(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Jenna Greene

August 8 (Reuters) - When an arbitrator decides a

lawsuit, it's supposed to be the final word.

Not so in bitter litigation by a former Tesla engineer who

in 2019 sued her ex-employer and CEO Elon Musk for defamation

and now claims an arbitrator's award against her should be

tossed because he was biased.

The case is set for a hearing on August 19 in San Francisco

Superior Court, where plaintiff Cristina Balan faces a high

legal hurdle to prove the arbitrator acted improperly in ruling

against her in 2021 -- an assertion that Tesla in court papers

calls "nonsense."

Still, the dispute raises what strikes me as an important

question about arbitration: How to ensure decision-makers don't

favor big companies that refer scores of cases to arbitration

each year, choosing the forum and often paying the fees.

Unlike federal and state court judges, whose salaries come

from taxpayers, arbitrators have an economic incentive to

cultivate customers who'll use their services again and again.

The result can be what some scholars have termed the "repeat

player effect," in which companies that frequently refer cases

to arbitration tend to win the cases more often.

It's a longstanding concern. For example, a widely cited

study in 1997 found workers won less often in cases against

employers that used the same alternative dispute resolution

provider repeatedly. And when the workers did win, they were

awarded significantly less money than their counterparts facing

employers that were one-off arbitration customers. Since then,

multiple researchers have documented similar results.

What's less clear is if repeat-player success stems from the

experience companies gain through arbitrating multiple times in

the private, non-precedential forum, or if it's an indication of

arbitrator bias.

Arbitration providers and the American Bar Association in

ethics guidelines stress that decision-makers are required to be

impartial and independent.

Balan told me she sees repeat-player dynamics in her

arbitration challenge. Her bias allegations were previously

reported by the San Francisco Chronicle.

In alleging "corruption in the form of a quid pro quo,"

Balan claims that a San Francisco-based arbitrator got at least

seven more appointments to hear Tesla or Musk-related disputes

after being assigned her case in 2019 -- his first-ever

arbitration involving the electric car maker.

Retired California Court of Appeal Justice Richard McAdams

accepted the other appointments both while Balan's case was

ongoing and after it was completed, she alleges, arguing that

this unduly influenced him to side with the company for personal

gain. McAdams, who works at for-profit alternative dispute

resolution provider JAMS, dismissed Balan's complaint in 2021 as

time-barred.

Balan also claims McAdams failed to promptly disclose one of

the new Tesla arbitrations he was picked for while her case was

pending -- an assertion that Tesla lawyers dispute -- and that

she'd have moved to disqualify him if he had.

McAdams and Tesla did not respond to requests for comment. A

JAMS spokesperson said the company "doesn't typically comment on

disputes handled by our neutrals," and declined to do so here.

Tesla's lawyers from Morgan, Lewis & Bockius in court papers

take issue with the premise of Balan's complaint. It's an

"every-day event" for arbitrators at JAMS as well as its

competitors to accept additional cases involving the same party,

they said.

An arbitrator "is not guilty of corruption, fraud, undue

means or anything close simply for doing so," wrote Morgan Lewis

partner Michael Weil, who did not respond to a request for

comment. "The case law does not support Balan's arguments."

He also argues Balan waited too long to file her petition to

vacate the award.

JAMS has a roster of about 500 retired judges and attorneys

that oversee more than 21,000 cases annually, according to the

company's website. Repeat customers include Tesla, which in

contracts has designated JAMS to hear some disputes involving

employees and customers.

According to his JAMS bio, McAdams became an arbitrator

after a 34-year judicial career in California, starting in small

claims court and culminating in his elevation to the Sixth

District Court of Appeal in 2003. He joined JAMS in 2011.

The parties in JAMS arbitrations don't typically hand-pick

who hears their case, Tesla lawyers point out. Instead, each

side is given a list of names to strike and rank to come up with

someone mutually acceptable - which is how McAdams got Balan's

defamation suit.

The case has its roots in her tenure at Tesla, where she

worked from 2010 to 2014 as a design engineer in California.

Balan alleges she was forced to resign after raising

internal alarms about potential safety hazards, claims that

Tesla has denied.

In 2017, the Huffington Post ran an article about Balan's

exit. In response, Tesla said Balan "booked an unapproved trip

to New York at Tesla's expense" and "spent company time working

on a 'secret project' without her manager's approval," among

other statements that Balan claims are false and defamatory.

About 16 months after the article appeared, Balan sued Tesla

for defamation in U.S. District Court for the Western District

of Washington, where she was living at the time.

A spokesperson for the Huffington Post, which is not a

defendant in the suit, did not respond to a request for

comment.

The ensuing litigation was procedurally complex, but the

upshot was that Balan was compelled to arbitrate her case.

Her claim hinged on what law to apply: Washington, which has

a two-year statute of limitations for defamation, or California,

with a one-year time limit.

Although Balan said the parties initially agreed the

substantive law of Washington would control, McAdams later

decided on California law, writing that Balan's employment

agreement with Tesla specified it and her defamation claims

stemmed from that relationship, among other factors.

For Balan, it was game over. Her case was dismissed as

time-barred.

Was the ruling the result of bias?

The Federal Arbitration Act permits a court to vacate an

arbitration award "where there was evident partiality" by an

arbitrator, but the law doesn't spell out exactly what that

looks like.

Tesla lawyers say California law requires proof that the

award was procured through "corruption, fraud, or other undue

means" to overturn the results of an arbitration.

It will now fall to San Francisco Superior Court Judge

Joseph Quinn to decide whether Balan has met that burden, and if

the merits of her defamation claim will ever be reviewed by a

court or arbitrator.