovery permitted under Wis. Stat. ch. 804, rather than just depositions, as Wis. Stat. § 788.07 permits. The insureds then sought and obtained a declaratory judgment from the circuit court that only depositions could be taken. Relying on substantial federal case law interpreting comparable provisions of the Federal Arbitration Act, the court of appeals reversed, holding that, at least in the absence of exigent circumstances not present here, parties may not obtain judicial review of intermediate decisions of arbitrators, but only of final awards.
To reach its alternative ground for decision, the court had to distinguish Borst v. Allstate Ins. Co., 2006 WI 70, 291 Wis. 2d 361, 717 N.W.2d 42, in which the Supreme Court reversed a final award because the arbitrators had permitted discovery beyond the depositions permitted under § 788.07. The court of appeals said that the presence of the quoted language in the policy about “local rules” made this an issue of contract interpretation here, as to which the arbitrators’ decision is final, under Employers Ins. of Wausau v. Certain Underwriters at Lloyd’s, 202 Wis. 2d 673, 552 N.W.2d 420 (Ct. App. 1996). See also Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002).
Marlowe has been recommended for publication. A link to the decision is here.