November 2012 Vol. 9, No. 3


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


Nemecek & Cole v. Horn  (2012) 208 Cal.App.4th 641


Must an arbitration award in an attorney-client fee dispute be vacated because of:  (1) arbitrator’s previous involvement in a 186-member bar association committee with a witness for respondent; (2) arbitrator’s appearance with respondent’s expert witness as  a panelist at various seminars and their service together on the board of governors of the Association of Business Trial Lawyers; (3) arbitrator’s employment as of counsel to a law firm representing legal malpractice clients in five cases (including two for itself) in an otherwise criminal defense and civil litigation firm; or (4) a prior appearance by respondents once before the arbitrator when the arbitrator was a district court judge?


No.  Though arbitrators are required by the California Arbitration Code (CCP §1281.9) to timely disclose any and all matters that could raise doubts a proposed neutral arbitrator would be unable to be impartial, an arbitrator is not required to disclose ordinary and insubstantial business relationships resulting from involvement in the legal or business community.  The arbitrator’s relationships were not substantial and did not involve financial considerations that could create the impression of possible bias. (208 Cal.App.4th at 646-647.)

Reviewing the case de novo as a matter of law, the Court of Appeal looked to the case of Luce, Forward, Hamilton & Scripps v. Koch (2008) 162 Cal.App. 4th 720 (EQ, 5.2.8), which opined that participation in a large organization within the legal community with other members was “slight and attenuated,” absent a close and personal relationship.  This is consistent with other rulings of the Courts of Appeal. (208 Cal.App.4th at 646-647.)

As to the of counsel law firm employment, the Court examined Benjamin, Weill, & Mazer v. Kors (2011) 195 Cal.App.4th 40, where an arbitration award was vacated as the arbitrator was found to be primarily employed in legal malpractice and had financial considerations at stake.  The present case, however, found no such consideration at stake as the law firm to which the arbitrator was of counsel was focused primarily criminal defense and civil litigation with a total of three legal malpractice cases since its founding, and two more defending itself.  The Court of Appeal found no financial bias could be inferred from these few cases in which the arbitrator was not involved.  (208 Cal.App.4th at 647-648.)

Finally, the Court of Appeal found the argument that the arbitrator should have disclosed a single prior appearance by attorneys at the respondent law firm when the arbitrator was a federal judge borderline frivolous.  (Id. at 648.)  “[T]here is no requirement that an arbitrator disclose that attorneys appeared before the arbitrator in one case during his four years as a district court judge.”  (Ibid.)

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