When Arbitration Isn’t Binding

October 2013

Can a party to arbitration force an adverse arbitration award to be vacated, based upon post-award research that reveals a potential conflict on the part of the arbitrator? What if the conflict claim is based on the arbitrator listing one of the defendant attorneys as a reference on his resume? What if that resume was ten years old?

In Mt. Holyoke Homes, LP v. Jeffer Mangels Butler & Mitchell, LLP (2013) 2013 WL 5321158, 2013 Cal. App. Lexis 765, the appellate court vacated an arbitration award based on just those facts. After the arbitration of a legal malpractice case, in which the arbitrator rendered an award in favor of the defendant law firm, one of the plaintiffs conducted an internet search, looking for evidence of possible arbitrator bias. She found a ten year old resume in which the arbitrator had listed a Robert Mangels, a name partner in the defendant law firm as one of his references. The resume had not been disclosed when the parties selected the arbitrator.

Based upon the results of the internet search, the plaintiffs sought to vacate the award. The trial court confirmed the award, stating it was clear that no relationship existed between the arbitrator and the named partner, other than the partner had appeared before the arbitrator when he was a judge in the past. The arbitrator acknowledged he had not discussed with the partner his decision to use him as a reference. The trial court found the information was not required to be disclosed by the Code of Civil Procedure section 1281.9(a)(6) and a person familiar with the facts would not doubt the impartiality of the arbitrator.

The appellate court reversed, finding that the information should have been disclosed under both C.C.P. §1281.9(a) and the Ethics Standards for Neutral Arbitrators (Standard 7(d)). The failure to disclose the information compelled the vacation of the award, even if there was no prejudice shown. (citing Haworth v. Superior Court (2010) 50 Cal.4th 372, 389).