The National Arbitration Forum Blog

Ted Duke, Maria Cardenas, Randal Graham, and David Graham were members of a limited liability company (LLC) called Way Cool Dirt Cheap (WCDC). A conflict developed pitting Duke and Cardenas against the Grahams. They arbitrated their dispute, as specified by the company's operating agreement. The arbitrator ruled to remove Duke and Cardenas as members of WCDC. The trial court confirmed the award.

Duke and Cardenas appealed, arguing that the arbitrator exceeded his powers in removing the two LLC members, because the Utah LLC Act limits LLC member removal to be strictly a judicial remedy. The Utah Supreme Court concluded that, in fact, the statute permits an arbitrator as well as a court to remove an LLC member or manager. (For more on Duke v. Graham…)

This recent decision reinforces that parties can, in arbitration, obtain the same results as in court. Best practices arbitration rules explicitly authorize the arbitrator to award any remedy that is permitted by the applicable law (see National Arbitration Forum Code of Procedure Rule 20).