Potential arbitrators are required to make disclosures of
potential conflicts. Many of the arbitration service providers accomplish this
through a questionnaire where the arbitrator walks through a series of
questions. In this case, the arbitrator’s disclosure consisted of 28 questions
over 11 pages. To question 28, which asked if the arbitrator would entertain
any other offers of employment from the parties while the case is pending, the
arbitrator answered, “yes,” that he or she* would consider offers to serve as
an arbitrator in other matters for the parties or their counsel. Unfortunately,
the eleventh page of the disclosures was missing.
After plaintiff lost the arbitration (to the surprise of
her counsel) she checked the forms and realized a disclosure was missing. She
later learned that while her arbitration was pending, the arbitrator had
accepted at least four more cases from the defendant’s law firm. The trial
court confirmed the award over plaintiff’s objection.
The Judicial Council has adopted Ethics Standards for
Neutral Arbitrators in Contractual Arbitration. Two of those standards—7 and
12—deal, respectively, with matters that need to be disclosed initially, and
ongoing disclosures after an arbitrator is appointed. Standard 7(d) requires
disclosure of matters that would bear on the arbitrator’s impartiality. In
particular, Standard 7(d)(4)(A) requires disclosure of other matters where the
arbitrator is serving as a neutral to any party or their lawyers. Standard 7(f)
provides a continuing obligation to update those disclosures with new
information. Standard 12(b) requires an arbitrator to disclose whether he or
she will entertain other appointments from the parties or lawyers pending the
arbitration. Standard 12(d), then, imposes an ongoing obligation to disclose
any such offers received or accepted.
These get enforced through § 1286.2(a)(6)(A) of the Code of Civil Procedure, which requires a trial court to vacate an arbitration award if the arbitrator
fails to disclose timely a ground for disqualification of which the arbitrator
is aware. Actual awareness by the arbitrator is required.
Here, the missing page violated Standard 12(b). But since
plaintiff should have figured that out at the time, she waived the right to
vacate on that ground. But that’s not true of the failures to disclose the four
other matters where defense lawyers retained the arbitrator.
That violated either 7(f)’s obligation to update or 12(d)’s obligation to
disclose.
Moreover, the Court finds that the knowledge element goes
to knowledge of the grounds, not knowledge of the disclosure or lack thereof.
So long as the arbitrator knew he or she had other cases with the defense
lawyers, that was enough. There was no need to also prove that the arbitrator
actually knew that the disclosures had not been made. (E.g., the arbitrator
can’t escape just because a non-disclosure was at the mistake of the staff at
the arbitration provider.)
Reversed.
*The Court is scrupulous about not naming the arbitrator
or even revealing his or her gender.
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