5.1.14

C.C.P. §1281.9:  Arbitrator’s Duty To Disclose

Case:

Jakks Pacific, Inc. v. Superior Court (2008) 160 Cal.App.4th 596

Issue:

Must all five individuals the trial court proposes to the parties as potential neutral arbitrators pursuant to C.C.P. §1281.6, when the parties are unable to agree on one themselves, disclose at that time “all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial?”  (C.C.P. §1281.9(a).)

Holding:

No.  The required disclosures need only be made when the arbitrator is notified in writing that he or she has been selected by the parties or appointed by the court.  “[I]t is clear that the court’s duty to ‘nominate’ five persons to be considered by the parties obligates the court to propose five individuals, not select or appoint any one of them as the actual arbitrator.  If the parties remain deadlocked, the court must then ‘appoint the arbitrator from the nominees.’  From the arbitrator’s perspective, his disclosure obligations are not triggered until (1) a determination is made that he ‘is to serve as a neutral arbitrator’ and (2) he has received written notice of his ‘proposed nomination [by the parties] or appointment [by the court].  Quite plainly, the trial court’s proposal (nomination) of possible arbitrators is done without notice to the candidates and before any one of them is selected (nominated) by the parties or appointed by the court.”  (Id. at 603, emphasis and parentheticals in the original; citations and footnote omitted.)

Note:

The Court observed that there were at least three practical problems with a contrary reading of the statute.  First, if the disclosure obligation were applied to all five potential arbitrators, “four will necessarily have wasted their time and quite a lot of it, since the disclosure obligations are substantial.”  (Id. at 606, footnote omitted.)  Second, the statutory timeframe makes no sense under the contrary reading.  The statute gives the arbitrator 10 days to make the disclosures, but the parties have only five days within which to make their choice from among the five potential arbitrators nominated by the court before the court must appoint one.  (Ibid.)  Third, the disclosures are made only to the parties, not the court and, in any event the court would not be in a position to know which disclosures would be of concern to the parties.  (Ibid.)