Company claims arbitrator couldn’t hear, dozed off

IOWA CITY – A company is trying to get out of paying an Iowa utility millions of dollars in a construction dispute by claiming that a retired judge who oversaw the arbitration proceedings had serious hearing problems, fell asleep and was confused.

Dustex Corp. asked a federal court in Iowa this week to vacate a $3.4 million arbitration award in favor of the municipal utility in Cedar Falls, Iowa. Kennesaw, Ga.-based Dustex argues that it did not receive a fair hearing due to the behavior of 76-year-old arbitrator Marshall P. Young, a retired state and federal judge in South Dakota.

Young chaired a three-member panel that heard a dispute over environmental upgrades that the Cedar Falls utility sought to make to a coal-fired power plant in 2006. The utility contracted with Miron Construction to manage the project, and Miron hired Dustex to supply a piece of equipment called a baghouse, which reduces emissions.

The utility claimed the baghouse never worked as intended, while Miron claimed the utility owed it money. The dispute went to arbitration. The American Arbitrators Association picked Young, who retired as a federal magistrate in 2007 after four decades on the bench, to chair the hearing panel and two other arbitrators as members.

After 12 days of hearings over the last year, the panel in November ordered Miron, Dustex and Continental Casualty Co. to pay the utility $3.4 million for the costs of fixing the baghouse.

Dustex and Neenah, Wis.-based Miron each filed documents this week seeking to throw out the award on several grounds, while Cedar Falls Utilities asked for the award to be confirmed.

Dustex’s filings, which include an affidavit from president and general manager Patrick Paul, repeatedly criticize Young’s conduct, saying he suffered from a “significant hearing disability” that caused him to ignore numerous legal objections and miss witness testimony.

Young did not have “the cognitive ability” to recognize the parties or attorneys, confusing their names even after several days of hearings; did not take notes or look at the exhibits in the highly technical case; misstated evidence; and repeatedly appeared to doze off during the proceedings, Dustex claims.

Paul wrote that he clocked Young snoozing for 20 minutes on one occasion and saw him nod off other times, adding that he did not believe Young was competent to serve. Young nonetheless had great influence because the other two members, Jerome Bales of Kansas City, Mo., and Wyatt Hoch of Wichita, Kan., deferred to his decisions on procedural issues, Paul wrote.