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Ghost of References Past: How a 10-year-old Reference May Create a Conflict for Arbitrators or Mediators.

Monday, December, 16, 2013


Establishing a practice as a neutral in mediation and arbitration can be a very long and arduous undertaking.  In the FMCS program, How to Become a Labor Arbitrator, it is recommended that a new arbitrator have a source of income to live on while trying to establish oneself.  Networking with professional contacts is at the top of every business development list.  A reference from a distinguished colleague, or even a former adversary, is often very helpful.

It also creates a potential for a conflict of interest that might not arise for years.  This is illustrated in Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP, Cal. App. (2013).  This was a case to vacate an arbitration award in a malpractice action.  The arbitrator, a retired judge, disclosed that defendant’s counsel had represented a party to a mediation before him within the past five years, but stated that he was not aware of any relationship with any party or attorney involved in the matter that would impair his ability to act fairly and impartially.  After hearing, he ruled in favor of defendants and awarded defendants $450,000 in unpaid legal fees, attorneys’ fees, and costs.

After receipt of the award, plaintiff undertook an internet search and discovered a résumé in which the arbitrator listed a named partner in the defendant law firm as a reference.  This résumé was found on the internet site of the National Academy of Distinguished Neutrals.  The résumé had been prepared approximately 10 years earlier and the arbitrator had never discussed the naming of the partner as a reference with the partner.  The plaintiff filed an action to vacate the arbitration award.  The trial court denied the plaintiff’s petition, awarded defendants the amounts awarded by the arbitrator plus interest, and awarded an additional $43,760.40 in attorneys’ fees.

On appeal, the Appellate Court reversed.  Under California law, a proposed neutral arbitrator is obligated to timely disclose “all matters that could cause a person aware of facts to reasonably entertain a doubt that the proposed neutral would be impartial.”  If the court finds that the arbitrator was aware of the ground for disclosure, then the court must vacate the award.  No prejudice needs to be shown. 

The appellate court stated that this question was not whether the arbitrator was actually biased, but whether a reasonable person could entertain a doubt that he could be impartial in the case.  The court concluded such a doubt could exist.  It reasoned that the arbitrator listed the defendant’s partner because he believed that he had a favorable opinion of the arbitrator’s abilities as a neutral and would speak positively, if asked.  The court stated, “An objective observer reasonably could conclude that an arbitrator listing a prominent litigator as a reference on his résumé would be reluctant to rule against the law firm in which the attorney is a partner as defendant in a legal malpractice action.  To entertain a doubt as to whether the arbitrator’s interest in maintaining the attorney’s high opinion of him could color his judgment in these circumstances is reasonable ….”  Thus, failing to disclose that the arbitrator listed a partner in the defendant law firm as a reference in a 10-year-old résumé was sufficient to vacate the award, at least where there was no evidence that the arbitrator was unaware of the listing when he was required to make his disclosures. 

Even though this is a California case, its principles could be extended to other jurisdictions.  Under the Code of Professional Responsibility for Arbitrators of Labor-Management Disputes, adopted by the Federal Mediation and Conciliation Service (FMCS), the National Academy of Arbitrators (NAA), and the American Arbitration Association (AAA), an arbitrator must disclose to the parties any close personal relationship or other circumstance which might reasonably raise a question as to the arbitrator’s neutrality.  As in the case under discussion, if an arbitrator has asked one of the parties or their attorneys to give a favorable reference if asked, it could raise an appearance of impropriety since one may reasonably conclude that an arbitrator would be hesitant to rule against one he or she has asked to be a reference.

This rationale could extend to mediation, as well.  In many states’ mediation rules, before the commencement of a mediation, the neutral mediator is required to disclose any known relationships with the parties or their counsel which may affect or give an appearance of affecting the neutral’s neutrality. 

That appearance could come from a résumé from ten (10) years ago

by William G. Trumpeter
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