In Gray v. Chiu (filed January 22, 2013) 2013 DJDAR 944, Judge Haber (Retired), a member of ADR Services, Inc., the dispute provider resolution organization in this case, was selected as the third member of an arbitration panel to preside as a neutral arbitrator in this medical malpractice matter. He sent disclosure statements to the parties in January and April of 2010 stating that he had no significant personal or business relationship with any party or lawyer in the matter. During the arbitration that ensued starting January 31, 2011, George Peterson, a partner in Peterson & Bradford represented the respondent, John Chiu, M.D. as lead counsel. Dr. Chiu retained William Ginsburg as his personal counsel, although his name was not listed as a participant on the disclosure statement. The arbitrators rendered a binding arbitration award in favor of Dr. Chiu.
A bit of history on attorney Ginsburg: for many years he represented Dr. Chiu as of counsel at Peterson & Bradford. In September 2009, Ginsburg left that firm to start his own arbitration/mediation business. On October 6, 2009, he became a member of ADR Services, where he was an independent contractor, with no financial interest in ADR. He additionally declared that he did not “actively participate” in the Gray trial, although he attended some depositions and was present during the entire arbitration hearing on the merits. He also stated that in 2010 he had given his ADR business card to petitioner Gray’s counsel, Eugene Locken. Locken recalled receiving a business card from Ginsburg, but denied it showed he was a member of ADR; that was something he had no actual knowledge of through the time of the hearing on the merits. Judge Haber was aware that Ginsburg worked through the ADR Services offices, but they never discussed the Gray matter.
After the arbitration panel’s issuance of the award in favor of Chiu, Gray filed a petition in Santa Barbara Superior Court to vacate the arbitration award because of Judge Haber’s failure to disclose that Ginsburg too was an ADR Services member. The trial court denied the petition stating that the Ginsburg relationship “may not have been disclosed at the arbitration hearing, but it wasn’t hidden.” The California Court of Appeal, Second Appellate District, Division Six, reversed directing the trial court to vacate the arbitration award, finding arbitrator Haber failed to disclose a ground upon which he could have been disqualified. It was unconvinced that this ground was waived; only the arbitrator was in a position to effectively disclose under the present circumstances.
Most compelling to the appellate court was language of California Ethics Standards for Neutral Arbitrators in Contractual Arbitrations, left unaddressed by the trial court. Specifically, Ethics Standard 8 requires a neutral arbitrator to disclose that a lawyer in the arbitration is a member of the administering dispute provider resolution organization. This duty of disclosure is a continuing one. (Standard 7(f).) Additionally Code of Civil Procedure section 1281.9, subdivision (a) (3)-(6), mandates the arbitrator’s disclosure of specified relationships including any significant personal or professional relationship with a party of an attorney involved in the arbitration. Finally, section 1286.2, subdivision (a) provides that the court shall vacate the award if an arbitrator failed to disclose within the time required a ground of disqualification of which the arbitrator was aware.
As someone who previously ruled on appeals asserting vacation of arbitration awards for failure to disclose, and who presently serves as an arbitrator, I see several analytical points worthy of brief mention. First, the attorney “involved” in an arbitration about whom an arbitrator should disclose a relationship pertains to any involvement (not requiring at least “active participation” as the terminology was used by Ginsburg). An arbitrator may want to document specific requesting the parties to divulge all who may be involved, rather than simply rely on a submitted “conflict list” at time of proposed appointment. Second, the arbitrator’s relationships about which the arbitrator should disclose may be more significant than thought. Err to the side of caution in disclosing seemingly innocuous relationships such as independent contracting, fellow memberships with limited contact, and the like. And third, be aware that, although ethical standards may not be contained in statutes, appellate courts may utilize such standards to reverse, nullify or vacate a ruling made by an adjudicator who breaches those ethical standards.
Finally, counsel might be wise to bring any potential conflicts of interest to the attention of the arbitrator and opposing counsel as soon as possible, in order to protect any award that might result from the arbitration.