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May 5, 2011

Benjamin, Weill & Mazer v. Kors (2011) 189 Cal.App.4th 126

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The First District holds that an arbitrator was required to disclose that his practice focused upon representing lawyers in litigation with former clients.

Nancy Kors disagreed with her attorneys, Benjamin, Weill & Mazer (“BWM”) about unpaid legal bills.  When Kors moved to compel arbitration under the California Arbitration Act (“CAA”), the trial court directed binding arbitration under the Bar Association of San Francisco (“BASF”) rules.  Kors opposed BWM’s petition to confirm the arbitration award and moved to vacate it because the chief arbitrator failed to disclose that his practice focused on representing lawyers in litigation with former clients as required by the CAA, but not the BASF rules.  The trial court denied Kors’s motion and confirmed the award.

The Court of Appeal noted that the CAA imposes a duty to disclose 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.  It was undisputed that the chief arbitrator’s legal practice focused upon the professional responsibility of lawyers and law firms.  At the time he was appointed arbitrator, he was representing a large law firm in a case before the California Supreme Court involving an attorney fee dispute.  During the arbitration, he was representing another major law firm in an action for attorney malpractice and related torts.

Because the chief arbitrator was “extremely involved” in the defense of lawyers and law firms, a reasonable person could doubt whether his dependence on business from lawyers would prevent him from taking the side of a client in a fee dispute with a former law firm.  Doing so might “put at risk” his ability to secure business from the lawyers and law firms whose businesses he solicited.

The required disclosure is broader than required of a judge.  However a sitting judge cannot simultaneously represent parties of the same class as those involved in an adjudicated matter.

Comment: The Court made clear that under the CAA, an arbitrator must disclose all matters that could create a perception of impartiality.  The opinion includes a lengthy discussion of relevant case law related to disclosures related by an arbitrator that is instructive to any person or entity providing arbitration services.

 

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