With Friends Like These ....

Bassett Unified School District v. Superior Court, No. B323528 (D2d5 Mar. 14, 2023).

Judge A is presiding over a employment retaliation case. The Plaintiff's lawyers are from a firm in which Judge B was once a partner. Judge B casually notes this fact to Judge A. Judge B then shows up in court a few times to greet the attorneys. He sits in on voir dire until Judge A notices him in the gallery and has the clerk pass a note asking him to leave. A some point, Judge A makes an evidentiary ruling that is viewed as favorable to the Plaintiff.

Plaintiff wins a $25 million verdict. When Judge B hears about it, he texts Judge A: $25 Million!! with a couple of fireworks emojis. Judge A asks Judge B not to communicate about the case anymore. Judge A, being diligent, discloses this ex parte communication to the parties, and explains her interactions with Judge B over the course of the trial. Defendant moves to DQ Judge A, arguing that the evidentiary ruling was tainted by bias. The judge assigned to hear the DQ under Code of Civil Procedure § 170.3 denies it. Defendant takes a writ.

The Court of Appeal finds no basis for recusal. Judge B seems pretty biased. But there’s nothing that merits imputing that bias to Judge A. Judge A took all the appropriate steps to avoid the appearance of bias, including by candidly disclosing all of the potentially problematic interactions.

Writ denied.

Kibbitz Costs Kaiser Arb Award

Grabowski v. Kaiser Found. Health Plan, Inc., No. D076968 (May 10, 2021)

Plaintiff lost a medmal arbitration, in which she was pro se. During a break, while she wasn’t present, the arbitrator and defendant’s counsel had an ex parte conversation about the difficulties with the fact that plaintiff didn’t have a lawyer and her inefficacy as an advocate for herself. The lawyer and the arbitrator had a laugh about it. Unbeknownst to them, the conversation was recorded. Plaintiff’s mother, who had been recording the proceedings with her phone to make a record, had left it on during the break. 

Arbitrators, of course, are not supposed to have ex parte discussions with one party’s lawyers about the other party. Because such communications are a potential grounds for disqualification as facts that might reasonably give rise to a doubt over the arbitrator’s impartiality if known by an objective observer, an arbitrator is required to disclose them. See Code Civ. Proc.§ 1281.9(a). A failure to do so is, effectively, structural error meriting the vacation of an arbitration award even without any showing of prejudice. See § 1286.2(a)(6)(A).) Which is what happens here.

Reversed.

Party-Appointed Appraiser Is Still an Arbitrator

Khorsand v. Liberty Mutual Ins. Co., No. B280273 (D2d4 Feb. 27, 2018)

Evidence Code § 703.5 strictly limits the admissibility of testimony from judges, referees, arbitrators, and mediators. There are exceptions, including when offered to prove contempt, a crime, judicial misconduct, or a grounds for disqualification. The court here accepts that an effort to prove that a ruling in an insurance claim-related appraisal (a form of arbitration) was procured by fraud falls within those exceptions. Although there’s not much analysis as to why.

But the court rejects a broader claim for admissibility on the basis that the appraiser who offered the declaration doesn’t count as an arbitrator. The procedural setup entailed each party appointing an appraiser, and then the two party appointees appointing a third appraiser, who is commonly called the “referee.” The declarant was one of the party appointed appraisers. The Court holds that even though a party-appointed appraiser might not be considered completely neutral, that doesn’t take him outside of the role of an arbitrator, and thus not outside of the exclusion under § 703.5.

Affirmed.

Not Wrong Enought to Be Arbitration-Wrong

Baxter v. Block, No. A144112 (D1d1 May 24, 2016)

Attorney and Clients arbitrated a fee dispute under the Mandatory Fee Arbitration Act. The Arbitrator awarded $0, finding that Attorney’s services were worth less than he had billed. They were, instead, worth a lesser amount, which just happened to be exactly what Client had paid. 

But Clients hadn’t paid as much as the Arbitrator thought. He apparently relied on a mistaken document. Attorney noted the mistake. And Clients, to their credit, basically admitted it. But the Arbitrator refused to modify his award.
Attorney moved to vacate the award; Clients to confirm it. Clients also asked for their fees on confirmation, based on a fee provision in the retainer agreement. In addition to the payment mistake, Attorney claimed that Arbitrator had failed to disclose that a bunch of his recent work entailed auditing legal bills, which is Attorney claims is a significantly pro-client job for a fee arbitrator that it merited disclosure. The trial court refused to vacate the award on wither grounds and gave Clients their fees, although he cut their fee counsel’s hourly rates and hours significantly.

The court publishes its opinion only on the disclosure issue and the fee calculation. So far as the bill auditing (non-) disclosure goes, the record showed the arbitrator did a bunch of different consulting work around the issue of attorney fees. Some on the client-side like bill auditing. But also some on the attorney-side like testifying about reasonable rates for fee applications. His expertise was thus in billing issues in general, not in representing one side or another in fee disputes. Which meant his consulting work didn’t cause him to have a particular economic incentive to go one way or the other or to rule a certain way to garner the favor of future clients. Because the consulting didn’t create any reasonable doubt about the arbitrator’s impartiality, the judgment could not be vacated for failure to disclose, or to otherwise provide a grounds for disqualification.

And on the fees, Clients’ two attorneys billed Client—and Client sought fee recovery—at the same hourly rate. Both had roughly the same pedigrees and experience. Yet, the trial court gave only one of them a substantial rate cut without any explanation. The court finds this to be an abuse of discretion and sends the case back for an explanation. But it affirms the hours cut, deferring to the trial court’s judgment that the time billed was excessive for a motion to confirm an arbitration award. Such judgment can only be reversed if it is “clearly wrong,” which it wasn’t here.

Reversed in part.